As business owners return from a deserved break many will have reflected on a tough 24 months. Challenged and tired they’ve found themselves sucked back in to day-to-day operations. Well-intentioned plans to transition out of the business remain unfulfilled. “Where’s the satisfaction gone?” some ask. “What’s 2011 going to throw at us?” ask others.
Alongside the dawning of a new year, so does the realisation: “I need some support”.
Given this mood I’m predicting 2011 will see independent governance of privately owned NZ companies finally emerge from its current shadow-like existence.
Struggling with the ‘dreaded’ governance word? Feel free to substitute with clarity, wisdom, guidance, stewardship or shared leadership.
Effective governance can be the difference between owning a good company and being the owner of a great company. This broader stewardship brings benefits including:
– Regular time set aside for bigger picture thinking
– Constructive challenge to you as owner
– New strategies and ideas for growth
– Neutrality when holding senior management accountable
– Informed but independent perspectives during decision making
– An extra set of eyes when monitoring business risk and compliance
My experience shows that owners also personally benefit through increased stimulation and motivation as well as greater clarity and delineation of their roles as employee, director and shareholder.
For those companies seizing this opportunity here’s what I suggest:
1. Structure: determine the best governance set up for your company, now and in the medium term
Be absolutely clear about your expectations of what governance will bring. Next, examine your ownership structure now and think how is that likely to change? Envision the organisation in 5 years time – what will it look like? What is the end goal for your involvement in the business? Analysing all this will give clear direction of the best governance structure: formal advisor, advisory board, independent director or maybe even a full board model.
2: Skill sets: confidently identify the right people with the right experience
Create a skills matrix to define the complete experience required of a governance team for your company. Mark off the owner’s current experience against this. The resulting skills gap will form the basis of a role description and person specification. Finally, outline a process for identifying potential candidates.
3. Secure: engage the services of the best person
Cast the net as wide as possible to recruit board members. Aim for the best – you’ll be surprised how often someone you thought unattainable is interested (or knows someone who would be). Produce a formal letter of appointment and consider the need for Directors & Officers insurance.
I always advocate payment to your advisors, even if it is somewhat token. It formalises the relationship and creates an expectation from both parties. The appointment becomes meaningless if it is seen as a favour or meetings and involvement begins to rank at the bottom of a very busy ‘to do’ list.
But doesn’t New Zealand need a more efficient and effective way to introduce potential advisers and directors to independently owned companies, I hear you ask. Well we have launched appoint as a better way to find directors and board members.