Death, Divorce, and Disability: How Can Your Farm Plan for Human Resource Risk? – Vegetable Crops Hotline

Death, Divorce, and Disability: How Can Your Farm Plan for Human Resource Risk?

This article is the second in a series that covers risks and planning for farms and agribusinesses. The first article, Adapting and Planning for Farm Businesses in Uncertain Times, can be found here.

When you hear the term “human resources”, do you automatically envision a large corporation’s department that manages benefits for many employees? Surprisingly, if you have an employee on your farm, then you have entered the realm of human resources. As the name suggests, human resources hold the human element, and with that comes a certain amount of inherent risk. Should your farm eliminate all employees and be completely automated? No, you can correctly plan for human resource risk and minimize the effects of many events.

The title of this article suggests death, divorce, and disability as three human resource risks, often referred to as the 3 D’s. However, there are many other human resource risks for which businesses can plan. Human resource risks include any risks associated with humans, which can range from poor communication on the farm (which could have some minor or major consequences) all the way to death (which could have the most devastating consequences). Some human resource risks that a farm could encounter include:

  • Poor communication/people management practices
  • Management error/competence
  • Illness/injury (temporary or permanent)
  • Temporary leave (military, family, other)
  • Divorce
  • Death
  • Disability (temporary or permanent)

The effects of some of the aforementioned risks can be minimized with the training of employees, such as poor communication, poor people management, and management error (Marshall and Alexander, 2005). As an owner of a business, you more than likely understand the importance of clear communication and customer service. However, everyone can always improve upon those skills. The way that you communicate internally to employees, market masters, and vendors can be just as important as how you communicate externally to current and potential customers. Training your employees to be friendly and transparent and to convey only positive comments to those internal and external to your business can pay off tenfold.

Other risks, such as divorce, disability, illnesses, leaves, and death, are more difficult to mitigate. Despite this fact, it is important to prepare for these risks. When someone is on temporary leave, others can step up and help to fill their void for a given amount of time. However, this void can be hard to fill when you are unsure as to what that person actually did or does on the farm. An easy way to remedy this is to have updated job descriptions for everyone in the farm business (yes, even the owner needs this). This job description needs to be updated annually at a minimum.

There are many sample job descriptions that can be found online; there is a publication entitled “Developing Effective Job Descriptions for Small Businesses and Farms” that can be found on the Purdue Institute for Family Business page on Management. If you are unsure as to how or where to start in drafting job descriptions, spend some time each season of a full year keeping record of what every position in the farm does (and be specific). For example, instead of documenting that someone in the business “does machinery maintenance”, make it more specific by saying that they “conduct regular inspections of farm equipment, make needed repairs, and provide advice on replacement of machinery” (Dobbins et al., 2021). This not only allows your employees to conduct that job in that person’s absence, it also helps to know who to recruit to fill that position if that person leaves permanently.

Other tools that you can implement in your farm are employee policies and an employee handbook. Employee policies are rules that act as guidelines for proper conduct of employees and the business, such as the time employees should report to work, the amount of vacation time the employees receive, personal/sick days that employees can access, pay day when checks are issued or direct deposits are made, and other benefits. An employee handbook contains important information for employees, including answers to frequently asked questions and basic employment matters that all employees should know. However, be sure that employees know that the employee handbook is not an employment contract; be sure to include appropriate disclaimers.

Planning for the future of your business also includes management transfer/succession and associated aspects of that. Especially if you are within 10 years of retirement age, you should start considering who will take over the business when you retire. Some questions that you can ask yourself are as follows:

  • Is the older generation ready to bring in a new generation and begin turning over management, control, ownership, and income?
  • Is the younger generation committed?
  • Do all generations agree on the future direction of the business?
  • Has the business identified and agreed upon goals and objectives for the future of the business?
  • Have you conducted a management skill assessment for the younger generation to determine where growth may be needed?
  • Have you considered how the business can divide management responsibility moving forward?

If you are unsure as to where to start in the management transfer of your business, “The Farm’s Legacy: A Guidebook for Intra-Family Succession” has a complete chapter on that exact subject, including articles on Transferring Business Management, What Makes a Good Partner in Business?, Roadmapping Your Succession Transfer, and more.

References

Dobbins, C., Ehmke, C., and R. Wiatt. (2021). Developing Effective Job Descriptions for Small Businesses and Farms. Purdue Extension Publication: EC-728. Available here.

Marshall, M.I. and C. Alexander. (2005). Planning for the Unexpected: Human Resource Risk and Contingency Planning. Purdue Extension Publication: EC-736. Available here.

 

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