What do you want from a non-executive director?

The report, released today, gives an interesting snapshot of the role of non-executive directors. It reveals that

• NEDs tend to have a number of businesses on their CVs. Only two per cent of those interviewed by Coutts were advisers to just one company.
• Nearly a third (31 per cent) advise between five and 25 organisations. 
• Priority skills required of a NED from a business owner perspective are: finance raising (32 per cent); starting and running a business (31 per cent); and delivering a business exit (26 per cent).
• Nearly nine in ten entrepreneurs said they judge the suitability of a non-executive director on track record. Over half (57 per cent) of entrepreneurs said a broad commercial career experience was a pre-requisite for the role. 
• More than half (55 per cent) of business owners and a third of non-execs (35 per cent) feel that non-executive contracts should be limited, and that NED teams should be regularly refreshed. 
• Two in three (66 per cent) of NEDs prefer a mixture of a flat fee and shares in the business in remuneration. 
• Networking (89 per cent) and business referrals (88 per cent) are the best ways to meet non-execs.

“The overall feedback from business owners is that non-executive directors can prove a vital resource, filling skills gaps and adding an independent, external perspective,” comments Andrew Haigh, managing partner for the Entrepreneurs Client Group at Coutts. “However, it is important that they are brought on board for the right reasons and that there are clear parameters in terms of what is expected.”

The Coutts report highlights the five golden rules to make sure your relationship with your non-executive director works:

1. Be clear about the brief, and identify where there is a gap in knowledge and skills that need to be filled.
2. Be open-minded about the nature of the appointment and consider whether you need a NED or a business adviser.
3. Make sure the fit is right with the business in terms of skills, culture and management team compatibility.
4. Source non-executive directors through referral and recommendation and sell them the reasons for working with your business.
5. Set clear parameters for the relationship from the start covering performance expectations and related reward and recognition.

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