(LinkedIn Article) – Written by James Brocket, Managing Partner at Calibre One – In times gone by, the primary role of a Non-Executive Director (NED) was to ensure good governance. Expectations of the value-add from NEDs was low and so the process of hiring them was often largely a box-ticking exercise with previous Board experience at the top of the list of requirements. Specialist Board-recruitment firms thrived through working their black-books, and frankly doing little else. Board seats became the preserve of a relatively small cadre of esteemed ex-CEOs, biding their time before full-retirement. Cue the present day, when a wholly different perspective on the Board has emerged.
From doing relatively little in the way of Board recruitment in the formative years of the firm (we were established in 1999) today, we do a great deal. Whilst it’s not the most profitable part of our business, in many ways I find it one of the most gratifying, and rewarding, and I know a number of my Partners feel the same. The reason being that the impact that a good Non-Executive Director can have, particularly in a growth business, is simply huge.
Days are numbered for old-school NEDs as previously described. We all know the type. Their input at Board meetings is limited, possibly on account of the fact that they read the Board report for the first time in the taxi on the way to the meeting. One of my clients referred to these NEDs as ‘Biscuit Eaters’ as their input is limited helping demolish the biscuits on the Board table. Nonetheless, they are probably good to have around, might have great experience they can bring to bear on the odd occasion, and provide some continuity and stability in companies where this is often in short-supply. Unless the Board gets too large and unwieldy then there is rarely a good reason to part-company with an established and well-liked NED. However, these days a new type of NED has emerged – a much more high-impact variety – the type that we are ordinarily tasked with searching for. These fall into two categories:
- The “Heavyweight”
- Full-time NEDs – typically invest in the companies on whose Boards they sit
- Stellar executive career behind them with deep expertise in a specific market
- Demonstrable track record, as a NED, in helping growth companies to scale
- Well-renowned, often famous, names
- Very few in number and are extremely difficult to hire
- Can be truly transformative
- The current CEO/first-time NED
- Typically earlier in their career, probably at the peak of their Executive career
- Likely be a CEO, or in a C-level position in a major corporate company
- Their networks will be fresh and of meaningful-value, their perspective on the market will be current
- They know what good looks like and will be able to add real value through helping to build in the right way
- Dedicated to make their first NED role a success and very often will go the extra mile to ensure they are successful
Both of these types can provide an input, and impact, way above and beyond what has traditionally been expected of a NED. Over 10 years ago I gave a presentation on NED hiring at a conference where I forecast that in the future NEDs would be set specific objectives and would be appraised and rewarded against the achievement of these. Whilst this is not the case yet, and it may not be for many years, it feels like it might well be the direction of travel.