Enhancing performance through good governance!

Enhancing performance through good governance!

In a recent discussion with a client, I asked the question ‘what have you gained through implementing governance in your business?’

The answer was surprising – and keep in mind that this is not a huge corporate but a small and growing business – like so many businesses out there.

His answer was, characteristically, blunt and to the point! ‘I still hate meetings – but at least I know that when we meet we will argue about the right things – oh, and I don’t take my computer on holiday with me anymore!’

Two, apparently, simple things, yet two significant developments that have led this business to improve and grow. The journey of corporate governance, a journey that too many growing businesses leave until it is too late, has facilitated two critical changes that have unlocked enhanced performance.

Firstly, corporate governance has led to the right focus.

In un-governed, or badly governed, businesses there are no clear lines drawn between the three main types of thinking that are inherent in the structure of any business. The thinking of shareholders, the thinking of directors and the thinking of managers. If these are not separated they tend to merge and mix and a lack of a clear focus pervades the (hated) meetings and interactions between the people in the business. The thinking is different in these three roles simply because the ‘interests’ of each of these three roles are different.

In well-governed businesses the right discussions (or arguments) happen in the right way, at the right time – and the different ‘interests’ are kept separate so clear thinking, and effective decision-making, can prevail. Simple tools, like agendas and correctly documented flows of information, can lift the group thinking to a whole new level!

Secondly, corporate governance enables a business to begin to ‘run itself’.

A well-governed business is one in which the authority and decision making are properly distributed throughout the organisational structure – and all this means is that it no longer has to all ‘run in the head of the entrepreneur’. The founders of the business no longer need to keep a ‘finger in every pie’ because responsibility and accountability are built into the mechanism of the business. In well-governed businesses, the business takes on a life of its own in the sense that it (the business) becomes the mechanism for delivering value – apart from the founders. The founders or entrepreneurs can step back and change their focus from merely working ‘in’ the business to that of working ‘on’ the business. They can also let go, to some degree, and shift to actually running the business – instead of being run by the business.

Without these kinds of impact on business corporate governance does become a list of tick boxes and things to do to comply. Corporate governance does not have, in fact, is not these things – rather it is the way that business can unlock their true potential and move to the next level of success.

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