Non-executive director 2.0

Alex Arnot

What should you look for and what should you avoid when choosing the right non-exec for you and your business? Alex Arnot explains

With many economic pundits forecasting the beginnings of a sustained recovery, 2014 is going to be an important year for many recruitment businesses as their thoughts naturally turn to growth strategies. An increasing number of owners and boards are now hiring non-executive directors as board advisers to help with setting and executing those strategies.

The same key challenges are being faced by virtually everyone in the sector. For example, how to increase revenue and profit, finding and retaining star recruiters, stopping fee and margin erosion, growing for exit before the next downturn and maximising company value.

The owners of recruitment small and medium-sized enterprises that I have met recently are telling me that there are two types of non-exec they see.

The first type is more geared towards large recruitment companies with their focus and advice almost purely on strategy and attending board meetings.

“What’s wrong with that?” I hear you ask. For SMEs, the main issue with this is that you can create the most wonderful business plan but if your recruiters do not deliver the numbers then the plan will fall apart. So, there can be a real disconnect between what the non-exec advises on a strategic level and what is actually going on at the coal face.

These SME owners are now typically looking for a different type of relationship and service from their non-executive directors. Those non-exes that help create the best growth strategy to achieve their objectives but are also capable, and willing, to roll their sleeves up, working ‘at desk’ with recruiters, are the second type.

Where many companies end up paying double for two people to achieve this these owners only pay once by utilising a non-exec ‘one-stop-shop’ who is able to advise and deliver on virtually every part of their business.

It’s not just about the high level strategy but also sharing a whole host of new business generation activities, tools and tips that are valuable across the whole company including board directors, managers, recruiters, marketing and back-office.

If you really analyse it, once a strong growth strategy has been agreed, apart from ongoing advice at board meetings, the vast majority of help needed by small and medium-sized recruitment companies, who make up more than 90% of the market, is tactical. 

Consequently, it is the non-exec’s ability to deliver both strategic and tactical answers to your business today that can count most.

“We have seen some really tangible results”, says Stephen Grainger, managing director of Verticality. “For example, our non-exec was a big driving force in helping us both create and execute our strategy of increasing our offering within the contactor and interim space in addition to our perm business. This has grown from 10% of our turnover to in excess of 50% and there is no doubt that this is partially down to Alex. Across the whole company, during the time we have worked with him, we have achieved close to 100% year on year growth.”

Now that the market is improving the vast majority of owners are looking to grow their business again however, this brings its own challenges. You should be asking yourself right now whether you have the best plan in place most likely to achieve your goals.  Are you making the right decisions every month or are you unknowingly holding your business back? The right non-exec should be able to give you an independent view on this plus they have to be someone you completely trust in the way that they operate and the advice that they give.

Non-exec 2.0 should be able to deliver both the strategic plan for your company as well as the ‘at-desk’ tips and techniques that will enable your recruiters to deliver your revenue targets thus ensuring your growth plan is successfully achieved.

Alex Arnot is a non-executive director and entrepreneur. He specialises in helping a select group of SMEs in the recruitment sector grow more quickly and more profitably. On average, the companies he advised during 2013 have increased their net profit by more than 50%. He can be contacted at aarnot@alexarnot.co.uk or 07949 082661.