Ask Us How: How your Board can contribute to the productivity of staff and the organisation

Posted by Michael Derin

Published on October 16, 2013 under NSW Business Chamber Partnership

Why is this important?

For businesses to function optimally, all facets of operations should be in good shape. This means that not only are the staff well-suited to their roles and responsibilities, and are productive, but that the Board of Directors is 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 of Directors to realise that they do have a role in the morale of staff. A functional Board contributes to the overall productivity of the staff and the organisation.

Staff 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.

It is the old cliché: “so much time is spent by Directors of small businesses working in the business and not on the business”. 

What to do

As a Director you can break this trend and shift your thought processes to allow you to have the time to work on the business.

The challenge is to structure the small business to run like a medium-large corporate operation. It is the mindset of the Director/s that makes all the difference, the process of re-educating yourself to think strategically and not getting constantly 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 medium-large organisation, corporate governance has changed the way these businesses operate, which has created a separation between ownership and management.

For  a  small  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 business partner.  Or, if you are a sole Director, that you’re Senior Management team has different responsibilities to yourself.

Creating structure around how your business operates will establish efficiencies; for example, you could be responsible for the business development and/or operations of your business, whilst your partner has responsibility for the finance/administration function of your business.  This means that only one of you is involved in certain aspects of the business ensuring that every aspect is covered and being controlled effectively.

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

Finally 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, you will be able to see clearly which areas require attention.

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 points 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 analyse the Corporate Structure of your Business. Promote accountability throughout the Staff, 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.

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