I considered bringing in an NED on a few occasions as I built my business. In the end I only ever appointed one – in a major transition phase of the business when I felt utterly certain of him and the value he could and would bring to the business.
On reflection, and I may have been lucky even then, I do feel I gained significant value from being drilled by my NED to stay focused on one single strategy, being held accountable to the plan I had set down.
1) Be cautious.
Initially the idea that I would bring a complete stranger to my business, to take advice and to help me grow was highly appealing in those moments where I felt over-whelmed by the volume of tasks, the change demands and the endless decision-making I was undertaking. Nevertheless it took me a long time to make my selection and I would recommend the same very cautious approach.
2) Have a wish list.
Identify what you want from the role:
- black book introductions
- sales influence
- wise expertise in an area where business needs knowledge short-term
- financial funding assistance
- grey hairs of experience
- simply an honest coach and sounding board
- all of the above
3) A good fit for the business.
Then hire your NED based on your business priorities, looking for someone who has succeeded in what you want to do. I personally think sector experience makes a great deal of sense and gets value return faster. You have to hire someone who you respect for what they have really achieved and like any other employee – check their references before wasting your time.
4) Select based on genuine value for your business over time.
You probably gain much more value when you bring onboard someone who challenges you to change/grow/innovate. Personally I have met two types of NED’s:
- those who are making a career out of earning money through coaching and adding a dribble of value but stay round too long and really don’t impact the business in a significant way enough to really earn the high amounts they expect to be paid.
- those who take up a two year post, passionately giving ideas, introductions and pro-actively look to be honest and open about the skills they can and cannot deliver to add value to your business – significantly.
5) Protect your equity.
As a rule I strongly suggest you never agree to give nor sell equity to an NED. I think they should outlive their value after two years of serious graft.
In my case, a small fast growth business, we were able to:
- formalise the board process
- establish a focused system of reporting information
- share the output for a more prioritized approach for bigger projects we undertook
The focus and expertise my NED provided – and indeed a small executive board – played a considerable part in our success and growth.
Accountability to more senior experienced people helped me, I liked to beat the targets and I liked to be given guidance which frankly sometimes I did not take. Decide early on the character of the person you are looking for and take care to find someone whom you believe will energetically add value to your mission.