Member Article

Non-executive directors power SMEs to next level

By Rachel Taylor, director of Keycare

SMEs can boost profitability and unlock powerful succession planning by appointing non-executive directors (NEDs) to their boards.

Although many business owners are sceptical of the value of such appointments - incorrectly perceiving the role to synonymous with ‘old boys networks’ and golf clubs - the right NEDs bring a wealth of experience and skills to SMEs of any size.

They also provide much-needed objectivity to help steer the company and deliver ambitious growth plans.

As a director and shareholder of Keycare which was founded by my late father Geoffrey in 1977, I have lead formative changes - which include making three senior board appointments - to drive the business to the next level.

Here are some of my insights on ensuring your NED is the right fit for your company.

When is it right to bring in a non-executive director?

NEDs are often drafted in when a business realises it does not have the requisite internal skills to ramp up to the next stage. And the size of your company is irrelevant – even an ambitious start up would benefit from an objective, strategic eye. However, don’t expect NEDs to be involved in operational detail – they are there to forge and review strategy and to be a credible and critical sounding board for executives and shareholders.

How to choose the right NED for your business

Non executives need to have the right blend of commercial and business acumen, track record – and the right personality for your business journey. You may also have specific sector issues which require someone with relevant experience. For example, Keycare is regulated by the Financial Conduct Authority (FCA), so it is vital that our board understands its responsibilities to satisfy its stringent rules.

Why a good cultural match is important

Forging and sustaining the right company culture - which sets the tone of the entire business - is critical. My late father’s ethos of fairness, rewarding loyalty, supporting worthwhile local causes and giving back to our local communities lives on in Keycare and is reflected in the values of the people we employ. Our NEDs understand that Corporate Social Responsibility (CSR) is an important element of our values and I recommend that you establish up front that your non executives are aligned with your culture.

What to expect from a NED

In summary, NEDs can bring much needed objectivity and balance and they can help to identify gaps in your business practices and plans. However, be prepared to be challenged as they may recommend significant changes to management, products or people – and this may entail difficult decisions. On the plus side your non executives are likely to have established, senior business networks which can be invaluable for opening doors and enhancing your credibility.

As a major shareholder of Keycare who has lead the appointment of NEDs, it is clear the very positive impact NEDs have made to taking our business to the next level. As a NED myself, I am now keen to help other SMEs on their journey to success.

Rachel Taylor is a director and shareholder of Shipley-based Keycare, the UK’s largest provider of insurance for lost and stolen keys.

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