Public companies have for many years had non executive directors on their boards, although in many cases they have failed to fulfill their role of protecting shareholders interests and remaining independent because they were part of the "magic circle". More and more privately owned companies are considering the appointment of non execs to their boards, particularly at the request of their bank who are seeking to ensure that their lending is being well used. Many don't like it, but if they get the right non exec it can have real benefits for the business, and I don't mean just keeping the bank happy. Among the benefits that a non exec can bring are their contacts. If they have been in the same industry in the past they will have contacts which can be leveraged to the benefit of the business. In other circumstances their experience of growing a business, making acquisitions, going public or selling a business may be appropriate. If you are a business going through any of these changes for the first time, the support of a non exec might well stop you making basic but expensive mistakes, after all why invent the wheel. But perhaps more than anything is the value that a non-exec can bring by challenging the accepted norms and group think that can develop in a business. This is true across all sizes of business, but is more and more being recognised as valuable in the SME sector and in family owned businesses. Used properly the non-exec acts as a critical friend forcing the business to face up to difficult decisions, ensuring that the directors carry out their roles responsibly and comply with the requirements of the governing legislation. One of the complaints made by business owners is the cost of a non executive, but it is up to the owner to ensure that they employ someone with the right experience and contacts to ensure that they add real value. Don't get someone from the old boys network, they won't be independent enough to challenge you when you are going off course. And finally before you appoint someone, take legal advice about how to structure the relationship with the non executive so that if he/she isn't delivering you can get rid of them and appoint someone else.
With over 30 years experience at director level, in operations and general management roles across a wide range of industries, I offer business owners practical hands-on advice and assistance to…
