The benefits of hiring executives into their first NED roles
Some years ago I sat down with the CEO and Chairman of a fast-growing PLC (a global manufacturing business with a world-leading niche product) to talk about a non-executive role. After listening to them for two hours I had one of those “Oh my gosh, of course!” moments. I would love to say it was my natural entrepreneurial creativity, but it wasn’t. In fact, it came from a business leader thinking ahead and applying the principles of ‘executive into board’ recruitment to non-executive director (NED) recruitment. In other words, defining the strategy, looking ahead, identifying the skills gaps and planning around this.
Together, we worked on and agreed the search priorities, creating a wish list of skills and experience that would be needed to support the board over the next five years - a journey that would see the business triple in size. At the time the list included global multi-site reorganization, re-listing, specific market knowledge (life sciences, aerospace and defense) and someone to act as a mentor and coach to the busiest executives. We decided to keep the experience as current as possible and ended up approaching board executives (CEOs, CFOs and VP HRs) to test the concept of hiring executives into their first NED role. We hired four new NEDs and the board changed dramatically, helping to facilitate the next stage in the company's growth. The new recruits brought fresh momentum, new leadership skills and accurate insight as to what the future might hold and how best to get there.
The need to adapt in turbulent and changing times
Now in 2020, I am delighted to see that hiring executives into their first NED role is far more widespread, particularly with mid-sized or fast-moving businesses and PLCs. This is excellent news, except that it means our Edward Drummond boast of innovating in this area has now lost its luster. But then came COVID-19, the lockdowns and the current economic maelstrom. Everything has changed and we are busy again, finding and hiring NEDs. What was needed eight months ago, in terms of strategic experience and know-how, already appears to be out of date. Some companies have been lucky. They offer the right product or service for the current circumstances. Some companies may need to tighten their lifebelts to survive. But others are growing. And hiring. They are thinking creatively, adapting quickly, calling on relevant experience and introducing exciting new strategies.
It has brought back memories of my eureka moment all those years ago because forward-looking businesses are asking for the same kind of help from us now. So, what is the best NED hiring strategy, not for last February, but for right NOW? Where are the gaps in our clients' businesses? What do they need in today's weird normal?
The need for specific expertise and experience
We believe that alternative investment market (AIM) listed companies should be looking for candidates who can respond quickly to change, with smart, relevant ideas. People who have been through turbulent economic times before (though probably not a pandemic) and have experience of putting survival strategies in place. Who will help your business not only to outlast COVID-19 and Brexit, but also take advantage of new situations to thrive and grow. Who can help you reach where you want to be in 3 to 5 years' time. This is where we have been busy: finding candidates with specific strategic expertise and introducing them to boards that need them, so organizations can be confident that they are doing everything they can at a senior level to survive, but more than this, to thrive.
What do NEDs bring to the boardroom table?
As company directors, NEDs are usually expected to contribute to:
- Entrepreneurial leadership
- Agreeing the company's values, standards and strategic aims
- Ensuring the business understands and meets its obligations to shareholders.
Because NEDs are independent, they have the freedom to comment when they believe board members are acting inappropriately or endangering the company’s success. On the other hand, their independence allows them to provide confidential support for you and other senior management, listening to your concerns and offering unbiased advice. Appointing NEDs will strengthen your board by providing outside experience, objective judgment and independent views. The right people will fill gaps in your current board’s experience, knowledge and balance. They may also have more specific responsibilities, such as:
- Strategy: challenging or helping to develop strategic proposals
- Performance: monitoring and reporting on management's success in meeting agreed objectives
- Risk: scrutinizing the integrity of financial information and checking that robust, defensible financial controls and risk management systems are in place
- People: particularly in appointing, removing or helping to set appropriate remuneration levels for executive directors
- Diversity: NEDs can add diversity and inclusivity to your board or help your business gain appeal to different cultures
- Governance - good corporate governance is critical, particularly within AIM-listed businesses, which by nature tend to be fast growing and constantly changing.
It’s also good practice and meets the recommendations of the UK Corporate Governance Code.
Founded in 1984, Agilium Worldwide LLC (https://www.agiliumworldwide.com/) is an international executive search group of independent, owner-managed retained executive search firms, with members who are active in virtually every market. Agilium Worldwide ranks among the world’s top 25 executive search organizations.
Agilium Worldwide’s member firms offer personalized, specialized, client-oriented services. By eliminating the formally structured, pre-programmed approach they can remain proactive and secure prompt, skilled and expert service to their clients, to help them find the “Perfect Fit” – the right person for the right position, at the right time, at the right location.
Agilium Worldwide member firms are trusted advisors to companies from the Fortune 500, as well as to upcoming and start-up companies around the globe. Clients get the best of both worlds: an entrepreneurial approach with global reach and local perspective.