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Smaller firms have doubts about non-executive directors

A percentage of smaller, entrepreneurial businesses have concerns over the efficacy of employing non-executive directors.

That is the finding of a survey conducted by Coutts Bank.

More than a half of those firms polled expressed doubts that they would get value for money when employing a non-executive director.

Much of the wariness was down to previous experiences, the study suggested, with an alarming third of respondents saying that they had been disappointed with the performances of non-execs in the past.

Some business owners voiced worries about the “the stereotype of the time-serving old hand who is mainly concerned with adding value to his CV rather than enhancing the boardroom fire-power of the companies he serves”.

However, the Coutts report did add that well-qualified non-executive directors can provide genuine value to a business.

Andrew Haigh, managing partner for the Entrepreneurs Client Group at Coutts, pointed out that, where the relationship with owners is a successful one, non-executive directors can be a “vital resource, filling skills gaps and adding an independent, external perspective”.

Non-executive directors can bring a wealth of experience to such matters as developing new markets and establishing business networks.

Businesses rated the ability of non-execs on their history of setting up and running enterprises, their understanding of how best to secure finance and their objectivity.

But the Coutts study also emphasised the importance of making sure that there is a real and measurable connection between the skills and know-how of the non-exec and the aims and culture of the business.

Mr Haigh concluded: “It is important that they are brought on board for the right reasons and that there are clear parameters in terms of what is expected.  Similarly, most NEDs want to be assured that it is possible for them to make a positive impact and many say no to opportunities.”