Matthew Roberts, CEO of In Touch Networks, gives behind-the-scenes insight as to how non-executive directors can boost business.
For many businesses in the mid-market, the appointment of a non-executive director may feel like an unnecessary expense against the ongoing battle of balancing the books. You have a strong team and a clear vision, so why would you need to pay someone from outside the business to come in and tell you how to do things?
The answer is a simple one; because the return on investment is potentially exponential.
The gatekeepers to success.
SMEs need to stop viewing non-executives as big business territory and realise that they might hold the key to reaching objectives.
For businesses looking for honest, insightful and inexpensive strategic advice, a non-executive director can be a fast-track to commercial success, off market introductions and productive criticism of their strategy.
Providing strategic advice, especially in a business without the luxury of a full board, can be exceptionally rewarding for both parties, but in this market a non-executive must be of a certain character and culturally match the organisation.
The best non-executive directors appreciate sometimes the tough questions need to be asked. When problems arise, business leaders – particularly in an SME – are often too close the issue. The right non-executive can act as a safety net, taking an experienced and level-headed approach to overcoming the obstacle.
Not forgetting that coveted black book of contacts which is now potentially at your disposal. Non-executives are the gatekeepers to influencers and for many this is where real value is realised as doors are opened.
The right fit
The right non-executive director will also add credibility to a business which can be crucial in advance of a transaction or investment where strength of the board is key, for example. Private equity funds and venture capitalists take much comfort from the involvement of a non-executive director who has a strong track record within portfolio companies.
Of course the final decision on business direction will rest with the executive management team and the CEO or MD, but an effective non-executive using their benefit of hindsight (and insight) should effectively manage and direct decisions to the company’s benefit.
When it comes to the S of the SME, smaller businesses tend to opt for a non-executive finance director, a skill which can be both incredibly valuable and helpful in controlling growth or steering a business to a position where it is able to effectively execute a transaction. Depending where a business is on its journey, this skillset may not be required full-time and can often plug in to a wider network of professional advisers.
The most effective appointments have come from seemingly quite generalist non-executives who have an insight in to the business’ industry in question or where they are on their growth curve.
Indeed, many success stories arise after appointing a non-executive director who plugged a skillset or perspective gap that the business didn’t even realise was missing through: