Trouble In Paradise

…of the 10 most effective ranch managers I know, on the most successful ranches I know, only two are family members.

I wish I had a buck for every time I have heard “I believe in doing things right the first time.” Well, what if you are doing the wrong thing?

Stan Parsons distinguished efficiency and effectiveness. An efficient manager “does things right.” An effective manager “does the right thing.” — jtl

by Dave Pratt via Ranching for Profit Blog

There is trouble in paradise. A large, well-run family ranch is facing a transition. Dad is a visionary and built a great ranch business, but he’s ready to step back. Junior is a great guy and a real good cowboy, but he’s not a businessman, nor does he want to be. Junior expects to step in. Dad expects Junior to step up. They may both be in for a rude awakening.

Of course this could (and probably does) apply to many of the roughly 1,500 outfits in North America that have more than 1,000 cows. There are two basic problems. First is the mistaken assumption that since your kids got half of their genes from you, they are genetically predisposed to managerial excellence. The second problem is the confusion from not understanding the difference between ownership, management and labor.

In his best-selling book, Good To Great, Jim Collins writes about getting the right people “on the bus” and making sure that they are sitting “in the right seats.” In other words, in any successful business, everyone in that business must have a role that fits their aptitude.

Building on that metaphor, I believe that there are three distinct sets of seats on the bus: ownership, management and labor. Ownership is responsible for determining the strategic direction. They decide where they want the bus to go. Management is responsible for tactical planning and oversight. They plot the route and are behind the wheel keeping us on the right road. Labor is responsible for filling the tank with gas and keeping the tires inflated (e.g. building fence, feeding cattle, doctoring calves). In essence, labor does all of the stuff that we normally think of as “the work.”

Too many ranchers and hands hold the naive paradigm that if we aren’t working up a sweat or building callouses, we aren’t really working. This belief is a major problem in ranching. Without effective strategic work by ownership, and effective tactical work by management, labor may be very good at doing things, but they may be doing the wrong things. (It doesn’t do much good to be very effective picking bulls if you shouldn’t be in the cow business.)

The problem is, I don’t think one person can be highly effective at all three levels. Two out of three, yes. Three out of three, no. I know owners who are excellent strategic planners and effective tacticians, but they’re downright scary when it comes to driving machinery or working cattle. I know others who are effective strategic thinkers and great with day-to-day work, but are terrible at managing employees. I also know effective managers who are also terrific hands … but I’ve never met an effective strategic thinker who can manage people and is someone you’d even consider hiring for day labor. I don’t believe that person exists.

How does this relate to the ranch I mentioned at the start of this column? I know that Dad has been a highly effective owner. He’s built the ranch into an impressive outfit. He’s also been an effective manager, delegating almost all of the hands-on work to employees, including family employees like Junior. Junior, on the other hand, has skills that his Dad doesn’t have. He is a very capable cowboy. With a little effort he can probably be effective looking at the big picture and doing some of the strategic planning. The problem is going to be at the management level. It is management that does the stock flow, cash flow, and grazing planning. It is management that oversees employees. As is, Junior doesn’t know how to do these things and doesn’t seem to be interested in learning.

It is easy to imagine that when we don’t have a manager to drive our bus we have a problem. Having unqualified people step up to fill that seat doesn’t solve the problem. In fact, it may create more problems. We can step into a role for which we aren’t suited and tough it out for a while, but our work is likely to be second-rate, the things we are good at will suffer, and it will exhaust us emotionally. It isn’t sustainable.

I’ve recommended to families in this situation that they hire a professional ranch manager to create and implement a plan following the strategic direction provided by the family owners. There are a lot of hungry, talented people who didn’t win the gene pool lottery but could be highly effective ranch managers if they were given the chance. In fact, of the 10 most effective ranch managers I know, on the most successful ranches I know, only two are family members.

I don’t know if it is pride or ego or guilt or something else that gets in the way, but my recommendation rarely gets serious consideration. However, if family owners set the strategic direction for a professional manager who does tactical planning and operational oversight, I think it is likely that the business will thrive, the owners will be happy and Junior can be a happy and effective cowboy without worry or guilt.

A Handbook for Ranch Managers Planned Grazing: A Study Guide and Reference Manual Environmental & Natural Resource Economics: The Austrian View Combat Shooter's Handbook Reconnaissance Marine MCI 03.32f: Marine Corps Institute The Betrayed: On Warriors, Cowboys and Other Misfits

The Essence of Liberty: Volume I: Liberty and History: The Rise and Fall of the Noble Experiment with Constitutionally Limited Government (Liberty and ... Limited Government) (Volume 1)  The Essence of Liberty: Volume II: The Economics of Liberty (Volume 2) The Essence of Liberty: Volume III: A Universal Philosophy of Political Economy (Liberty: A Universal Political Ethic) (Volume 3)

A Handbook for Ranch ManagersA Handbook for Ranch Managers.  In keeping with the “holistic” idea that the land, the livestock, the people and the money should be viewed as a single integrated whole: Part I deals with the management of the natural resources. Part II covers livestock production and Part III deals with the people and the money. Not only would this book make an excellent basic text for a university program in Ranch Management, no professional ranch manager’s reference bookshelf should be without it. It is a comprehensive reference manual for managing the working ranch. The information in the appendices and extensive bibliography alone is worth the price of the book.

You might also be interested in the supplement to this Handbook: Planned Grazing: A Study Guide and Reference Manual.

Advertisements

About Land & Livestock Interntional, Inc.

Land and Livestock International, Inc. is a leading agribusiness management firm providing a complete line of services to the range livestock industry. We believe that private property is the foundation of America. Private property and free markets go hand in hand—without property there is no freedom. We also believe that free markets, not government intervention, hold the key to natural resource conservation and environmental preservation. No government bureaucrat can (or will) understand and treat the land with as much respect as its owner. The bureaucrat simply does not have the same motives as does the owner of a capital interest in the property. Our specialty is the working livestock ranch simply because there are so many very good reasons for owning such a property. We provide educational, management and consulting services with a focus on ecologically and financially sustainable land management that will enhance natural processes (water and mineral cycles, energy flow and community dynamics) while enhancing profits and steadily building wealth.
This entry was posted in Managing the Ranch as a Business and tagged , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s