Building up a New Governance

Governance is strategic for every company, SME as well. Governance is the central axe of the strategic decision process of companies. It’s there the long-term strategy is envisaged through competition analysis, market analysis, and discussions with management and shareholders. The New Market Realities should drive the reflexion. To be effective, the board should not only represent the shareholders. It should be diversified with independent directors and represent a diversity of competencies among the directors.

The role of the Chairman is also determinant. He is playing the role of conductor of the board as well as within an orchestra. He is suggesting content for the meetings, he is arbitrating the different between the directors, he is the link between the board, the management and the shareholders. In many small family businesses, there is no real governance. The Chairman is the most important shareholder and the directors are all family members. During the meetings, the commercial and financial results are reviewed. The strategy is decided by the Chairman without many interactions with the board members.

In order to compete with corporation, SME should transform their boards into professional strategic Think Tank focusing on the future challenges of the company and the New Market Realities.