Very few of the small and medium sized businesses I interact with have a governing board of any real quality. Many have a ‘board’ required under the various regulatory regimes they must meet, but very few have a board that acts in the manner of a public company, as an independent oversight of strategy, financial and operational performance, culture, and of the senior management effectiveness.
This is something that should be remedied.
The short term costs are in my experience heavily outweighed by the benefits over the medium to long term.
Some of the benefits I have seen can be summarised as:
- Introduction of industry knowledge and networks.
- Introduction of business management expertise and experience from a wide range of backgrounds.
- Provides time and the catalyst for management to consider wider issues than the normal ‘urgent’ things that dominate the daily routines.
- Provides diversity of views, values and ideas
- Keeps management and particularly the CEO focussed on the issues that will impact long term commercial sustainability, as well as the short term financial outcomes.
- Adds depth to the management functional capability by enabling mentoring and coaching
- Thought starter and sounding board for management
- Acts as a catalyst and guidance for longer term capability development of employees, and the manner in which the business captures and leverages those capabilities.
- Oversight if not development of strategy, and oversight of strategy implementation, feedback and renewal.
There is an old saying that most of the smartest people in your industry work somewhere else. Therefore it makes sense to try and tap into that expertise in some way, and a well considered ‘board’ is a great method.
These bodies do not necessarily operate under the rules of the Corporations Act, where there are enforceable fiduciary responsibilities. They are usually more of an advisory body, often meeting formally only 4 times a year, but with significant interaction with management on an as needed basis.
