Finding the right ChairmanOctober 2015 | Growth Guides
There’s no exact science to finding the right non-executive chairman for a high-growth business, says BGF's Cate Poulson. For most of entrepreneurs it’s a completely new experience. Overwhelmingly, the business owners I speak to tell me they want advice from someone who carries the battle scars of business and have come out the other side – with ambitions to help others succeed. The biggest barrier is in gaining access to the right people.
Knowing this, BGF has built a talent network of more than 2,500 of the UK’s most successful business men and women. Here, three of our talent network members give their views the role of a non-executive and what makes the relationship work:
Paul Gilbert, non-executive chairman of BGF investee company Better Bathrooms and former financial director of Matalan:
I’ve heard it said that there’s no such thing as a non-executive chairman in the traditional sense anymore. Things have certainly changed. It’s not about sticking to a defined role or filling time at the end of a corporate career: it’s about being passionate and flexible enough to help a business make real progress. That requires a “rolling up your sleeves” attitude.
But I don’t want the chief executive’s job either. As a non-executive, you have to differentiate between intervention and interference: you certainly don’t want to be interfering but there is a place for intervention if you foresee a problem.
On balance, I believe the chief executives I work with make the same decisions with me on the board as they would without me there. But I help them get to the answer quicker and in a way that they feel more confident about, because as the business grows there’s inevitably more risk at play. I tend to weigh in on a range of very diverse issues: it can be about people and how they are incentivised; it might be about property and identifying or securing new sites; or it might be making new introductions.
One of the most valuable roles a non-executive plays is bridging between management teams and external investors. There’s a basic structure for engagement and communication around board meetings. We all know that the meeting’s coming, which allows everyone to prepare properly and use time productively. Formality is useful in that sense. Outside of that, it’s a flexible format - you’re there as and when needed.
Stephen Bellamy, non-executive chairman of BGF investee company Benefex, and formerly chief financial officer and chief operating officer of Sherwood International and Becrypt:
If the relationship isn’t one where you can comfortably and easily pick the phone up to each, then you haven’t got it right. There doesn’t always need to be a particular issue in play: if a couple of weeks go past and I haven’t heard from my chief executive, then I will call just to touch base. “How’s that big opportunity progressing? Is there anything I can do to help?” It needs to be a natural relationship, not a forced one.
I like to work with businesses I can relate to and in markets rich in opportunity. But for me, people are the most important ingredient. I like the ‘can do’ attitude of entrepreneurs. It’s about the journey that they are on and where they want to go.
It’s fair to say that there can be some scepticism at the outset of the relationship, with business owners naturally questioning why a non-executive is needed. Are they there as some kind of policeman or spy?
The key is to show in the early stages how you can make a direct contribution. It’s about being facilitator and a mentor. I bring experience, not necessarily in the same industry but in similar types of businesses. I’ve made mistakes and seen mistakes happen, and I have some battle scars to show for it.
The role is frontloaded and you need to be more involved and hands on in the early stages. Then, assuming that you’ve done your job well, it becomes more a question of guiding and making sure that things are still heading in the right direction. I typically work with the founders, so they know their businesses inside out. If anything, it’s a matter of asking them to let go to the wider team, which is an essential part of the growing process.
Andrew Caffyn, non-executive chairman of BGF investee company Thames Card Technology, and former chief executive of Deloro Stellite Group and Avery Weigh-Tronix
It’s important to find a fit where the skills of the chairman balance and support the chief executive’s. Owners of growing businesses can feel quite isolated at times and for them, the chance to work with an external chairman who is a little battle scarred can be reassuring.
I escaped big corporates seven or eight years ago and have worked with entrepreneurial businesses ever since. Big corporate environments can be suffocating and with smaller businesses, I feel that I can personally make a real difference – and quickly.
I’m involved in companies that are already growing from an established base but it’s important to know if that trajectory is sustainable. I look for clear customer engagement and real spark in a management team that’s hungry to realise the next big idea.
There’s a great deal that smaller enterprises cannot be expected to know, and that becomes more obvious as they expand and grow. For example, when a business starts exporting for the first time, there are all sorts of issues that emerge which management teams haven’t had to think about before. In this instance, there’s huge value in appointing a non-executive that’s been involved in international businesses and is able to pre-empt the issues.
At some point, it’s inevitable that a growing business will face issues or challenges. What’s important is that the non-executive can help guide the management team through these problems.
You have to remember that you’ve got the same goals. Although the non-executive role is different, it becomes easier once that alignment of interests is recognised. You’re there because you’ve got complementary skills and experience and together you can build something stronger and more valuable.