Mentoring is Corner Stone of Corporate Governance for Early-Stage Companies
In the recent years we have seen many instances that amplified the missing links in corporate governance, both at the levels of medium and large corporates. But, when we talk about sound corporate practices,governance we should start from the early-stage companies, which is also topical today in this startup or entrepreneurial decade. Despite having some of the best innovative scalable business models, many startups seem to have lost their sheen due to governance practices. This brings into sharp focus, the necessity of an appropriate framework for assisting start-ups navigate the governance requirement.
One possible route for start-up entrepreneur to meet governance requirements is to have a “mentor” who can act as their friend, philosopher and guide. They may have faltered early, because they did not have a right mentor at the right stage of growth. Being entrepreneurs, it is understandable that they wish they had longer working days to meet your business goals and hence soft areas like corporate governancecould be ignored in number games.
At the initial stage, there are a couple of things that are very critical for an orderly and sustainable growth. First is to have a reasonably clear mid-term strategic objective. Second is to develop an operating plan; and finally, which I’d count as the most critical one, is on-boarding and retaining talent. As companies are pacing on growth they should be hiring experts who can mentor and help retain talent.
A startup grows by bringing in innovation which requires good talent
The biggest challenge for all startups is on-boarding and retaining talented professionals. The advantage of a mentor is that they can help you manage people issues and identify better talent from the available pool of resources. If the basic business model is right, execution needs the commonality of vision between the entrepreneur and the rest of their senior management. But it’sprecisely here, most talented entrepreneurs fail miserably. Together with this is the problem of financial indiscipline. A lot of entrepreneurs do not know how to plan cash flows and they tend to either accelerate or decelerate based on availability of cash.
And here’swhere the role of a mentor assumes greater significance as a vital element at the first stage of growth.Any serious entrepreneur needs a seasoned mentor who can ideally be his corporate director or his chairman who would help him navigate the ship throughgood and bad times.
As entrepreneurs, at different stages of growth, one needsdifferent levels of governance perspective to help them straddle the operating management and governance management. And here is fundamental need of a hands-on mentor who can devote enough time to you. To have such a person, first and foremost, the entrepreneur must realise that governance is a part and parcel of any organisation. Till the company is in embryonic stage of growth, there is need for a mentor who can challenge them by opening their minds to the vicissitude of growth.
Mentoring is a two-way street
Risk attendance for business growth is very critical but the entrepreneur will need an extra pair of eyes for vigilance. However, mentoring is a two-way street— they must be willing to listen, imbibe and walk the talk. Because asentrepreneurstheyare so busy growing the business, many a time theysee mentorship as a needless burden. But the fact is, it isn’t a burden as sustainable growth is extremely critical and without a mentor they will end up committing mistakes makingon-the-job learning all the more difficult.
Then comes the next complication. If one doesn’t have the time and willingness to learn, there are chances of mistakes. The first and foremost mistake is making growth an excel-sheet model wherein you affirm that you will grow in a multiplier effect year after year without break. But what you do not know is, what levers can accelerate and decelerate your growth. Here comes the importance of having a strategic growth plan.A strategic growth plan is putting systems and processes in place so that there's reasonable amount of checks and balances. You achieve thechecks and balancesby delegating powers to two or three trusted senior people.
To sum up, governance has two parts-people issues and business issues. And it’s in tackling the people issues where governance playsthe most critical role. You may have the best of ideas. But for buildinga functional, sustainable, predictable and work-oriented business organization one needs lot more than just greatideas. For an idea to become a valid business model and from there to become a sustainable business model, you need a lot more effort which, many a time as an entrepreneur,you are unable to spot and appreciate. For all these to happen,there is need of a sounding board, you need someone who can guide youas a hands-on mentor.
Does corporate India have enough talent who can be mentors? Though it’s always difficult to get good mentors, we have so many seniors who have put in decades in active management and are now willing to help budding entrepreneurs grow. So, getting a good mentor is not a big challenge.
Vimal Bhandari is Managing Director & CEO of IndoStar Capital Finance Ltd (ICF), a leading NBFC offering a wide bouquet of debt products and poised to cater to the ever-growing credit requirements of Indian corporates. The institution is sponsored by reputed private equity houses including Everstone, Goldman Sachs and others
An astute business acumen and focused planning capabilities have enabled Vimal to build IndoStar into a Wholesale Credit Institution of world-class standards. His impeccable credentials backed by 30 solid years of commendable experience as finance professional have consolidated a niche position for him in the financial services industry. As a leader, he has always believed in broadening the contours of operational performance and guided his team to attain superior targets to meet their business goals.Under his able guidance, ICF has forayed into SME lending services.
In his earlier stint, Vimal has worked with AEGON N.V as its Country Head for 7 years. He was also responsible for spearheading the financial services business at Infrastructure Leasing & Financial Services Limited (IL&FS), one of India’s leading infrastructure development and finance companies. He served with IL&FS for 17 years, of which 12 years was as itsExecutive Director.
Vimal’s professional expertise has been sought by notable corporate entities as he sits as an Independent Director on the Boards of various Public Limited Companies including Bayer CropScience, DCM Shriram, Kalpataru Power Transmission, Piramal Glass, RBL Bank, JK Tyre and Bharat Forge. He is a member of the CII National Council of Financial Markets and member of the National Executive Committee of FICCI, the apex Chamber of Commerce. He was a member of Listing Committee and Executive Committee of the NSE.
Vimal is a Chartered Accountant and a Commerce graduate from Mumbai University. He has attended Advanced Management Programs at International Institute of Management, Lausanne, Switzerland.