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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
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!
Challenges
• Grow the value of the business, organically or
perhaps with exit in mind
– What defines value? To which potential buyers?
– Long term income or 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
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
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
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….
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
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
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
Essential conditions
• Awareness
• Openness
• Willingness
• Teaming
• Culture
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.
Is your board fit for business?
Wednesday 22 May 2013
100 Victoria Street
Bristol

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Having an independent non executive director on your board is essential for growth

  • 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 income or 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