How a Board can influence an SME Business

Board meeting

19 Feb How a Board can influence an SME Business

A functional Board contributes to the overall productivity of the organisation and staff often look to the Board of Directors for guidance, regulations, support, and the tools and resources to do the work that is expected of them.

When a Board is lax or negligent, or does not take care of tasks and responsibilities, it doesn’t take long before staff and the daily operations of the organisation are affected.

The challenge is to structure the business to run like a medium-large corporate operation. It is the mindset of the Director/s that makes all the difference and the process of re-educating yourself and other Executives to think strategically and not get caught up in the detail of the business.

As a start, it is imperative that you have:

  • Corporate structure and position definitions;
  • Executive Management who have accountability;
  • Board Meetings; and
  • Strategic ideas generation.

Corporate structure

CEO’s, CFO’s, Chairman and Directors: what’s the difference? For a large organisation, corporate governance has changed the way these businesses operate, which has created a separation between ownership and management.

For a small-medium business the corporate structure does not need to be complicated, but roles and responsibilities involving the Executive Team need to be clearly defined so that you have a structure which works best for your business.

It is extremely important that your responsibilities differ from that of your partner/s and it is really important that Directors are being accountable for their business’ success.

If you streamline how your business operates and create corporate structure within each director’s role and responsibilities, then you are able to establish Key Performance Indicators (KPIs) for each division.

The easiest way to grow a business is to have a clear direction and focus for the year ahead and beyond.

Ensuring your Executive team is accountable for their KPI’s and is responsible for reporting back each month on their team’s success/failure will help create a culture of ‘accountability’.

Board meetings

For your business to grow, you need to understand how it is doing each month, both operationally and financially. By holding a well-structured formal Board meeting, with attendance by your CFO, Board of Directors and/or Senior Executives you will be able to see clearly which areas require attention.

This is where a CFO can add real value to your business.

It is recommended that you develop well- structured Board meetings which include:

  1.         Agendas
  2.         Board reports
  3.         Someone to run the Board meetings – for example a Chairman

Each Board meeting should cover:

  1.         Financial reports
  2.         Marketing reports
  3.         IT reports
  4.         Operations reports for business activities
  5.         Human Resources

Each Board meeting should end with:

  1.         Minutes of meetings
  2.         Action items to be addressed prior to next Board meeting 

Director’s responsibilities

It is essential for the Director to be involved in the business in order for him or her to understand the direction that it requires. This becomes impossible, however, if the Director is lacking direction themselves.

A Director must foster corporate structure by defining employee’s positions and responsibilities. This should include addressing the tasks for which Executive management are responsible – thereby promoting accountability.

A Director must initiate and facilitate structured Board meetings which address the contemporary issues of the Business and also allow for the generation of Strategic Ideas.

A final tip

Take some time over the next month to properly analyse the corporate structure of your business. Promote accountability throughout your team, focusing on KPIs. At the next board meeting, take the time to observe the function of the business, and allow for the generation of strategic Ideas.

Lacking the expertise to develop a corporate structure or put in place sound monthly board reporting.  Speak to us about how we can assist with appointing the right executive team to support your needs.

For businesses to function optimally, all facets of operations should be in good shape. This means that not only are the staff productive and well-suited to their roles and responsibilities, but that the Board of Directors is also doing its job as well. While Board members may not see and understand all the ways their role influences the overall health of the organisation, it is important for the Board to realise that they do have a role to motivate staff.

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