Having an independent non executive director on your board is essential for growth
Having an independent Non-Executive Director on your boardis essential for growthBryan FossIndependent Non-Executive Director, Risk &Audit Chair, Board And Business DevelopmentAdviser, Visiting Professor Bristol BusinessSchoolIs your board fit for business?Wednesday 22 May 2013100 Victoria StreetBristol
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 orperhaps with exit in mind– What defines value? To which potential buyers?– Long term income or short term growth, profitsynergies etc. A clear core purpose?– Know we need to be focused, but too busy to stopand 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-testexecutives 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 thatmight balance revenue risks• Influencing the market as an independent• Challenging re pipeline content and assurance ofclosing, leading to confirmed cash - or looking atcost reductions / working capital fund raises toreduce 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 andstatus, not behind• Consider value of risk management / independentassurance. 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 onething 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 afocused summary – e.g. how will the bribery bill (ornew annual reporting rules etc.) affect yourbusiness?• Introduce you at the right time, making meetings andoutcomes far more effective
Summary• ‘Growth’ of business maturity and value, not only revenuegrowth (although this is an essential component)• Lower cost, lower risk, ‘independent’ (actually supportive ofyour team in many ways) access to their experience and theexperience of their networks• Need to know or learn what you need, provide space forsuggestions and keep challenging towards outcomes• Etc.
Is your board fit for business?Wednesday 22 May 2013100 Victoria StreetBristol