“Alright Governor” – Governance …for the Board & Troops

governance 1It is common knowledge that New Zealand industry comprises a vast number of small and medium size companies, owned and run by “the boss” – usually an immensely talented, passionate, resilient and broad shouldered individual that spends many an hour working in (and occasionally “on”) his or her business.

Certainly no one begrudges the effort of this hardy soul, and the commitment is there for all to see.

However, if one of the goals is to grow the business (let alone survive in challenging times), it is essential that these businesses incorporate a focussed and pragmatic “Governance Program”. It does not need to be expensive or “over the top”, but it needs to be there!

Furthermore, it needs to incorporate the differing company levels: from Board … to Owner … to Management.

Good governance is not just for the Board!

The days of running the business by the “seat of the pants” is for the extremely brave, fool hardly, or ignorant. The owner/operator may have broad shoulders, but eventually they will crumble under the load – a very painful experience for the owner and other key stakeholders including any fellow shareholders, employees, creditors, customers and suppliers.

I suggest that all companies should have a Governance Program that uses the “power of the team”.

The aim of the Governance Program is to consistently manage, monitor and improve the business – to keep a watchful eye that “the baby” is on track to achieve the strategic and operational goals set by the owner(s) and ratified at Board level.

Ideally these goals will have been flushed out through your strategic and business planning process. (For those who do not believe in planning, my blog “Businessplans – Unplugged” may be of interest!)

  • Usually the business owner(s) will take the lead in setting the company vision and goals – importantly with the wider team involvement and buy-in.
  • The Board will constructively challenge and push the vision, goals and boundaries – and help to develop appropriate strategies.
  • Management will help develop and execute the action plan to achieve these.

 

As part of this planning cycle, you will have identified your objectives, key milestones, targets, and budgets for the year ahead.

You will also have identified the areas of responsibility for delivering the plan and sensible KPI’s (key performance indicators/measures) to help you assess the success or otherwise of the various strategies and activities that you use to execute the plan – whether they be sales and marketing, new product development, financial, operational, etc.

Now, the name of the Governance Program game that I am recommending is to capture and deliver:

  1. Who (at the ownership, board, and management levels) needs to know what – to review performance, deliver on the plan, and comfortably sleep at night without undue stress;
  2. How often they need to know it;
  3. How best to report/communicate this information – to keep things focussed and simple, (and to save the odd rain-forest!)
  4. How feedback and any required change will be accommodated and followed through.
  5. Authority lines and powers of the Board and management levels consistent with the company Constitution/Shareholders Agreement.

 

We often hear moans about reporting. However, for good governance to be real, it has to be based upon effective communication, including reporting to ensure that those tasked with leading and managing the company have both the visibility and opportunity to review quality information to assess performance.

Naturally this process will be unique for each company. Be wary of any template solutions!

This information flow is likely to be the nerve system and a key ingredient for success and longevity of your business.

Some tips:

v  Engage in an open and constructive fashion with your key managers to identify what they really need to review performance, and then put in place systems and procedures to ensure the timely flow of the said information. The cultural environment is certainly important.

Invest time in developing the process, constantly reinforce the collective benefits, and encourage the process to be viewed as a tool for success rather than a threat.

v  Advisory Boards are recommended for small and medium sized companies. They may be “at the top” but they are not “over the top”!

 

  • They provide for a higher level governance and discipline. Additionally, a good board will bring balance, specialist expertise, innovation, and added credibility.

 

  • One would expect to pay for a good board member. Regard this as an investment!

 

  • There is no hard and fast rule for the Board make-up; although a mix from financial, legal, technology and sales & marketing backgrounds is often recommended – ideally with a good affinity and reputation within your industry. Additionally, consider bringing in an independent adviser to ‘chair’ the Board with experience, expertise and objectivity.

 

  • Whether board meetings be monthly or quarterly, it is important that they are governance by nature and do not “dig into the operational weeds”.

 

  • Board reports will have been submitted – for example covering company financials; sales & marketing activities, HR, Operations – and these will form the basis for discussion.

 

  • Discussions will incorporate compliance matters but should lean heavily towards performance review; progress towards achieving rolling 5 year plans; and possible new strategic initiatives to further bolster growth.

 

  • Early meetings may appear to be unstructured and untidy as the team come together and focus upon the vision; a recommended five-year plan; values; the brand map; and the key challenges to be faced and strategies to bowl them over.

 

  • Meetings may ebb and flow between “hot issues’ – whether they be R&D, cash flow, personnel, etc

 

So to conclude:

-          You may be good, but don’t do it alone;

-          Look to the wider team – management through to an Advisory Board;

-          Work out what they really need to help track performance consistent with the plan;

-          Develop the information gathering, communication, review and follow up process

-          No one likes reporting, but do not shy away. It’s for the better good!

Neil leads our team with over 30 years experience guiding companies both large and small to commercial success on the international stage. He is passionate, curious and known for his down-to- earth style and love of life. He has worked in a variety of commercial, business development, and leadership roles in the private and public sectors in New Zealand, Australia, North America and the U.K, and has been helping SME companies since 2009 under the wing of his own coaching business. If you need a hand, give him a call on 0800 000 758
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