we complete your success managing relationships governance for smes nigeria

We Complete Your Success We Complete Your Success

Managing RelationshipsGovernance for SMEs Nigeria

2We Complete Your Success We Complete Your Success

Methods of Learning

Why relationship management?

• A company is not an 'island‘ - it has many inter-dependencies

• It is made up of people often with differing views, opinions, beliefs and values

• It has an impact upon or is impacted by many groups of individuals (or organisations) - called "stakeholders".

• All of these relationships, whether internal and external need to be managed

Stakeholders

COMPANY

Shareholders

Directors

Managers

Employees

Customers

LendersSuppliers

Regulatory Authorities

Local community

Module Objectives

• Identify key players within a company and examine the

tensions, dilemmas and challenges between them

• Identify external stakeholder groups and examine the

tensions, dilemmas and challenges between these groups

and the company

• Examine the impact of outside influences on decision-

makers

• Develop appropriate governances responses

Module content

1. Managing internal relationships

2. Managing external relationships

Managing Internal Relationships

Session 1

Objectives and content - Session 1

• Objectives:– Identify the key players, their rights, duties and

liabilities– Explain the tensions between the key players and how

to solve them• Content:

– Key players– Tensions

Players within a company

Shareholders (Ownership)

Directors (Supervision)

Managers(Management)

Elect & dismiss Are accountable to

Report & answer toGuide & control

Management

Management have their roles, responsibilities, duties and rights set out in the following documents:• Their contracts of employment• the country's employment law• the power delegated to them by the Board or in

the case of a Managing Director the Shareholders.

Shareholders

• Obtain relevant material information about the company on a timely and regular basis

• Vote on appointment and removal of Board members• Share in the company’s profit• Participate in, and be sufficiently informed on,

fundamental decisions such as:– Amendments to articles of association– Conducting major transactions such as acquisitions, disposals,

changes in business plan that are outside normal business activities

– Financing obligations• Pre-emption rights

Directors

• Duty to act within powers

• Duty of skill and care

• Fiduciary duties

• Statutory duties

Duty To Act Within Powers

• Act within their powers as defined by the constitution or approved by shareholders

Duty Of Care

– Exercise reasonable care, skill and diligence.

– This means the care, skill and diligence that would be

exercised by a reasonably diligent person with • (a) the general knowledge, skill and experience that may

reasonably be expected of a person carrying out the functions

of a Member of the Board of the organisation, and

• (b) the general knowledge, skill and experience that the

Member has.

Fiduciary Duties

• To act in the best interests of the organisation• To exercise their powers for a proper purpose• No ‘fetter on discretion’• No conflict of interest• No secret profit• To act in accordance with the company’s

constitution• To deal fairly as between different shareholders

Statutory Duties

Do any Statutory Duties Exist for Directors in the Following Areas?• Companies Act• Employment Law• Data protection and privacy laws• Health and safety laws• Customer rights• Human rights• Environmental• Others

Director’s Rights

• Access to information• Reimbursement for pre-approved expenses

incurred• Discharge their duties without interference

from co-directors• Attend and participate in board meetings • Notice of meetings• Advice• Delegation

Tension between players

• Shareholders & Directors/ Managers:– Differing views on the future strategy for the company– Dividend available to be paid vs Reserves kept for

reinvestment– Dividend available to be paid vs Directors/managers

remuneration• Directors & Managers:

– Directors’ duty to promote the success of the company vs Managers’ obligation to their functional activity and staff.

Dealing with Internal Tensions

• Introduce Good governance practices• Develop an effective Control Environment• Act as a Good Corporate Citizenship• Build Trust through disclosure and transparency• Robust and transparent relationships with

stakeholders• Strong commitment to good governance

Managing External Relationships

Session 2

Objectives and content-session 2

• Objectives:– Identify the key stakeholders– Explain the benefit of engaging stakeholders– Map out the position of each stakeholder and decide

how to engage it– Deal with influences

• Content:- Stakeholders- Influences

Key external stakeholders

• Parties with contractual relationships• Employees

• Contractors and suppliers

• Providers of capital

• Business partners, regulators, accountants, auditors, etc.

• Other parties not having contractual relationship• Communities

• NGOs

• Analysts, investor associations, pressure groups

• Media and other “reputational” agents, etc.

Why engaging stakeholders?

• Build & strengthen a good reputation and brand

recognition– Gain and retain loyal customers

– Attract talented staff

• Reduce risks

• Tapping opportunities for innovation

• Create value and wealth

How to engage stakeholders

• Start early• Keep an open mind• Tailor engagement practices to the needs and

interests of the company and its stakeholders• Manage engagement as a business function

• Take a long-term view.

Stakeholder Mapping

KEEP SATISFIED

KEEP INFORMED INVOLVED AND CONTRIBUTING

MINIMAL EFFORT

KEEP INFORMEDLOW

LOW HIGH

LEVEL OF INTEREST

Influences

• Company’s Articles of Association• Laws and regulations• Policies and Procedures (internal and external)• Media• Standards• Political• Others

Governance System

Stakeholders

Regulators Customers

Unions Suppliers Lawyers

Accountants Public

Rating agencies Media

Government

Influences

Articles of Association Policies and procedures

Laws and Regulations Codes of Best Practice

Standards Media

Economic conditions Government Policies

Shareholders Directors Managers

Contact

• SME Management Solutions (Business Edge & SME Toolkit) IFC Sustainable Business Advisory/Nigeria First Floor, Maersk House Plot 121 Louis Solomon Close, Victoria Island Lagos-Nigeria Tel: +234 1 2799 400 Fax: +234 1 2793618-9

we complete your success managing relationships governance for smes nigeria

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