15 Oct 2015

Small company directors lack skills, says consultant

10:46 am on 15 October 2015

A corporate governance consultant said a large number of directors of small companies do not have the skills they need to do the job adequately.

Business advisory firm Crowe Horwath principal Paul Moodie said there are more than half a million companies registered in New Zealand and half of them have fewer than 20 employees.

But he said the Institute of Directors has fewer than 7,000 members and that means a lot of directors have not had the chance to get training and acquire the skills needed to do their job.

Mr Moodie said a lack of time and focus was the biggest issue facing directors of small companies, many of which are owner-operated.

But he said people running such companies need to put down their tools and start thinking more broadly.

"They've got to take one hat off and put another on and start saying, 'I am director of a company which employs people, has health and safety responsibilities, has fiscal responsibilities and has community responsibilities'," Mr Moodie said.

He said small companies need to consider bringing in advisors or appointing independent directors to help with important financial, employment and governance issues.