Increasing number of board of directors in Danish SMEs
The board work in Danish SMEs is doing well. This is one of the conclusions that can be drawn from a large conference for the Danish business sector held at Aarhus BSS. And this is good news, as companies with a professional board of directors perform better than companies without.
Almost 200 business people were gathered at Aarhus BSS recently to take part in an executive summit. One of the topics on the agenda was the state of the work done by the boards of directors in Danish SMEs. Today, more and more companies are introducing a professional board of directors - and this benefits the entire Danish business sector.
The reason is that that a professional board has proven to add value to a company, as it gives the company - and especially the owner - access to a group of people who view the company from the outside and thus often from another perspective.
“A professional board of directors is able to fine-tune the company’s entire business model and to initiate as well as implement a strategy process. And the board can also pose the unpleasant question - is what we are doing good enough? All in all, this contributes to safeguarding the future of the company,” says Carsten Fode, partner at the law firm Kromann Reumert, honorary professor at the Department of Law at Aarhus BSS and one of the speakers at the conference.
Constant assessment of risks
Simply because all industries are changing, and thus all companies are as well. But to the owner manager, the need for change may be hard to spot - simply because the day-to-day operations rarely leave time for reflection.
“The board of directors is responsible for having an overview of the risks and for spotting the threats on the market. The board of directors must be able to identify the first signs that something is about to go wrong, and then it must help the owner manager act accordingly. Some companies are able to consolidate their position. Others are sold off in time, while others still go bust. But this is where a board should step up to the plate - especially in the SME segment,” says Carsten Fode.
And keeping an eye out for threats and for strengthening the strategy is, according to Carsten Fode, currently the greatest barrier to growth among Danish SMEs.
“You often hear that it is impossible to secure financing. But that is not true. If you are able to develop a detailed and ambitious business model, the financing will be there. The challenge is to find the right form of financing and to get the owner manager prepared and ready to implement the necessary adjustments,” stresses Carsten Fode.
The barriers are gradually broken down
Many SMEs are structured around the owner manager, who to a great extent also defines the company. This means that the owner manager needs to be convinced of the need for having a professional board of directors.
“The owner manager will often be convinced that it is time-consuming to form a board of directors and also that it entails a loss of sovereignty. And yes, having a board of directors does cost time, but the board is responsible for making sure that this time adds value to the company. Another central task of the board is to strengthen the position of the owner manager by offering him or her advice and counselling on a daily basis.
Read more about the Centre for Small and Medium-Sized Enterprises at Aarhus BSS or about the board member education programme with a focus on small and medium-sized enterprises.
