How to become an SME Non-Executive Director – or similar
Many senior executives ask us how best to set about finding NED appointments with SMEs. Here, we try to offer some guidance and answer some of the questions that get asked most.
Mostly, these are newly independent and take the view, for a number of reasons, that securing one or more NED appointments is an attractive career option and a sensible part of a portfolio approach. Sometimes, they are still in employment at senior levels and are taking a measured approach to what happens after they leave – either at their choice – planned or opportunistic – or not at their choice!
The best time to start looking for NED work is when you are still working and on someone’s payroll. You need to get the blessing of your line manager and of your current organisation. It needs to be seen that diverting a small part of your time and effort would work to the benefit of your company and you need to handle this persuasion process with skill. Different companies have different views on this, ranging from those who have never considered it to those who have formal and structured arrangements. A growing number of organisations are adopting these as an enlightened approach to outplacement and a kindly element in the employment contract. Being fairly close to your line manager helps. The downside is that your manager will think you are getting ready to quit and he was not expecting this or wanting it. In this case, it may be best to forget about being an NED – it’s not for you.
The worst time to start looking for NED work is when you are sitting at home with nothing to do. Or when the income from NED work is how you make your living and you need the money to pay the mortgage and feed your family. However, taking early retirement does present an appropriate opportunity as does openly anticipating such a time.
Looking at SMEs seems to be the best option because it looks easier.
Finding the work is a challenge and is the focus of this piece. But you also need to want to be a Non-Exec and you need to have the skills, knowledge, background and temperament to bring something valuable to the organisation – otherwise why would they want you? You need to invest in developing your professional attractiveness and ability to be seriously useful. Remember, there is much more supply than demand. You also need to be aware of the statutory obligations and, importantly, the risks. This area has and continues to change hugely and great care is needed. Deciding to join a company as an NED is as important a decision for you as it is for the company. You should seriously approach the process of acquiring as much information and views of others as you can – and keep the process going. Search the internet. Read as much as you can find. Talk tom people who have successful records as NEDs. Treat your existing knowledge and skill base as a platform, not as a qualification. If you are asked o pay money for “training” examine the prospect carefully. A number of recruiters at the SME level can’t make enough money at the client end so they try to make money at the candidate end and, sometimes, this is part of the arrangement to go onto their database.
Recruitment volumes are low throughout this market and agencies can only make an acceptable income if there is a low cost of winning the assignment and the opportunity of charging a good fee. This is why there are only a handful of NED dedicated agencies and these can only operate effectively at the high end of the market. Lower down, the cost of winning the work and natural limits on the fees that can be charged make viability difficult. Other agencies have divisions that handle NED work, often referring to them as their Board Practices and this improves the economics from the agency perspective for a number of reasons - the agencies’ overheads are shared by the other work they do and assignments are won as part of the mainstream client development process and often opportunistically. At the lower end, you see agencies coming into the market and, after a while, disappearing. Some see NED training as an income base for the business but aspirant NEDs generally don’t; not that they don’t need training – they just don’t like seeing it as a quid-pro-quo to secure assignments – particularly if they don’t materialise – either within an acceptable timeframe or at all.
· Networking is key.
· Prospective clients and intermediaries need to know that you are an NED.
· You need to have credibility and, perhaps, a specialisation reputation
· You need to adopt a structured approach to self-marketing
You might think that networking is mainly relevant when looking for NED work at the lower end of the market because the agency structure does not work much at that level. Yes and No. At the SME level it is clearly the best way to get the work but, at higher levels, who wants an NED with no contacts. Contacts are conduits to making things happen. They are also part of your own learning process. Organisations do not want NEDs with closed minds.
Being appointed NED because of your contacts is not always what it seems. If this is because the company sees you as able to – perhaps indirectly – secure new clients/customers/business that might appear attractive to you. But once you have exhausted your range of contacts of have failed to get anything out of your contacts, your usefulness in that context is at an end. The best contacts are those who can broaden and keep broad your business perspective and improve your own judgements, through conversations and through the interchange of information.
Your aim is to create personal profile. Profile gets people coming to you without specific effort on your part.
Here is a checklist -
* Join Trade Associations and become active
* Get speaking engagements – get a reputation - even a highly specialist one
* Write articles and get them published
* Get to know editors – so that they call you for quotes
* Consider Charity Trustee or unpaid professional involvement but on a balanced basis
When still in employment, get to know well top people in suppliers and also with competitors. Much of this is relevant when you are NOT in employment but the status is different. Others view you very differently when you have some corporate status and this tends to evaporate quickly when you are just an ordinary individual!
Apart from potential clients that you will identify through your usual business involvements, other useful contacts include -
* Private Equity
* Venture Capital companies, in particular 3i who, allegedly, use fewer outside NEDs than they used to as their trend has been towards bigger investments in larger companies. They also (allegedly) have a preference for people they know.
* Established Management Consultancies
* Regional Development Agencies,
* Business Links,
* The IoD,
* The CBI,
* Trade Associations,
* Accountants,
* Lawyers,
* Other NEDs
* Websites of organisations where needs might arise.
* The better established web-based recruiters
* Don’t forget social connections!
Getting value out of all this will involve careful and often lengthy research and much rejection. But it does work. And what it produces ought to stay with you for ever.
Charles M Russam