By Lara Morgan, founder of Company Shortcuts and recently named one of the UK’s Top 10 most powerful Business Women
Lonely leaders of small business are often advised that a Non-Executive Director can help accelerate their growth and give them support they need, perhaps as a sounding board, a person to sense check developments with or just someone to share some the strains of the business. However, all too often I see inexperienced company leaders in a fast growth phase take on an ill-fitting, expensive and sometimes out-of-date deadwood individual who will drag out their black book, carefully manage the value they introduce to the business over a longer period of time than is necessary, and aim to milk their tenure for a term well beyond their sell by date.
Please, please business leaders: It is your responsibility to hire a Non-Executive Director (NED) with the same tenacity and responsibility that you apply to all other recruits. Take references, agree probation and review process exactly as you would in any other meaningful role. I clearly remember my first experience thinking I should hire a wise, middle-aged, allegedly enterprise-experienced individual to help me to accelerate my growth, but I am so glad that I listened to my gut feeling telling me that I was not going to get considerable return on investment for that amount of time and distraction.
Of course, I am not condemning all Non-Executive Directors. I am simply questioning the competency of a large (and growing, since redundancies of multiple bankers and business consultants) number of individuals who I believe would take on any NED role in a company, even when they are fully aware that their black book introductions and network cannot really accelerate growth potential. Often their skill set is not nearly as good a fit and their expertise not as valuable as perhaps someone “less experienced” who has recently returned from the sector.
I remember thinking perhaps a NED would bring my young, inexperienced company a sense of professionalism, but I was scared by the smart suited individuals that were recommended to me. They were much more experienced than me — I was more used to “flying by the seat of their pants” entrepreneurs. Had I listened I might well have allowed the standard conventions of a rigorous agreement and interview process to fall aside to a word-of-mouth introduction and a convivial coffee.
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. They take the cushy one-day-a-month advisor role with no clear plan of how they will really drive to add value to the small business and its business owner that will more than cover their own costs then some.
A Non-Executive has to be held accountable, and as a Directorship they should be taking their role as seriously as a liable member of the company — or else be a mentor and an honest broker of advice until you know that you can add value no more. It is just not good enough to take a few thousand quid for the day-a-month role simply because of a few introductions made higher up the greasy pole of sales potential decision makers.
If a company owner takes on roles such as a NED I would also suggest that the term of the relationship is clearly established from the start. The aim should be that the NED is utilised to maximum involvement for no more than 2 years, and then rolled out for a NED with a new skill set NED to add value based on what is required as the business evolves.
Finally, a quick thought from my past experience: It is better to have the same hole in your business than the wrong cog.
Lara Morgan is one of the UK’s most successful entrepreneurs, and the Founder of Company Shortcuts, a consultancy dedicated to excellence in sales and leadership. For more information visit www.companyshortcuts.com