From the moment you become a director, you are no longer responsible just for your own actions, performance and responsibilities, but for those of everyone in your company or corporation
In fact you become legally responsible for, and to, many others, including shareholders and customers.
Good governance lies at the heart of all successful businesses. However, whether you are starting up or have been a director for years, good governance can be challenging.
‘Governance’ should not just be viewed as a corporate phenomenon, but rather a way of leading by decision-making which weighs up the right and the wrong in order to succeed. It is about making those decisions in the most efficient, affordable and stress-free manner.
Lara Fox, winner of the Institute of Directors (IoD) East of England ‘Young Director of the Year’ Award 2019, puts the principles of good governance into practice as she embarks on her first directorship:
Objective IT is a bespoke software development and data analytics company. Until two years ago, the company was run by the founder and two other directors. After all three retired or moved on, I was asked to take over as Managing Director. We still have staff here from when the company was founded, and the average length of service is 8 years. It was no easy step to come into this team as MD, especially when I have been working with them since 2012.
My plan was to see the company last another 30 years and make sure the staff were confident in this, especially in this time of transition. I set about communicating my vision and expressing how I thought we would get there.
Some people pushed back on a few ideas I had. “We tried those years ago”, they said. However, whilst I listened to some advice and did not pursue all my ideas, I did decide to go with my gut feeling on others.
One change that developed a lot of resistance was the new way we ran projects. We have a web portal which our clients were intermittently using. I dedicated internal resource to make this more appealing for our customers, which in turn cut down our admin time. Along with this I ensured each project was run by a developer and an account manager, with the use of a business analyst or director only when required. This was a departure from director-led projects.
The team feared that clients would be upset being looked after by an account manager and not a director, but this was not the case. The enthusiasm from the account managers being more involved in the project and the ability to talk directly with clients meant that they had fewer queries about the work being done and saved us from having to repeat requirements.
In our recent round of reviews everyone said they were happy with the new direction and changes. The staff were more engaged and felt that they were helping to shape the future of the company with me. This taught me to have a vision and stick to it. Yes, make changes and react where necessary, but you need to know in your own head where you are going.
As I became Managing Director we were hit with a very serious problem when our largest client suffered unforeseen difficulties and had to suddenly withdraw a lot of work. This obviously had a huge knock-on effect for our business.
So we added a new service: data analytics. This was initially a request from a customer who we had built a very large database and multiple systems for. After building their database they asked us to analyse the data within it. We invested heavily in our learning, hired a knowledgeable member of staff and completed a Knowledge Transfer Programme.
In order to convince our shareholders this was worth doing I managed to find a matched funding grant we could use for our marketing and sales efforts to ensure we could justify the investment we were putting into this new service. They went for it, the business grew, and we now have a data science team of 4 members of staff.
Investment allowed us to increase our marketing budget and host events, from which we gained more clients. Other activities have also been successful but have taken a little longer to show success. This taught me how important it is to have patience when running a business.
Thankfully, despite a very stressful period, we have managed to maintain our total turnover. However, it would not have been possible without the team’s confidence in my decision-making.
One of the main criticisms in our staff reviews was that they often did not know what another team were doing, or they would not hear the big news, even though we are only a company of 20.
We started a weekly communication email. This was a hit. Everyone could see what work was going on and they liked the communication. Typical updates included things like “We signed a new client”, or “A member of staff is having a baby”, or “This new tool has just come out”, or “We donated money to charity”. This transparency also allowed us to know each other’s work load so that we could assign people to tasks accordingly.
At Objective we have built a tool which allows our clients to add tasks, track time spent and the progress of projects. I opened up the possibility for developers and data scientists to make requests for it too. This made life much easier for everyone because developers were being briefed directly by the client, meaning that we were saving time explaining tasks multiple times!
Small changes like these were what helped us maintain our turnover. In hard times of change, it was important to implement changes in small increments so as not to break the morale of the company, while building the team’s trust in me as MD. I believe that as a new MD it is important not to jump in and start dictating sweeping changes straight away. You need to build trust first.
Our shareholders are happy, the staff are happy, and our charitable trust we started has grown. We might not have as much cash in the bank as we once did due to directors retiring with their shares, but we have a healthy cash flow and business is growing.
Becoming a director is a difficult task. Diving straight into a Managing Director role during turbulent times is even harder. Whilst this was all going on I was doing an MBA, getting married, buying a new house and a puppy. The last year has been one of the toughest, but proudest of my life.
Having the support of other directors has been invaluable. I attend a monthly Mastermind with the IoD, but I think having any form of group is important. Having an advice line, whether it is your accountant, a mentor or a more formalised method such as the IoD Advice Service is also essential for a new director.
Being a good director is about building trust, being patient, seeking advice and remembering that although there is a lot to wrap your head around, you are not alone.