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Continuous communication

There are three simple steps to establish a family business code of conduct

There is a change in how families communicate today. I see the evidence in my daily work. You probably see it around the farm tables, in the barn, or with your accountant. Different discussions are happening now. Discussions are being driven by different players — sons-in-law, spouses, children — people coming into a farm family and wanting more than promises of the future.

These are people who are demanding communication and agreements about what is in store for their future.

In this fourth part of my series on continuous improvement, I wanted to introduce the idea of continuously communicating. This involves understanding the value that communication brings to relationships, accepting the driving forces behind it, and working towards establishing healthy family communication. We need to have conversations about the business and its future, and those conversations need to be face-to-face between the stakeholders.

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One of the families I work with needs my help with a continuity plan for their dairy farming business. When I got together with them last month and asked how they are currently communicating, I was met with the answer: silence.

In their case, the transfer of knowledge between generations hasn’t started yet, and communication is the barrier. Of course, there are underlying issues. Dad isn’t ready to give up control because he isn’t confident in his son’s abilities. Son wants to know when the transition is going to occur and what it will cost him. His new wife also really wants answers to these questions.

While both father and son openly share these concerns with me in private, they struggle and sit silent when we try to have these discussions all together.

These are common roadblocks I see when working with families. It is something that challenges most of us. What made this case more difficult was that these two had not spoken in over a year, other than a few grunts and groans. The only communication was happening via text between the mother and the daughter-in-law to manage expectations as best they could.

This was obviously so broken that we needed to repair some relationships. How could we begin to do that when this family didn’t know how to have a conversation without losing their cool? This family clearly needed help learning how to communicate, so we started with Communication 101 — creating a code of conduct which they built together.

It’s straightforward to start this process with your family. It can be built around answering one simple question: how do you want to be treated? Respect is the number one answer both sides will give. We want to be heard. We want to be listened to. We want to feel safe in sharing how we really feel. We want to feel we have a voice as a new family member. And guess what? We all feel the same way.

Once that basic principle is stated out loud and agreed to by all sides, it’s amazing how a conversation can start to flow. Then, beginning with the positive is a wonderful way to continue the conversation. For example, we ask, “What’s working well?”

In the dairy farm family, both father and son said the same things: “the cows are milking well” and “we have good feed.” After that, though, they had trouble coming up with anything else that was working well. The operation was running well. The financials were impressive. Yet this farm was in serious jeopardy because of the lack of communication and complete breakdown in a relationship.

A lack of communication becomes a serious barrier in how to transition farms from one generation to the next. A lot of families will say: “we talk to each other in the barn.” In reality, that might mean yelling at each other instead of having conversations about the business in a healthy environment. Open communication can avoid awkwardness around the family business and these relationships are critical to the future of the operation.

I can sense it when someone wants to ask: “Is it wrong to get frustrated when someone comes into the family business as a spouse and wants more than what had been planned or had been talked about for the future?” But maybe if we have the strength to shift the way we view this and to see that maybe what this individual really wants is certainty and confidence, it may help us in how we communicate our future plans to the next generation.

We can set guidelines or establish a standard of what is shared and when — but let’s not keep it in the dark.

We must embrace this as an opportunity to share with the next generation how you have built the successful family business. Share the stories about how you got the farm and what you feel are important skills they need to demonstrate before succeeding with the farm. This is about setting your expectations and theirs. It’s a step towards opening, or continuing, the communication channels and starting the transition of leadership of the legacy you helped to build.

There are some very simple steps to establishing a Family Business Code of Conduct that can continuously improve your communication. Consider the following:

  • Outline ground rules for these meetings. Who will speak and who will be present? If your are including extended family members (i.e. non-farming children, spouses) establish early who will have a voice versus who will have a vote.
  • Set a schedule and an agenda for family meetings. Establish how often is fair to meet and a safe environment in which to meet. Keep the meetings focused and on time.
  • Set monthly priorities. Agree to a basic schedule of what each stakeholder can be better at that month. Evaluate at the end of each month to benchmark the progress.

Examples of the Code of Conduct Toolkit and the Family Constitution Toolkit can be found at the Farm Life Financial website.

Darrell Wade is a certified family enterprise adviser and a CFA-certified farm adviser. He is the founder of Farm Life Financial Planning Group and can be reached directly at [email protected].

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Darrell Wade is a certified family enterprise adviser and a CFA-certified farm adviser. He is the founder of Farm Life Financial Planning Group and can be reached directly at [email protected]

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