What can SMEs learn from the Post Office scandal?

• Face up to uncomfortable truths

  As a director, your job isn’t to accept everything you’re told – it’s to test, challenge, and clarify. In the Post Office case, directors got too caught up in the company’s narrative and didn’t push back. If something doesn’t feel right, don’t brush it off. Ask questions. Test the thesis. Trust your instincts

  

• Breakout of the boardroom bubble

  SME directors often juggle multiple roles. That makes it hard to take a step back and look at the wider picture but it’s essential (and a legal requirement) to make time to listen to staff, customers, suppliers, and other stakeholders who might be affected by your decisions. The Post Office Board developed a dangerous ‘groupthink’ mentality. Good governance is about keeping a broad perspective

• Don’t ignore red flags

  One-off issues might not mean much in isolation – but recurring ones can signal deeper trouble. Look out for patterns, not just individual problems. Use board meetings to reflect on trends and patterns, not just urgent tasks. Are certain problems cropping up repeatedly? Could a bigger issue be lurking beneath the surface?

• Ensure proper governance of outsourcing

  Keep an eye on your key suppliers. Part of the problem in the Post Office scandal was over-reliance on Fujitsu as a supplier and accepting the Fujitsu narrative without question. It’s a good idea to reassess key supplier relationships every year or two to make sure they still fit where your business is going. A supplier who was right for an organisation at one point may not be the correct choice for that organisation three years down the line

• Directorship is about the Whole Thing, more than One Thing

  It doesn’t matter whether you are a finance director, or marketing director or HR director – if you’re a company director, you are responsible for the whole company, even if something is outside your area of expertise. Directorship involves a view of the whole organisation and considering all stakeholders. Think about how to address any ‘blind spots’ within an organisation

• Demand full access to all relevant information

  It’s not always deliberate but information can be filtered as it moves up the chain, even in small teams. Some of this is because directors are often time poor and want the ‘short version’. But careful thought must be given to what’s included in board briefing packs. If you feel like something’s missing, speak up. Ask for the information you need to make fully informed decisions. It’s your responsibility to know what’s going on

• Advisers advise, Directors decide

  External advisers can be incredibly useful – but they don’t make the decisions, you do.
  For example, if an auditor makes an error, the directors would still be accountable. So, take advice seriously but make sure you’re applying it in a way that works for your business. Ask questions, seek second opinions if needed, and don’t be afraid to challenge it. Advisers should be used as a source of information for directors and not as a decision-maker

• Get properly trained as a director

  There are career directors and there are those who are directors by default. The latter is often true for SMEs, where entrepreneurs become directors as a by-product of building the business from scratch. But everyone knows that ignorance is no defence in the eyes of the law and so it’s vital to understand the role you’ve taken on. If you’re a director, it’s a good idea to invest time in learning what that really means. It’ll help protect both your business and yourself

• Due diligence and Induction is more than a ‘nice to have’

  Many SME directors are owner-managers and so have a full understanding of their organisation. However, new directors need a proper introduction to the business. That means understanding the numbers, the risks, and the culture. This is true even if a long-term team member is promoted to a director position. It’s a new role and they’ll benefit from a focused induction before they formally assume board responsibilities

• Use board evaluation as a key governance tool

  In the same way that many businesses undertake annual employee reviews, it’s a good idea to review the performance of the board, even if informally. SMEs are unlikely to have in place a full independent board evaluation process. But they might have access to mentors who could provide an independent review. A fresh outside view can offer valuable perspective on what’s working – and what isn’t

• Insist on IT literacy

  In the Post Office case, a lack of IT understanding meant the board couldn’t perform their role adequately. In today’s world, IT isn’t just a department – it’s central to how businesses operate and a critical success factor. Directors don’t need deep technical expertise, but they do need to be able to understand the issues, ask key questions and understand key risks

• Maintain a moral compass

  It can be easy for anyone to be sucked into or “go with the flow” of an organisation and not question the approach being taken. This is what happened in the Post Office scandal, board members lost sight of ethical business behaviour. If something feels off, follow up. Being a director means setting the tone for how everyone in the business behaves

Final thoughts

Directorship doesn’t have to be daunting. Most SME directors are already, instinctively, making thoughtful, informed decisions every day. The key is to stay curious, stay involved, and make time to reflect. If you ever feel stuck or unsure, feel free talk to your My Inhouse Lawyer Principal. We’re here to help