Non Executive Directors - My view

Lara Morgan
Company Shortcuts
Company Shortcuts Ltd
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It seems once again there is talk in the marketplace by some regarding the need for a Non-Executive Directorship – and yet again I will advise small business owners with fast growth companies to be extremely wary of the type of relationships they take into their business and indeed the clarification of the role the NED is expected to play, as well as performance standards, expectations of input and other basic expectations of objectives for their involvement.

Like other potentially very valuable roles – like a part-time FD or part-time Sales Director there is of course a huge upside for being able to attract experience and market knowledge and a great black book BUT owners must do so with the same eye of their rigorous employment terms and conditions applied to any other member of their teams. Too many times, I think because an NED is meant to be the older wiser, and often therefore better connected – and scarier individual with gravitas (as opposed to flying by the seat of their pants entrepreneur) the standard conventions of a rigorous agreement and interview process seem to fall aside over a word of mouth introduction and a convivial coffee. I remember actually being sadly unimpressed by some candidates I once interviewed and
thought better of the first recruitment thinking I had had of an NED – as I felt those I met were on a gravy train – at the end of their careers not truly looking to inject expertise and hard won wisdom into fast growth ambitious companies facing challenges of change.

Too often executives offer their services as NED without focus on a particular industry sector experience to which there black book could really bring advantageous insight, introductions and shortcuts, and they take the cushier one day a month advisor role with no clear plan of how they more than cover their costs and really drive to add value and then some to the small business whom could do with their help.

A valuable NED should more than pay their way – I suggest much more if placed in the right kind of partnership where synergies and past relationships can be leveraged for accelerated growth potential, purchasing improvements, perhaps logistical dynamism and simply because of introductions made higher up the greasy pole of sales potential decision makers? If a company owner takes on such roles such as an NED I would also suggest the term of the relationship is clearly established, their should be an aim that the NED is utilized to maximum
involvement for perhaps 2 – three years and then rolled out for a new skill set NED as the business evolves..

Just a thought from past experience, is it better to have the same hole in your business than the wrong cog?

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