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Governance and alignment

Module 5: The seven responsibilities of a leader

A CEO has several responsibilities and one of them is to make sure the company is properly governed, and that all parts of the organisation are aligned.

Governance

Companies can be owned by a single person, a group of people, a family, several stakeholders including investors and/or employees, or, in the case of a publicly listed company, the public. When you have outside investors, they expect you to have a board. But it’s equally important for friends and family members who are owners and working in the business to understand the importance governance plays in the success of their company, as well. They should designate a specific time when everyone who owns some part of the business takes off their employee-hat, puts on their stakeholder-hat and goes into a room to talk about the performance, health and future of the business.

A board – whether advisory or governing – that sits outside the organisation can provide an outside-in perspective that is sometimes difficult for the CEO to achieve, especially if they are still working inside the business.

Boards play a number of different roles, including:

  • overall governance, management and strategic direction of the organisation
  • delivering performance in accordance with the organisation’s goals and objectives
  • ensuring the organisation operates prudently and ethically
  • ensuring accurate and timely financial reports
  • appointing, reviewing the performance of, and removing the CEO, when necessary
  • planning for executive succession.

Even if the board is comprised of so-called ‘insiders’ (family members who also work as employees), it’s very important that they come together on a regular basis, set aside their personal roles and decisions, do the outside-in view of the organisation, and look at it as a whole, not just the sum of their individual parts.

It’s equally important for friends and family members who are owners and working in the business to understand the importance governance plays

Alignment

Just as the board takes an outside-in view of the company and looks at the organisation from a broader context, the CEO needs to look at the organisation from a ‘5,000 ft. view’ and make sure that everything is synced up and in alignment. If you don’t take time to make sure all parts of the organisation are aligned to the plan, you may find that the sales team is being compensated on the basis of selling more to current customers, when the plan specifies that 10% of the customers will be new customers. Or you may find you are hiring someone for a systems role when you really need to be hiring someone to develop products to run on the new system. This is a job that only you can do, because the CEO is the only person with a big-picture view of the whole organisation as it’s operating now – and as it needs to operate in the near term to achieve the three-year vision.

The CEO needs to look at the organisation from a ‘5,000 ft. view’ and make sure that everything is synced up and in alignment

In a way, governance and alignment are two sides of the same coin. The CEO is responsible for the efficient and effective operation of the organisation, for implementing the mission, values and vision, and for growing the company. The board is responsible for supporting the CEO in that role, and for holding them accountable to other shareholders, making sure that the company is operating ethically and providing value for shareholders, employees, and other stakeholders.

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