First boards, fresh thinking
A new initiative from the Institute of Directors in NZ aims to lift governance skills in small and medium businesses. Most are owner-managed, and many suffer from the owner spending too much time working “in the business” rather than “on the business”.
Perhaps the biggest fear for owner-managers is loss of control, but a good non-executive director isn’t there to usurp the owner’s authority, instead helping shape thinking and encouraging decisive action:
They are committed only to the company, but can be objective about it.
Combine this level of commitment with skill in critical areas - say, international trade, marketing or finance - and you can tap into a powerful source to guide the company and help it to grow and develop. A well-chosen board is also one of the cheapest sources of advice available.
A good board will challenge the perspectives and attitudes of the owners and managers. If the owners, perhaps unconsciously, have been used to getting their own way, they may find this a bit of a strain…to say the least. The smarter, progressive ones will get over it and recognise the benefits of being challenged, but also properly supported, by independent-minded people.
The role of owner, owner-manager or Managing Director can be pretty lonely. A board gives them the opportunity to test their ideas and get a sense of perspective from people not involved in the day-to-day
Another common fear is expense. However, just like hiring good staff, a good director will easily help you make or save many times the cost of their fees.
If you look at successful medium or large businesses, almost all have at least one independent non-executive director. Very few of those companies would consider not having that oversight and advice. Visit firstboards.iod.org.nz for more information.
Disclosure: I’m a member of the IoD Wellington branch committee.
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