Governance overview

Importance of governance

Did you know...

Deciding what governance looks like for a small business depends on the size and stage of the business, the input needed, and the nature and level of risks, according to Liz Wotherspoon of The Icehouse, an Auckland-based business growth centre.

It’s important to regularly look at the ‘big picture’ of a business — things like finances, long-term strategy, and risk management.

Maybe — but it’s only relevant to bigger businesses Yes — it’s important for keeping out of trouble Yes — it’s important for making good decisions and doing the right thing Yes — it’s important for a wide range of reasons Absolutely — it helps to manage risk, build reputation, improve results and attract investors

Importance of governance

Did you know...

Governance applies to all businesses, including start-ups and those focused on achieving high growth, according to the Institute of Directors.

Looking at the big picture is something I do in my business.

No — I’m more interested in getting our paid work done Not really — but I think I have a natural understanding of the big picture Sort of — I have a few checks and balances in place Yes — I review the big picture fairly often Absolutely — I prioritise working ‘on’ the business to make sure everything’s on track

Finding time and people

Did you know...

Obviously, no one wants to miss a short-term forecast or sales goal. But it’s much more costly to focus your time and energy on today at the expense of planning for the long term , according to Harvard Business Review.

I struggle to find the time for looking at the big picture of my business.

Yes — I have no time at all for it Yes — I know I should find time, but I’m not sure how much I need Yes — I try to put time aside for it, but it’s never enough Sort of — I put time aside for it and I’m working on finding more time No — I’ve freed up regular time slots to make reviewing my business a priority

Finding time and people

Did you know...

The people you choose to help govern your business need to bring specific skills that you’re missing and will be important to your business’s success, according to Forbes.

I know how to find the right people to help me govern my business.

No — I have no idea where to start looking Not really — but I guess I’d ask people close to me Sort of — I’d look for people with skills that complement mine Yes — I’d ask other professionals with governance experience Absolutely — I’d use my networks, online databases, or specialist organisations to find the right experts

Directorship

Did you know...

Directors play an important role in making sure a business follows the law and stays financially secure, according to the Institute of Directors.

I understand my legal duties as a director.

No — I didn’t know I had any duties Not really — but I know I should understand them Sort of — I know I’m responsible for keeping my business afloat Almost — I broadly know my duties but I can’t remember every one Absolutely — I know all my duties and I take each one seriously

Directorship

Did you know...

It’s important to understand your liabilities before joining a company as a director, according to the Institute of Directors. Ask about indemnities and Directors and Officers Insurance, and about any legal claims you might become responsible for.

I know how important it is to fulfil my director duties.

I haven’t really thought about it Sort of — I guess it must be important More or less — it’s good for my business Yes — it keeps my business out of trouble Absolutely — it’s key for protecting my business and keeping me personally out of trouble

Risk management

Did you know...

Only a few businesses grow if they are completely risk-averse, but reckless decision making also causes business failure, according to the Institute of Directors. Effective risk management sits at the heart of good governance.

I’ve identified current and upcoming risks to my business.

Not really — I only know about things that have happened before Sort of — I know some of my current risks Mostly — I know most of my current risks and possible risks for coming months Yes — I know all my current risks and possible risks for coming years Absolutely — I regularly identify and document current risks and possible future risks

Risk management

Did you know...

Independent directors often play devil's advocate and challenge conventional thinking when risk rears its head, according to the Institute of Directors. They can help a board take advantage of something exciting at the same time as ensuring the risk doesn’t outweigh the benefits.

I have a clear plan for managing the risks to my business.

Not yet — but I know I should Not really — but I know how to avoid the worst issues Sort of — I have strategies ‘in my head’ for dealing with risks Sort of — I have a good plan, but I haven’t written it down Yes — I have a regularly updated plan for identifying, prioritising, controlling, and monitoring each risk

Boards

Did you know...

Properly structuring your board could be one of the most important things to determine the success of your business, according to Forbes.

The benefits of having a formal board are:

I’m not sure — but I don’t think a formal board is relevant to my business I’m not sure — but I’d like to find out They help keep businesses on track, but I don’t know the benefits in detail To make governance more structured and thorough To manage risks, seize opportunities, and stay on the right side of the law

Boards

Did you know...

What makes boards great? It’s not rules and regulations. It’s the way people work together, according to Harvard Business Review.

A difference between an advisory board and a board of directors is:

No difference at all — they’re the same thing Not sure — but I guess they have different responsibilities One advises and the other directs A board of directors has more powers Both give expert advice, but a board of directors has more authority and makes decisions that affect the business.

In association with

Governance overview

Self-assessment: Governance

Self-assessment: Governing your business

Importance of governance

Did you know...

It’s important to regularly look at the ‘big picture’ of a business — things like finances, long-term strategy, and risk management.

Importance of governance

Did you know...

Looking at the big picture is something I do in my business.

Finding time and people

Did you know...

I struggle to find the time for looking at the big picture of my business.

Finding time and people

Did you know...

I know how to find the right people to help me govern my business.

Directorship

Did you know...

I understand my legal duties as a director.

Directorship

Did you know...

I know how important it is to fulfil my director duties.

Risk management

Did you know...

I’ve identified current and upcoming risks to my business.

Risk management

Did you know...

I have a clear plan for managing the risks to my business.

Boards

Did you know...

The benefits of having a formal board are:

Boards

Did you know...

A difference between an advisory board and a board of directors is:

Tell us about your business

Checks and balances

Tips and tools to help you run your business effectively

What governance is and why it’s important

Laying the groundwork for good governance

Governance: Key things to review if you do it yourself

What it means to be a good director

Structured governance - boards

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