February 17, 2022 What makes a good company director?
Company filings, diversity and inclusion, climate change risks, customer and employee welfare, anti-money laundering measures……..
These are just a few of the topics which we have covered in recent months. And the list could go on and on and on; potentially leaving company directors to wonder when they might have any time for running the business with all of these other topics to consider. But the fact is that all of these areas are as intrinsic to a business as the development of products or the provision of services. And just as with products and services, unless it is an extremely small company, no director could or should find their time tied up in the minutiae.
That doesn’t mean that directors can afford to ignore some areas of the business. After all, one of the duties in the law of a company director is to promote the success of the company. And you can’t do that if you are sidelining certain aspects of the business. But what you can do is to create the conditions in which others can thrive, enabling all of your people to work with the directorial team in order to deliver the vision and strategy of the company.
That’s why the duty to promote the success of the company is widely seen as the most fundamental one out of the seven duties of a director as set down in the Companies Act 2006. The Act even goes on to set out six key elements of this duty to promote success; including fostering business relationships with suppliers, customers, and others, the interests of employees, and the desirability of maintaining a reputation for high standards. Directors should also have regard to the likely consequences of any decision in the long term.
What makes a good director, therefore, is someone who is able to take an overall view, to see what is important for the long term success of the company. Good directors are then able to share that vision with their employees, creating a culture that not only engages people in strategy delivery but also values areas such as diversity, respect and good conduct. So much so that, in a business supported by a strong and ethical culture, the responsibilities of a director are made easier by the fact that every employee action, every decision and every process looks towards delivering the company values.
Not that that means that directors can step back and absolve themselves of responsibility in certain areas. But with the entire organisation aligned to one goal, good directors can ‘steer the ship with a light hand,’ leaving them free to spend more time on growing and promoting the success of the company.