There comes a time in the life of any successful company, particularly as it experiences rapid growth, when the ability of the Senior Management team safely to see the wood through the trees becomes difficult. When that team is comprised principally of Owner Directors, it become even more problematic.
Professional Advisors (Lawyers, Accountants, Management Skills Trainers, Recruitment Consultants, etc) can often give good advice but this will generally be from a specific point of view. It will often be at irregular points in time; probably uninformed of the complete corporate scene and full recent history; led only by the information they are given or choose to ask for. The benefits of having a senior “Board Level” advisor, Non-Executive Director (NED), sounding board (call it what you will) – are considerable. It is however sensible if they come from a background of experience and skills relevant to the company, its business and its needs and also come from organisations considerably larger than this company. It is also sensible if their skills complement those already within the senior team.
Another important factor in having a person such as this to work with the Directors is that although the company will remunerate them for the time they give to the company, the individual will not be wholly dependent on the company for his or her livelihood. To that extent their advice will be more independent, can be more questioning and more objective.
Should the person be a Director (Non-Executive) or not?
In reality it does not matter too much and in fairness it may be a brave or foolhardy individual who picks up immediately the legal responsibilities of Directorship before knowing the company in some detail.
What is important is that the Directors (and Shareholders) think of the person as an equal and share all corporate information with him or her. Meetings must occur on a routine, timetabled basis, generally monthly. All relevant corporate information should have been passed to the individual with sufficient time before the meeting for it to be absorbed.
To be effective, the individual should also have time and freedom to meet and talk to staff within the organisation, be involved periodically in some activities and perhaps lead on individual projects where his/her skills or time available etc are particularly relevant.
Finally, it is sensible if all involved like and respect each other so that easy trust is engendered.
The route to appointment and the significance attached to it should be just as great as that given to the appointment of a fully executive member of the Senior Management Team. The contribution that such an individual makes is relative to their historical skill base and not relative to the salary which is paid.
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