Depending on the size and type of business you may also want to have a separate or more detailed quarterly report.
I believe that your senior management should be working with a business plan that should include budgets and cash flow forecasts. The plan should be produced yearly, by senior management, cover the next three year and be available for discussion and your approval at least a month before the end of the current year.
Along with any management reporting I believe that you as the owner of the business should have a meeting with your senior management, at a minimum of at least once each quarter at the businesses facilities. In a small business environment I believe that it is very important that the owner of the company be visible to all of the employees.
It is also very important that you maintain on-going contact, in some manner, preferably in person if at no other time then the quarterly management meetings, with your second level of management. The primary reason for maintaining contact is to have a back-up plan and ensure continuity of operations should your senior manager be no longer available because he has resigned or becomes incapable of performing his job functions due to illness or accident?
I have seen situations where the investor owner wants to remain invisible to the staff, other than to the most senior manager. As a general statement, in a small business, I disagree with this philosophy. I believe that this is discomforting to employees, which has an overall negative affect on the business, specifically in the area of employee moral and productivity.
There are ways that an investor owner can make himself known without being available for discussion:
- You, the investor owner could send out birthday cards to each employee with a gift certificate from a local restaurant and a note saying how much you appreciate their efforts. The company could actually send out the cards, but there is still a sense of a relationship if it has your name on it.
- If the company holds summer and/or Christmas staff parties then you should attend.
- Any employee bonuses should come from you, the investor owner.
If you choose to be an absentee owner it is still very important that you:
- Keep your senior management informed as to your whereabouts and provide them with contact information in the event of a serious problem, emergency and/or opportunity that requires your input or attention. If your business does not have senior management, but only has a senior manager I recommend that a second person in the organization be given the contact information in the event that the emergency involves that senior manager.
Reporting:
Whatever you determine is your comfortable level of involvement; you should ensure that you have adequate reporting in place. I recommend that you mandate a formal reporting requirement to your senior management.
- Give instructions and direction in writing. I suggest utilizing email, it provides a date, time, is very convenient and can be accessed from almost anywhere in the world including cruise ships.
- Detail what responsibilities and what authority you are prepared to give to your senior management. Make sure that they understand those responsibilities and authorities and that there is no ambiguities that could lead to conflict in the future.
Remember that responsibility without the appropriate authority is counter productive!