SIX Reasons for Non-Executive Director Appointments | DMA

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SIX Reasons for Non-Executive Director Appointments

The Non-Executive Director is the best kept secret of most successful companies. Whether a temporary appointment or a full time fixture, the non-executive director contributes a wealth of knowledge, experience and contacts to the business.

A company does not have to be well established to be looking to bring a non-executive director onto their board. In fact it is strongly advisable for startup companies and SMEs to search for and recruit the perfect person to be a non-executive director for their organisation.

But why do you need one? Apart from having a great title and making your company appear soundly structured, the non-executive director has a lot to contribute. Providing they are carefully chosen,there are a great number of benefits to your company.

Photo by Michele Kerstholt

Improved Board Conduct

Many boards, regardless of how much training they have been through and how practised they are, can often fall into bad habits. Items are brought up which are not on the agenda, conversations are sidetracked, day-to-day business is brought up. Introducing a non-executive director to your board meetings will encourage your chair to keep things on track. Time is important and the meeting needs to be specific and to the point.

The non-exec is usually a more experienced business person with a respected background which will also encourage other members to come to each meeting prepared and eager to both please and learn. This can be especially important in a startup company where the ideas are great but needs direction and management. Sometimes a firm, but constructive, response from an experienced non-exec can ease any tensions.

They’ve Seen It All Before
As previously mentioned, the non-exec is an experienced business person who has probably helped a number of companies find their feet or survive through some tough times. There will not be many things that this person has not experienced and dealt with before. You can feel safe in the knowledge that, no matter how troubled you may be by an issue, your non-exec will have dealt with this issue before – or know someone who has! They will be able to rationalise any worries and assist your board and managers in setting clear tasks to achieve what needs to be done.

It’s Not Always What You Know
The most successful businesses are connected. Networking involves making great connections and keeping them. It can be a time consuming and difficult process to build up a trusted network of contacts that you can call on for expertise when you need them. Relationships take time to develop, and you just may not have that time to devote to networking. A non-executive director usually offers a diary of excellent contacts to go along with all their experience. Years in their chosen field has earned them the respect of their peers and fellow businessmen/women. If you need to make an important connection to help further your business, the non-exec will probably be able to make an introduction.

For startups this could mean connecting you with a supplier, distributor or potential client that could really boost your productivity or trading. For more established companies this could be a marketing guru or potential partner which would add new dimensions to your business, or mark a change of direction.

Photo by VMWT

They Look At The Big Picture
The non-executive director does not work with the company full time. They have no interest in the day to day running of the company but are there to focus on the Big Picture. What is the direction of the company? Are targets being met? Who is the growing competition, and what are the plans to keep ahead?

Often boards can get bogged down in the detail of some fairly insignificant day-to-day management and structure and lose track of the wider issues.

The non-exec will ensure that all board members are aware and acknowledging changes in the environment (economic, socio-political etc) and implementing strategy to deal with this. Having seen changes sweep over the business sector in the past they will be able to advise, with confidence, the direction they think it may go and how you can place yourselves to achieve success.

You will be amazed at what they will notice that other board members may miss, and again how beneficial your non-executive director’s contacts are at sounding an early alarm!

They Are Not Afraid To Be Honest
Because this expert does not work with you day to day, does not engage in office politics and retains their independence, they are able to offer unbiased, constructive criticism at all times. All boards try to behave as professionally as possible, but there are times when they are only told what they want to hear and very important lesson learning opportunities can be missed.

When you have a non-executive director casting their eye over the way the business is conducting its affairs, you can be assured they will ask probing and pertinent questions, in order to get to the real detail. They can ask the difficult questions because everyone understands that they are doing it purely for the good of the company and not for the benefit of a personal agenda within the company.

This does not mean that they will be constantly criticising, but rather encouraging the board to be accountable for decisions they have made, and praising them when they have achieved good work (even at times where it may not have gone to plan).

Picture by Patrick Bouquet

They Bring Out The Best
A good board is one with a broad range of personalities, strengths and experiences. Great talent and intuition can be lost or overpowered by stronger voices if it is not nurtured. A non-executive director will often spot those people whose potential isn’t quite yet being fulfilled and offer advice and support in order to grow their confidence or efficiency. In small companies and startups it is not uncommon for a non-exec to work for a short time with the directors to help them identify their strengths and weaknesses and understand how they can work more effectively together by playing on those strengths.

You really don’t need to take much more time considering whether your business needs a Non-Executive Director. They are an incredibly valuable asset to any company, at any stage and you will quickly start to reap the benefits.

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