There are really no exclusions from applying good corporate governance as everyone has a duty to comply with the corporations act.
Corporate Governance is all about leadership ensuring that the organisation acts in a legal and ethical manner. Particular emphasis should be directed to the financial management of day to day business and that solvency is ensured at all times.
A board should be comprised of a blend of skills including vision, commercial, finance, and strategic operations. The combination of these skills then become focused on both strategy and management including the makeup of an effective, cohesive organisational structure committed to ensuring the strategic business plan and associated budgets are achieved.
There must also be clear position descriptions which define responsibilities but also allocate authority levels in full support of account-abilities. A business must also have a clear organisational structure with delineated duties that have supportive overlaps but very clear responsibilities with no areas of grey. Managers must be fully aware of and accept these responsibilities/accountabilities.
Regular and accurate feedback of information from the CEO to the board is critical in order for correct decisions and judgements to be made. There should also be policies and procedures in place which guide the decision making process on day to day activities. Without these the business is opened up to undue risk particularly in the financial, human resource and operational areas.
Risk is an area which must be managed as any business is vulnerable to events that may have an adverse impact on many fronts. Potential risks need to be identified on a regular basis with strategies developed to either eliminate or mitigate them and their potential consequences.
It is critical for a business to consider and understand the responsibilities of a board member:
- Keeping track of the strategic business plan and in particular the organisational structure/effectiveness, Mission statement and financial trend charts relative to budget projections
- Maintain an analysis of the organisation particularly resources, operations, sales, services ensuring there is an ongoing support between these areas and that there will be a ‘no surprise’ outcome of performance at the end of each month
- Review the business as an outsider/client would to determine how you can continually exceed client expectations
The company mission statement is the ‘STARTING POINT’ of all business strategies:
- It must be qualitative
- It must be a clear statement of the business you are in and it’s capabilities
- It must define the scope of your business activities
- It must assist in the decision making process
- It must not be to make more money or profit
- It must reflect your commitment to your employees