Summarised and Consolidated Notes from IoD Bucks & MK Breakfast Meeting 17th May 2018 at Hartwell House Aylesbury
Benefits of NEDs:
- Can open relevant doors and bring beneficial contacts.
- Help the leadership team maintain focus through relevant navigation of the enablers and blockers.
- Bring independent thinking, challenge, objectivity - ask right and difficult questions in the right way.
- Get the management outside their comfort zone in a way consultants often do not.
- Independence is vital – not appointed to be “friends” with CEO.
- One attendee turned down a NED role because of his relationship with firms owners.
- Good NED’s know when to leave, and all agreed their time should be limited (say 3 years) with relevance and performance regularly reviewed.
Has to be balanced with the needs of the business.
- Size matters – probably not appropriate at 1-5 employees, more so at a few £m turnover and bigger.
- Has to be affordable as well as appropriate.
- Owner managers often do not recognise the need.
- Benefits the NED as well as the Company
- Has kudos and allows the NED to “put something back”
Legal Responsibilities of NEDs:
- All were clear that the legal position is the same for all directors, NED or Executive
- Vital to understand the role and purpose of the NED before appointment.
- Understanding of the position of the business before appointment.
- NED must be rigorous before appointment - need for thorough due diligence before appointment.
- Need for contract and/or letter-of-appointment.
- IoD is a good resource – provide training for Directors/NED’s, Directors and Officers Insurance, etc.
- NED must be aware of Companies Act and Codes of Practice relating to boards.
How to become a NED:
- Group was a mixture of existing Ned’s and ‘NED seekers’ looking for their first role.
- Some is still by word-of-mouth.
- Professional networks are active for NED’s – good resource for SME NED’s.
- Some recruitment firms handle some NED appointments – but one recruitment firm attendee commented “the recruitment market for matching NED’s with roles does not work well”.
- Opportunity here for IoD
- Attendees believed there is a clear opportunity for the IoD here – feedback to IoD Pall Mall.
- Also, IoD Directors Competency Model is a good framework to include NED Competency – feedback to IoD Pall Mall.
The IoD cannot be held responsible for any of the comments or information included in this summary which was summarised from the presentations and discussions that took place at this event. These notes should not in any way be considered as advice from the Institute of Directors.