need tips for combatting the gsd herding instinct

First of all this is very normal gsd behavior.
 
I'd suggest obedience training for your boy.  That's going to put you more in control of the total situation and more able to distract him when he starts herding your child.  Perhaps Anne can offer more specific ideas.

Thanks.  Yes, my last gsd was a herder as well, although he wasn't quite as bad, and he seemed to outgrow it.  My new (skinny) gsd has been obedience trained, although not be me, so the basics are already there.  I just didn't know if there were some specific techniques that worked on this particular behavior. 

Do you correct him when he nips you?
 
Obedience classes would be great especially for you (you'll learn a lot!) He needs to now that people are not for herding.
 
Timing is everything, when you see him starting to lunge to take a nip, step in there and give him a good correction *before* he bites such a firm NO. If you catch him after, its already too late - try next time. Right now, if your not giving him a correction, he thinks that there is nothing wrong with his behavior therefore he will continue it.
 
Why don't you get him on some sheepies? []

I have a couple problems with the word NO in and of itself.  First off, it doesn't tell them what I WANT them to do instead, and second, in an emergency, the first word that's gonna fall out of my mouth is going to be a resounding NOOOOOOOOOOOO!  If I use it for every day stuff, then it looses its impact.
 
In my house, getting to the bathroom can be a challenge cuz everyone wants to help me find the way.  When they decide to herd US they very quickly get told to SIT and stay.  I prefer to keep a sharp eye to prevent behaviors that I don't want and get them to do something else instead.  But with a new to you dog you really will have to watch carefully and correct BEFORE the behavior can start.  My oldest boy is the WORST herder and every now and then I'll just look at him and ask "do I LOOK like a sheep??"  That's all it takes with him.

Thanks!  He would no doubt love the sheep! 
Actually, I have been to obedience school with two previous dogs, so I've had a little training too -- just not with him.  (I am definitely a BIG advocate of obedience training.)  I do try to catch him before the act, but it generally happens so quickly that it's tough to get the timing right.  I do know better than to scold him afterwards, though.  I guess I'm just going to have to get a little quicker so that I can beat him at what is obviously his game right now!  []

Maybe I'll have to try that approach, too!  Thanks for sharing all your wisdom.  I like the idea of telling him to sit! when he tries to nip.  I'll give that a try!

Glenda,
 
I agree with you regarding to making them sit and stay when you notice them trying to herd you. But, why not say no? I tell my dogs no when I don't want that behavior - and  promptly enforce it with a different behavior (like you said - a behavior I want it to do like sit).
 
'No' to me, is telling the dog that whatever it was doing was wrong. They learned that from the time they were puppies. I would then tell it to down and stay (again, enforcing a different behavior like you said) and reward with praise letting them know that was what I wanted.
 
So, to me, having a 'no' on your dog is very helpful in certain situations. 
 
I just wanted to clarify where I was coming from. Just trying to learn! []

As I said, it doesn't tell them what I want them to do....and it could make the word have much less impact when I need it to count.  I liken it to my boss repeatedly saying NO to me, but not telling me what s/he WANTS instead of what I am doing.  I'm not a mind reader and I don't expect my dogs to be either.  That's just my way.  I will say no bite or no something, but I just don't use the word alone.  I sometimes use Unh uh.....but I reserve the word no all by itself for important stuff.

JMHO, but I would not "correct" him.  He could interpret it as "Every time I'm near kids something bad happens - I hate kids".
I have an Aussie, and a half Aussie, and I find that it is more successful to teach them a good "leave it" command (and "leave it" "come" is even better), than to try to intervene and correct them for natural behavior.  After all, herding dogs that really work can be called off the livestock, and told "that'll do".
You could also stop the kids from running and allowing the dog to chase, or contain the dog in a crate or another room when the kids are being rambunctious. 

My dogs are corected a LOT when they are near sheep. It doesn't make them any less enthusiastic about them!

I don't use NO per se but I do use a correction. (Ahh ahh is my favorite, sometimes HEY). Corrections aren't punishment, they are a communication that "What you are doing is unacceptable." I don't have to tell them WHAT to do, dogs are geared mentally to come up with "something else" immediately if they are used to having the freedom to do so. But the moment after a correction they are mentally open to suggestion. The key is to be fair, quick, and then SHUT UP and give the dog freedom to think..

I don't worry that "no" will lose its effectiveness. My dogs learn over time that no always means the same thing. I say, "Ahh, ahh," or HEY and they stop and say What? Over time they also learn that "amusing themselves", running off, and using their herding instincts if I don't ask for it - are all inappropriate. Soon you have a dog that you can walk off leash through a field full of sheep and certainly can trust around children (assuming no temperamental glitches).

This difference is that you are an experienced shepherd, and the OP may not be.  I hate to advise ordinary pet owners to correct their dogs because their timing may not be quite accurate if they haven't lots of experience.  It's much harder to ruin a dog using positive methods in the hands of the inexperienced. 
And, just for the record, my drivey Aussie pup will leave a child, a rabbit, or a cat alone with a "leave it" command, and she has not been corrected physically or had the word "no" ever used at her to date.  She is destined to be a performance dog and hasn't been on livestock, but then children aren't livestock LOL.