Farm and Ranch Business
Management Functions
Curriculum Guide
I.
Goals and Objectives
A.
B.
C.
II.
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Learn the basic concepts of the following three functions of management:
organizing, staffing and directing, and controlling.
Learn the interrelationship between these functions.
Learn how to utilize these concepts in the management of your business.
Description/Highlights
A.
Management functions include organizing, staffing and directing, controlling, and
planning. The planning function, while not discussed in this set of materials, is discussed
in RM3-19.0, “Managing Your Farm and Ranch Operation.” The organizing function is
the management process of identifying or establishing jobs, positions and chain of
command. Organization should facilitate the communication needed to make good
decisions at all levels of the operation. Organizing is also inventorying physical and
financial resources, identifying skills and talents among employees, and physically
arraying these resources for efficient use.
B.
How the business is organized is fundamental to communication within the business, the
delegation of authority, the risk management plan of the overall business, and the process
of supporting good decisions. The whole point of organization and organizational charts is
to make the operation run smoothly and efficiently.
C.
Every decision made by any manager is based on information. The business organization
provides for information flow. Figures 1, 2 and 3 illustrate various communication and
information flows (who answers to whom). Note that in each example there is a two way
flow. Review Figures 1, 2, and 3.
D.
Lead the group in developing an organizational chart for their businesses. Starting at the
top of a page, draw in each position; list the person or position to whom the position
reports to; list the person(s) who are supervised by the position, and list the responsibilities
of each position including the manager.
E.
Staffing and directing is personnel management. Staffing is the process of identifying and
placing people in positions, while directing involves identifying employee strengths and
weaknesses, and matching positions with the most suitable personnel. Directing is also
training, evaluating, firing employees, communicating to employees what is expected of
them, telling employees how they are doing (rewarding), and providing conditions and
opportunities for advancement.
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III.
F.
Effective staffing begins by filling each position with the best person available. A
manager must thoroughly understand the responsibilities of each position. The job
description is critical.
G.
Treating employees with respect will bring about improvement in employee morale,
productivity, and appreciation for the work performed. Adequate training and continuing
education are important in keeping workers productive and loyal. Employees who feel
good about where they work are likely to believe that the better the business does, the
better they do.
H.
The controlling function is the process of measuring a firm’s progress and involves
collecting information that can help you track the business’ health and progress towards
attaining goals. There are many farm and ranch financial and production management
measures that can help in decision making.
I.
Lead the group in developing the 10 most important financial and production management
measures for their business.
J.
The controlling function is very much the measurement of management - measuring the
attainment of your goals. If you have been successful, set the next goal. If unsuccessful,
identify what must be changed to reach you goal.
Potential Speakers
A.
B.
IV.
Extension economists
Management consultant
Review Questions
1.
Why is it important to have a well organized business?
Answer: The whole point of having a well organized business is to make the
operation run smoothly. When a business is well organized, everyone understand
their duties and responsibilities. The lines of communication move information to
the decision-makers or managers and allows for making better and more timely
decisions.
VI. For More Details
Drucker, Peter F., The Effective Executive. Harper Collins Publishers, Inc. 1985.
See publication RM3-20.0, “Farm and Ranch Business Management Functions” in this series
for additional reading.
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Farm and Ranch Business
Management Functions
Ž Four Functions of Management
+
+
+
+
Organizing
Staffing and Directing
Controlling
Planning
Ž Organizing Function
+ A management process
+ Identifying and establishing jobs, positions, and
chain of command
+ Facilitate communication
+ Identifying skills employees
+ Arraying physical, financial, and human
resources for efficient use
+ Provides for information flow
+ Goal is to make business run smoothly
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Farm and Ranch Business
Management Functions
Figure 1 - Organizational Chart
Paul
Manager/
Owner
Jack
Herdsman
Figure 2 - Organizational Chart
Manager/
Owner
Herdsman
Jack
Paul
Figure 3 - Organizational Chart
Paul
Jack
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Manager/
Owner
Herdsman
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Farm and Ranch Business
Management Functions
Developing an Organizational Chart for Your Operation
Action: Draw an organizational chart of your operation, drawing in each position.
Does your organizational chart represent what is really occurring?
Example Position Description
Position: Herdsmen
Reports to: Manager
Supervises: the milkers, Jack and Paul
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Responsibilities
1. Herd health
2. Milking/quality
3. Milking equipment
4. Herd nutrition
5. Dry cow maintenance
6. Replacement herd care
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Farm and Ranch Business
Management Functions
Ž Staffing and Directing Function
Staffing and directing is personnel management.
Staffing
!
!
!
!
Identifying and placing people in positions
Filling positions with the best person available
Understand the responsibilities of each position
Job description is critical
Directing
!
!
!
!
!
!
Identifying employee strengths and weaknesses
Matching positions to most suitable personnel
Training, evaluation, firing
Communicating expectations
Rewarding
Providing opportunities for advancement
L Treat employees with respect
L Training and education
L Employees need to feel good about where
they work
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Farm and Ranch Business
Management Functions
Ž Controlling Function
+
+
+
Measuring a business’ progress
Collecting necessary information
Determining what management measures to use;
financial and production measures
Farm and Ranch
Financial Measures
1) current Ratio
2) debt to assets ratio
3) acid test ratio
4) leverage ratio
5) debt to equity ratio
6) rate of return on total farm capital
Production Measures
(Ex. Cow-Calf Operation)
1) pregnancy percent
2) calving percent
3) calf death loss
percent
4) weaning percent
5) average weaning weight
6) pounds weaned per
exposed female
! What financial and production measures do you use?
! What measures do other successful businesses use?
! Does your present accounting or record system
provide you this information?
! What benchmarks can you compare your measures
with to help set your goals?
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Farm and Ranch Business
Management Functions
Developing Financial and Production Measures for your Operation
Action: List the 10 most important financial management measures for your farm
business.
Action: List production management measures you like to use on your farm or
ranch.
Financial
Measures
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Production
Measures
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