Six reasons why an SME should hire a non-executive director

James Metzger, MD of Metzger Search & Selection, shares insights into why smaller companies, whether start-ups or SMEs, should appoint a non-executive director to help them grow

One of the most difficult decisions that corporate leaders can make is whether to bring a top level advisory director into the fold. This is not the just a practice of the large corporate entity, and nor should it be. Start-ups and SMEs can benefit greatly from having an injection of fresh expertise on board and here’s why:

  1. It can get lonely at the top

For young companies, and their CEOs, all their energies are spent trying to make their mark in the marketplace, sorting through a myriad of strategic decisions, paying salaries, making profits, sorting out pension schemes, attracting new clients. However, it doesn’t all have to be a struggle. The burden of making key decisions to enable your company’s growth and prosperity, and not just its present survival, can be shared with a key, experienced advisor in the form of a non-executive director. They can be available at the end of the phone line, or in regular scheduled meetings when counsel is needed. They provide expert advice and experience that many new, maturing companies don’t necessarily have in their own teams. When there are so many aspects to consider and possible directions to go as the company develops, it’s good to have someone in the team who is just removed enough to see the wood for the trees.

  1. Been there, done that

There’s nothing quite like experience to give that valuable perspective in times of change and growth in a company. An experienced non-executive director will have travelled those roads before during their own careers. They can readily identify hidden pitfalls in the current climate, areas of weakness in a business, assets or potential. More than likely, their leadership insights with people management and financial acumen will be superior, purely because they’ve been doing it longer in the same kind of arena. They will be able to suggest and tactically advise on the brutally honest (and sometimes painful) courses of action required to help make your company a success.

  1. It doesn’t have to be expensive

For smaller companies, hiring a permanent top-level advisor is a significant investment to make. However, it’s not impossible to find a director or senior manager who is prepared to work part time, a few days per month; this is where engaging a professional recruiter can be useful as they’ll execute a detailed search to widen your options according to your criteria. Your company can still receive the same quality of expertise, with a financial outlay appropriate to your resources. You will receive seasoned CEO level advice, but not at CEO salaries.

For some directors being a senior advisor to another company is an appealing and refreshing prospect; they can share their experience without the commitment of being a staff member and are removed from the internal company politics. They might be attracted by being an ‘external’ coach or mentor for younger staff members, which is a bonus, especially for unseasoned, smaller companies who would benefit most from this contribution. It is also an opportunity for an experienced director to give something back to industry and promising fledgling companies.

  1. Find the right partner and the relationship succeeds

There’s got to be good chemistry between the new non-executive director and the team. Picking someone that fits with the company culture and people, or is open enough to understand and embrace them, makes a significant difference in the success rate of the partnership. It’s not just about what strategic advice your non-executive director gives, but how it is likely to be received by CEOs and the team. It’s easier to accept honest and tough critique from someone who understands what goals you are trying to achieve. It also increases your chances of getting there. 

  1. Expanding your network

An experienced senior advisor, with a long and varied career, may offer the added benefit of a healthy network of contacts. While helping your company, they may tap into their own resources; other leaders in the industry, potential new business partners, investors, and maybe even new team members to join the organisation.

  1. A leap of faith at the crossroads

For those smaller companies that are at the crossroads of a major leap in growth and development, having a non-executive director on board to steer through that change is a valuable investment. Companies facing a growth spurt like this need objective, informed guidance at senior level. This becomes important if they want to adhere to their fundamental ethos, whether that means being customer led, without detracting from high quality of service delivery, or sales focused. Someone else who had been through it before would know how to maximise the positives on the road ahead and be resilient through the negatives. They can provide clear, strategic thinking on the tough decisions that have be made, to prepare the company to perform at a different level, from recruitment to restructuring.