Our typical SME business clients can be largely unaware of the responsibilities and therefore risks of being a Company Director. In addition, these clients rarely receive any form of formal training in these areas and can be ignorant of the benefits of conducting effective monthly board meetings. Add to that the fact that many of our company clients are ‘mum and dad’ businesses without the support that larger or franchised businesses enjoy and you can begin to imagine the benefits to be gained from learning and applying such skills.
Clients don’t know what they don’t know. They will often make general remarks such as ‘We need more business direction’, or ‘Our business controls us, we aren’t in control of it’, without necessarily connecting that lack of direction or control with a need to govern and strategically plan the business more effectively.
Clients need to be reminded of the benefits of proper governance by way of structured monthly Directors’ meetings. These include:
- Working ‘on’ rather than just ‘in’ the business. The monthly directors’ meeting provides an opportunity to work on the governance and strategic areas of the business, rather than only managing the typical day to day events.
- A structured agenda forces your clients to review all functional areas of the business: Operational, Financial, Human Resources and Marketing.
- Such meetings will generally have a time limit, forcing more time efficient sessions.
- Appointing someone to the role of chairman tightens the meetings and diffuses conflict between directors, particularly in ‘mum and dad’ companies.
- Appointing the accountant in the role of ‘virtual chairman’ enables the client to also use the accountant as a sounding board for all manner of business ideas and issues.
- By applying the correct rules of conduct at the meeting, the directors eventually grow to view the Board Meeting as part of the normal operation of the business, and not something that needs to occur because there is a pressing problem in the business.
- The necessary keeping of meeting minutes and documenting and following up of action plans encourages decisions to be implemented rather than just verbalised.
We should all be aware of the risks of being deemed a Director of a company, by virtue of assuming the unofficial role of ‘Virtual Chairman’. We should only select clients whose businesses are financially sound.
Selection criteria should include:
- The business is likely to have a future, i.e. viable.
- The business is solvent.
- Your clients value your time and are prepared to pay your premium charge rate.
- Your clients have a history of implementing plans and ideas.
- You enjoy a great rapport with these clients.
- Your clients are competent within their business.
Timing of the Meeting
Directors’ Meetings should eventually be restricted to three hours, with many capable of being concluded within two hours.
Initially, it may be that the meetings take considerably longer than this. As people settle into their roles, start to observe the rules of conduct and eventually circulate their board reports to Directors on time, session times will shrink back to something reasonable.
Location of the Meeting
Most clients see value in conducting the meeting in your board room, rather than at their premises. They can avoid interruptions by staff, and having the meeting at your place of business provides an increased level of professionalism. There will of course be occasions where the clients’ place of business is appropriate, particularly where a new product or other resource needs to be viewed by the Directors.
Rules of Conduct
- Appoint the Virtual Chairman — usually the accountant. The accountant simply chairs the meeting. He or she is not the Chairman of the Board, but simply facilitates or guides the meeting.
- Board reports (Operational, Financial, Human Resources, Marketing etc) are circulated at least five working days prior to the meeting. It will need to be established in advance who is responsible for compiling each of the various reports.
- An agenda is prepared and circulated at least five working days prior to the meeting.
- Minutes are kept and definite actions required are noted in an Action Plan. Encourage your clients to complete such minutes and Action Plans.
- Minutes and Action Plans are circulated to Directors within 48 hours of the meeting.