Job Responsibilities of a General Manager - PowerPoint

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					Strategic Business Planning for Commercial Producers




   Succession Planning: How do I
   Train the Next General
   Manager?
Strategic Business Planning for Commercial Producers




     What is succession planning?
     …it is a PROCESS that ensures the
      continuation of a business through
      the generations.
  “The final test of greatness in a CEO is how well he
   chooses a successor and whether he can step aside
   and let his successor run the company.”

                  Peter Drucker, management expert
Strategic Business Planning for Commercial Producers


     Did you know. . .
   • 90% of U.S. businesses are categorized as
      family owned.
   • 7 of America’s 8 oldest family businesses
      are farms.
   • While 78% intend to pass the business on to
      children, only 34% create a succession plan
      (for 25% a will is the only element of that
      plan).
   • 70% of first generation businesses fail to
      survive into the second generation.
   • 15% survive into third generation.
      1% Small Business Administration
   • Source:survive into the fourth generation.
Strategic Business Planning for Commercial Producers
Strategic Business Planning for Commercial Producers



     Steps in Succession Planning
     Process
       1.   Understand what succession is
       2.   Discover expectations
       3.   Examine options
       4.   Create a plan
       5.   Check with experts
       6.   Finalize the plan
       7.   Implement the plan
Strategic Business Planning for Commercial Producers

   Step 1. What Succession Is and Is
   Not
   Succession is:   Succession is not:
   • A process                 • An event
   • About family, people      • One person’s problem
     and relationships
   • About ownership,          • About minimizing
     management and              taxes
     estate
   • About what is fair        • About equity
                               • Driven by technical
   • Driven by the family        issues that are
     values, wants and           handled by lawyers,
     concerns                    accountants, etc.
Strategic Business Planning for Commercial Producers



     Step 2: Discovering
     Expectations
     • Should involve all family member
       (whether in the business or not)
     • Assumptions at any stage about
       other’s wants or expectations
       should not be made
     • Say no to secrecy!
Strategic Business Planning for Commercial Producers




                              Perry Jr.
                       Kay
   Perry    Rose




               Say NO to Secrecy!
Strategic Business Planning for Commercial Producers




     Step 3: Examine Options
     Key Questions:
         – What role, if any, will family members play
           in the succession plan?
         – What can we do to treat all offspring fairly?
         – How can I prepare for either a different
           role in the business or for retirement?
         – How will the transfer of ownership be
           handled?
         – How will the successor(s) be trained?
         – How will the change in roles be
           communicated to stakeholders?
Strategic Business Planning for Commercial Producers

     Family First versus Business
     First
      Carl
                                         Joe
   Farm Owner



                      Bob
      Jan
                                            Friend
                                            Part-time farmer
                                            Key employee
   Physician
Strategic Business Planning for Commercial Producers

     Fair versus Equal


     Robert
Strategic Business Planning for Commercial Producers



     Step 4: Create a Succession
     Plan
     • Plan for transferring management
     • Plan for transferring property
     • Contingency plan for managing
       disruptive events
Strategic Business Planning for Commercial Producers




     Choosing the Successor
     •    What specific attributes would
          you look for in a successor?
         –   Education
         –   Experience
         –   Personal characteristics
         –   Skills required
         –   Job responsibilities
Strategic Business Planning for Commercial Producers



     Grooming the Successor
   • How do you provide opportunities to
     make decisions, take risks, and
     develop management skills?
      –   Initial evaluation
      –   Management training
      –   Career growth
      –   Regular feedback
      –   Timetable (allow 5 years to 15 years)
Strategic Business Planning for Commercial Producers
                                                                Low            Average            High
                                                               1   2   3   4    5   6    7   8   9 10

  Evaluation of FarmCrop Management
                    1                                                             l
                                                                           l                 
  Management Skills Livestock management
                    2

                    3 Marketing                                        l   
                                                                           
  Charles for Charles       4 Purchasing                               l
                                                                                        l
                           5 Mechanical ability

                            6 Building construction skills                 l   
                            7 Personnel management                        l
   Dad for Charles          8 Financial management                     l   
          l                 9 Securing resources                       l       
                           10 Physical endurance                                                l
                           11 Emotional endurance                      
                                                                       l
                           12 Analytical ability                           l   
                           13 Decision making                                  l   
                           14 Ability to act and accept risk                   
                                                                               l
                           15 Communication skills                     l       
                           16 Negotiation skills                       l       
                           17 Leadership skills                                
                                                                               l
Strategic Business Planning for Commercial Producers




     Step 5: Check with Experts

     • Use them to comment on your
       thinking, not to do your thinking
       for you
     • Should be visited only after you’ve
       thought about the process
Strategic Business Planning for Commercial Producers




   Step 6: Finalize the Plan


              Write it down!
Strategic Business Planning for Commercial Producers




     Step 7: Implement Plan
      • How to announce the plan?
      • Develop program with action plans
      • Set target dates
      • Schedule follow up/review of
        program
      • Keep everyone informed
      • Review the plan periodically
Strategic Business Planning for Commercial Producers



        Typical Parent-Child Business
        Arrangements On Family Farms


        • Spin-off model
        • Landlord-tenant model
        • The “super-firm” model
Strategic Business Planning for Commercial Producers




     Succession Planning
        Critical Issues:
           • Transfer of management
           • Transfer of assets
           • Anticipating disruptive events
Strategic Business Planning for Commercial Producers
Strategic Business Planning for Commercial Producers


   Key Questions About Involvement In the
   Family Business
     • Who are the participants?
     • What role(s) will each family
       member play in the business?
             • Employee            concerns include
               income and benefits, financial
               security, recognition
             • Manager           concerns include
               responsibility and authority, career
               growth, recognition
             • Owner          financial growth, risk
               versus reward, rate of return, cash
Strategic Business Planning for Commercial Producers



     Think About Separating The
     Roles
     • No single participant need wear all
       three hats as manager, employee,
       and owner
     • One advantage of business entities
       (super-firms) is they allow us to
       separate ownership and
       management
     • Provides opportunity to keep non-
Strategic Business Planning for Commercial Producers



    Fundamental Tasks When Planning to
    Accommodate Off-Farm Heirs

       • Assure a degree of marketability
         to investments of off-farm heirs,
         minority interest holders
       • Provide assurances about current
         or future returns on their
         investments
       • Provide for legitimate forms of
         involvement in family/farm
Strategic Business Planning for Commercial Producers




      Multiple Entities

        (Advantage: Flexibility in
          Numbers)
           • May be easier to deal equitably
             with on-farm and off-farm heirs
           • Using a new operating entity
             reduces the investment needed by
             on-farm heirs to gain control of the
             operating entity
Strategic Business Planning for Commercial Producers




  Family Governance Structures:
        Family Council
           • Includes all adult parties in interest
             to business or family assets
           • Deals with questions of the family’s
             role in the business and the welfare
             of family members
           • Purpose is to give all stakeholders
             a legitimate voice in the family
             business
Strategic Business Planning for Commercial Producers




   Strategic Business Planning for
   Commercial Producers

				
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