‘Theft of time’ can damage farm’s financial performance

I had an interesting discussion a couple of weeks ago with someone who works in a large not-for-profit organization. The management team in the organization had just finished working through a planning session.

Part of the focus of the session was on roles, responsibilities, work plans and desired outcomes. It was pretty typical: who has what role and what is going to be accomplished? That sounds like a farm to me.

The person I was talking to said that their planning session discussion moved to performance. She said the management team believed that performance wasn’t where it should be. Accomplishments and outcomes correlate with performance. Organizations and businesses (including farms) benefit when there is clarity on what the desired accomplishments and outcomes are — and how they’re going to be measured.

The adage that says you can’t manage what you can’t measure applies. It is difficult to know whether you are successful unless success (outcome and accomplishment) has been defined, tracked and evaluated. Without clarity of purpose, what is performance going to be measured against?

For the woman’s organization, profit isn’t the driver. They clearly have mandates, goals and objectives. Certainly, they need to at least break even because there’s no mechanism for any deficit funding. However, profit isn’t the driver.

For family farms, profit has to be a driver. However, other things also typically factor into what defines successful outcomes for a farm business. For some families, these “other things” can be of equal importance to profit. In my opinion, they just shouldn’t be of greater importance than profit. Farms need to make money. It’s the profit that ultimately enables the other accomplishments.

Back to my discussion. The woman said the management team spent time analyzing why performance was lacking. They believed that they had an excellent and qualified team. They were of the opinion that objectives had been clearly communicated. They acknowledged that resources were a constraint, observing that more people and/or larger budgets would help.

But why was performance not at an acceptable level? They anecdotally reviewed what team members were doing and concluded that there was a lot of time being lost to non-productive activities — or, and maybe more importantly, to activities that were not connected to the agreed-upon priority objectives. They referred to this as a “theft of time.”

That caused me to think about the time required in managing a farm business.

There is a management theory called balanced score-carding. Robert Kaplan and David Norton are credited with advancing the application of the concept in the mid 1990s. The theory looks at financial and non-financial measures in businesses.

The important part of the theory is that it looks at performance within and between management functions. Performance improves when owners and managers look collectively at all the management areas of their businesses rather than focusing on just one or two. Understanding that management functions interact with each other works to achieve better outcomes, which in turn drives profit.

The theory applies exceptionally well to farm businesses. We refer to it as balanced management in the work we do with farm families.

The main management functions on a farm are operations, marketing, human resources and finance. The “within and between” connection to management exists on farms. For example, getting better yields results in more grain to market, which results in increased profit.

The reality is that individuals involved in managing a farm will have different interests and different strengths and weaknesses in these management areas. Logically, we all do a better job of working at something we like and are good at. It’s easy to procrastinate on things we don’t enjoy, which in turn affects our performance.

From a balanced management perspective, where should you be spending your time? Obviously, operations take the lion’s share of management focus. It’s also what farmers enjoy the most.

However, what about those other areas of management? Where should your focus be in order to optimize your desired outcomes? In the absence of clarity on these questions, how does someone determine whether their performance is acceptable or is even focused on the right things? You can grow the best crops but if you are poor at marketing or don’t make best use of your or your employee’s time, financial performance will suffer.

There is one absolute constraint on a farm, and that’s time. What’s stealing your time?

Terry Betker, P.Ag, is a farm management consultant based in Winnipeg. He can be reached at 204-782-8200 or terry.betker@backswath.com.

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