Managing Exit Strategies ZAB102 - WEEK 6

The following is a transcript from my lecture. You can listen to the lecture, read the material or watch the videos.

This week, we are exploring the management of exit strategies.

The days of getting a job when you’re sixteen, working hard because of an inherently high work ethic, and staying in the same job until you retire are long gone – or are few and far between. There are lots of theories about how many different careers someone would have by the time they retire. In my own case, I’ve worked for many different employers, across three different professions – coincidentally the first and most recent profession is the same - agriculture.

So, let’s start with how you might leave a business? Once employed, this can be directed by either an employee or employer.

One way to exit a business is by resignation.

Resignation is the form of exiting a business that is directed by the employee.

Regardless of the reason for wanting to resign, there are ways to do it so that bridges are not burned.

Remember the farmer from Week 1? Tom Lindsay, Dairy Farmer from Bishops bourne also joined us for a tutorial discussion. Tom recounted a story about an employee that had told him where to stick his job.

Following this, the worker informed Tom that he would be out of the house he was getting as part of salary package in 2 weeks. Now, if you’re anything like me – when someone is abrupt to you and even abuses you, it’s very unlikely you will have immediate compassion and want to help them.

At best, you might not respond at all, which is probably advisable. At worst, you might respond the same way. Tom told him that if he felt that way about the job, he needed to be out of the house by the end of the day. The worker was astounded by Tom’s response and protested profusely – with very polite language – not. In this case, the worker obviously didn't connect his housing arrangement with his attitude towards his job.

So, the lesson from this is that if you’re going to resign in this fashion, you need a very good contingency plan. Leaving a job is not unlike getting a job in the first place. Arrive with dignity and respect – leave in the same way. You might recall my story from last week about my first farm job. It was actually with Tom’s father. I worked for him for about 12 months, full time over summer and a day a week for the remainder of the year. I left on good terms. Twenty years later I came back to the farm as a consultant. Tom was very happy to engage my services. I’d kept my bridges open. Even if you hate your job, the employer is a tyrant or the workplace uncomfortable to be in, you always leave with dignity and respect.

Another way of exiting a business is through termination.

Termination is the form of exiting a business that is directed by the employer

When you are in a management position, there are many reasons for terminating an employee’s position:

The first reason is that the work dries up. For example, this is a real challenge for smaller agronomy companies that rely on being contracted annually by individual growers. If the season is not shaping up very well, paid advice is the first to go. I’ve had comments like – Sorry mate, I can’t afford your services this year – last year’s yield was good, but the prices weren’t. As an employee in this situation, the business can’t keep paying you if you don’t bring in enough work.

The second reason is Company restructure, takeover by or merger with a competitor. Positions are made redundant and costs may need to be reduced. This is the story told with one such recent case in Tasmania. The takeover of an onion processor. Refer to this link:

It does make you wonder what really happened in this situation with at least one position. Why, in the same month of the merger/takeover, was the manager position suddenly available?

Refer to this advertisement

Although we don’t know the real story, it does highlight the potential for job shedding in these situations.

The third reason for termination is when someone is Performance managed out of the position – this occurs when either an employee is just not suited to the position and has come to the end of their probation period, or consistently poor performance even from a long term employee.

The last reason for termination is from Misconduct – it probably doesn't need any further explanation and we also covered some of this in week 5 with my story about a young man in Laos.

Managing these exit strategies are a challenge for business managers. Refer to the following, which gives us some strategies about how people exit employment.

Exit Interview

Then there is the exit interview. The following video describes this from an employee’s perspective.

1:23 mins

There are some further readings that may be helpful for questions like:

1/ Why are you leaving us?

2/ Exit interviews: too little too late?

3/ Should exit interviews be conducted internally or externally?

4/ How to make Exit Interviews Count?

Exit Business | 38 secs

The third way to exit a business is by succession planning or “who’s going to take over when I’m gone?”

Succession planning by definition is a process for ensuring a smooth transition between the old leaders and the new leaders. It’s a form of passing on the baton. This is extremely important in Agriculture as prior knowledge is critical when planning for new activities. For example, the new manager of a farming enterprise obtains a contract to grow onions in what he believes is a ‘clean’ paddock – in an agronomy context, that means that it’s been over 5 years since the last crop of onions. The new contract might be for a new company, so there is no knowledge of paddock history. If, however, the manager had prior knowledge from his/her predecessor, they would know it’s only been 2 years since onions were in the paddock from a different processor – and choose a different paddock.

So, what is involved in the process of succession planning? Refer to this video for some ideas.

9 Step Process | 2:01 mins

The 9 step process outlined in the video might be good for an organisation, but what about the family business – do the same rules apply.

Passing on the family farm has been referred to as another form of child abuse. It certainly has the potential to destroy a family when children do not have the passion for the farm that their parents did. However, as farms transition from being a lifestyle to a business, succession planning is certainly a necessary part of the process.

I invite you to watch this next video. The statistics are sobering, particularly around businesses that have survived through generations.

Succession Planning in Family Business | 4:30 mins

I worked for a company in Queensland designing farm machinery in the 1980’s. Yes, the age of the mullet. The company was owned and managed by 3 brothers, first generation Australian. They were sons of one of 3 brothers who immigrated to Australia in the 1950’s. Only one of the brothers had children, so it appeared to be fairly clear who would take on the business. However, in my two years at the company, it was evident that the 3 brothers were riding on the work of their father and uncles. There were many disagreements and even one occasion where all three were involved in a stand up brawl in the workshop. There were also occasions where dubious, bordering on unethical decisions were made. One such event occurred when I was asked to draw up a machine that was obviously not originally made in their factory. By the way, when I arrived, none of the 50 machines that they constructed had working drawings – they just made the next one off the one in the yard. By the time I left, they all had drawings. Anyway, I digress. Getting back to my story. As I was drawing this up from various hand sketches and measurements, I actually questioned them. They said, no it’s okay, its’ not exactly the same as we’ve changed this and that. Well, I managed to get them to amend their design, but not before they were taken to court. The company no longer exists – in fact it was taken over by the company that sued them for copying one of their machines. The telling of this story is not to ascertain the rights or wrongs – merely to point out that business values and ideals are not hereditary. They need to be well grounded in succession planning.

I think I’ve talked long enough. Now I invite you to reflect on all these issues around managing exit strategies in your ePortfolio.

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