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Having an independent Non-Executive Director on your board is essential for growth

Having an independent Non-Executive Director on your board is essential for growth. Bryan Foss Independent Non-Executive Director, Risk & Audit Chair, Board And Business Development Adviser, Visiting Professor Bristol Business School. Is your board fit for business?. Wednesday 22 May 2013

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Having an independent Non-Executive Director on your board is essential for growth

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  1. Having an independent Non-Executive Director on your board is essential for growth Bryan Foss Independent Non-Executive Director, Risk & Audit Chair, Board And Business Development Adviser, Visiting Professor Bristol Business School Is your board fit for business? Wednesday 22 May 2013 100 Victoria Street Bristol

  2. Background • Client side and supplier side perspectives • Varied and hybrid background • Independent NED portfolio • Time available for ‘Interventions’ when called • Also for continual learning & unpaid helping!

  3. Challenges • Grow the value of the business, organically or perhaps with exit in mind • What defines value? To which potential buyers? • Long term incomeor short term growth, profit synergies etc. A clear core purpose? • Know we need to be focused, but too busy to stop and think? Usually results in wasted resources, whether money, people or time window

  4. How an NED might help • Get a busy executive team to stop and think • Focus efforts on an appropriate strategy and pre-test executives before public actions • Help to keep stakeholders (investors, advisers, regulators etc.) onside, so ‘safe to deal with’ • Be available for coaching & support via phone, email & coffee meetings, also at critical times • Give independent & committed advice (shared risk) at a very competitive cost

  5. Helping with revenue specifically • Routes to market, via partners etc. • Knowledge of other markets, Asia/US etc that might balance revenue risks • Influencing the market as an independent • Challenging re pipeline content and assurance of closing, leading to confirmed cash - or looking at cost reductions / working capital fund raises to reduce liquidity risks • Engaged & helpful while independent / Non-exec

  6. What’s the business case? • Cost of an NED • Listed company shares more public risk. More pay needed to reflect this • Private company NED has limited risk as director. Payment closer to a day rate • Can use shares or options etc. Best to pay at least their costs (e.g. expenses, VAT, tax on income?) so that they are not risking more than time • Value • 12 to 20,perhaps 30, days of consultancy at half-price • Connectivity, communications and influence with stakeholders • 24/7 access to a second opinion before acting? • Risks & mitigation • NED’s don’t engage usefully : Set clear expectations as team member • NED have strong exec views of their own : Coach the NED! • NED doesn’t add value : Say so – then move them on….

  7. Rightsizing governance • Why: ‘Safe to deal with’ • Clarity of core purpose to all stakeholders • Board skills must be ahead of company maturity and status, not behind • Consider value of risk management / independent assurance. SID role? • Value of a part-time independent chair? • Name/experience, also advocacy & team oversight

  8. Expect & support due diligence • Access to financials of course, including pipeline • Access to key stakeholders (investors, partners, clients and employees – also advisers) • Floor walking / back to the floor (internal & external). Listen to calls, review complaints. ‘What is the one thing that would help’? • Mystery shop: Buy and use products & services • On-going engagement process, not one-off

  9. An external perspective • You don’t have time to get out enough • Need to keep up with markets, alternatives, regulation, risks, best advisers, etc. • Can explore on your behalf and come back with a focused summary – e.g. how will the bribery bill (or new annual reporting rules etc.) affect your business? • Introduce you at the right time, making meetings and outcomes far more effective

  10. Essential conditions • Awareness • Openness • Willingness • Teaming • Culture

  11. Summary • ‘Growth’ of business maturity and value, not only revenue growth (although this is an essential component) • Lower cost, lower risk, ‘independent’ (actually supportive of your team in many ways) access to their experience and the experience of their networks • Need to know or learn what you need, provide space for suggestions and keep challenging towards outcomes • Etc.

  12. Is your board fit for business? Wednesday 22 May 2013 100 Victoria Street Bristol

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