KC Dairy parlor

Arturo Mendez prepares for milking at the KC Dairy in Elkton, S.D. The dairy was recognized recently for its efficiencies in reproduction and fertility.

How dairies manage employees is the big differentiating factor between dairy farms, according to one industry expert who spoke at the Central Plains Dairy Expo March 27.

“If you don’t get the people thing right, it doesn’t matter what you implement, you’re not going to be as successful as you should be,” Raffael Lichdi said.

Lichdi, the director of sales and marketing for Milc Group, introduced the management company’s co-founder Bruce Vande Steeg to discuss how dairy farmers approach labor.

His focus was on human capital management, or working with employees as if they are assets, rather than costs. Through his 30 years of dairy experience, Vande Steeg said he has come to realize that as technology has progressed and become more ubiquitous, just having the most advanced technology is no longer enough to differentiate your dairy from others.

“The heart of the dairy operation is ‘How are we going to deal with people?’” Vande Steeg said.

Vande Steeg calculated that 98 percent of all dairy income is directly influenced by workers, not the technology or the dairy cattle. It’s employees that impact productivity with new technology, the cows and the operation as a whole.

He outlined keys to human capital management, starting with leadership practices. It’s just as important to foster knowledge as it is to gain it, Vande Steeg said. Operations that actively teach employees instead of hording information for personal gain are always more productive, he said.

The second key is engaging employees, which starts with simply knowing their names and promoting good work.

Vande Steeg cited a study by the Massachusetts Institute of Technology that found that engaged employees produced 10 to 15 percent better than those constantly afraid of turnover.

“I’ve been on farms where it’s common to use the word fired. It just strikes fear in everybody’s hearts,” Vande Steeg said. “Are you creating an environment of trust, respect, and appreciation?”

The third key, he said, is helping employees understand the organization’s structure and how to move up. It helps retain employees and foster trust, he said.

A simple flow chart outlines each position and who they report to, and it can help solve issues more quickly and keep things running smoothly.

Shifting focus away from technology comes at a time of very high turnover and a very small worker pool. While the baby boomer generation phases out of most operations, Vande Steeg said Generation X is too small to take their place, and millennials have just begun focusing on careers. He estimates labor issues in the industry will continue for another 10 to 20 years, depending on immigration policy.

“It doesn’t matter what party you are, it’s just a fact of life. We aren’t getting the legal or illegal immigration like we used to,” he said.

Dairies are competing with jobs like working at fast food restaurants because workers are looking for the best wage and the best work environment.

Ultimately, Vande Steeg said having a successful dairy comes down to persistence and working on the root cause of troubles.

“The most competitive dairies will be those who manage people like the assets they are,” he said.

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Reach Reporter Jager Robinson at 605-335-7300, email jager.robinson@lee.net or follow on Twitter @Jager_Robinson.