Dealing with changing family dynamics​


Dealing with changing family dynamics

2 minute read

In brief

When a farming business transitions from parents to more than one child or from siblings and sisters to cousins the family dynamic can be quite different and your succession plan must recognise and deal with this new landscape

In a typical succession case, Mum and Dad may have started the business many decades ago and have managed to build a successful farm with little formality. There was only one family to worry about and their focus was to provide for themselves and their immediate family.  The farm is now being passed down to their son and daughter who are both married. Somehow, they notice that things are different. Their adult children are talking about the needs of their own spouse and children. Understandably, their main focus is on their own family unit rather than that with their parents.  

The degree of separation that exists between a partnership of two families, rather than one, must be dealt with in ways that weren’t necessary when it was simply Mum and Dad.


As the degree of separation between family interests widen, it is necessary to introduce greater formality. 

Structured meetings and communication

A Partnership Board of Management should be established to deal with key business decisions including budgets, cash flow, human resources, capital expenditure, long term planning and other business-related matters.

Decision making policy 

A decision-making policy should be established to detail the circumstances upon which tasks are delegated, those which require a majority vote and those matters which require unanimous agreement.

Define roles and responsibilities  

To avoid future conflict and improve communication, it is most important that the management team agree on their roles and responsibilities.

Remuneration and Drawings Policy

A comprehensive remuneration review should be undertaken. A formal remuneration policy should be established and documented. The remuneration package could include any cash component and agreed expenses to be met by the business.

Identify management and operational procedures

To minimise the potential for future conflict, improve training and development and enhance business efficiency, a review should be conducted on the method of managing, recording and reporting work procedures within the business.

Develop a business plan

The workshopping of a revised business plan will be important to create an alignment in thinking and provide a vital forum for the transfer of knowledge between generations.   It can outline future strategy, provide focus, crystallise ideas and identify priorities.

Workshop and document a partnership agreement 

A Partnership Agreement covers the funding, structure, management and direction of the business. It outlines the responsibilities and obligations of the business owners.  It is designed to deal with the issues that may arise during the life of a business, by determining in advance, how such issues should be dealt with.

To give the business every chance of success it is important that the partners understand and address some of the key elements to a successful partnership. 

  1. Alignment of Core Values.

They must all share and believe in the same standards, ethics and values to ensure a sense of mutual trust exists between the partners. 

  1. Common Vision.

They must have a common understanding of the future direction of the business. Where it is now and where they want it to be.  

  1. Complementary Strengths.

Members of the partnership do not have to be similar in personality. Often, different personalities create different skill sets. For example, one partner may think big picture, and another may focus on the detail and be better and excel in operational matters and implementation. 

  1. Effective Communication.

Perhaps the most important element of a successful partnership is good communication. Communication should be structured and both informal and formal.  Partners should feel free to express their opinion and believe they will be listened to in a fair and responsive manner. Family and business discussions should be kept separate and distinct.  

  1. Sound Business Planning. 

Realising the business vision and objectives requires a mutual commitment. A shared and documented business plan incorporates this vison but also explains how the business will achieve its goals. Do the partners understand and agree on an analysis of the strengths, weaknesses, opportunities and threats and how to make decisions based on this understanding? 

  1. A Set of Rules.

As mentioned above no partnership can exist without a comprehensive partnership agreement that has been workshopped and agreed upon by all stakeholders.

  1. Trust and commitment to each other   

Partners must trust that the other partner will deliver and do what they say they are going to do. They must have the best of intentions for each other. Trust is based on integrity and a belief that each partner is looking out for each other’s interest as well as their own. 

Farming businesses can take a long time to recover when they are split because family members want to go their own way. They are often stronger if kept as a whole and if the family understands how to deal with the changing dynamics of the relationships the business can be given every chance of success.