Management Transitions: Handing Over the Reins

Abstract

hen a family farm or ranch is handed down to successive generations there are a multitude of potential economic and rela-tionship issues that can derail the best-laid plans, but foresight and planning will greatly improve the odds of a successful management transfer. Most successful cases we have observed during the past 30 years were due to early and deliberate planning. Good transitions between managers leave little to chance (Table 1).Some ranch families may think the title Chief Executive Offi cer (CEO) sounds too corporate for ranching and does not apply to them. On many ranches it may be “Dad” or “Grandpa,” or it could be “Grandma.” If the ranch is managed by outside talent, it may be “the general manager.” Whatever the title, there is one decision maker who carries more weight than all others and for the purpose of this discussion, that person will be the CEO. For a family ranch to make it from one generation to the next, with every CEO there must be a successor. Here again someone may say that life on our ranch is not so simple. However, one of the keys to successfully passing on the ranch to the next generation is planning for the future. Thinking in terms of “CEO” and “successor” is the fi rst step in that direction.The focus of this article will be on four problematic aspects of the transition process: 1) a reasoned approach to identifying the right successor, 2) open and honest commu-nications on the ranch, 3) development of the successor, and 4) the exit of the current CEO.