Real benefits of good Steps to creating a

high performance
governance organisation

Businesses owners want to grow their business and improve

its financial strength and performance. Moving to a more
flexible corporate structure that enables new owners and
shareholders to enter the business can help achieve these
outcomes.
This approach may require more formal governance arrangements such
as the establishment of a board, improved management reporting and
changes to decision making processes.
Whilst lawyers and accountants must be engaged early in the process to
ensure the correct legal and taxation structure is created, what is often
forgotten is the impact of the new operating model on the people and
processes of the business, particularly the current owners and existing
shareholders.
Transforming to a more structured and formal governance and
management structure can cause confusion if stakeholders are unaware
of the new operating environment. Not to mention the high costs
associated with frequent changes to documentation if the business
requirements are not clearly identified up front.
Whilst more time consuming initially, a collaborative approach where
strategies and objectives are clearly articulated, and key stakeholders
are engaged and feel a part of the decision making process will yield
far better results in the longer term, and build a greater appreciation for
good governance.
The following five step process will assist in building a well governed
and high performance organisation, and maximise the outcomes of
changing your business ownership structure to support your growth
ambitions.

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1. Confirm the strategy of the business 2. Clarify the goals of the individual owners
■■ What is the overall strategy for the business? ■■ What is driving each of the current owners to
make this change?
■■ Does it have a clear vision/mission that staff
can articulate easily? ■■ What are their personal goals and time
horizons?
■■ Where are the growth opportunities for the
business? ■■ Are all current owners on the same page – do
they all share the same objectives?
■■ What unique capabilities does your business
possess, what is the competitive differentiator ■■ What has caused concern to owners previously
compared to similar businesses? that they would like to see changed as part of
the new structure?
■■ At a strategic level, what must the business do,
and by when? ■■ Is there a clear exit path for existing owners/
shareholders and a process to facilitate this?
■■ What are the key risks to the business?
■■ Do owners have other external business
■■ Are there plans to acquire new businesses,
interests? Is there potential for conflicts of interest
joint venture or partner with others, or divest
that need to be addressed?
business assets?
■■ What are some of the business scenarios that
might impact on your strategy?
■■ Is the business at a level where it requires an
advisory board to help provide independent
advice and guidance to owners?
■■ Is the business at a stage where it requires
a formal board to help set strategy and
introduce more formal governance
arrangements?
3. Evaluate the existing company structure and
consider options
■■ Does the current structure support the
organisation’s strategy?
■■ Do you want to allow new owners/
shareholders into the business and is there a
clear pathway and funding mechanism in
place to facilitate this?
■■ Would you consider an external investor or
progressing to a public listing?
■■ Have you ensured the common sticking points
in the legal agreements are understood,
discussed and decided before moving to
legal drafting, for example:
■ director appointment processes – election,
nomination, term
■ shareholder types and voting rights
■ decision making processes – what a board
may decide without reference to others
■ shareholder exit eg: “good” leaver and
“bad” leaver provisions, restraint periods
■ remuneration and new employment
agreements
■■ When was the constitution of the organisation
last reviewed – does it need to be updated to
enable the proposed changes?
■■ How do you minimise taxation payable as
result of any structural changes?
■■ Is the proposed structure sufficiently flexible to
adapt to changes in business strategy?
4. Establish a good governance framework for your
organisation
■■ Do board members/directors clearly
understand their duties, responsibilities and
expectations?
■■ Does the composition of the Board support the
organisation or are new skills required, is there a
skills matrix to objectively highlight any gaps?
■■ Is an independent director or Chair required
on the Board to help challenge the
owner-directors?
■■ Do other owners/shareholders and
management clearly understand the role of the
Board?
■■ Are there good protocols in place to ensure
highly efficient and effective board and
committee meetings eg: minutes, agendas,
timely distribution of papers
■■ Are directors confident that the organisation is
adequately discharging all of their regulatory,
compliance, policy and legal obligations?
■■ Are there subcommittees to allow the Board to
delegate work? Do the subcommittees have
clear terms of reference?
■■ Are there forums to allow minority shareholders
to ask questions or obtain information about the
performance or future plans for the business?
■■ Does the Board have a code of conduct to
articulate the desired leadership behaviours?
■■ How often will the Board review its own
performance?
5. Ensure management is supporting the owners
and the Board
The Consulting & Performance Coaching
■■ Does the Board have the right reporting in team at Hood Sweeney specialises in
place to understand the key performance improving business performance:
drivers and risk management indicators?
■■ strategic planning
■■ Is there a “dashboard” that easily allows ■■ organisational change management
owners and directors to review the key ■■ collaboration and stakeholder engagement frameworks
trends in the business – both financial and ■■ strategic project support
non-financial?
■■ business coaching
■■ Does management know how to report to a ■■ leadership coaching and development
board? ■■ corporate governance and board development
■■ How are decisions made in the organisation?
Are there clear and effective delegations
from the Board to management that allow the Chris Stewart
Director
business to run smoothly?
chris.stewart@hoodsweeney.com.au
■■ What are the key drivers of value for this M 0425 411 760
business – on what basis is value measured
and calculated?
■■ Are there clear communication processes in
place throughout the organisation to promote Simon Starr
speed of decision making and an engaged Associate Director
culture? simon.starr@hoodsweeney.com.au
M 0488 717 966
■■ Would the business benefit from professional
management coaching for key staff and
teams to enhance leadership performance?
■■ Does management have clear objectives
and measures to drive accountability and
performance?
TL:Governance24071FA

ACCOUNTING & BUSINESS ADVISORY

CONSULTING & PERFORMANCE COACHING
FINANCIAL PLANNING
TECHNOLOGY SERVICES
FINANCE