Your Reading List

Governing the farm

On most farms, ‘governance’ sounds like the last thing you’d want to talk about if you hope to keep everyone happy. Steve Tomtene used to think so too, but is glad he changed his mind

Like many farms with added complementary enterprises like a trucking company or livestock barn or a seed business, Tomtene Seed Farm at Birch Hill, Sask., has developed systems to juggle all the moving parts.

“Maintaining identification and producing seed products of quality merit takes a shift in thinking about the products, about production, about the organizational structure,” says Steve Tomtene.

Planning and thinking ahead is paramount to the success of their farm. The extra costs, management time and risks with seed production and with exporting niche products to many countries take stronger, smarter systems.

Related Articles

Of course, as a seed grower, it also takes a crystal ball, selecting varieties to grow this season to be sold three years from now.

And the Tomtenes are doing it on a fairly large scale with nearly 12,000 acres of canola, oats, barley and wheat, peas and flax to grow, plus processing, retailing, managing intellectual property and exporting around the world. At that size it takes extra effort to allocate resources for documentation, cleaning, bin management and logistics.

Adding to the complexity, three generations of family members are working on the farm. There’s Steve and Jeannette and sister Susan and her husband Dan Slind, who work with their semi-retired parents, Terry and Lois. Steve and Jeannette’s son Brad is now farming full-time with them along with their daughter Sarah and husband Blair Strautman.

The stakes are higher than ever to do it right. As their business grew beyond supplying neighbours, more professional approaches were required. “Additional information adds value to the seed but that needs systems to manage that and there’s more seriousness, more liability,” says Steve Tomtene.

Tomtene also says being a seed grower requires a mentality of wanting to produce specific products that people want. Instead of producing a commodity, the psychology approach of having a symbiotic relationship with customers has led them to other relationships. For example, they grow IP canola for Cargill. “They want it. I grow it. There’s an emotional connection,” says Tomtene.

The mentalities of win-win and pre-planning infiltrate their farm and their family. For example, succession is continual, more like transitional business planning rather than estate planning, which is also how they approach governance.

Uniquely, the Tomtenes have created a simple business governance system and policies to smooth out the potential wrinkles of working together. “The system allows us to separate personalities from business,” says Tomtene. “Governance policies show us how to separate business from personal needs and interests.”

The idea of creating a system to avoid and manage potential conflicts came to Tomtene after he participated in a workshop held by Iowa farm adviser Jolene Brown. In her family business workshops, Brown shares tools to honour farm families by doing the business right.

One tool is for conflict management and others include a chart to help document basic job responsibilities and results, which leads to compensation. However, she does not have templates of governance or written policies.

“When it comes to family, I’ve learned more, not less, must be in writing,” says Brown.

When Tomtene sat on the SeCan board, he noticed how simple and practical their board governance structures were and how well it worked for this member-only executive. So he basically extrapolated SeCan’s governance structure to fit his own family farm. In a way SeCan is like a farm, except for the personal asset value, he says.

Now the farm has policies in place to deal with potential conflict areas and ways to help resolve any conflicts that may arise. For example, they have written policies on how they deal with compensation, vehicles and housing laid out in the living document. “It gives us an interface to deal with these issues,” says Tomtene.

Steve Tomtene says farm groups need to lobby government for smart policies
photo: Dave Stobbe

He says other boards he’s been on with no collective agenda and few rules of engagement tend to be driven by individual needs and independent thoughts. At these meetings personalities interfere with facts and figures.

Manitoba-based family farm adviser and coach Elaine Froese says farmers need to view conflict resolution strategies as part of business risk management. And mothers should not be put in the position of keeping the peace, a position that Ontario-based adviser John Fast calls “acting as family CEO” — chief emotional officer.

Instead, Froese suggests farmers can think and plan ahead on how best to deal with conflicts on their farms and use structures to keep family issues from taking over business meetings. “Select a chairperson, follow an agenda, set down rules of conduct, and take minutes,” says Froese in her book Do the Tough Things Right….

Families need to understand how conflict is a normal part of business and life, and it can be positive. In other words, it exists but what really matters is how you deal with it. Come from a place of curiosity and caring, Froese tells her clients. Understand the underlying issues, and be prepared to forgive and seek common ground before the discussion about the conflict begins.

Also, really listen, ask questions, and be willing to play with possibilities and ideas. “By having a way to discuss conflict issues, the family can create a culture of trust,” Froese says. “It should build confidence, accountability and create a culture of fairness, respect and commitment.”

Potential governance strategies to prevent conflicts in family businesses include family employment policies (i.e. compensation, employment, exit and entry, reviews) plus formalized family meetings, strong, effective governance, sometimes with independent board members, and dealing with issues and conflicts as they arise in a direct, timely and open-minded way.

Leverage your systems

It’s also important to connect with trusted peers off the farm, says Tomtene, but keep the governance work confidential. He has a small group of nearby farmers he meets with informally three times a year. “It helps to have support, to know we are not alone out here,” he says.

The Tomtenes have been growing seed and have been members of many seed associations for decades. Tomtene says those meetings have overarching issues and information but it’s often in the side conversations, before and after the official meeting, where growers share information and become trusted friends.

It’s a lesson that farm organizations can pick up on, he believes. Tomtene thinks Canadian farmers, with our strong business and regulatory systems, are primed to take advantage of world niche markets. But, he says, “We need to be partners you can trust to do business with.”

Now, he says, farm groups need to lobby government for smart policies. It’s just like on the farm. Systems have to have real purpose, Tomtene says. “Regulations can be a hindrance, if they are not thoughtful.”


Building blocks for farm governance policies

The advantages of working with family are numerous and powerful: flexibility, affection, long-term thinking, children-friendly cultures, compromising for others, deeply shared purpose and history. It can be a competitive advantage…
if you can prevent and manage potential conflicts.

To help you build governance policies for your business Elaine Froese took a page out of an old manual on managing multi-generational farms and created the list below in her book Do the Tough Things Right… She says the founding generation should flesh out their answers and then write each topic on a recipe card to be discussed one at a time at meetings.

1. Brief history of the farm.
2. Values of current owners.
3. Setting family business meetings — who, what, where and when.
4. Criteria for employment of family members.
5. Employing spouses, in-laws and children.
6. Compensation for family members and adding up the benefits and perks.
7. How to deal with non-family members and extended family.
8. How much volunteering and philanthropy is okay?
9. Management, ownership-transition timetable.
10. Expectation of minority shareholders.
11. Fair and equitable exit strategies.
12. How to distribute profits.
13. Nuptial and prenuptial agreements.
14. Conflict resolution process.
15. Leaves of absence and sabbaticals, vacation time.
16. Terms and conditions of loans to family members.
17. Who speaks for the business and does public relations.

Governance policies show us how to separate business from personal needs and interests,” Tomtene says. As farms grow larger, it’s a role that grows in value

About the author

Senior Business Editor

Maggie Van Camp's recent articles

Comments

explore

Stories from our other publications