Management

When deciding what companies to invest in, one of the many attributes of a business worth assessing is the quality of the firm's management. 

ausbiz delves into the strengths and weaknesses of management by speaking with expert guests, and business leaders themselves. With the focus on ESG, governance is central to the discussions. 

What influences performance of management 

Two transparent examples of superior management are when those in the c-suite have been with the firm for some time - preferably in various roles - and those that are heavily invested in the company.

A good CEO has a supportive executive team that fosters growth and vision. A person with rock-star status on social media doesn’t necessarily imply superior management skills.

A high-profile change at the c-suite level can negatively impact a firm's stock price. Stock analysts can re-rate a company based on management changes if there isn’t a clear internal successor or suitable external candidate. 

Unchecked bad management or poor governance can be costly: ask any shareholder of Crown, AMP or Nuix, or any lender associated with Greensill.  Poor governance becomes news all too frequently.

Why management matters 

Poor management can prevent or hinder a company’s ability to innovate, exploit new technologies, and react to new challenges and opportunities. This can significantly impact productivity and the pricing structure.

At the board and senior management level, good governance ensures that the organisation also acts in a legal and ethical manner.

The old adage of “profit at all cost” is no longer appropriate. In fact, investors demand a whole new set of priorities, especially around diversity, flexibility and ESG.

A fresh management challenge is preparing companies for operating in a post-pandemic environment. For example - is it company policy to be vaccinated? Can workers work from home? If not, why not?

Governance on ausbiz 

Poor governance can move share price performance and returns for traders and long term investors. Here at ausbiz we cut through the jargon, to uncover what good management can mean for investment strategy.

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