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The document discusses the benefits of good governance and outlines a five step process to build a well-governed and high-performing organization. The five steps are: 1) confirm the business strategy and goals, 2) clarify the goals of individual owners, 3) evaluate the existing company structure, 4) establish a good governance framework, and 5) ensure management supports the owners and board. Implementing these steps in a collaborative way that engages stakeholders can help optimize outcomes when changing a business ownership structure.
The document discusses the benefits of good governance and outlines a five step process to build a well-governed and high-performing organization. The five steps are: 1) confirm the business strategy and goals, 2) clarify the goals of individual owners, 3) evaluate the existing company structure, 4) establish a good governance framework, and 5) ensure management supports the owners and board. Implementing these steps in a collaborative way that engages stakeholders can help optimize outcomes when changing a business ownership structure.
The document discusses the benefits of good governance and outlines a five step process to build a well-governed and high-performing organization. The five steps are: 1) confirm the business strategy and goals, 2) clarify the goals of individual owners, 3) evaluate the existing company structure, 4) establish a good governance framework, and 5) ensure management supports the owners and board. Implementing these steps in a collaborative way that engages stakeholders can help optimize outcomes when changing a business ownership structure.
Businesses owners want to grow their business and improve
its financial strength and performance. Moving to a more flexible corporate structure that enables new owners and shareholders to enter the business can help achieve these outcomes. This approach may require more formal governance arrangements such as the establishment of a board, improved management reporting and changes to decision making processes. Whilst lawyers and accountants must be engaged early in the process to ensure the correct legal and taxation structure is created, what is often forgotten is the impact of the new operating model on the people and processes of the business, particularly the current owners and existing shareholders. Transforming to a more structured and formal governance and management structure can cause confusion if stakeholders are unaware of the new operating environment. Not to mention the high costs associated with frequent changes to documentation if the business requirements are not clearly identified up front. Whilst more time consuming initially, a collaborative approach where strategies and objectives are clearly articulated, and key stakeholders are engaged and feel a part of the decision making process will yield far better results in the longer term, and build a greater appreciation for good governance. The following five step process will assist in building a well governed and high performance organisation, and maximise the outcomes of changing your business ownership structure to support your growth ambitions.
ACCOUNTING & BUSINESS ADVISORY
CONSULTING & PERFORMANCE COACHING FINANCIAL PLANNING TECHNOLOGY SERVICES FINANCE 1. Confirm the strategy of the business 2. Clarify the goals of the individual owners ■■ What is the overall strategy for the business? ■■ What is driving each of the current owners to make this change? ■■ Does it have a clear vision/mission that staff can articulate easily? ■■ What are their personal goals and time horizons? ■■ Where are the growth opportunities for the business? ■■ Are all current owners on the same page – do they all share the same objectives? ■■ What unique capabilities does your business possess, what is the competitive differentiator ■■ What has caused concern to owners previously compared to similar businesses? that they would like to see changed as part of the new structure? ■■ At a strategic level, what must the business do, and by when? ■■ Is there a clear exit path for existing owners/ shareholders and a process to facilitate this? ■■ What are the key risks to the business? ■■ Do owners have other external business ■■ Are there plans to acquire new businesses, interests? Is there potential for conflicts of interest joint venture or partner with others, or divest that need to be addressed? business assets? ■■ What are some of the business scenarios that might impact on your strategy? ■■ Is the business at a level where it requires an advisory board to help provide independent advice and guidance to owners? ■■ Is the business at a stage where it requires a formal board to help set strategy and introduce more formal governance arrangements? 3. Evaluate the existing company structure and 4. Establish a good governance framework for your consider options organisation ■■ Does the current structure support the ■■ Do board members/directors clearly organisation’s strategy? understand their duties, responsibilities and expectations? ■■ Do you want to allow new owners/ shareholders into the business and is there a ■■ Does the composition of the Board support the clear pathway and funding mechanism in organisation or are new skills required, is there a place to facilitate this? skills matrix to objectively highlight any gaps? ■■ Would you consider an external investor or ■■ Is an independent director or Chair required progressing to a public listing? on the Board to help challenge the owner-directors? ■■ Have you ensured the common sticking points in the legal agreements are understood, ■■ Do other owners/shareholders and discussed and decided before moving to management clearly understand the role of the legal drafting, for example: Board? ■ director appointment processes – election, ■■ Are there good protocols in place to ensure nomination, term highly efficient and effective board and committee meetings eg: minutes, agendas, ■ shareholder types and voting rights timely distribution of papers ■ decision making processes – what a board ■■ Are directors confident that the organisation is may decide without reference to others adequately discharging all of their regulatory, ■ shareholder exit eg: “good” leaver and compliance, policy and legal obligations? “bad” leaver provisions, restraint periods ■■ Are there subcommittees to allow the Board to ■ remuneration and new employment delegate work? Do the subcommittees have agreements clear terms of reference? ■■ When was the constitution of the organisation ■■ Are there forums to allow minority shareholders last reviewed – does it need to be updated to to ask questions or obtain information about the enable the proposed changes? performance or future plans for the business? ■■ How do you minimise taxation payable as ■■ Does the Board have a code of conduct to result of any structural changes? articulate the desired leadership behaviours? ■■ Is the proposed structure sufficiently flexible to ■■ How often will the Board review its own adapt to changes in business strategy? performance? 5. Ensure management is supporting the owners and the Board The Consulting & Performance Coaching ■■ Does the Board have the right reporting in team at Hood Sweeney specialises in place to understand the key performance improving business performance: drivers and risk management indicators? ■■ strategic planning ■■ Is there a “dashboard” that easily allows ■■ organisational change management owners and directors to review the key ■■ collaboration and stakeholder engagement frameworks trends in the business – both financial and ■■ strategic project support non-financial? ■■ business coaching ■■ Does management know how to report to a ■■ leadership coaching and development board? ■■ corporate governance and board development ■■ How are decisions made in the organisation? Are there clear and effective delegations from the Board to management that allow the Chris Stewart Director business to run smoothly? chris.stewart@hoodsweeney.com.au ■■ What are the key drivers of value for this M 0425 411 760 business – on what basis is value measured and calculated? ■■ Are there clear communication processes in place throughout the organisation to promote Simon Starr speed of decision making and an engaged Associate Director culture? simon.starr@hoodsweeney.com.au M 0488 717 966 ■■ Would the business benefit from professional management coaching for key staff and teams to enhance leadership performance? ■■ Does management have clear objectives and measures to drive accountability and performance? TL:Governance24071FA