Let’s say you’re going to interview someone for your job as the CEO of your farm. Or maybe you’re considering someone in the next generation for the job. Or you might even be looking in the mirror, asking yourself where to focus your energy over the next year. What questions would you ask?
That was the concept behind a highly praised story that Country Guide ran six years ago. Today, the pressures are even greater. So here’s how it looks with the summer of 2021 barrelling toward us.
A lot has changed, but decision-making is still the most important job on any farm, large or small. What does it take to be a farm CEO?
“Generally, today’s farmers are getting the job done. That’s clear. But there’s also an awareness — on some farms, you might even call it a nervousness — that the emerging role of farmer-CEO is about to get way more complex.
“Many family farms are already to the point where they need to have somebody at the chief executive level,” says Glenn Dogterom, business transition advisor with MNP at Lethbridge, Alta.
Partly, that’s just a fact of life if you’re farming in the 2020s. It takes more dollars, the big decisions are getting even bigger, and every aspect of farm governance, financial management and HR comes with a mystifying amount of expert advice.
More farms also have multiple generations of family members that are responsible for increasingly high-tech and high-value roles.
There’s also the growing recognition that if your farm was any other kind of business, you would hire different CEO’s at different stages.
“If you’re at the growth stage, and looking to launch into new markets, you need to find somebody with a growth orientation versus somebody who is of a defensive mindset, somebody who’s very good at stabilizing a company,” says Trevor Maclean, senior advisor, agriculture at MNP in Lethbridge.”
If this is the first step in understanding what you as a leader need to bring to the table to optimize your farm’s performance, it raises tough questions. Where is the farm at? Where do you want it to go?
Maybe your business is in crisis and you need to build a team to stabilize it. Or it could be stagnant and you are looking to grow by integrating other commodities or business enterprises, or you might be exploring new markets or partnerships. Or are you in expansion mode?
Old ideas might limit you to old kinds of solutions, so imagine your farm is a company in any other sector. What would your board of directors say?
“It’s an inflection point,” says Maclean. “If you choose the wrong person at that inflection point, it could tank a company or send it into a tailspin. It all comes back around to understanding where you are and where you are going.”
If you are the person you are choosing, how should you answer these questions?
Can you create a sense of structure?
Having a clear organizational structure is essential to creating a strong and proficient team. Who makes what decisions? Who is accountable for what?
Do they know it? Does everybody else?
“The idea of good governance is to provide the best guidance and direction,” says Dogterom.
With a strong commitment to structure, a CEO will also be able to assess the farm employees’ current skill sets against the skills needed for top performance. Indeed, the larger the farm gets, the more important it is that the CEO or manager demonstrate they can respect, work with, and maintain the loyalty of people who know more than the CEO does in their specialty areas.
Not everyone is up to that job. It takes conscious effort.
A fundamental step in developing a CEO role can be to define roles and accountabilities, and also to identify weaknesses and strengths.
“It’s so important that somebody is able to impartially do that assessment,” says Dogterom. “It’s often hard to do that and identify what needs to change in order to be successful.”
Can you mould the farm’s culture?
Every business has a culture. It’s the basis of how people interact, how formal or informal they are, how they celebrate their successes, and so much more.
Outside of agriculture, professional headhunters focus intense energy on finding the right CEO for the culture. “There’s no way to set up somebody for failure quicker than not understanding your culture, and hiring somebody that’s going to clash with that culture,” says Maclean.
On the farm, it means creating a place where people like to work, where they feel they fit in and where they know what’s expected.
If you were hiring a company CEO, Maclean says, you’d ask smart questions and get the candidate to explain exactly how they created a buzz in their former workplace and whether they were able to help employees blend their personal and the business’s goals.
As you groom yourself as a CEO, or if you’re considering a member of the next generation, ask yourself: What kind of resume would they write? And if you were checking their references, what questions would you ask?
Do you have off-farm experience?
Dogterom has long advised his young farm clients to work off-farm for a while and gain some experience.
“Ideally, if they work in a bigger business that does things right, when they come back to the farm, they have some practical experience, they have a vision of what good business practices are and how a company should be run,” says Dogterom.
People seldom do that in a farm family business, he adds. “It’s hard to get some young people to leave because they see themselves as an important component of the company, and worry what’s going to happen to their role if they leave and come back, yet that’s really what they need to do to grow,” says Dogterom.
The ideal CEO will have a blend of academic credentials and other attributes that bring value to the business.
“You have to find that balance between capabilities and competencies,” says Maclean. “It’s so critical that one doesn’t outweigh the other. A person may be a great farmer, know how to put crop in the ground, when to spray, when to take it off, everything else, but he or she may be lacking in competencies like relating to employees, or marketing, or understanding leverage from a balance-sheet perspective. There has to be a balance and sometimes the only way to get it is to draw upon external resources.”
Can you develop a business strategy?
The reality is that a lot of farm operations haven’t moved the needle much in terms of adopting business practices like business planning, financial management, human resource management and transition planning.
“Our experience tells us farmers tend to turn away from business practices when times are good, and our research confirms that,” says Heather Watson, executive director of Farm Management Canada. “We would argue the successful manager continues to apply proven business practices at all times — good and bad.”
You might also ask how they measure success. While profitability is still the main goal of any business, Watson says success also involves factors such as mental health and wellness, family and other interpersonal relations, happiness, the ability to service debt, and progress with transition planning and business continuity.
The CEO or manager must be a strategic thinker and develop a business plan based on the vision derived from the core values of the people involved.
Ideally, the leader will develop a long-term, three- to five-year plan to give a sense of direction and provide a roadmap to take the business where it wants to go.
From there the CEO should be able to assess the business and the management areas within it to see if they align with the vision, and develop practical strategies to move the business towards achieving the goals linked to business cycles, so that the business plan can be regularly evaluated — at least annually, but preferably each quarter — to measure progress and revise if necessary.
Can you balance the short- and long-term?
Can you envision something that you would implement in year one, where the benefits may not be seen until year five?
Maclean often asks the question in interviews because he wants to prompt the candidate to see beyond the numbers and look at something deeper. That’s a sign of a true, visionary leader.
“You can start implementing small incremental changes as a CEO or as a leader, but you have to be honest that those changes aren’t going to be seen overnight,” says Maclean.
“It’s not like cutting costs or cutting head count, where you’ll recognize it tomorrow or on the next quarterly financial statement. Something like how you empower people or changing the culture of an organization can be started today, but you’ll only truly see it when you reflect back in five years and see how the business has transformed.”
Are you a ‘box’ or a ‘cloud’ thinker?
Today’s CEO should be able to understand and appreciate this difference.
“The concept of a box is often how we construct a job description based on what has been, what the previous person had,” says Maclean.
“The cloud concept is understanding that nothing is sitting still, so don’t put it into a box. It’s about being fluid and adaptive to the dynamics of the business.”
Few sectors are as fluid and dynamic as agriculture today and the demands placed upon agribusiness, agri-food and producers are enormous. So, the concept of the cloud is to create something that can expand and stretch, yet come back together as the winds change.
Can you read and understand the financials?
Not all CEOs or managers have in-depth financial training, and this is a skill set that can easily be hired or contracted out if need be, but they should at least know how to read a financial statement, interpret a balance sheet and understand cash flow because these are tools they need to manage the finances and ensure profitability.
Again, treat your CEO grooming experience as if you were hiring a CEO for a company. Imagine putting financial data such as a statement, cash flow or projections in front of a candidate and asking them to explain what they see. What do the figures tell them about the business?
Can they identify key targets, and propose ways to measure your progress toward them?
Can you build and lead a team?
No one can conquer a mountain alone. Building a team is an essential, and the CEO needs to be good at attracting great candidates to yours.
Dogterom also says it means ensuring the team understands your goals, plus their role in achieving them.
Human resources is a challenge for most organizations and this is particularly the case with ag industries due in part to the location of the business, and the fact that people don’t always perceive front-line jobs as appealing, so attracting and keeping talented individuals becomes critical.
Once the business has its team, the farm manager or CEO must effectively lead and inspire that team, so people skills such as being a good communicator and an effective facilitator are needed to build strong, living relationships.
That also means the CEO must be prepared to do the tough jobs like fire people, especially in a family environment, so the right people are in the right places, and everyone thinks in terms of the team.
Do you know your leadership style?
“A leader must understand their leadership and behavioural tendencies as this can disclose potential blind spots in their leadership,” says Maclean.
“Leaders need to remain open, adaptive and curious. There is no one, right way to lead, but rather, a constant state of a “being”: Being aware, being curious, being inspired, being purpose-directed. We can all change ourselves, and these sorts of tools help leaders who are open to better understand and improve themselves and those around them.”
Do you understand risk?
“Agriculture is probably one of the most technical, risk-prone businesses to be involved in,” Dogterom says.
As a result, the CEO must take a more comprehensive approach to managing risk, says Watson. That involves knowing risk tools and options. For instance, Farm Management Canada developed a Comprehensive Guide to Managing Risk in Agriculture based on its exploration of the risks producers face and their risk management practices. It also offers an online risk assessment and planning tool called AgriShield.
It also means another CEO shift. “We look far beyond financial risk to include people, finance, markets, management, business environment and production,” says Watson.
So, what can a CEO approach do to help your farm deal with the multitude of risks that face agriculture today?
“One of the key elements is he or she had better be well read,” Maclean says. “In today’s environment, risk can come from something that you never perceived as a risk before, and it can catch people flat-footed,” says Maclean. “Recalls, traceability, food security and sovereignty, transmittable diseases; the farm community is susceptible to it all, so a big part of mitigating that risk is to have a network of people around you that are sharing information.”
It’s important to be a critical thinker too, says Maclean. “Having an inquiring mindset, picking up on what the nuances or messages are, and not being dismissive are so necessary in all business today.”
Are you a lifelong learner?
FMC’s Dollar and Sense survey from 2015 found that a commitment to ongoing skills development was the leading differentiator between top- and bottom-performing farms. It’s still true today.
“Most senior executives are always involved in some aspect of education, whether it’s self-education or a more formal approach,” says Dogterom. “That can be by participating on committees, boards or industry lobbying groups, all of that is a practical education. It’s as valuable a component to what you’re doing as any formal education.”
The potential CEO who can demonstrate participation in these kinds of activities is one that is likely going to continue to seek out and take advantage of learning opportunities, whether it’s seminars, conferences or mentors, bringing a lot of value back to their role.
“More and more often, we’re seeing farm managers take the next step in farm management by getting involved in peer advisory groups and even putting advisory boards in place to help guide their decision-making by having the means to gather intelligence and insight from other farmers, business managers and advisors too,” says Watson.
Why here, and why now?
Here’s a loaded question that many farmers would have to answer with a “no” but the CEO shouldn’t. Can you delegate?
“One of the classic situations that you find in a farm is it will grow to as large as the owner or the manager can manage. Once they have stretched themselves to that point, they can no longer manage all the people underneath them, but are not willing to develop and grow that responsibility amongst others, and they stall and are not going to grow anymore,” says Dogterom.
The people who can develop and grow their business are those who can delegate. They also have the confidence that others can assume some roles or functions, so they don’t need to micromanage them.
Those are qualities you want in anyone who is running your farm as a CEO, including if that person is yourself.
Then, crucially, you can assess your CEO by asking one more pivotal question:
Why here, why now?
The answer can help you ultimately decide who is the right person for your CEO role because it should tell you the characteristics, attitudes and aptitudes that you know will be necessary to do the job right.
“I’m looking for somebody who says, ‘I’m always looking to push myself, to grow and to learn,’” says Maclean.
“I want to hear somebody say, ‘I believe I’m ready for this position, I believe in continually challenging myself and looking for that next opportunity to explore new frontiers, grow as an individual and grow professionally.’”
Looking outside of the family for the next CEO
Whether it’s a family member who is looking to take over the reins or someone recruited from outside, the needs of the farm business should come first. On a family farm that’s often an easier thing to say than do, because many are still stuck on the idea that the successor, CEO or manager has to be their own flesh and blood.
“Many farm families want their bloodline at the top of the food chain, but family members are not always the best choice,” says Glenn Dogterom, business transition advisor with MNP at Lethbridge, Alta. “They may have some skills, but they may not have the skills that the business really needs to take it where it wants to go.”
To come to the table as an effective CEO a person must have some academic credentials, and also some practical experience and something of a track record showing they’ve got what you need.
“If you measure each of the candidates, including the family members, against those criteria, do you lower your standards enough that all of the candidates would be eligible, but the family member is the one that’s going to get the job?” says Dogterom. “Or do you hold tight to the fact that you want the best-run business that you can achieve and you’re going to go outside the family in order to do it?”
While the vast majority of Canada’s farms are family-owned and operated, an increasing number of successors aren’t necessarily family members.
“For farmers without successors there are other options, and for others who are not positioned to take over the farm, they can still have a future in farming,” says Heather Watson, executive director of Farm Management Canada.
It is possible to choose the right leader and still maintain the family legacy. For example, the family member could still be chair of the board, while someone else more qualified serves as CEO, and sometimes that might be a term position to help mentor the family member into that role eventually, if they have the capability to do the job but need some time to develop the right skills.
“More farmers are thinking about the skills, experience and expertise required to manage the farm, rather than simply having someone take over because they are family,” says Watson. “On the other side, sometimes the next generation may feel obligated to carry on the family farm legacy, while their true passion lies elsewhere, outside of farming. We need to make room for this in our thinking about farm legacy and continuation of the farm.”