Member Article

The Age Of The Non-Executive Director

There are two main theories about the end of the dinosaurs.

One is often referred to as the Gradualist Theory. This suggests that over millions of years the earth’s climate was gradually changing, becoming cooler, so that by the end of the Cretaceous period, most dinosaurs found it impossible to survive.

Then there’s the Impact Theory, suggesting an asteroid crashed into the earth with such force that it created a nuclear winter and killed off the dinosaurs forever.

It’s interesting to keep those two theories in mind when considering the change that’s taking place in the world of business, where SMEs and Start-Ups are increasingly [if gradually] recognising the benefits of bringing in Non-Executive Directors to help them grow. The established thinking has hitherto been one of board-room conservatism or protectionism:

Our small, tightly-knit board needs no help from meddling outsiders, thank you very much. We know what’s best for our company.

The philosophy is often the same in larger companies, too. Yet in both cases, while such thinking is common and widespread, all around them the world, [what we might term the operational climate] is changing. More and more companies are seeing the business sense of bringing in NEDs to offer sharp, focused and forward-thinking advice to help them cope with the challenges they face. And this creative approach to boardroom management brings with it a whole range of benefits: a non-exec will have wide experience of the market; will have a powerful wealth of contacts; will bring challenge to accepted thinking and moribund strategies; and will raise the company’s profile and commercial “attractability”.

The gradual development of Non-Executive Directorship is changing the climate in the business world, but is this gradualism moving with Cretacean slowness? Will it bring about a permanent change in boardroom composition and nullify the impact of dinosaur philosophies? Are we at the beginning or the end of the process?

Well, we’re not at the end, that’s for sure. Dinosaurs still roam the business world, refusing to accept that things are changing and that they need to change, to adapt, too.

Which is where the Impact Theory comes in. One variation in the main theory is that, rather than a single asteroidal impact causing such devastation and extinction, there was a series of such impacts spread over a great number of years. Their combined effect brought about the end of the dinosaurs – a kind of Gradual-Impact Theory.

Perhaps Non-Executives are having that kind of effect. SMEs and Start-Ups feel the impact of their presence and influence on the board. They make a real difference, and they do it quickly, in a much more cost-effective way than a permanent executive on a large, fixed-figure salary.

Whichever analogy we use, one truth is constant: Non-Executive Directors are bringing about a climate change in the world of business. Companies that bring in their expertise are much more likely not only to survive – but also to prosper in a new age.

Ian Wright is the CEO of NonExecutiveDirectors.com

This was posted in Bdaily's Members' News section by Ian Wright .