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Table 1: Son's mean scores for extent of responsibility for |
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Activity/Decision |
Son's mean scores |
|
1 |
Decide when to pay bills |
2.6 |
2 |
Obtain loans and finance |
3.3 |
3 |
Negotiate sales of crop/stock |
3.3 |
4 |
Decide when to sell crop/stock |
3.6 |
5 |
Decide when to take on additional staff |
4.9 |
6 |
Make annual crop/stock plan |
4.9 |
7 |
Decide type and balance of enterprises |
4.9 |
8 |
Recruit and select staff |
5.1 |
9 |
Plan capital projects |
5.2 |
10 |
Negotiate machine and equipment purchase |
5.3 |
11 |
Decide timing of operations |
5.5 |
12 |
Decide amount of quality of work expected |
5.7 |
13 |
Decide type and level of feed, sprays, fertilizers or drugs |
5.8 |
14 |
Plan day to day work |
6.2 |
15 |
Supervise staff at work |
6.6 |
16 |
Decide work methods |
6.6 |
17 |
Decide type and make of machine and equipment required |
6.7 |
* Note: the results of responsibility scores produced separately by fathers and sons were very highly correlated (Spearman .8060, significant at .001). |
Movement from one phase in succession to the next is not an orderly or planned process. Exceptions to the general rule occur frequently according to the situation on the farm. The First Phase Activities 14 to 17 in the responsibility index (Table 1) represent the management activities in which sons are most likely to become involved, during the first few years at home. Day to day work planning and deciding work methods are the most natural activities as the sons are likely to be doing most of the work themselves, but under father's supervision. Supervision of staff is largely situational as the son becomes a convenient mouthpiece for father and someone to whom staff will defer when necessary. Initially the son's involvement in such weighty matters as deciding the type and make of machines and equipment appears as something of a surprise. However the explanation is probably straightforward and related to father's perception of the son's knowledge and expertise. Before leaving school many farmers' sons become experts in makes, models and the characteristics and qualities of various pieces of farm equipment. Respecting this knowledge, the father will look to his son to provide an evaluation of the merits of the various machine options and be strongly influenced by the son's recommendations. The father's willingness to defer to the son is perhaps enhanced because inevitably the father had far less contact with sophisticated machines early in his own career. Secondly, change and new technology is something which the farmers always felt their sons would keep up with more easily than they could themselves. The Second Phase During the second phase it is likely that the son will also become involved in the planning of capital projects involving new enterprises, buildings, or additional land. The origins of the ideas for these projects may come from the sons themselves. More likely however is that fathers are seeking to expand the business in order to set up two or more sons. The sons are drawn into discussions because usually they will be expected to do the work and the developments will affect the longer term which the sons themselves will be managing. Knowledge of machinery, which featured in phase one, gives sons the first opportunity to negotiate purchases and sales during phase two. Normally father's approval would be sought before the sons are permitted to bargaining on prices. The Third Phase The third phase in succession includes activities five to eight in Table 1. The level of decision-making taken on by the son during this phase is considerably enhanced, though this phase is less distinct and seen rather more as an extension to phase two. The two main areas within this phase are those relating to staffing and also decisions on annual and longer term enterprise structure of the business. This level of decision has far greater, long term financial implications for the business than anything previously encountered. The Fourth Phase The majority of fathers, even those who had purchased their own farms, usually had to wait until their own father's death or failing health before the final phase of succession took place: that involving the control of cash and capital in the business. In this sample there were only three sons who had more than 75% of the management control and whose fathers were more than 65. Examination of the responsibilities of the three sons reveals that they were in total control of all technical management, both long and short term. They had least involvement and control over financial aspects of the business. The four management activities with lowest mean scores, which indicates limited involvement for the son, are all activities which involved money. Payment of bills and making decisions on loans and finance are two of the key control elements for the current cash and capital position of the business. Deciding when to sell crops or stock is in part dictated by age and quality of stock. However it is probably the fact that farmers pride themselves on their ability to negotiate to obtain the highest prices that causes them to retain these activities. Timing and negotiation of sale will only marginally affect the price received, but could have a major effect on the cash flow position of the business. Fathers consistently retain control of cash, capital and buying and selling decisions. Although a part of the reason might be situational, it does seem that the checkbook represents father's final bastion of status and control in the business. It would be inappropriate to create a picture of despotic financial controllers, whose intention is purely to control and manipulate. When sons first return to the home farm, few are interested in the financial aspects of the business. As father grows older he will spend less time on physical work and his natural role is to spend more time on pure management and administrative duties. Thus handling bills and paperwork, judging the market and negotiating with contacts known for 30 plus years is seen as an excellent way of using time. The danger lies in the unprepared son. The son's greatest concerns on final takeover are for the financial activities and decisions usually retained by father. The benefit of any college training in financial management has largely decayed over 10 to 15 years and fathers appear to make little attempt to train or provide any opportunity for their sons to gain experience in financial management or in buying and selling. Financial Management Experience The very considerable danger of technically very competent sons being faced with a relatively new world of business management on the demise of their fathers is clear. There are exceptions however, which although they had not necessarily been planned to give business experience do have a similar effect. Here it is necessary to draw a distinction between being responsible for an enterprise and the son having an enterprise of his own. In a number of instances sons were said to be responsible for individual enterprises, in one case one of the two sons was responsible for the sheep and arable work on the farm. Examination of the son's role revealed that his work was more akin to a working foreman who was responsible for the technical management of the enterprises. Although the son had some influence on when to buy and sell, the final decision and all financial control rested with the father. By contrast the second son in the same business had his own enterprise, the dairy unit. In this case the son controlled all the technical management and by keeping his own financial records, the major share of the financial management. However, even in this case, checks were still signed by the father and when cows or calves were being bought or sold father would always be present to supervise. The reasons for the son's involvement with specific enterprises varied. In the above example the one son had made the dairy a condition of his return home. To be fair to the second son father had made him responsible for the sheep and arable enterprises. In another example a father had made his son responsible for the dairy unit, partly because of the son's interest and competence but equally important was the fact that father disliked milking. Starting with day to day technical management the sons gradually become involved in longer term business management decisions. Involvement in anything to do with cash or capital management is likely to be delayed until father's health and age force him to relinquish control. Despite college training, few sons appear to be prepared through either exposure or experience for financial management. Any involvement in financial management will largely result from the son's own abilities and interest often arising from college training. Whilst total control of an enterprise on the farm, separately costed, would seem an appropriate method of providing the necessary business management training, the option is not commonly adopted by farmers. The Effects of Involving the Sons With regard to taking control of the business the majority of sons were quite confident that they could manage if they had to. Interestingly some of the younger sons were amongst the more confident, a feeling which appears to decline as they become more involved in business affairs and see the true scope and complexity of the management activities. The main concerns on taking over were related to those activities that are presently retained by fathers. Sons were most likely to be upset by lack of management involvement and responsibility, lack of knowledge of father's long term intentions, and interference from father in jobs they were doing. Otherwise, they appeared to be reasonably happy with their role apart from one or two minor complaints and disagreements. However, happiness is relative and the author was left feeling that a number of the sons were accepting their situation as being as good as they could reasonably expect with their particular father. Apart from a minority of cases there was no overall evidence to suggest any conflict between father and son over levels of payment as suggested by Commins and Kelleher (1973) nor in the son's ambitions for control and wanting to run the business his way as was suggested by Weston (1977). Father's complaints concerning their sons related particularly to younger sons and their attitudes to work standards. There was also some conflict due to the different values placed on work and leisure pursuits, with fathers puzzled as to why their sons did not want to work the same hours as they did. Three-quarters of the farmers felt that the son's involvement in the farm had had significant benefits. Twelve farmers were able to quote examples of expansion, new enterprises and improved results as a result of the son's involvement in management. Others provided examples of savings, but these were mainly due to cheaper labor, getting more work done and improved work methods. In one case the son's influence appeared to have reduced profits and in a further two the cost of farm improvements had left a larger overdraft but presumably there would be some long term benefits from these improvements. Making Transfers Easier The overall attitude and approach adopted by fathers and their children to working together on the same farm is important. The aim should be to produce a lasting and constructive working partnership where the youth, enthusiasm and interests of the children complement the strengths, experience and wisdom of the father. Partnership is more important than individual power. If the approach is competitive, one of waiting for father to step aside, or expecting too much from the children too quickly, the result will be frustration, arguments and despair. The secrets of success are that both generations have patience, make genuine attempts to understand one another's viewpoints, which includes listening as well as telling. Perhaps most important is that time is set aside for honest discussions about roles, feelings and future plans. As a general guide for fathers the following are suggested:
References Anderson, R. and Hepworth, M.: "Retirement from Farming-Some Economic and Social Considerations." North of Scotland College of Agriculture-Farm Management Review, No. 13, January 1980, pp 1-8. Clarke, C.J.: "Elderly Farmers in the United Kingdom." Report of a ADAS Socio-Economic Group Working Party. ADAS/MAFF 1976. Commins, P. and Kelleher, C.: "Farm Inheritance and Succession." Macra Na Fairme, Irish Farm Centre, Dublin, 1973. Errington, A.: "Delegation on Farms." Ph.D. Thesis, University of Reading, 1984. Fennell, R.: "Farm Succession in The European Community." Sociological Ruralis Vol. 21, No. 1, 1980, pp 19-42. Fyfe, M.: "An Economic Study of Cattle Fattening Farms in North East Scotland." M.Sc. Thesis, University of Aberdeen, 1965. Gasson, R.: "Occupations Chosen by the Sons of Farmers." Journal of Agric. Econ. Vol. xix, No. 3, 1968, pp 317-326. Northfield, Rt. Hon. Lord: "Report of the Committee of Inquiry into the Acquisition and Occupancy of Agricultural Land." H.M.S.0.-London, 1979. Thomas, H.S.: "Need for a Business Approach to the Problems of Succession, Inheritance and Retirement." Farm Management, Vol. 4, No. 4, Winter 1980/81, pp 157-162. Weston, W.C.: "The Problems of Succession." Farm Management, Vol. 3, No. 5, Spring 1977, pp 237-247. Original article appeared in Ag Manpower, journal of the Agricultural Training Board in the UK. Abridged version for People in Ag: Managing Farm Personnel published in 1985. |
15 November 2004