What are boards really there to achieve? Are they solely about compliance? Or can boards actually add value – through the provision of fresh ideas, different perspectives, and contribution to strategy and growth?

I speak to owners of companies each and every day.  Some of those companies are small, some substantial, but on the whole, most are pretty well established with revenues in the range of $10 - $150 million dollars.

Most of the owners I deal with founded their business or have been responsible for significant growth over the years. On the whole, they are capable, successful and ambitious individuals – and are still very busy running the businesses they founded.

These owners tend to fall into three broad camps when it comes to the future:- those who are keen to continue growing their business, those who are happy with the status quo and those who are thinking about succession, or about slowing down or releasing capital from their business.  Some straddle more than one of these positions.

Many of my conversations with owners centre around better understanding both their personal and business aspirations.  In differentiating these aspirations, I'm better able to understand what they'd do if capital wasn't a constraint, how they'd expand their business, or if they'd like to free up time or capital to do other things.  I'm then better able to suggest appropriate ideas and solutions which help those owners achieve their objectives.

The interesting thing is, almost always in these discussions we cover some new territory – a new idea or angle – and the talk moves to the value of different perspectives, and often on to the desire of an owner to have a sounding board in place beyond those in the business.  Someone to brainstorm ideas with – or simply to test thinking around growth or change.

The fact is that many owners are simply too busy to afford the luxury of taking the time to stand back and think about strategy.  They are so deeply entrenched doing what they do best in the business to take the perspective of working on the business.  But despite the obvious appeal of external expertise, I'm constantly surprised at how few businesses utilise boards or advisors.  According to the 2007 ANZ Privately Owned Business Barometer, a third of companies in the New Zealand mid market don't even have a board.  Of those that do, only 57% meet regularly (monthly or bi monthly).  Despite this, 48% of companies believe they could benefit from involving an independent director.

If my experience is any guide, the majority of owners I have met could benefit from the different perspectives an outsider could bring to the table – whether around accelerating growth or planning for change.

Perhaps this not so surprising though, with the common perception is that boards are there only to ensure compliance – to add that mark of respectability – and with a hefty cost to boot!  This is reflected in the many boards which simply include a spouse, accountant or lawyer and meet annually to review the accounts.  Many accountants, lawyers and spouses do an incredible job - but it's not the same as having a sales or marketing specialist on the board who can complement skills inside the business and really come up with some new thinking.

Understandably, most of us find it pretty hard to cough up fees for compliance only.  But it might be different if we could get relevant experience around the table which really makes a difference to our growth and strategy!

What is needed is a mind-set shift around the role of boards.  Owners must first see a board's role as being 80% about value and strategy, and only 20% about compliance.  They must then look for the right people with the appropriate skills to add value.  Then all of a sudden the proposition changes.  Boards will start to add value, and owners will start to feel much more like remunerating that value.  Company performance will lift, and the virus spreads.

Imagine what it would be like if the owner of every growing business in New Zealand had access to a board who could add value the owner was happy to pay for.  Imagine the enhanced results….

We are not a nation that takes well to outside advice.  And as owners we like to do it our own way.  But in my experience, there are a lot of very capable owners out there who could genuinely benefit from an outside perspective.  It doesn't mean giving up control.  And it's not necessarily an easy transition.  But I've dealt with some pretty tough nuts over the last two years who started very anti – and now wouldn't look back.

It's not for everybody.  But it's worth considering.  Take a moment to consider what value you'd like from outside the business.

For more information please email: hamish.bell@anznational.co.nz

Hamish Bell, Director, Capital Solutions, ANZ National Bank