KFA’s governance is Best for the World!
August 2019 was a great month for Kung Fu Accounting. It marked the end of our third year in business and our first year as a full B Corporation. We achieved a number of significant milestones throughout the year and we’re excited to report that we’ve matched or improved on our financial, social and environmental impacts compared to 2018. We’ll be sharing our 2019 results very soon.
But August 2019 was also the month we were told that our company was a “Best for the World” honoree – in the top 10% of B Corps for Governance. This is an incredible accolade if you consider that there are now over 3,000 B Corps around the world, with some very high-profile companies in that list!
Over the last three years, we’ve been building a foundation that we believe will result in a sustainable business model, allow us to continue being a force for good, and deliver our desired social and environmental impacts. So we’re delighted that our efforts have been recognised in this way.
What is Governance?
Whenever we talk to anyone about accounting, we stress the importance of a great bookkeeping foundation underpinning financial success. Strong governance is the equivalent foundation for your business to achieve its mission.
You probably know why your business exists, how it does what it does, and the impact you want to make. Governance links all that to a mission statement, sets key performance measures, and dictates how these things are going to be monitored. Good governance impacts the way your business operates, how it manages risk, and helps define the business’ culture.
In short, it’s the structure for all decision-making in your business.
Accounting as a force for good
Kung Fu Accounting was formed out of a desire to run an accounting business which was a force for good in the world. That’s why we applied for B Corp Certification – B Corp perfectly explained what we wanted to achieve. So we changed our governing documents to lock our mission in place, and we now have a legal obligation to consider people and the planet when making business decisions.
But in order to understand how our business was going to work, it was vital to have a powerful mission, a clear vision and values which all aligned. So we invested in that right from the beginning. That clarity sets out the way Kung Fu Accounting operates, and how we make all business decisions.
Sharing is caring!
In Kung Fu there’s a saying – there are no secrets, only hard work. And we live by that. We share information openly and honestly with the team, and strive to be a powerful force for good in every situation.
We share financial and non-financial results with the whole team, and yes, it’s easy as there are just three of us right now, but we’ve started as we mean to go on and will continue sharing that information with our team for as long as the company exists
Internally we have monthly and quarterly reviews, with all-important external accountability, which helps keep us focussed on the bigger picture. In these sessions we set and track our key performance measures across the various financial, social and environmental areas in which we want to make an impact.
One change arising from these reviews was to set a more robust target for charitable donations. As accountants we know only too well that ‘profit’ can be manipulated, so we measure our donations as a percentage of turnover. As a result we’re now committed to donating at least 1% of our turnover each year to charitable causes – a change arising directly from our governance structure.
Further, we share information about our social and environmental impacts on our website, and set out our targets for the coming year. Sharing this externally means we’re setting expectations, against which we can then be measured and judged.
The case for good governance
There should be no secrets in business, and we’ve seen the damage that such uncertainty can do. Very often, where there is no information people imagine the worst case; employees don’t feel safe in their jobs and become disruptive; customers worry about whether the business will deliver on its promises; suppliers start pressuring for early payment.
A lack of communication breeds uncertainty. The best way to remove that uncertainty is by communicating regularly and being open and honest.
For example, sharing our financial information has built trust across the team, and increased buy-in to the mission. We’ve found that everyone feels more involved as a result of sharing the financials with them.
Want hard proof? Grant Thornton recently released a report on exactly this subject;
They studied 500 FTSE350 companies over ten years, and the findings are really interesting. Their key headline;
“Companies that consistently invest in their decision-making infrastructure outperform those that don’t.”
The study shows that companies with strong governance procedures generate more cash flow from operations, are more efficient at making and selling their products, are more solvent, have more cash and are more profitable than companies with poor governance procedures.
So what now?
We know that using business as a force for good is the right thing to do. In their report Grant Thornton prove that it also works financially too.
Just as “the wise man built his house upon the rocks”, a strong governance structure will give our businesses the best possible foundation from which to grow.
So invest in governance. It will make your business better!