Family Business Codes of Conduct

“Someone has been writing farm cheques to pay for personal expenses.” “We call our business meetings for Tuesday noon, and as a partner he needs to show up, but he rarely does!” “When someone gets mad, they just get sad and don’t talk about the business decision in a healthy way, we don’t do conflict, we just avoid it !”

Sound familiar ? Many farm families are stuck because they don’t have a “rule book” to refer to. Hockey fans and players enjoy the game because they follow the rules, and when they don’t, they pay the consequences. The penalties for not having the security of rules are high. There is mistrust, unresolved conflict, and a farm business that just isn’t performing well.

“Establishing family business rules and policies i.e. your family business code of conduct could result in the most important piece of work achieved by the family business in effectively managing its “family component” ( Managing the Multi-Generational Farm {MMGF }page 22. Call 1-888-232-3262 or go to wwwfarmcentre.com ).

Conflict is decreased when people know what the expectations and rules of the game are.

As a coach, I’ve seen many scenarios that were not helpful to the farm, just because not all the family members valued the same things, eg. honesty and openness. In many cases the founder might know what is really going on, but just lets it slide…and trouble visits quickly.

Here’s a checklist from the MMGF for you to start fleshing out your code of conduct:

Brief history of the farm.
Values of the current owners (personal and business).
Family business meetings (who, what, where, when)
Criteria for employment of family members.
Employment of spouses and in-laws. (Your daughter-in-law’s techie skills are valuable!)
Compensation for family members (benefits, perks, bonuses ) Free farm gas?
Non-family members and extended family.
Community activities. (How much volunteering is okay without hurting daily operations ? )
Philanthropy.
Ownership by future generations (criteria, method, funding)
Management succession.
Ownership succession.
Fair and equitable exit strategy.
Expectations of minority shareholders.
Policy on distribution of profits.
Nuptial and pre-nuptial agreements. Second marriages are challenging.
Conflict resolution process.
Leaves of absence and sabbaticals by family members.
Loans to family members (terms and conditions).
Public relations ( who speaks for the family business? ).
Conflict of interest for family members…what are the guidelines?

WHEW! That’s a long list. I suggest that you take a pack of 22 index cards, and write the key word on each. This becomes what I call your “undiscussabull ™ “ card for discussion by the farm business team. It will help you literally focus on the issue on the table, and then develop a policy around it. Family issues are called the “soft” issues, because they are hard to define and put into neat management formulas or spreadsheets.

Talking is the work. Meet together with cards on the table and formulate clear business codes of conduct.

Frustration creates friction. You know how hockey players react when they feel the ref didn’t make a proper interpretation of the rules. Come from a position of curiosity, not judgment and ask the opinions of the business team. Document the code of conduct and re-visit it often.

Find a binder and create the tabs according the items on the code of conduct checklist. Take time to do some conflict resolution training, two days of interpersonal conflict resolution training will really help. Go to www.crnetwork.ca to find the course nearest you.

Embrace a positive attitude towards making changes. I’ve found that the daughter-in-law is usually the most frustrated team member. She is the one with “fresh eyes” on the family dynamic, and has a different perspective. Usually her insights are left uncovered, and that is truly a shame. The next generation that is coming to create labour and new energy in the business needs respect and clear guidelines. They have other options besides farming, but have chosen to be part of the family team.

Don’t continue to cultivate mistrust and frustration. Take the code of conduct checklist and start building your own policy manual for your business. This time and energy will pay huge dividends for the entire family.

What’s a happy family worth to you ?

Elaine Froese is a catalyst for creative change and courageous conversations. Farm families use her coaching and facilitation skills to have fruitful family business meetings. Visit www.elainefroese.com or call 1-866-848-8311. Buy her award-winning book “Planting the Seed of Hope” to encourage your family to move forward. Elaine and her husband farm near Boissevain, Manitoba.

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