Mind Your Farm Business — Ep 62: Good governance is good business

The rules of order around a boardroom table may seem unimportant to a discussion on farm management, but the more complex a farm becomes, the more important good governance becomes.

Brian Hayward, long-time agriculture business leader and now author of The Great Chair: A Window on Effective Board Leadership, says that as soon as a farm requires a board at incorporation, it’s key that the management team and family members commit the time to create and lead a board effectively.

A common pitfall of board governance, Hayward says, is the DIY mentality that many businesses have. “You can pull your own tooth, but you go to a professional,” he says. The same goes for learning to run a board — don’t assume someone within the farm team is qualified to create and run a board. Get the help of a professional to set up the board and teach the team about good governance. (Story continues below)

What’s more, Hayward says that it’s key that there is always an odd number of seats on the board. It might seem like a simple thing, but says that some high profile family companies have ended up in court over a decision because of an even-numbered board. There needs to be a mechanism to reach a majority, he says.

Farms are sophisticated businesses, and Hayward says that the complex nature of family, risk, tech, and big dollars means that farms require the kind of leadership and governance that many other businesses do, but that at times, the farming mentality is “it’s just a farm.” Good governance at the board level is required to manage risk, to preserve relationships, and to keep the farm legacy going.

Disclaimer: Royal Bank of Canada and its subsidiaries are not responsible for the information provided in this podcast, and this information does not necessarily reflect the views of Royal Bank of Canada or any of its subsidiaries. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its subsidiaries.

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