Setting up a corporate governance structure
Corporate governance is about good decisions being made by the right person and is not just the domain of companies – small businesses need corporate governance too.
A good structure will allow you to ensure that the start-up of your business occurs smoothly, with minimal confusion about responsibilities. As this can have many flow-on benefits to your business, it's worthwhile considering how to implement a corporate governance structure best suited to your business.
If you're looking to grow your business, established systems and processes will ensure that your growth occurs smoothly and that important decisions are made in minimal time.
Here are a few things to consider when setting up your governance structure:
Creating and delegating authority
When making important decisions, it's important to have the right person making them. By setting up and communicating clear lines of authority, you can help your staff understand which decisions they can and can't make on their own.
Developing clear policies and procedures
Written policies and procedures are an essential step for reaching business goals. Procedures communicate clear steps to achieving a goal, such as a sale, which you wish your staff to repeat frequently. The best policies are clear, concise, and easy to understand. They should also reflect your brand, compliment your business goals and objectives as well as your risk management plans.
Creating formal policies and procedures allows you and your staff to make better decisions. They also add legitimacy to a decision. Having an agreed process will allow you to guide behaviours and reduce risk within your business.
Once created, make your policies and procedures available to all staff. Constantly revisit these documents to ensure they're up to date, particularly as your business environment changes.
Managing employees and ensuring accountability
With policies and procedures in place, everyone can be more accountable and comfortable about the decisions they make. Accountability is important and can involve rewarding or disciplining staff. Your established policies and procedures can also help when providing constructive feedback and ensuring that better decisions are made in the future.
With a good governance structure, your employees become more willing to take on more responsibility. As the business owner, you can then focus more on other core management activities that can help make your business a success.
What to do...
- Find out more about business structures and types.
- Read about things to consider when changing your business structure.
- Find out how to effectively manage risk in your business.
- Need help to create policies and procedures for your employees? Our taking on an employee checklist can help guide you through your employer obligations.
- Search Advisory Services to find a business advisor who can help you create a corporate governance structure.