As a board, have you built a business resilient to change or is it a house of cards? Do you accept personal responsibility for not being resilient to market shocks?
We have a well-known saying in Sirdar Group: Insert Excuse! It’s applicable and relevant whenever we hear a director or shareholder-manager say, ‘Yes, but…’ as to why their company is not performing or the well-used ‘but our company is different’.
As a director of a company, be it executive or non-executive, the decisions you make are yours, whether you believe that or not. The Companies Act agrees and requires that directors act in the best interests of the company and with care, skill and diligence.
Our view is that blaming external forces — or as a board even blaming a rogue or incompetent managing director – in no way relieves you of your directors’ duties.
If it happened on your watch
We consider it to be a key requirement that a high-performance director is exceptionally critical of his or her own performance. This is not about back-lashing and guilt for mistakes and errors in judgement. It’s about leaving the ego at the door and embracing continuous improvement.
This requires an attitude of humility backed by confidence and it’s easier said than done. Sometimes it requires acceptance that the game of business is bigger than you or is not suited to your talents.
In privately-held companies and family businesses, the challenge of ego and letting go is often the greatest hurdle for founders, who typically wear all three hats — shareholder, director and manager. They have nurtured the business from birth and made an immense emotional, mental and financial investment.
As the company grows, and needs higher levels of leadership, the cracks begin to show. The excuses and reasons ‘why not’ become a mantra of holding onto the status quo and not letting ‘the baby’ grow up.
The simple truth is that no matter which hat you wear in addition to the director hat, if the problem happened on your watch, you are responsible.
When life hands you lemons
This willingness to take responsibility is most evident during economic and political turmoil. When external forces rattle the cage, they are often used as the reason ‘why we cannot’. Recent events in South Africa are a classic example.
Market and funding uncertainty will impact every company. Yet, as a board, have you built a business resilient to change or is it a house of cards? Do we have an attitude that accepts personal responsibility for not being resilient to market shocks?
In conducting research for my book Traversing the Avalanche, published in 2014, I learnt everything I could about avalanches. We use the avalanche as an analogy for the disasters that strike companies and how a board is fundamental to being able to traverse the avalanche when it strikes. It was interesting to discover that most people who died in avalanches were the trigger for those avalanches.
Applying that metaphor in business, life-threatening or even highly challenging strikes could, in most cases, be averted by a company that approached its growth in the right way. In the ‘Risk Mitigation and Compliance’ dimension of the Sirdar Enterprise Governance Compass, we challenge directors to see risk as opportunity and to unlock value by approaching risk in a proactive way. Risk should be managed, yet high-growth companies know how to turn risk into reward.
So too does this apply in economic uncertainty. Look for the opportunities to stabilise your foundation and leverage up your growth — not despite the challenge but because of it.
Put down the excuses and be exceptionally critical of your own performance. Embrace the opportunity to use the shake-up as a means of creating stable and sustainable growth.