The financial papers are full of news about a company called Bellamy, which has sacked its CEO and is facing a boardroom cleanout, while the share price is taking a hit. Bellamy was riding high with a star CEO, Laura McBain, a Telstra Business Woman of the Year, who took the company from a value of $65m to $1bn based on the organic milk products it is selling into China.
Why this is relevant to our nonprofit corner of the world is that the boardroom revolt, the share trading suspension and general crashing and burning of a long-standing company, with a great product and fantastic talent - are all reported to be related to the lack of financial information which was going to the board in a timely and clear manner. The growth of the company was faster than the systems in place to report on the growth, apparently.
Many organisations, either because of funding changes such as the NDIS, fundraising efforts, government policies, suddenly become responsible for delivering more programs in new areas, which leads to more hirings, fresh premises, and more complex service delivery. Where services grow quickly, there is often a lag in the policies and procedures for HR, finance and compliance, and the Board is usually in catchup mode when it learns about the changes taking place. Information coming to the board can be summarised, opaque, or absent, exposing the directors to risk. The organisation may face reputational risk, and the directors may end up being personally liable where financial decisions are made without full knowledge or proper inquiry.
The Bellamy story will run its course, and there will be disruption and pain before its sorted, but there is a timely reminder that external factors (in this case the changes in the China market for the product) can have a dramatic impact on an organisation's fortunes, and the responsibilty of the board is where the buck stops.