3 min read
In this episode of the SME Growth podcast, Rich and Dave explore the roles and responsibilities of boards and directors, particularly in small and medium-sized enterprises. They break down the key differences between corporate and SME board structures while providing practical guidance for new and existing directors.
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Key Topics Discussed:
- Board Fundamentals Detailed examination of the four main roles of a board: establishing vision and values, setting strategy and structure, delegating to management, and exercising accountability.
- SME Board Challenges Analysis of how smaller company boards differ from corporate boards, particularly when directors often hold executive positions.
- Director Responsibilities Comprehensive overview of legal duties and practical responsibilities for directors, including the importance of independent judgment.
- Governance Requirements Discussion of essential governance procedures and how to balance formality with practicality in smaller organisations.
Quotes to Remember: "Without a vision, the people perish - it's true, you've got to have that vision to know where you're going, even if not an absolute destination."
"You're not allowed to say 'oh I'm not very financial' - that's not good enough when you're a director."
"There's no one else responsible for anything going right or wrong around here other than the people in this room."
Top Takeaways:
- Board Structure Understand the distinction between board and executive roles, even when individuals wear both hats.
- Independent Judgment Directors must exercise independent judgment regardless of their expertise or position within the company.
- Financial Responsibility All directors, not just finance directors, need basic financial literacy and understanding.
- Decision Making Balance the need for proper governance with practical, efficient decision-making processes.
- Vision Setting Recognize the importance of clear vision and strategy, particularly in smaller organisations.
- Documentation Maintain appropriate records of decisions and discussions, even in less formal SME settings.
- Legal Duties Understand and comply with legal responsibilities while maintaining practical business operations.
- Stakeholder Consideration Consider all stakeholders' interests when making board-level decisions.
This episode provides essential guidance for anyone serving or planning to serve as a director, particularly in SMEs, emphasising both the legal requirements and practical considerations of the role.