Succession, Governance and Disasters

This title reflects the reality of running businesses whether the business is very small, large or a public company.

Succession planning is very important and it applies to all levels of the team not just the CEO and it requires a plan to be put in place to ensure that there is ongoing training and development to ensure that as far as possible vacancies are able to be filled by internal promotions.

Corporate governance relates to a lot more than just Board of Directors which is where it obviously starts.  People appointed as a Director should have a working knowledge of the Corporation Law requirements of the duties and responsibilities of a Director and in turn the Directors should ensure that the Leadership Team members have a clear understanding of what the Directors’ role is and how the Management Team relates to the Board of Directors and implements the policies and strategies that have been approved by the Board of Directors.  This is corporate governance in operation!

And in the last few days we have seen the challenges that natural disasters present to business operators, citizens and governments with the aftermath of ex – tropical Cyclone Jasper and the massive floods which have disrupted thousands of people in Far North Queensland.  In this edition we are summarising the latest announcements from Governments on disaster assistance and working capital loans.

2024 is nearly upon us, and one of the issues that many companies discuss at the beginning of a New Year relates to ‘Succession’.

Succession not only concerns the Senior Leadership Team of a business, but also relates to every other position in an organisation.  By training people within the organisation, benefits can be created by being able to fill vacancies caused by retirement, illness, resignations, by a person who has worked for the company and therefore understands the systems, the processes and the culture.  This is ‘Succession Planning’.

In the Business Plan, it is a good idea to ensure that a section of the plan relates to ‘Succession Planning’.

In this instance, succession can relate to the Chief Executive, Leadership Team, Directors and Board of Advice Members.

Companies will benefit by having instigated ongoing team training and mentoring in a wide range of business issues, including business operations, management training, team training, corporate governance, predictive accounting (Budgets – Cash Flow Forecasts – Projected Balance Sheets), costing systems, technology, communications, public speaking.

Some companies have successfully instigated processes for effective succession including the following:

Conducting a strategic SWOT Analysis – where are we now?  What would happen if?

Developing a Mission Statement and Corporate Objectives analysing the long-term goals of the business to answer the question – where do we want to be?

To enable the Mission Statement and Corporate Objectives to be achieved – what succession strategies does the company need to instigate?  Will these strategies contribute to a continuation of people with the ‘corporate knowledge’ and ability to guide the company in the future?

Maintaining ‘corporate knowledge’ in an organisation is a key reason for companies to have an effective succession strategy.

Directors are the key people required by law to administer a company.

An understanding of corporate law and corporate governance issues has to be learnt by the individual Director.

It’s a good idea for a Board of Directors to prepare a ‘Skills Matrix Chart’.  This chart should identify the skills that the current Directors have and also the skills that the Board of Directors believe it would be desirable to have at least one Director with a particular skill.

Some Directors are totally involved in the company’s operations and perform many of the duties that in a larger company would have been delegated to a Leadership Team member.

When Directors have appointed a CEO who in turn has appointed the Leadership Team, the Directors are still responsible for the company abiding by the Corporations Act and the other laws that affect the company’s operations.

When managers are appointed, the key requirement is for the Directors to enquire what level of training that the Leadership Team members have received, to ensure that these managers have a clear understanding of ‘Corporate Governance Issues’.

Whilst many duties and responsibilities have been delegated by Directors to the Leadership Team, overall the Directors are still responsible for what happens within the company.

The Directors are responsible for ensuring that appropriate systems have been implemented throughout the company, to safeguard the company’s assets and its reputation and to ensure that the company’s systems and records have been established.  This will enable appropriate reporting to government agencies and ensuring that the company is abiding by workplace health and safety laws, employment laws, environmental laws, town planning requirements, taxation reporting and payments and many more.

Assistance for Far North Queensland Businesses Has Been Announced

Producers, Small Businesses and Not-For-Profit’s affected by ex-tropical Cyclone Jasper will be able to apply for disaster assistance and working capital loans, while employees and sole traders who have lost income as a direct result of the disaster will be able to receive payments for thirteen weeks.

The loans from the Commonwealth and Queensland Governments will assist with the repair and recovery of essential equipment and the loss of income.

Disaster assistance loans will be for up to $250,000 for producers and small businesses and $100,000 for not-for-profits to repair or replace damaged assets like plant and equipment, premises repairs or to replace stock and maintain liquidity.

Essential working capital loans of up to $100,000 for producers, small businesses and not-for-profits to allow for the continuation of operations including paying wages, rents or rates, purchasing items such as fuel, fodder and water, or for the transportation of livestock and produce.

The package also includes freight subsidies of up to $5,000 for primary producers in some of the hardest hit areas to alleviate the costs of moving stock and operating materials.

Small business loans are only available to applicants in the Cairns, Cassowary Coast, Cook, Douglas, Hopevale, Mareeba, Tablelands, Wujal Wujal and Yarrabah local government areas.

The same local government areas will be eligible for not-for-profit loans with the exception of Hope Vale.

Primary producers can apply for loans if their operations are located within the Cairns, Cassowary Coast, Cook, Douglas, Hinchinbrook, Mareeba, and Tablelands local government areas.

The Queensland Government has announced that anyone eligible for disaster loans or other activated assistance measures can apply with the Queensland Community Recovery Hotline on 1800 173 349.

If you are located in the disaster areas of Far North Queensland we are thinking of you and hope that you will be able to access these financial facilities from the Governments and revive your business operations as soon as possible.

After talking about natural disasters, it is a bit difficult to return to succession and corporate governance, but here goes:

If you would like to have a discussion in relation to the implementation of succession strategies in your company or organisation or you are interested in introducing corporate governance awareness to your company or organisation we would be happy to talk to you and then submit a written proposal to you.

We also take this opportunity of wishing you a happy Christmas and we hope that 2024 will be  successful for you and your colleagues in your business.

Stay safe!