Bad governance gets its fair share of press coverage - and rightly so - when there’s a governance failure in a large corporate everyone feels the fallout.
Yet I can’t help but wonder why the benefits of good governance get overlooked…especially by those who do not have to comply.
Perhaps too many people have only experienced governance done badly – a “paint by numbers” approach that acts as an anchor on agile decision making and a cost drain. If this is your experience of governance then I can understand why you would avoid it until your company reaches a size when compliance is imposed.
A paint by numbers approach to governance is destructive for business. I can see why companies resist it – I do too! Going beyond a box ticking exercise is when governance gets exciting and where the real benefits can be achieved.
Hearing The heartbeat
Painting by numbers is an impersonal experience for any artist and the outcome created is generic. I don’t see many people proudly nailing this type of painting to their wall.
The best governance experts want to create something that your company can be proud of – so we take time to understand the full picture of a company before starting to apply any colour. We listen to the heartbeat of an organisation. We talk to people at all levels so that we are able to deliver something that fits the company’s culture and strategy.
Give employees the green light
Good governance can save a company time and money as well as boost its reputation. I see it like traffic lights on a crossroads; if no one knows when it is safe to drive there is paralysis, indecision and the flow of traffic slows down. Good governance empowers people to move quickly but only when it is safe to do so.
Why would an effective board want its employees to waste time stuck in bureaucratic traffic when they can empower them by putting systems in place?
Choosing the right colours
Good governance experts help create strategies that support employees to do a better job, boost the company’s reputation and make external finance more accessible. All of our “paintings” are unique – they have to be – otherwise you won’t nail them to your wall and they become another useless piece of paper at the bottom of your drawer.
There’s no excuse for applying governance processes without thought. At best it wastes the time of the person trying to implement them. At worst, it costs the whole company time and money, alienates employees and frustrates senior managers. Wasting people’s time will only happen once and when you lose your voice in the boardroom it’s almost impossible to rebuild.
Untapped potential for SMEs
SMEs have the greatest potential to capitalise on the beautiful colours that good governance can provide and to achieve a positive return on investment from its implementation.
I have seen the implementation of governance deliver so much for companies that get it right. I’ve watched profits increasing through improved accountability and reduced inefficiency. I’ve seen companies attract additional investment by increasing their internal and external reputation and credibility. I’ve experienced companies minimise losses and reduce conflicts by implementing internal controls and by setting clear roles and responsibilities for decision makers. Finally, and most importantly, I’ve seen how good governance has helped growing businesses save time and prepare them for the future.
Yet I still only see this coming from the companies that are forced to comply by law. I am not for one minute suggesting regulation is imposed on SMEs, far from it, I just think there is a real untapped potential for SMEs to benefit from good governance; it simply makes good business sense.
Paintings can fade over time
In a growing company the governance framework needs to evolve too. Just as outdated technology holds back progress, a company outgrows its governance. To stay agile governance needs to be reviewed regularly. Seen in the wrong light, this could be viewed as an ongoing cost, but in reality it is a fresh opportunity to identify additional streamlining saving more time and money. It’s an opportunity to enhance your painting.
An artist at work
Anyone can paint by numbers but only a true artist can paint freehand. Governance has a paint by numbers option, but this stifles growth, wastes money and adds unnecessary bureaucracy. A company’s governance framework should create the structure for an organisation to move quicker and make smarter decisions. The right governance is something every profitable company should seek. This is why I think SME governance is so important and why I founded Beyond Governance – I want to leave the paint by numbers set for my toddlers to play with.