“I didn’t go into business to be performance managed.” So many entrepreneurs share this statement, and in my experience, it’s one of the biggest stumbling blocks to real growth.
When discussing the value of enterprise governance with business shareholder-managers, this is often the response I get. And it’s true. Getting away from a boss might actually be your motivation for taking that leap into building an enterprise.
What’s quite likely is that you wanted to create something significant, build an empire, create wealth or express your desire to do something truly unique. But here’s the only relevant question: Who ensures that you deliver on this promise?
In my experience and through the research I have done, governance is misunderstood and not widely recognised, especially in the SME and privately-held sectors. So here is a golden nugget myth-buster: Governance is as much about performance as it is about conformance.
Governance is a strategic responsibility and opportunity. It should drive the strategic growth and focus of your enterprise, while holding the enterprise accountable to its promise.
If you are the chief executive, you should also be held accountable for performance in your role as leader. It makes no difference that you might have founded the enterprise or are a majority shareholder.
If you want to achieve your primary goals and the reasons you really went into business, understanding the role of a board in your performance management is critical.
As an independent chairman and director of billion rand privately-held companies, I know what can be achieved by shareholder-managers who are willing to be scrutinised by a board.
It’s not just about scrutiny; it’s about challenge, constructive support and career development. The initial response is usually: ‘A board won’t help me. They will never understand my business the way that I do.’
Once the shareholder-manager starts to see that directors excel at business principles irrespective of the industry, the response becomes: ‘The board holding me accountable won’t get me to perform any better.’ Really? I would beg to differ. In one of our client companies, the chief executive who was very competent had never been performance managed in his 30 year career.
The moment that performance management was implemented, even at a small-scale initially, there was a significant improvement in his performance as a leader.
Boards challenge management to step up to the next level and to let go of the areas they previously held close, which may also have been holding them back. A formalised performance management process is a game-changer.
I know that a shareholder-manager’s governance understanding is evolving when the response then shifts to: ‘That’s an interesting question’ and then to, ‘When is my next performance review?’
When the chief executive then says: ‘What a valuable session that was!’ we know that as a board we have cracked through the block to accountability that will unlock the business on so many levels.
Empowered for Growth
The chief executive of one of our client companies, recently shared: ‘I cannot believe how much I have been freed up to focus on growth. And while this year we did not meet our revenue targets, we have more than achieved the profit line. It’s the board that has forced me to do this.’ Without a board, who is pushing you to achieve more personally and professionally than you thought possible?
Implementing governance and a board is a challenging yet rewarding journey. If you did not go into business to be held accountable by a board then did you really go into business to achieve financial success? In my experience, you can easily have one without the other.
Related: A Formula For Uncommon Success