High fliers need bungee

High growth companies are likely to appoint advisory groups or boards of directors though they are not required to do so by law, a new report says.

Surveying more than 300 companies who participated in the Deloitte-Unlimited Fast 50 competition, Victoria University professor of entrepreneurship Mark Ahn found a predisposition toward establishing a board of directors and actively using that board for strategic planning.

Half of those surveyed had a significant impact on creating company value.

The survey found 73 per cent of companies had advisory boards or boards of directors, though only a small number were required to as private companies.

Nearly every company said strategic planning was an important role for board members, in addition to having input on regulation and compliance.

Professor Ahn said the true value of board members was through their extended networks and business experience.

"Supplier, customer, and investor networks, together with the strategic knowledge on advisory boards, are all crucial in creating sustainable high performing, high-growth companies."

Except for 17 per cent of companies that hide details of executive compensation levels from their boards, most companies allowed board members some access to all business information, the survey showed.

A high level of collaboration between management and boards was the catalyst for unlocking the productive benefits from the relationship, Professor Ahn said. The alternative was "static, periodic, and ceremonial" board meetings.

One of the survey participants wrapped up the importance of the help they got from board members in the high-growth environment. "Managing high growth is like leaping over a bridge and attaching a bungee in mid flight - you need help!"

A quarter of the companies surveyed had more than doubled in size in a year.

- © Fairfax NZ News