June 25th, 2014
By Ian Wright
It’s not clear exactly what is not working, but growth is lacklustre, innovation is faltering and motivation is poor. Or alternatively, the business may be facing a particular challenge or set of challenges. In either instance, escaping the rut is much easier if you have a fresh perspective, moral support and a source of new ideas, experience and insights. So appointing some non-executive directors could be just the fillip you need to bring the business out of the doldrums.
Businesses with huge financial resources, just like major Hollywood film companies, can afford to bring in the very best talent on stellar salaries, while others can only look on with corporate envy. It isn’t fair.
Correction. It wasn’t fair.
These days, however, there’s a growing flexibility about the concept of surrounding yourself with talented people in an affordable way, a way that will allow you to benefit from the advice and expertise of people you can’t afford.
Any small company with a creative and inspirational spark will recognise the advantages of bringing in non-executive directors – those whose track record is as hugely impressive as the full-time salaries they could command – on a part-time, focused basis. By surrounding themselves with such people, companies are able to develop their business with a growing confidence while avoiding those punitively high executive salaries.
Of course, there is a cost. Non-execs will expect remuneration commensurate with their experience and expertise, but this will be on the basis of, say, one or two days a month. And the benefits that will accrue from such an arrangement will be measured in the company’s growth as it implements the advice, makes full use of the NED’s profile, and develops the contacts he or she has brought with them.
Think of a non-executive presence on the board, then, as doing the metaphorical job of a pair of spectacles, sharpening the vision of the company, offering clarity and focus.
Their presence on any board is also a safeguard: they provide advice based on experience, of course, but they also offer a view of things that only outsiders can give – a fresh pair of eyes. In the US, non-execs are called Outside Directors for that very reason.
But a non-exec isn’t a hand puppet. Nor is he or she a rubber stamp. If those are the roles envisaged for them before they are incorporated into the board then there’s a seriously myopic state of affairs that runs the risk of unfocused decisions, blurred and unsatisfactory outcomes.
Again, think vision. Some people have reading glasses and distance glasses, and they use each pair according to the situation. Now, if you’re at a football match and try to watch the game with your reading glasses you’ll see a blurred and very indistinct version of the game. You certainly won’t appreciate the intricacies of the way the game is going, nor see the dangers lurking at the back through a leaky defence!
That’s why companies need to undertake some serious research before making the decision to appoint a non-executive position. If you want the right pair of glasses to suit your vision you go to an optician.
Just in case you’re not convinced, here’s an example from Hollywood. In 1976 the Oscar for Best Picture went to a film produced on a budget of $1.1 million and went on to gross $225 million. The multi-talented team [let’s compare them with a start-up or an SME, shall we?] included Sylvester Stallone [nominated for best actor] and John Avildsen [winner of Best Director], and the franchise for Rocky went on for a number of highly profitable years.
The script is remarkably simple: get the right team together, harness the talents of those non-execs you’ve identified as essential to your growth, and just let the cameras roll.
This is the rationale behind why I founded NonExecutiveDirectors.com, which brings together SMEs and NEDs in a network which makes finding and engaging NEDs completely free. By bringing together the two sides in a mutually-beneficial website you have a forum for both the seekers and the sought. The uniqueness of that concept is a simple one: the seeker can be either company or non-exec. So can the sought.
The aim was to disrupt a market that serves to penalise ambitious business owners for wishing to add extra talent to their boards without being hit with huge recruitment fees – often in the £20,000 range. Now those all-important fresh pairs of eyes that NEDs bring can help to transform businesses of all sizes.
Ian Wright is CEO & Founder of NonExecutivedirectors.com, the UK’s largest and only “free to recruit from” Non-Executive Director network. Clients include government departments, banks, major international and domestic charities and thousands of SME businesses who are looking to appoint Chairmen and Non-Executives.