I often get asked these questions. What is Governance? How can I apply sound governance practices in my company.
First and foremost, Governance is not about slowing down processes or 'Red Tape' (which many private and family owned business owners think). Governance starts from within. I prefer the definition that Governance is translating the wishes and desires of owners into results (Dr. John Carver). It is extremely important to understand that the following points are fully grasped and understood.
Owners Expectation: Having complete clarity in what owner's expect is the first and foremost. I have noticed companies going straight into strategy without taking time to truly understand owner's expectations. In some cases, owners themselves are engrossed, working fully on strategy and operations of their company, without fully connecting to what they really want. All decisions must be clearly linked to the owner's expectations. The starting point for Governance is to fully grasp...
In times past, corporate or business leadership meant being at the front of the line, ahead of the curve, innovative, charismatic, and talented. While those descriptions may still fit, the modern executive must understand that successful leadership is more than achieving objectives or showing a profit. Regardless of the size of your company, to be a leader means that you are first a thinker. Thought leadership is, at its core, the first function of a true leader.
While it is true that success favors the bold and that action is a necessary element of progress; the ability to be successful in 21st century business is centred on a manager’s ability to be logical and to efficiently dissect and process information. These functions are vital in a world that is becoming increasingly small due to a massive free-flow of information. From a market standpoint executives must be cognizant of the fact that the window for taking advantage of opportunities is getting smaller, decisions...
The conventional methods of selling and earning good margins has completely changed. Buyer behaviours have changed and more choices are now easily available. The key question is, how can you increase revenues and profits during these disruptive times?
Boohoo, an online fashion retailer posted a 97% increase in profits and growth in sales by 51% in the past year. On the other hand, Next, a fashion chain posted a drop of 2.5% in total sales in 13 weeks. The point I am trying to make is, what is a successful growing company doing compared to another in the same industry which posted unfavourable results? Though Next has retail outlets as well as an online presence.
There is a common trend for companies that are successful. They focus and act on certain activities which struggling companies are inconsistent with. I filtered out 7 insights which have made a positive impact to businesses which are key to their progression over the years. These are:
1) Asking the right questions...
Many boards are vague on what board meetings discussions should focus on. I recall a family owned manufacturing company, where the directors met to discuss monthly management reports. A senior member of an accounting firm was chairing these meetings. There were reactive arguments throughout one such meeting (I had the opportunity to observe) which lasted an hour and a half. The chair was dominating the meeting and ultimately making decisions without much contribution from the other directors and executives. They considered these to be board meetings as they comprised of directors and the head of finance.
My point is, there are many such companies who have not evolved to the new reality. The global landscape rapidly changes and boards must prepare more than ever before. Board level discussions and management meetings must have clear distinctions. In this article, I reveal 7 signs of an effective board.
1) Focused on Priorities: The...
In turbulent times when clients are decreasing their budgets, banks aren’t lending, competition is becoming more hostile and threatening, and change is no longer variable but a fixed part of “business as usual” it often effects small companies much differently than large companies. A major reason for this is that larger companies (at least those that are solvent and long-standing) for better or worse depend on their infrastructure and internal systems to get them through tumultuous times. A major part of this system is the Corporate Governance Structure of the organization. This system provides structure in times of uncertainty, it provides a network of quality individuals who are familiar with the company and capable, as a group, of making logical decisions on matters that will determine the level of success or failure within that organization. Some may assume that small companies don’t require the same type of structure to succeed; in fact some may argue...
The job of an employee is to perform the actions of his job responsibly, to achieve those goals provided to that employee by management, and to work as a part of an overall unit to maintain and usher growth for the company as a whole. The job of the executive team within a company is to develop and implement the strategies that will carry the company into the future while protecting the infrastructure of the company and managing the integral parts of the company in an attempt to move the company towards its goals.
These are pretty defined objectives for these two classes of stakeholders within a company; and it is in that definition that they are able to serve their purpose. While it is important to have defined roles within the company, not all parties involved share this particular trait. The board of directors of a company has a simple mandate as it relates to their duties “Protect the Interests of the Shareholders”; and while very...
We see rapid changes taking place globally and technology disruptions forcing companies to tweak and make relevant changes to their business to adapt to these external realities. Though this article aims at help all sizes of companies, research indicates that 96% of small businesses fail in the first 10 years.
I have come across businesses who are doing well on paper, but face serious cash flow problems. The reason is, directors and executives don’t take enough time to evaluate the critical triggers which drain company value.
Before we go into the question, I often get asked as to why I refer to both directors and executives. After all, the duties of directors are different and segregated from what management does. Directors must not entangle themselves into micromanaging and not all executives are on the board.
The following are some of the reasons why directors and executives need to work together in certain circumstances:
The Financial Ingredient: Financial Management in the Corporate Strategy Equation
It seems like a principal that is easy to understand; to make corporate decisions you must understand the financial ramifications of the actions that are being taken. How else can you make strategic business decisions; right? You have to consider how the strategic position being taken will affect the company’s financial infrastructure.
While this ideology may be simple to understand it is often ignored (or at the very least undervalued) when company’s are developing their operating strategies. This is not to say that decision-makers don’t consider the financial costs of such decisions, because they might; this is to say that many times they don’t fully under- stand how their financial infrastructure will be affected in the long and short-term as it relates to other factors beyond costs.
When operating strategies are being created, it is incumbent on management to understand how...
More than One Way – Good to Great
In a poor global economy most companies are required to stand back and reflect on the situation that they find themselves in and how that situation will change with the volatility in the market (be it local, regional, national, or international). When doing this analysis many companies will be in one of the three following categories:
Decision making is the most basic and vital aspect of running a company and the ability to do it well is a major determinant in the level of success that a company may experience. At its best corporate decision making is a collaborative effort between those in the company that have been specifically placed in positions of power due to either their specialties or their overall business acumen. In these situations, multiple individuals seek to make decisions by analyzing specific situations, providing their input, and allowing the group to determine the best course of action. While ultimately there is a key decision maker who signs off on the final decision, that person depends on the groups’ ability to collaborate to make informed decisions.
The problem that arises in modern corporate settings is that this type of collaborative decision making rarely occurs because of the structure of the organization. Whether the CEO is the chief decision maker and rarely requests the...
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