Does Your Business Have the Defining Characteristics of a Fortune 500?

8/17/2013 7:00 AM

A sk any dairy economist or analyst what the number on<\n> factor influencing the success of any dairy farm business, and they’re likely to respond that it is the management team’s ability to focus on the business side of the dairy. When we think of companies doing a good job at managing the “business side” of their operations, we think of Fortune 500. While the number of dairy farms that can compare in size and scale to a Fortune 500 is near zero, most dairy farms can emulate the characteristics that define today’s Fortune 500 companies.

So what are those characteristics? Here are six characteristics included in a list of twelve that Fortune Magazine identified in an article published in February 2011.

Vision. Fortune 500 companies have a clear vision on what they are about and what they want to be. That vision is clearly communicated to all employees and used on a daily basis for making decisions. When you think about your own dairy operation, what is your vision for the business? Where do you want to be and how are you going to get there? Do your employees know what that vision is and are you using it to make daily decisions on the farm? Once you are, it will make those decisions much easier to make.

Performance. Employee performance is monitored and measured in a way to ensure optimal performance, and goals are set in all major areas of performance, with feedback provided routinely about how the organization and employees are doing with those goals. Do you have goals in place for your dairy? What is your goal for your herd’s rolling milk production average? What is the pregnancy rate you are striving for? Where do you want your somatic cell count to be, and how quickly do you want to see your heifers entering the herd? Once those goals are in place, put together a strategy to achieve them and measure yourself to determine where you are falling short.

Team approach. Employees are organized as much as possible into teams to facilitate the best means for solving problems, building morale, and creating synergies for achieving group and organizational goals. Whether you are a husband and wife team on a 100-cow dairy or a producer with 3,000 cows and 30 employees, this concept can be utilized. Are you encouraging the others involved in your team? Are you working together for the good of the organization and your goals at hand? Or are your efforts counterproductive of one another?

Quality. The organization prides itself on producing quality goods and services all of the time. The company knows that long-term success depends in large part on the long-term reputation of the company and so consistently seeks to build quality products. Do you take pride in the products that are coming off of your farm? You have to think in terms of all the products you produce — not just the milk. Do you make sure that cows going to market are in good condition and represent your farm’s quality goals? Have you set goals for your milk quality levels? Do you make sure that the heifers you are raising are prepared to enter your herd as productive, well-grown replacements?

Communication. Management knows that communications is the oil that keeps the company operating smoothly. It seeks to communicate frequently to employees at all levels and to allow opportunity for employees to communicate in any direction within the organization. On a dairy farm, communication involves more than just your employees. Any dairy farm has a number of consultants you work with regularly to support your business — your nutritionist, veterinarian, lender, accountant. How often are you meeting with them to identify potential bottlenecks or profit area improvements? Creating a dairy advisory team can help bring you bring these individuals together for open communications to benefit the business.

Acceptance to change and innovation. These were actually listed as two separate characteristics in the article. However, on the dairy, they go hand in hand. Fortune 500 companies make changes and integrate them with existing organizational practices. They firmly believe that innovation is central to a company’s strategy and performance, but recognize that getting it right is as hard as ever. Innovation is nothing new to the dairy industry. Being able to adapt and use this innovation to your advantage will be a key to success going forward. However, making sure everyone in your team is comfortable with the changes you’re making is also a critical ingredient to success.

At the Center for Dairy Excellence, we track the milk production and herd performance of Pennsylvania’s dairy herds, and we are pleased to see that milk production in the commonwealth is growing, with many of our dairy herds showing improvements in key parameters such as somatic cell counts, pregnancy rates and days to first service. What is more difficult to track, however, is how well these dairies are doing at managing the business side of their operation. We know that higher yield is often correlated with higher profits, but that isn’t always the case.

So, as you strive to meet your production goals, make sure you consider your business goals as well and strive to emulate the characteristics that define success in today’s corporate environment. Sit down with your farm management team and consider how you would score in the six areas listed above. Think about how your business can benefit from emulating some of these characteristics.

The Center for Dairy Excellence can support those dairies in Pennsylvania that want help in meeting their profitability goals. To learn more about our programs and resources, visit or call 717-346-0849.

Editor’s Note: John Frey the Center for Dairy Excellence executive director.

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