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Fast-growing companies have countless barriers to success and continued growth that they need to navigate every day. Some of these challenges can be anticipated and planned for, others require quick, creative, and agile thinking.
Because there are legal, ethical, and fiduciary responsibilities for companies of every size, creating and nurturing a strong board of directors and a solid corporate governance strategy is crucial for growing companies. It’s something they can and should plan for. Well-functioning, diverse boards propel companies forward, so it’s important to build a corporate governance structure that facilitates growth, right from the beginning.
Good Corporate Governance and SaaS, IT, and Finance
It might seem like something that can wait until your company is bigger and more established but instituting strong corporate governance should be a priority for growing businesses, across industries and especially in fast-growing verticals like SaaS, IT, and finance.
Good corporate governance promotes growth, stability, transparency, and accountability. It builds trust with investors, who can feel confident in the company’s commitment to meeting its fiduciary duties, and with stakeholders, who can be sure capital will be administered ethically.
8 Tips for Growing Companies to Ensure Good Governance
- Prioritize Good Governance Right from the Start. A solid foundation of good governance positions your company for continued growth and success. It sets up an overall culture of good corporate governance and regulatory compliance.
- Build an Independent Board. It’s crucial for growing companies to nurture a diverse, independent board that’s set up to make the sound decisions that affect every aspect of a growing business. Make sure your board members have wide-ranging experience and skill sets, and that they can be counted on for their honest and straight-forward opinion and perspective.
- Appoint a Capable Chair. The chairperson sets the tone for the organization’s overall approach to governance. They need to lead by example, demonstrating that they understand the importance of good governance, especially in a growing business.
- Keep Executives and Management Separate. When companies are first getting off the ground, the C-team (CEO, CFO, CTO etc.) will usually manage the daily tasks involved in running and growing the business, as well as governance. But fast-growing companies will need the structure in place to support their rapid growth. Make sure your internal team focuses on supporting the business and your management team focuses on ensuring good governance.
- Monitor the Organization’s Performance. Be sure to set clear objectives, KPIs, and other performance goals, and provide the tools, technology, and training for your board to succeed. Set deadlines, assign tasks, and routinely check on progress to ensure everyone is working toward their goals and effectively as possible.
- Make Meetings Count. Conduct productive, well-run board meetings where you accomplish what needs to get done. Ensure that your members come to meetings prepared to make sound, well-informed decisions. Consider board portal software to manage your board, streamline processes, and ensure compliance.
- Plan for Independent and Transparent Auditing. Fostering an environment of transparent financial reporting will encourage integrity and accountability, right from the beginning. Consistent, accurate, and transparent reporting / auditing sets the tone that financial responsibility is a fundamental tenet of the organization. Any accounting issues should be resolved transparently and changes should be implemented to prevent repeat infractions.
- Prioritize Strong Corporate Ethical Culture and Integrity. Evidence is mounting that a company’s environmental, social, and governance (ESG) performance is top-of-mind for investors, and ESG issues can affect mergers, acquisitions, and divestitures. Growing companies need to consider and plan for the ESG impact of their long-term strategic planning.
Good Governance for Growing Companies
Good governance doesn’t just happen. It’s an ongoing strategy that should evolve as your business grows and your needs change. The more a company grows, the more complex their regulatory, compliance, and governance responsibilities become.
Make sure your growing company institutes a comprehensive corporate governance plan, right from the beginning. It’s a crucial part of ensuring you have the structure in place to increase the odds that your growing business keeps growing.
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