A privately owned company is only as successful as its management team (Board of Directors). FILE PHOTO | NMG
I spent part of my weekend
reading an autobiography by Narendra Raval. What a striking personality!
His Book GURU: A Long walk to success talks about his personal journey
to success which, quite admittedly, is as humbling as it is
inspirational.
But most importantly, towards the tail
end of the book, he delves deeper into the growth of his company, Steel
Centre Limited; a simple-little-unknown company once situated in Gikomba
Market, occupying a 5,000 square foot room that went on to become a
globally recognised business empire with outlets across East and Central
Africa.
One would venture to ask, how can an
individual maintain and operate such a private multi-billion shilling
business empire, taking into account its size, resources, maturity,
culture and level of complexity, whereas his competitors in the market
are facing dire financial constrains?
What’s striking
about Guru’s group of companies is that they have been consistently,
albeit strategically, expanding and diversifying to other sectors,
whilst still making handsome profits.
This in my
opinion is attributed to observance of a good corporate governance
structure. I once wrote, in relation to governance, that most companies
fail either because of poor corporate governance structures or because
of laxity from the regulators in ensuring that these code of corporate
governance are strictly adhered to.
Whether it’s a
kitchen-table start-up, family-controlled business or a publicly listed
company, there has to be a well-functioning governance structure aiming
to reach the company’s financial and expansion goals, using the best
resources available on the market- in full accordance with the
principles of accountability and appropriate checks-and-balances.
Governance
is such a broad term with no specific or globally recognised
definition, yet it encompasses many aspects relevant to running of a
business. It defines the rights and responsibilities of the various
stakeholders in the business, and determines how decisions will be made
when establishing checks and balances.
A key and
central part of corporate governance is the role of the board and the
established audit committees. Though not expressly mentioned in the
book, you can tell that these are his core business principles;
principles that have seen him expand and sail through all sorts of
economic turbulence.
A privately owned company is only as successful as its
management team (Board of Directors). If a board shares values and
principles such as honesty, transparency and financial accountability to
all its stakeholders, such a team is only bound to propel the company
to exponential heights.
It’s a commonplace fact that
the code of corporate governance both locally and globally, are strongly
focused on publicly listed companies, where shareholders are often
distant from executives running the company, thereby neglecting the
private sector.
Thus, the reason why the UK through the
Financial Reporting Council published a consultation on corporate
governance principles for large private companies known as the “Wates
Corporate Principles”, where large private companies are encouraged to
follow and adopt on an “apply and explain” basis.
BASTON WOODLAND, Advocate of the High Court of Kenya.
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