Do you need a non-executive director?

Recruiting a non-executive director can be the key to unlocking growth in your business. Paul Freedman, founding partner of Four Elements Consulting explores how to find and recruit the right one.

Successful entrepreneurs are brilliant at convincing other people – staff, suppliers, customers, investors, bankers – to join them on a journey. Sadly this conviction often drowns out something that mere mortals suffer from – self-doubt.

The more an entrepreneur invests into building their business the harder they find it to ask themselves searching questions about why they run things the way they do. Recognise yourself in this description?

One of the smartest things I did as an entrepreneur was to hire a non-executive director (NED). He had no track record in my sector but he had intellect, practical business experience and emotional intelligence in spades.

Our meetings became a safe space for us to ‘knock it all down’.  His liberal use of questions such as “Why?”, “What if?” and (my favourite) “So What?” helped me to challenge my own convictions – to stop blindly believing my own hype.

Wins not whales

The practical results of this relationship?  We stopped whale hunting (huge business opportunities, not actual whales) and focused on building distribution from the ground up.  One brick at a time.

We searched for and found new markets where we could sell on value rather than price – resulting in a four-fold increase in our average selling price in just a few years.  And I faced up to a few truths about my team, their motivations and capabilities.

Most of the answers came from within the business, but the NED’s ability to extract them had a dramatic effect, and proved to be the best value for money appointment I ever made.

This experience later helped me in my own role as a NED for small and medium size businesses. Entrepreneurs need a safe space to challenge their convictions without fear of showing weakness to their colleagues and stakeholders – to ask and be asked blunt questions about anything and everything in the expectation that you will find a new approach, way of thinking, or even a new truth about you and the people around you.

My experience is that this is the most valuable role a NED can play in an SME environment. And if they only bring with them connections or technical/product expertise, then great! Get them on board as an adviser – but the role of NED should be reserved for someone who can help you start asking profound questions and look for the smart answers.

Need a NED? Start here

Finding such a person is not easy.  I don’t recommend NED recruiting sites – instead ask your connections and friends. Your accountant or lawyer can often help.

Beware – there are many charlatans out there who masquerade as great NEDs but who will either disappoint or will do you more harm than good.

These 5 tests will make you more discerning in your choice of NED and should pay great dividends in the long run:

  1. You quickly feel that you can say anything to them without worrying that you will sound either stupid or vulnerable.  People who make you feel safe like this have emotional intelligence – the most important of all traits in an NED
  2. They do not have aspirations for an executive role in your business – this helps create a forum for open discussion
  3. They demonstrate a calm, dispassionate objectivity that will allow the free exchange of ideas
  4. They will leave their ego at the door and make available all of their experience for your benefit rather than their own self-aggrandisement.  They have nothing to prove to you
  5. They listen hard and ask lots of questions.  They don’t rush to judge.

Four Elements Consulting LLP is a partnership between Paul Freedman and the chartered accountants HW Fisher & Company.

Praseeda Nair

Praseeda Nair

Praseeda was Editor for from 2016 to 2018.

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Non-executive directors