Meg Whitman on Squawk

Meg Whitman on Squawk

Last Friday Meg Whitman appeared on CNBC’s Squawk on the Street and was grilled about the poor performance and guidance downgrade of Hewlett Packard Enterprises (HPE). She fielded every question with frank and direct responses. She certainly had nerve appearing there and also showed that she had a firm grasp of what was going on at HPE.

My thoughts were how owners of closely held businesses would hold up under such questioning, and whether they should subject themselves to this ordeal. Obviously they will not be on national television, but they can replicate the situation, and I believe they should try to. Here is why and how.

1. Owners of their own business frequently do not have anyone they are answerable to, have to account to or justify their actions. This removes a critical and possibly beneficial voice in assuring the best leadership and management for the business.
2. I have found that when people are answerable for what they do they usually take an extra thought before committing to a path.
3. Knowing that actions will need to be explained can provide some extra care or caution before a decision is made or acted on.
4. An effective way to accomplish this is for a business’ owner to assemble an independent Board of Directors or Advisory Board. This could be made up of your accountant, attorney, insurance agent, marketing consultant or advertising agency account executive, some key customers, suppliers or employees, and maybe a family member that is not involved in the business. The maximum workable group should be about five people with the hope that they all could attend every meeting but with the possibility that at least three would attend the meetings which could be held quarterly or semi-annually.
5. Note that if your accountant is your independent auditor, they should not be included, although having a quarterly meeting or lunch with the engagement partner is advisable.
6. For the meetings to be effective, financial data would need to be shared, so you should not include anyone that you do not want to have access to such information.
7. An agenda should be prepared for each meeting and circulated in advance as should the financial summaries.
8. Some of the issues that can be discussed besides past performance are future plans, innovative initiatives, a SWOT analysis (see my blog posted Nov 7, 2013), staff and capital needs, business value drivers and creation, and succession or exit strategies.

This is not easy, but can be very effective in helping the owner develop a more macro outlook toward their business. An alternative is an annual retreat with key staff and possibly segments with key customers and suppliers and professionals the business works with. Another alternative is to have the accounting staff put together a “package” similar to what a public company’s board of directors might receive to review the annual performance and projected operations for the next year and succeeding five or so years.

All of these work – some are more effective than others, but they all are helpful in moving the owner away from being mired in the “get through the day” tasks to being a leader and driver of the business toward future stability, growth, profitability, success and enhanced value. I believe Meg Whitman and HPE is better off because of the process and so could you be.