Leadership of Small Business

Leading successful SMEs needs strong corporate governance

Many people think that corporate governance is something for big companies and boards. In fact, it is applicable to ALL organisations – small and medium businesses and also not-for-profit organisations.

It’s about doing the right thing

In a nutshell it’s about  doing the right thing. Leading an organisation in an ethical  way that treats all stakeholders  fairly and with respect.  That includes staff, customers, suppliers, owners (shareholders), members and the entire community that the organisation  is connected with.

Corporate governance is all about improving performance across all areas of the business or organisation.  Ensuring things are done properly in accordance with best practice for an organisation of your nature and size.

It’s not one size fits all

It is not a “One size fits all” approach, and I think it’s a common misunderstanding that it is something for large public companies with a high profile board of directors.  That’s because, it’s when these high profile companies fail in their corporate governance that we get to read about it in the media.  Crown Casino as a recent example.

Well governed companies tend to be successful

As a small company or a not-for-profit organisation, the principles of running a business well, that staff want to work for, that attracts and retains loyal customers and suppliers want to do business with are paramount to success.

10 non-negotiables

In thinking about running a business well there are some non-negotiable elements to good corporate governance.  Here are my top 10 non-negotiables:

• • 1. Knowing why the organisation exists; what it’s purpose  and aspirations (vision) are, and what it stands for (the values).
    2. Having a Plan for where you’re going and how you’re going to get there.  Call it a strategic plan, but it needs to be backed up by an operational implementation plan and a financial plan- the budget and cash flow forecast.
    3. Getting your legal and tax structures right. Compliance with all relevant law and regulations. Setting yourself up to trade with appropriate terms & conditions, insurances, ATO registrations and an accounting system.
    4. As an employer establishing relevant policies & procedures, and of course compliance with payroll and other statutory obligations, but most important of all, creating a culture that embodies values that attract the right “fit” of people to work with you.
    5. Good people doing the right thing = good corporate governance.
    6. I think of this as “doing the right thing and not the popular thing“, or the “standard you walk past is the standard you accept“.
    7. Having a robust finance function that enables accurate numbers to be produced.
    8. Fit for purpose policies and procedures across all areas of the business.
    9. A culture of accountability.  Everyone being very clear about what their role is, knowing what is expected of them, and whether they have done a good job or not. Not being afraid of holding people to account. A means of keeping yourselves on track. Monitoring performance and having the right information available to make decisions, flex and change direction as needed.
    10. Being a socially responsible organisation – being known as a good “corporate citizen”.  Others knowing your stance in relation to diversity and inclusion, the environment and the community.

Corporate governance is how the organisation operates each and every day

Corporate governance is how the organisation operates each and every day. The standards of conduct. It’s reputation. A well governed company tends to be a successful, profitable and sustainable one. Others will want to do business with you. People will want to work with you and the results will flow.

If you want to explore what you might be able to do differently to become a more resilient organisation and better corporate citizen,  I would love to hear from you.