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How do we appoint a non-executive director to family business to help cope with Brexit?

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It’s a difficult step to hire an outsider, but most companies see the benefit of it after time

It’s a difficult step to hire an outsider, but most companies see the benefit of it after time

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It’s a difficult step to hire an outsider, but most companies see the benefit of it after time

Q I am the general manager of a family-run haulage company established 10 years ago with a staff of just five. We now have 25 people working with us and we are set to expand significantly over the next five years. We have decided to appoint a non-executive director to the business to help us with our strategy to address Brexit challenges, serious competitive threats and a lot of change going on within our customers and marketplace. But we don't really know where to start. Where should we go and what should we look for?

A Many of Ireland's most successful SMEs and family businesses have reached a similarly seminal stage, where they recognise the immense value a high-calibre independent non-executive director can bring but are unsure how to find the right person.

This is a time of continued uncertainty in every sector, with management teams and boards facing significant challenges. An independent non-executive director can provide invaluable experience and diversity of thought to a management team. An effective non-exec director will offer high-quality constructive challenge and have significant input into the assessment and identification of strategic options. He or she will also enable the management team to leverage the non-executive director's experiences in developing new and more efficient routes to market and alternative ways to expand a business.

In many family-run businesses the board and management team are effectively one and the same. It is a big step, therefore, to introduce an 'outsider' into that mix and important to understand the changes that will inevitably take place in board and business dynamics. A quality independent non-executive director will not only bring high-value support, they will balance it with constructive oversight and challenge management's performance. This can be unsettling at first, but over time most management teams recognise the value in a more vibrant, challenging board, that improves strategic capability and the overall quality of decision-making.

Given the critical importance of this step for a family business, it is vital to get the process right to find the most suitable person for your business, and also the most appropriate personality and character-fit for your team. It is essential that sufficient time is invested by the chair and CEO/managing director during this process.

First and foremost, it is critical that (1) the chemistry is right and that you and your team genuinely feel that you can work well with this new board member, and that (2) you define the specific skillsets you need and key aspects of the business to which you're expecting the new non-executive director to contribute.

Prepare a role specification to share with candidates to ensure clarity around the type of non-executive director you are looking for, and the annual time commitment expected in preparing for and attending board meetings and supporting management at other times.

SME and family-run businesses typically utilise their own networks and business advisers (accountancy, legal, banking) to identify potential candidates. A recent addition to this mix is the introduction of search services by specialist board support and advisory practices, to help source appropriately experienced non-exec directors.

When you have a shortlist of candidates, it's important to have an initial 'convivial' fireside chat with each candidate, prior to the formal interview, to understand their current commitments, their approach to previous/current board roles, their understanding of your business and sector and their genuine level of interest in your business, and in working closely with you and your management team.

This may result in candidates you had previously considered as suitable being removed from the shortlist, so it's always wise to start with a candidate shortlist of four or five.

A first independent non-executive director is a big step for a family-run business but when handled correctly can be a key enabler in helping the business scale to new heights, despite the strong headwinds facing all businesses today.

Kieran Moynihan is managing partner of Board Excellence (boardexcellence.ie)

Sunday Indo Business