Case Studies
"The board is becoming fragmented and ineffective."
The Issue
The independent Chair identified the board as increasingly challenging management in a non constructive way and generally becoming frustrated with each other at an individual director level.
Our Approach
TBPL initiated the TBPL board evaluation and review questionnaire with management feedback and the addition of three easy questions to be completed by each director on each director. A total board review feedback summary report was sent to the board and then a TBPL principal led a feedback session using the report as a basis for discussion with the board. A non attributable individual feedback report on each director was also provided for the Chair to complete individual discussions with the directors.
The Outcome
The Chair reported that following the feedback session board was significantly more united and demonstrated greater cohesion and this situation has been ongoing and lasting. The Chair also commented that the individual director feedback provided gave a solid, constructive basis for a good discussion with each director. Overall the Chair reported that there had been a significant shift with the members with a greater respect and understanding of the directors towards management and a change in cohesiveness around the table.
"The directors who are shareholders cannot agree on the future structure of the company."
The Issue
The company was operating in a co-operative structure in a rapidly changing market environment where the company's main customers were becoming larger and more powerful and demanding due to a series of industry takeovers.
Our Approach
Following discussions with the company TBPL decided to hold a meeting with the Board where TBPL presented the changes to the industry structure and the possible implications. TBPL also introduced examples of other sectors where similar change had occurred and the resultant impact on companies in these sectors, including the change in risk profile of the companies.
The Outcome
The directors were able to recognise and understand the implications and increased risk to their company with their current structure and lack of cohesive approach. The Directors agreed to review amalgamation options, previously discarded, as a means of not only strengthening their current position in the market but also to reduce the associated risk and potential loss of value to their own individual businesses.
"How Can I Raise Capital for an SME?"
The Issue
The company was a small company in reasonable health and with growth prospects but in need of equity capital. The board, consisting mainly of owners, had operated on a "common sense" basis but continued to fail in presenting a strong enough case to the capital markets to convince potential investors that they were "serious" enough to warrant investment.
Our Approach
TBPL provided an independent Chair on a limited time basis with the direct objective of regularising governance arrangements and setting the scene to raise capital. At board level Commitment to Values statements were developed, codes of practice developed, and selective training in the role and function of directors was undertaken. The emphasis was on application of the law and practice specifically adapted to the SME environment in terms of cost and time as well as practicality.
The board then developed a series of management instructions to guide the CE in improving coherence, consistency and timeliness of financial reporting, formalising all third party contracts and establishing a risk management plan which fit the board's strategic plan.
The Outcome
The original CE found that the new governance structure was not suited to his style of management and left. This slowed progress and generated short term financial stress. Once a new CE was appointed however, the company was able to complete the re structure process and go on to raise over half a million dollars at its first attempt.
"We have such a large Board – how can we improve the efficiency and effectiveness of our decision making?"
The Issue
This company is a co-operative, where each of the individual members has the right to one place on the Board of the group holding company. This result was an overall Board of 18 people. This size of the Board meant that decisions were made slowly, Board meetings took a long time and there was a lack of distinction between Management decisions and Board decisions.
Our Approach
The Boardroom Practice worked with the Chair and CEO to structure the meeting agenda to differentiate between Board decision-making and Management decision making. The Directors and Managers also participated in a course on the differing roles and responsibilities of Board and Management and the overall legal obligations of Directors.
The Outcome
The time spent in Board meetings was drastically reduced for each individual. Decisions were made and implemented with increased effectiveness, since the Directors and Managers now fully understood their separate roles in running the company.
"We are the company’s Shareholders, Suppliers and Customers as well as its Directors. Which ‘hat’ should we be wearing, and when?"
The Issue
The Chairman of a primary industry company approached The Boardroom Practice, concerned about impartial decision making at Board level. The company’s Directors were also Shareholders, Suppliers and Customers of the company. This was causing difficulty at Board meetings – for example, some of the Board’s decisions were being made from the perspective of a Supplier to the Company, rather than that of a Director on that Board.
Our Approach
The company’s Directors participated in a course on the roles and responsibilities of Directors and their legal obligations. They also took part in a session on the wearing of ‘two hats’, and on how to determine which hat to wear in Board decision-making to ensure that the interests of the company are best served.
The Outcome
The company Directors were able to put their decision making into context, resulting in a significantly improvement in ‘collective interest first’ Board decision making.
"Why aren’t we reaching our potential as a business?"
The Issue
A Board of owner operators had a sound business that was performing well below potential and losing ground to competitors.
Our Approach
The Boardroom Practice audited Board meeting processes and found that meetings were dominated by operational issues. After facilitation the Board agreed to appoint an Independent Chairman to refocus Meetings upon business development and strategic issues.
The Outcome
The Board developed a strong focus on future development. Revenue increased rapidly from $7m to $26m, with a comparable rise in profits.
“We have a dysfunctional situation that we just can’t solve on our own.”
The Issue
A joint venture company had two Shareholders, who each held 50% of the company’s shares and appointed two Directors. The Board met regularly, but because the Shareholders did not trust one another it rarely achieved any constructive business and was unable to address essential governance issues.
Our Approach
The Boardroom Practice gathered input from all parties, including an open evaluation of Board Meeting conduct. We then facilitated an agreement to appoint an Independent Director who would be Chairman.
The Outcome
The appointment of a strong Independent Director as Chairman enabled the Board to make progress in directing the company, and to focus on maximising the company’s position in the market place through good governance practice.
“How can employees who are also shareholders better understand their role?”
The Issue
A large privately owned infrastructure company was offering shareholding to some of the Management partners within the company. During this process the company realised that some confusion existed over the status of partners as Employees and Shareholders within the company.
Our Approach
The Boardroom Practice sought input from all parties before structuring a working session including questions and answers on the different roles and responsibilities of the CEO, Management, Directors and Shareholders.
The Outcome
All parties improved their understanding of the relationship between governance and organisational objectives.