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This multi-role can create confusion: what ‘hat’ is being worn, who leads, who decides, and who is accountable? Add the dynamics of a family business and you introduce another layer of complexity.
In most SMB situations, the board structure & performance depends on other players. Without going into sections 126, 127 and 128 of the Companies Act 1993, we’ll assume in this case the board may include other working shareholders and directors.
In reality, the relationship between the MD and the board sets the tone for everything, culture, execution, and growth. When that partnership works, businesses scale with confidence. When it doesn’t, governance becomes a drag & the focus is operational.
I like to use the term govern with purpose. To me this means leading with clear intent, so every decision aligns with the SMB’s long-term vision, not just short-term results. The opposite is governing by default, where boards react to issues, focus only on compliance or short-term gains and lose sight on the future.
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As mentioned, govern with purpose is about boards being intentional in how they lead, creating clarity, focusing on strategy, and holding meaningful conversations that drive the business forward rather than just reviewing the past.
It provides the opportunity for the board to make a difference in how it operates, always looking to improve and working collaboratively with the MD to drive the business forward.
A couple of years ago, I listened to a podcast, Board Matters, hosted by Steven Moe for the Institute of Directors NZ. It explored practical insights on governance, leadership, and purpose-driven decision-making for modern boards.
In it, Steven asked the people he interviewed: ‘If you wrote a book about governance, what would the title be?’
When I heard that, I thought my title would be 'looking to the future but staying out of jail today'. To me, that sums up the relationship between the MD and the board. When the board meets, it is the opportunity to collectively think ahead, as opposed to having ‘heads down’ in the business for those executive members.
At the same time, it’s about ensuring the MD keeps the business steady and moving in the right direction.
A strong MD–board partnership doesn’t happen by chance. It’s built through clarity, communication, and a shared commitment to better decisions.
- Be explicit on roles and expectations: MD leads, board governs.
- Design board meetings around strategy, risk, and key decisions.
- Build a standing agenda item for MD–board reflection: ‘What’s working? What needs to change?’
- Encourage respectful challenge both ways.
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When the MD–board partnership doesn’t work, it often shows up in subtle but damaging ways:
- Blurry roles – directors drift into operations, or the MD dominates decisions meant for the board.
- Reactive meetings – agendas filled with updates, not strategy or forward thinking.
- Low trust – the MD feels second-guessed and the board feels shut out.
- No challenge – too much comfort or too much control, neither adds value.
- Short-term focus – energy spent firefighting instead of shaping the future.
In short, governance becomes compliance, not leadership and the business loses its rhythm.
- Does the board drive strategy or just rehash operations?
- Do directors know when to lean in and when to step back?
- Is there genuine trust between the MD and the board?
- Do executive directors understand the difference between their employed position and board role?
Remember, governance with purpose delivers the most value when the MD and board operate in partnership, aligned, challenging, and focused on the future.
Regardless of size, every SMB can benefit from a clear board or advisory structure.
Governance isn’t about how big the business is, it’s about creating better decisions, stronger accountability, and long-term success.
