How to get an outstanding NED for your start-up

As a founder of a company getting external directors on board — Non-Exec Directors — can be hugely powerful to help you accelerate commercially, improve your strategy, help boost your network and be an honest sounding board for you as CEO.

Choosing the right NED is important. But more important is getting the top NED to choose YOU.

The traditional way to approach this topic is to look at what you need from a NED. There is much advice out there from important organisations like ICSA’s 5 essential qualities for a NED or the Telegraph’s usefully broad article

I’m going to take a different approach,— helping the startup CEO know what a good NED is looking for, not the other way round.  As a partner at Emerge Education and active NED,  I was invited with Mary Curnock Cook, OBE (who chairs our Higher Education board) to attend a NED dinner hosted by Eton Bridge Partners with guest speaker Natalie Ceeney, CBE. I credit the participants in this excellent evening for the ideas in this piece.

The Top 10 concerns and interests of NEDs when considering a role

If you give a NED comfort on these items, it increases the chances they will accept your offer. Even more importantly these tips will lessen the chances of a corporate governance crisis or disaster happening to your company and improve your chances of being more successful long-term.

1. Make it Easy for NED’s to do due diligence on you

Enable them to understand the organisation’s business model thoroughly. Be transparent on the weaknesses and challenges you face up front. Make the business very simple to understand. They will want to ask around widely. Let them talk to your auditors, the other NEDs. They will look at Glassdoor and research you and your FD.

2. Tell them that you only want them as NED if they rate you as top quartile

I know this is self-explanatory but if that initial respect is not there, it will make the ongoing business relationship extremely challenging. Challenge them to really rate you and make sure you start with radical candour at the joint selection process.

3. Tell them that when on the Board you will encourage them to engage below you

Let them come to your office and meet and get to know your senior team. Help them understand the business and culture in a deep way. Let them attend a senior management meeting without you there. Tell them bad bits, the dissenting views from staff and customers.

4. Encourage them to build relationships with the other NEDs

Create time for the NEDs to get to know them and it will make it easier to work together — and to challenge each other. Creating NED-only time around board meetings will allow space to look at underlying issues. It also makes it easier for your advisers / NEDs to work together should a crisis occur.

5. Ask the dumb questions yourself as CEO and encourage the NED to do the same

This is harder to do around some board tables than others. No one wants to look stupid in front of their peers. But it’s essential to foster a culture of learning and openness.

6. Ask the NED to be clear on their red lines and stick to them

Your role with a NED is defined by what they tolerate. Get them to create their list of red lines that are non-negotiable. This might be about the process (e.g. lateness of board papers) or content (e.g. supplier terms). And be clear and open about these red lines to all Board colleagues.

7. As CEO, run board meetings to look at the “how” as well as the “what”

Boards should focus on strategy and governance, but a lot can go wrong in implementation. This is not to say NEDs should micromanage, but NEDs can and should be encouraged to ask questions about the capability to deliver, risks of delivery and delivery governance.

8. Don’t hire a NED as the single “expert” in your company to cover a gap.

I used to run a mobile tech company. I get asked to be NED for companies “to create their digital strategy” or “oversee their tech roadmap”. This is an executive responsibility. Don’t try and get NEDs to cover for clear gaps in your senior team, that’s a ‘red flag’.

9. Encourage your NEDs to meet the shareholders or owners

This should be standard but not all boards encourage it. Meeting investors and advisors is a critical part of ensuring NEDs understand what shareholders or owners want  from the board.

10. Encourage the NEDs to have a CEO succession plan always on the radar

It’s surprising how many boards are squeamish about focusing on the likelihood that they will fire and hire a CEO or that the CEO will suffer health issues and be unable to work for a period of time. As a CEO, you should encourage that this is ongoing, even when you are a relatively new CEO and/or performing well, and ensure that they are always benchmarking and developing internal talent (the senior team) to widen their options for any eventuality.

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Thank you for reading… I would hugely appreciate some claps 👏 and shares 🙌 so that others can find it!

Nic

Nic Newman

Read writing from NAXN — Nic Newman on Medium.

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