By Erika Eliasson-Norris, founder of Beyond Governance
Businesses need good governance to survive and retain their competitive edge – and this applies to all businesses, no matter the size. From big corporations to smaller start-ups, governance plays a key role in the long-term success of the business, and it is vital to get it right.
What Does Good Governance Do For Businesses?
Governance should be at the heart of every business, no matter the size, as it sets the roadmap for where the business is headed and how it’s going to get there. It is all the rules and guidelines, written and unwritten, for the company – what the key decisions are, how they’ll be made and by whom, as well as the structure of the business and how to make the processes efficient. It encompasses identifying and managing potential and real risks and specifying how staff and board members will be protected from legal action.
Governance is how you want to run your business and how exactly you will do this for the long-term while navigating challenges and risks and achieving business goals along the way – which is why it is crucial it is done well.
Good governance creates a positive and productive culture where staff feel appreciated and supported in their roles. The work environment is good, and people want to work for the company so are engaged and hardworking, and it becomes easier to hire great employees as a result. Any investors in your business are content and trust you’ll make the right decisions, and your reputation improves along with that of your company, which enables fast growth.
What Happens Without Good Governance?
Businesses that have bad governance struggle to do well. Any investors become jumpy as often the company starts to make poor decisions. The culture becomes unhealthy as managers are reluctant to take accountability for their work and good staff resign – it becomes a company people don’t want to work for. This is obviously damaging for the business internally and externally, and it becomes harder to survive in a competitive marketplace.
Why Size Is Irrelevant
Good governance is important for smaller companies and start-ups just as much as it is for larger corporations. This is because they face the same issues and challenges, just on a smaller scale.
Even businesses without a board still need to ensure that managers and leaders are living by the standards set by governance as this will determine the company culture. With a happy and supportive culture, people perform much better as they know their role and feel empowered to fulfil their duties, knowing there are measures in place to limit risk and to protect staff if needed.
Furthermore, having good governance in place means you have taken the time to properly plan for your business and know exactly how you want it to operate. You have an awareness of what you need to do and who you need to hire in order to achieve your goals.
You can run your business from day one in the most efficient way and enhance your chances of growing it into a successful company in the future.