Making the right choice

If you’re looking to recruit a non-executive director for your commercial entity it’s crucial you make the right choice, as the role they play is an important one – bringing their knowledge, experience and contacts to help keep your organisation set for the right course.

Setting up commercial enterprises has become increasingly important for local authorities in recent years, with many councils finding that income from commercial operations can ease financial pressure and enable them to keep providing services that may otherwise be lost. And this trend is likely to continue, with almost three quarters of councils predicting an increase in revenues from commercial activity over the next three years.

In particular, setting up local housing companies and Propco’s to build, sell and manage properties is proving particularly appealing. Councils have been able to both make and save money – while also gaining control and taking a more proactive role in ensuring their local housing markets are affordable and fit for purpose. It’s a move broadly supported by government, who are keen to see councils ‘building again’ and demonstrating entrepreneurship, while some larger local housing companies are attracting private finance and have established revolving investment funds.

While all of this makes for encouraging reading, it does raise issues, one of which is expertise. Do councils have the right knowledge and experience in-house to develop these ventures successfully? It’s essential to get the right people onto the board – in executive and non-executive positions alike.

Political and economic uncertainty means that companies need to combine long term strategic vision with the agility to adapt to constant change. For a non-executive director, striking the right balance by providing calm support and expert guidance, while also issuing reality checks and challenging the board when needed, is no mean feat.

Furthermore, at a time when the financial crisis and continuing austerity are placing an increased focus on corporate governance, it’s vitally important to ensure shareholders’ needs are respected. All of this means that when appointing non-executive directors, you need individuals with the experience to help your company navigate these challenges.

So, what key things should you look for?

  1. Fairness, strength and tact

Strong communication and emotional intelligence are vital for a non-executive director, because they will often be the one who has to deliver home truths and speak up if things aren’t happening as they should. This can often require a high level of diplomacy, especially with executives who may be unaccustomed to having their views challenged.

2. Alignment with your values

A non-executive director needs to be able to challenge your board when needed. This will be impossible to do effectively if you haven’t ensured they share your organisational values, because it will make it harder for them to justify their suggestions.

3. Competencies needed for their specific role

It’s not essential for a non-executive director to be experienced in the sector you’re operating in – but they may need to be if the tasks you want them to perform require it. Similarly, if you want them to monitor your financials, you’ll need to ensure they’ve got the experience and credentials to do this.

4. Networks and contacts that can be leveraged

Part of the appeal of non-executive directors is that they can benefit a company with the fruits of their vast experience. As well as knowledge and skills learnt, this can also include a strong book of personal contacts that can bring something positive to your business.

5. A commitment to staying up to speed

An effective non-executive director will ensure they always have an eye on what’s going on in your company, your market and any relevant technological advances. They may also alert you to any hidden issues or external factors that could affect the business.

Because they’re not involved in the day to-day running of a business, non-executive directors are in a position to view things from a more objective perspective, without becoming distracted by the minor details that can make life difficult for everyone else.

It’s worth making the extra effort to find someone with the right knowledge, temperament and track record. Ultimately, they will offer a great deal of stability and help keep your company on track.

You can contact me at david.weir@tile-hill.co.uk

David Weir is director of Tile Hill

David Weir

Back to listing