Why owner managed firms need to evolve their leadership structure for greater shareholder value
Organisational development & corporate governance is key to organisational effectivness
Organisations evolve over time. Leadership in owner managed organisations begins with an entrepreneurial leader innovating and growing the business. Typically, such leaders tend to be quite power centric. This paper looks at why organisational and leadership structures need to evolve as the company grows. Moreover, it also shows why corporate governance needs to evolve into modern practices. This original research has been compiled by the Ramsey Hall and The OPG.
Why traditional power structures must evolve to enhance leadership
The paper will outline why traditional power and leadership structures centred on owner managers running most aspects of the business needs to evolve. The paper explains why modern leadership team structures based on shared responsibility our more effective. This is in part due to the changing skills set leaders need as the organisation evolves from an entrepreneurial led business to a mature service led organisation. We argue that this changes the skills set and competencies needed of leaders.
Moreover, the paper reminds us that managing a company is complex and as it grows it becomes too much for any one or two individuals to lead. SME organisations tend to suffer from ‘resource poverty’ in that leadership development is often scant and resources for professional managers are limited. This paper demonstrates how appropriate leadership structures generates healthy profits.
Corporate Governance & Risk
The paper touches on the need for good corporate governance. It also highlights why good corporate governance must not be confused with bureaucracy. Recent corporate scandals and insolvencies have highlighted the importance of having robust board oversight. It also illustrates the need for meaningful and rigorous business controls. These are fundamental to having effective risk management processes in place. This paper argues that owner managers alone cannot be effective in every area of risk and business controls.
The family owned company
This paper also analyses the unique challenged faced by family run/owned organisations. Leadership, corporate governance and family succession concerns weigh heavily on these organisations.
Leadership and management skills are often lacking amongst these owners because the skills and competencies have not been developed.