In this blog and the next, covering staff structure as the fourth factor in row crop consolidation, we’ve assumed you believe your business will grow larger. A larger business requires more staffing. The staff needs to be highly competent and well-organized, with roles defined and management who support adherence to the roles. However, if you don’t want to have a more advanced management structure, you should not plan on growing your business substantially. And that’s okay.
Staff to support your family farm's entity structure
In the prior blog, we addressed the issues of organization structure. When you have multiple entities for different purposes as defined in the earlier blog, it’s extremely important to have the staff to support the entity structure. The people you hire and how they are structured will impact your business. For example, if you have 3-5 entities or more, the financial accounting should be handled by personnel with multi-entity experience rather than accounting for sole proprietors. Typically, using personnel who lack multi-entity experience is a mistake.
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Consider "span of control" as you staff your farming operation
As you prepare to grow your organization substantially and add staff, there is a management concept called “span of control” that is important for you to understand. This concept says one person can only manage a given number of people. The industry standard is about ten; the number of people you manage is dependent on several factors: your management style, where the employees are located, and/or personal preference. Together, these factors will determine how many people you want to have reporting directly to you.
To better understand span of control, look at the military. They have span of control experience that goes back centuries, to the Romans. The military starts with a squad of 4-10 soldiers, and the squad has a leader. A platoon is 2 or more squads led by a lieutenant. 3-5 platoons make up a company, led by a captain. Since the military has used this concept successfully for centuries, you might want to attach some significance to the idea of span of control. I can also tell you from personal experience that John Deere had block managers, who ran 8-12 JD stores. Holiday Inn regional managers have 8-12 hotels reporting to them. The same is true with McDonald’s franchises. So, there is validity to the span of control concept.
I personally have been involved with farm owners who have 15, 20, 30 or, the most I ever worked with, had 31 employees all reporting to him. I told him this was a problem and would not work long-term; pretty soon he would burn out. He should have had a minimum of 3 supervisors under him, managing 8-10 people each. He was farming 30,000 acres, with about 1,000 acres per employee. Two or three years later, he was back down to 10,000 acres. He could not handle that many reports. We have seen operations grow, reach a point, and scale back. Often it is because of a violation of this span of control concept and the resulting lack of time with family.
Span of control and staffing large farm operations
When you are thinking about a larger organization, think about it in terms of the four groups of employees. The first group is workers. These are the individuals who do the day-to-day manual work; they are not supervisors or managers, but they have a supervisor or manager. In agriculture, you typically need 1 worker for each 1000 acres more or less, and it has been that way for years. You probably began as a worker and, as your organization has grown, you went to the next level, manager of workers. As a manager of workers, you usually work with the workers, involved in day-to-day tasks, but you have the added responsibility of setting out the jobs and logistics for the next day, week, etc. for all the workers Being a manager of workers is a very difficult position. You usually don’t have time for family. Workers go home at the end of the work day and you, as manager of workers, still have to plan and prepare for the next day(s) and week(s). This is a tough job.
The third group is the manager of managers. This position has workers reporting to the managers of workers. The manager of managers then manages those managers and usually the functional managers such as financial and accounting, grain sales, growing the business, technology and office administrative activities. The last area is the manager of the organization. That is the individual who is managing the organization, the manager of management. These are found in very large organizations, usually with multiple layers and middle managers.
Coming up in the next blog...
In our next blog, we will outline the staffing structure that should be in place for larger farms.If you are interested in learning more about consolidation and how FamilyFarms Group can help your family preserve your farming legacy, call us at 618-372-372-7400.