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The farmer as CEO

AME Management: What roles and responsibilities must a farmer assume in order to be effective?

An Internet search will reveal several definitions of the roles and responsibilities for the chief executive officer (CEO) of a business. The degree of formality of the actual position and its title varies considerably from business to business, depending on size, complexity, and organizational preferences. Potential roles and responsibilities of the CEO are summarized below.

CEO roles and responsibilities

Leadership:

  • Promote change related to the mission and vision of the business.
  • Motivate family and team members.
  • Work to increase shareholder (or owner) value.
  • Manage succession.
  • Liaise within the community.

Vision:

  • Monitor industry developments and look for future opportunities.

Management and decision-making:

  • Oversee operations and plan implementation.
  • Manage human resources.
  • Manage investment and related financial performance.

Risk management:

  • Analyze risk.
  • Develop and implement mitigation strategies.

Management evolution on a farm

More farms are finding themselves in situations where they are considering a CEO-type application for their businesses. The farmer, early in his or her career, provides all labour and management to the operation. As the business evolves, they take on the role of teacher as there are new employees (or family members) who provide some of the labour component.

The farmer’s role advances to where the function then more closely resembles that of a manager. This is the most common, and at the same time challenging situation farmers find themselves in. It is challenging in that many farmers find it difficult to fully engage as managers, which requires more time be spent in the office and less time in the field.

For some, it is a question of what they enjoy doing. For others it is a function of value. Is an hour in the office equal to an hour in the field? The answer to the question has direct correlation to the purposeful, personal advancement of the farmer through to a manager and then to a CEO.

The difference between the leader and manager function is subtle, and can best be described by looking at the actions of the people who provide the labour component. Where a farmer is functioning as a manager, the people providing the labour component will be doing so because they’ve been told what to do. Where a farmer is a leader, by contrast, the people providing the labour will be doing so because they want to — because they’ve embraced the vision and plan as presented by the leader.

It is increasingly difficult to advance through the different phases of management evolution, but the farm or business should see the positive results of the advancement. Employees working with a leader versus a manager will generally be more productive. For example, on a farm, more care will be given to production details resulting in better yields when people working on the farm are working for a leader. There will be less downtime due to equipment breakdown, and there will also be improved employee retention.

These in turn improve the farm’s financial performance, which then increases shareholder value, which, as noted above, is one of the responsibilities of the CEO.

CEO position application

Clearly, leadership can be attained without the formality of the CEO title. The title alone will not get the desired results.

However, where there is motivation to formalize the position, the first thing is to develop a detailed position description. There can be challenges in situations where there are partners (husband/wife; brothers) involved. Who should be the CEO? How will the decision be made?

When there are multiple partners involved, a specific and/or limited role that best represents the needs of the farm is one option. Or there could be a rotation where one partner is CEO for a couple of years, with another partner then assuming the responsibilities for a term. Often, people will decide they don’t want to take on the position as it will require, depending on the description, some change in what they do on a day-to-day basis; in other words, less time “in the field.”

The CEO function can also be effective in succession planning. A senior family member can take on the CEO position and transfer managerial and operational duties to the incoming generation. This provides opportunity for the next generation to assume some responsibility and autonomy. It also creates a structure that can endure through the full transition when the senior member fully retires.

There are courses or workshops that provide instruction and training in leadership. These may be a useful first step in a longer-term plan to develop the CEO position on a farm.

Terry Betker is a farm management consultant based in Winnipeg, Man. He can be reached at 204-782-8200 or [email protected].

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