What is corporate governance and what does it mean to small business?
Corporate governance is often overlooked as something relevant only to large companies and corporates, but it’s just as important to small business.
Corporate governance is the structure and processes you have in place to ensure good decisions are made by the right person.
Good corporate governance can also streamline operations and support the growth of your business.
Here are our 5 corporate governance tips for small business.
- Delegating authority
It’s important that you have clear lines of authority and understanding within your organisation of who makes what decisions. Employees also need to be supported and enabled to exercise their authority.
- Policies and procedures
Policies are documents that outline what you want to achieve as an organisation, when it comes to particular areas of your business and why it needs to be done. For example, a restaurant may have a policy that outlines its commitment to sourcing local ingredients whenever possible.
Procedures outline the steps you need to follow to achieve the policy goal.
A policy and procedure may be combined into the one document, but they must be clearly written, as concise as possible and easy to understand and follow.
Policies and procedures should be written in consultation with the people who will need to follow them. They should be communicated to employees, readily accessible and regularly reviewed and updated as needed.
It’s important you hold everyone accountable for respecting delegated authority and adhering to policies and procedures.
Positive reinforcement should be given to those who adhere to the procedures but consequences for breaches should be well understood and enforced.
You should use your policies and procedures as the basis of providing constructive feedback and welcome continuous feedback on how things could be improved.
- Customer complaints
One of the most critical areas of your business that requires clear policies and procedures is managing customer complaints.
Your procedure should promote the management of complaints in a professional and calm manner.
You should have a process for recording customer complaints and any follow actions that need to occur. Then you need to check that all follow up items have been actioned.
Your business will also be bound by local Consumer Law, so you will need to familiarise yourself with your legal obligations.
- Pre-empt and prevent problems
Policies and procedures are useful for managing tricky situations but it’s even better to pre-empt and prevent potential issues.
As part of your risk management in your business, you should work with your team to identify all of the potential or current issues in your workplace and what can be done to mitigate, mimimise or avoid the problem occurring.