A lack of capital or funding to invest is one of the greatest inhibitors to achieving growth in an organisation, a new King & Wood Mallesons Directions corporate governance report has revealed.
The report surveyed more than 300 directors across a range of sectors and revealed four out of 10 feel a lack of capital was holding them back. An aversion to risk taking, management being too short-term focused and a lack of incentives to promote innovation were also found to be major growth barriers.
KWM partner and co-author Meredith Paynter said that last year respondents were more concerned with regulatory issues and red tape, rather than balancing strategic over sight.
“It is notable that three of the four top issues highlighted by directors as inhibiting growth – aversion to risk taking, management’s short-term focus and a lack of incentives to promote innovation – are internal issues which the board can directly influence through their oversight of strategy and remuneration structures and their supervision of senior management,” she said.
“Taken together, the results suggest that while boards have the remit to address these issues, the balancing act of focussing on strategy and growth, versus immediate performance and compliance, is quite precarious.”
Australian Institute of Company Directors managing director and CEO John Brogden said the results highlight the challenges boards face in their effort to boost performance.
For firms, Paynter said understanding the issues top of mind for a director is key.
“Whether that be helping with remuneration arrangements, managing cyber issues, understanding the tax regime, or ensuring that disclosure is appropriate and effective,” she said.