While I still feel pretty young, as I grow older it seems that with each passing year, December arrives earlier and earlier. Harvest was late across much of the upper Midwest this year. We were lucky to have exceptionally warm weather that allowed for bountiful yields to be collected in good condition and time to apply manure that best positions the 2018 crop for another record year.
I believe the late harvest and warm weather further disguised the reality that year-end is already here and that 2018 is knocking on the door. Now is a great time to take a brief pause, to reflect on 2017 and proactively position ourselves for 2018.
As we connect with producers who are closing out year-end, many of the same recurring topics come into our conversations. In many instances we find that our conversations revolve around incredible pig performance. In addition to the dynamics faced during the ramp-up phase of a recent construction or expansion project; and most frequently, the disconnection observed in market hog prices as reflected by the gap between the cash market and the pork cut-out, relative to the historical spread. As we engage in these conversations, there is recognition that misery loves company when thinking about areas of adversity. However, we find that the best producers focus our time together on the events of the year that they had the ability to impact and control.
We need to be aware of the things that are completely out of our control, but we also need to recognize that our reaction to these events is what impacts year-end results. Likewise, in a proactive light, measuring progress toward 2017 operational goals and strategic initiatives is important. Goals are commonly set around specific production targets for sow unit and grow-finish metrics. Operations that have their own feed milling operations approached the year with new requirements around veterinary feed directives and had goals to capture manufacturing and delivery efficiencies that support sustained biosecurity efforts.
Year-end financial reports are not yet available, but producers are anxiously examining how their cost of production will measure up, as compared to the original budget. It is helpful l to analyze the actual to budget on a gross dollar basis, as well as on a “per-pig” and on a “per-pound-sold” basis. Producers with this level of analysis are able to dig into not only what happened, but why it happened. A lot of time goes into the annual budgeting process, so it’s important to use that tool to measure actual to budget performance on both production and financial results. This analysis is vital in determining what worked well and how to drive continued improvements in 2018.
As referenced above, now is a great time to identify key initiatives for the upcoming year and to set supporting goals that the team can focus on in the months ahead. Key initiatives should be focused on the strategic direction of the business. Strategic direction may revolve around diversification, vertical integration or specialization. With a strategic direction identified, key initiatives can be set to support the movement of the business in that direction.
Examples of initiatives are enhanced biosecurity, improved feed efficiency, managing costs or enriching team member engagement. Initiatives are intended to span across various segments of the farm. It is within each segment that goals should be set to ensure each person and/or team has an intentional focus on working toward these goals.
Goals work best when designed in a S.M.A.R.T. structure as referenced here.
Specific — Be sure that detailed, precise results are identified within the goal. Avoid vague references to simply “getting better” or “improving.”
Measurable — Peter Drucker is quoted saying, “You can’t manage what you don’t measure.” Having measureable components within your goal is important and helps ensure that you are making progress.
Attainable — It is important to understand current performance levels and those of your relative peers before setting a new goal. Once you know where you are at, you can determine what an attainable level of improvement is to ensure there is realistic capacity to achieve the goal.
Relevant — There are a number of important goals, but having too many will have a diluting effect on the team’s focus. Be sure that the goal is pertinent to a key initiative that supports the strategic direction.
Time bound — Setting specific check points for when the goal will be measured, helps hold people accountable and to instill urgency.
Setting goals is only the first step in driving performance into the new year. How you engage your team and help them understand why the goal is important, is vital to ensuring you have a united effort. Sometimes teams can get lost in the how and why, so keep it simple and be sure to give them a clear what to do. You want to be sure you provide the team with enough freedom to drive innovation through new, creative approaches, but it is essential that you set appropriate guidelines that best position them for success.
Checking in regularly to provide ongoing coaching further enhances your team’s probability for success. Coaching is not the same as micro-managing. Be sure your team understands your intention to best position them for success in reaching the goal. Just like a star athlete needs a coach to reach the Olympics, your team needs to trust that you’ll be there to motivate, challenge, hold them accountable and to provide support through challenging times.
It is at this time of year we especially pause to reflect on the broader blessings we’re surrounded by. The U.S. swine industry is filled with wonderful people. It is truly an honor to work together with you to provide families across the country and around the world with safe, nutritious, delicious pork. We wish each and every one of you a safe and happy holiday season and a prosperous 2018!
Timmerman is a senior swine lending specialist for Compeer Financial. For more insights from Timmerman and the Compeer Swine Team, visit Compeer.com/Swine.