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Board support: "Non-exec" or "Independent" Directors help you develop your business

Independence of thought

It is vital that all board members understand the necessity for the NED to retain, and exercise independence, that's independence of mind, body and action as it is of little use telling the Board what they want to hear.  Indeed, constructive challenge and criticism usually provides the most valuable opportunities for improvement.

In the smaller company scenario, the NED can work closely with each of the directors to help them identify their strengths and weaknesses.  This leads on to setting their key performance indicators and objectives, all of which considerably enhance the company's chances of success.

The following comments show how valuable a well-chosen non-executive director can be...

"...He is twice as old as any of us and sometimes seems to have twice the energy and enthusiasm too. He limits his commitment to a day a week, but he puts a great deal into making that really valuable. He has introduced us to new clients and new channels for marketing, for example, we have always worked in strategy support in isolation, we now work alongside coaches who introduce us to clients with a real need and then follow up on our work to make sure the strategy gets put into action.

On the practical side of things, he secured a great venue for our launch party and used his reputation at the bank to get us an overdraft. On the less tangible side, he has a wealth of experience to draw on, in business, sport and life. He points out common pitfalls, before we topple over the edge, he shines a clear light on the problems with the way we work and he always has an inspiring story to tell, when we say it isn't possible.

He is worth every penny we pay as a salary and far more. We have agreed a package with him that is largely dependent on the success of the company. He has faith in us and we are more than happy to share our profits with the man who helps us bring them in..."

At AUTUS we would strongly recommend that you think about appointing a non executive director, even if (or especially if) you're just starting up.  Take time to find the one that is right for you, be very clear about commitment and remuneration and it will be repaid to you more quickly than you would expect.  To see how this could work for you, call Dan and over a coffee we can explore the benefits an NED would bring to your business.

The case for SMEs using non-executive or independent directors

The need for Small to Medium sized Enterprises to use the services of non-executive directors is just as strong as for the PLCs, but different in the detail.

The many reasons why the larger organisations use independent non-executive directors (NEDs) are already well understood.  Additionally, when a company has used venture capital, there is invariably a stipulation that one or more independent directors be appointed to monitor the company and its' progress and act as the venture capital provider's watchdog.

These reasons do not necessarily apply to smaller companies. What may not be so widely appreciated are the benefits that can be realised when they voluntarily take on an NED.

Probably the initial biggest influencing factor on the smaller company board is the realisation by the other directors that a new, experienced, 'fresh pair of eyes' has come on the scene.  This paves the way for improvements in boardroom performance and promotes a more prepared, structured and effective board meeting.

The next important aspect is the contributions that the new nonexec can make. These usually take two forms. The first relates to input based upon the nonexec's own expertise and experience. The second concerns his/her appraisal of the board and company.

The former point should follow naturally if the CEO has made a careful selection and appointment from the database of candidates. The nonexec will invariably have specialised knowledge and relevant experience from which to draw.  These are particularly germane to discussions on the future strategy of the company.

The latter point comes down to the ability of the nonexec to listen well, absorb detail and ask pertinent questions about the way the company conducts its affairs. This provides enough material from which to form a balanced view and then to deliver a clear report of the company's good and bad points.

  • We hired Daniel as a consultant to our business, to provide additional senior management expertise. He has provided excellent assistance in the areas of strategy, global account management, administrative processes, and structure. He continues in that role with our Company.Ross Kennedy, CEO, QHi-Group Ltd, Harpenden.
  • “Dan has an usual blend of qualities - a clear incisive mind, good aesthetic judgment and the ability to know when something isn't working and when it's time to stop, make a decision and change direction. People often value 'drive' too highly; knowing when to come off the gas is a depressingly rare trait in my experience. In addition he is both good humoured and a pleasure to work with. I recommend him very highly."John Matchett, Owner, SJM Photographic, Bristol
  •   “...he is pro-active in his approach and communicates well with suppliers, colleagues and clients. He is always keen to understand the requirement and looks to consider other solutions that may provide better performance or are more economic. He is a pleasure to work and I would recommend him to others.”Robert Thorogood, , Chief Technical Officer, hurleypalmerflatt, London.
  • Diane is one of the best commercial managers I have worked with - always on the ball, aligned to customer needs and wants and therefore very effective in finding mutually beneficial solutions. Her wide ranging cross functional experience and insight means that all angles are covered.Michaela Jarvis, Category Marketing Controller, UNIQ plc, Swindon.
  • Being a SME, we had been burnt in the past with consultants charging high fees for little results.  After meeting Dan through the GrowthAccelerator programme our faith was quickly restored that there are actually professionals out there that can help push your business forward.  Working with Dan has been a breath of fresh air, my business partner and I are now extremely focused and moving our business forward in the direction we want it to go.Felicity Griffiths, Director, , CHB Global Limited