A fish rots from the head down – a book title that aptly describes the odoriferous effect of rotten leadership.
It’s especially relevant to entrepreneurs growing their start-up into a bigger business. Inevitably, you will have to assemble a board of directors to not only spread the executive workload, but bring in other skills you need to run an increasingly complex organisation. Your starting point ought to be hiring a few non-exec directors (NEDs) to support you as a sounding board and to keep you accountable to your strategic goals.
But putting together your first board of directors is simultaneously one of the most important tasks of a successful entrepreneur and one of the riskiest. We’ve seen many of our clients’ hair turn grey in the process!
A key challenge is matching a limited small business budget with the talent you need. The hard truth is that experienced directors don’t come cheap. For example, according to the 2018 5th edition of Non-Executive Directors’ Fees Guide, published by Institute of Directors SA, small companies (valued under R160m) pay their NEDs on average R37 000 per board meeting. Including them in other committees, like remuneration or audit and risk, for example, will set you back additional fees per director of between R7 000 and R20 000 per meeting.
Fortunately, it is possible to find less-experienced talent to join your board at lower rates. But for first-time NEDs with no track record, how do you know they’ll cut the mustard? A May 2019 guide by executive placement agency Spencer Stuart discusses 5 critical skills to look for in novice NEDs:
- Excellent interpersonal skills.
- Strong intellectual approach.
- Collaborative yet independent thinker.
- Strong inclination to invest and engage with your company.
What I like about this article is that it strongly supports my heuristic observations through my executive coaching and NDE work with many clients. Interestingly, a skill we don’t see in this list is heavy industry expertise. And I agree with that, too. What do you think?
So a final tip in addition to these top traits to build your dream NDE team: if your business is on a growth trajectory, start planning for your board of directors sooner rather than later. When it comes to growing your business growth team, you don’t need to sacrifice quality just because you can’t afford the heavy hitters.
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