Northwest FCS News
As agricultural businesses become larger and more complex, human resources and personnel management become increasingly critical components of business success. This year at The Executive Program for Agricultural Producers (TEPAP), Dick Wittman, the stellar farm management consultant, surveyed participants concerning policies and practices related to the people component of the business. I believe the results merit close examination.
Surprisingly, only 32 percent of the participants had job descriptions despite the fact that the average full-time equivalent (FTE) was 8.6 people per operation represented. Official job descriptions are often overlooked, particularly in family businesses where responsibilities are sometimes vague or undefined. Most often, this results in conflict and dissension, which hinders productivity as well as profitability.
Another survey item was performance reviews. Out of the TEPAP participants, only 36 percent conduct performance reviews for employees and principles on a regular basis. This process can be an excellent opportunity to improve communications and efficiency inside the business. It also provides valuable feedback for employees, which is usually expected, especially with members of the millennial generation.
As part of the survey, participants were asked about written and communicated personnel policies for all employees and spouses. Results indicated that policies concerning housing, meals, medical and life insurance, sick leave and others were lacking. This basic of human resource management was in place with 44 percent of the operations represented. Undefined personnel policies often result in communication issues for the business.
Miscommunication is a problem; particularly with family members. Often, family members expect job “perks” such as vehicles, paid vacations, co-mingling of personal and business expenses or housing. I recommend written procedures and policies along with quantitative financial accounting of the perks. This accounting should appear in each individual’s earning statements and be reviewed annually.
Finally, an aspect of evolving businesses that is often bypassed is standard operating procedures. Only 27 percent of the TEPAP participants have operating procedures in place. It is true that writing out standard operating procedures can take considerable time initially. However, this can be a valuable tool by which managers can think through processes and procedures and appropriately align the best talent with the task. In addition, writing out procedures allows a manager to better measure performance.
Even with 25 years of participation, I continue to be impressed by the TEPAP participants. However, when the survey shows an area of weakness for this elite group, it is most usually an issue for much of the industry as well. Indeed, there is much room for improvement in the area of personnel management and human resources in agriculture. As farms and ranches continue to grow in size and complexity, special emphasis and attention must be focused in this area. Developing job descriptions, performance reviews, personnel policies and standard operating procedures could take the business to another level while avoiding them could be the Achilles’ heel blowout!