An integral part of many large companies, the role of a non-executive director provides essential strategic advice and corporate governance. As a role, it is most commonly utilised in large corporate businesses and is not usually one you would associate with a small enterprise or startup business.
The potential and value such a role can offer a small business cannot be understated. As the needs of a larger company are likely to be somewhat different, it is important to adapt the requirements for recruitment of non execs to best suit a smaller company.
What Can an NED Bring to Small Businesses?
Something many small business owners can relate to is that it can be a lonely pursuit, with little in the way of support on a day-to-day basis. Therefore, the focus of a non exec would be that much-needed sounding board, essential support, perspective and strategic direction advisory.
Decision-making can be one of the toughest challenges when growing a small company and yet many of these decisions are crucial to long-term business growth and success. From staff infrastructure and software to growth rate and expansion — these can all be fundamental factors which dictate if a business will sink or swim in the long run.
Often business owners simply ‘learn the hard way’ by making decisions which take them in an unexpected direction and which in some cases end up costing excessive time and money to rectify.
Business owners may initially fear that such a move may in some way mean relinquishing their power and control of their business. This is not the case, as the final decisions will always continue to rest with the CEO or director.
By investing in an experienced NED, entrepreneurs and small business owners can simply have someone to question their thought process and offer alternatives. In doing so, the risk of unforeseen issues occurring is lowered and the likelihood of overall business success is increased — win-win!
Finding the Right NED
What you require from a non-exec will depend on the specific needs of your business and your own experience. For example, an NED can provide necessary industry expertise or gaps in knowledge.
The best possible outcome would be to identify these gaps. In order to do this, it can be useful to be completely honest about your own levels of competence and experience in key areas of the business — strategy, operations, finance and legal. Wherever there can be most value added should inform what you are looking for in your non-exec role.
Often small business owners and entrepreneurs are specialists which mean there will be some areas of business management understanding outside of their field of knowledge. As such, seeking an individual with general knowledge and broad business experience will likely be the most beneficial approach to recruitment.
The Best Relationship Dynamic
The relationship element of this appointment is fundamental to its overall success. Before considering the introduction of such a role, it’s important to be clear that this is a two-way relationship and will only bring the value you seek, if you allow the role to achieve its intention.
As such, you’ll need to expect to be challenged, expect arguments and healthy debate. After all, this is what will help shape the very best direction for your business.
The role is not to threaten or berate the chief executive and viewing an NED’s questioning of a decision in such a way will not make for an effective relationship. Therefore, it is vital that CEO’s perceive the importance of their own role in the success of the relationship.
This is an opportunity to gain a unique vantage point and valuable insights. How open CEO’s are to being influenced will ultimately determine how successful the implementation of a non-exec role will be.
