Corporate governance just as vital to SMMEs

Governance isn’t simply for giant, multi-million dollar companies. It is a key component of any business – be it a business with one employee or a company of a reasonable size. Implementation of cost-effective and simple processes will establish structure, improve operations, contribute to business growth and ensure effective compliance with the law.

The problem is that small, medium, and micro-enterprise (SMME) business owners see corporate governance, as a concept that applies to just that – corporates.

Unfortunately, the increased levels of corruption and a general decline in business confidence are taking their toll on the South African economy. This has resulted in the Institute of Directors in Southern Africa releasing a guide for Governance in SMMEs which simplifies the King III principles so that these can be easily understood, modified, and implemented by any business irrespective of its nature, size, or level of maturity.

SMMEs are encouraged in this guide to embed the fundamental corporate governance principles and practices into their businesses from the beginning in order to set the ethical foundation from the ground up. The best way to achieve good governance is to make it part of the culture and values of the organization.

The reality is that the survival and growth of SMME businesses are dependent on good leadership and corporate governance. It allows companies improved access to finance ensuring sustainability and support for better performance.

Basic ways to implement corporate governance

• Create simple internal policies such as procedures around skill and responsibilities
• Demonstrate effective leadership characterized by ethical values of responsibility, accountability, fairness, and transparency.
• Separate roles and responsibilities of the shareholder, director, and manager to limit liability and ensure effective division of labor and function.
• Do your bit for your local environment and community - nature, society, and business are interconnected.

Corporate governance is a natural progression and while the full structure may not be suited to all businesses, a certain degree of the structure needs to be implemented in order to ensure business growth.

In today’s business and legislative environment, the impact of decisions and actions on stakeholders and employees is increasingly considered to be the responsibility of directors and managers. As an SMME owner, you need all the support that you can get to ensure the effective operation and growth of your enterprise.

As your business grows you will need the right financial staff to help you ensure sustainability. Connect with Communicate Recruitment as we can assist. We boast experienced recruitment consultants that specialize in the Finance industry that can help you find the perfect employee for your team. Contact us today.