The Importance of a Non-Executive Chair for invested businesses and the value they add
The role of the non-executive has changed considerably in recent years. As Executive Search consultants with a track record of many successful Non-Exec Chair appointments, we bring an independent and informed perspective on what success looks like.
You could be forgiven for thinking that non-executive board roles are largely filled by former industry leaders looking to utilise their valuable experience whilst stepping away from full-time executive duties. Their impact would be confined to running board meetings and ensuring board rooms had sufficient levels of corporate governance, however, this has evolved into a more strategic, added value role.
The benefits of adding a Chair to your Board that has witnessed first-hand the challenges of a high-growth business and the know-how to maximise opportunities is invaluable. Resultantly, the addition of a Non-Executive or Chair is more commonly an imperative for successful business growth and not a nice-to-have.
Getting the timing right
Internal or external pressures can trigger the appointment of a Non-Executive. Board-room planning, business direction, changes to strategy, exit and/or retirement planning, and the completion of an investment process are all common drivers.
Appointments are not always driven by incumbent or incoming investors.
Appointing a Chair early in a business’ growth story is becoming increasingly common, with many founding teams and CEOs opting to bring in a Chair to assist with specific aspects of a growth plan ahead of raising external finance, with the aim of increasing valuation multiples.
Shifts in Experience Requirements
Investors will usually stipulate that the appointment of a Non-Executive, normally in a Chair capacity, is a requirement of the investment process. Sector expertise, well-rounded experience, a strong/willing network of influential industry leaders, and Board experience are often requirements of the recruitment process. The market is also trending towards candidates who’ve recently held executive leadership positions as they often bring a different perspective to the board room and one that can relate well to current leadership teams embarking on ambitious growth plans.
Landing a Non-Executive or Chair is more than just about adding experience to the board room. It’s about adding strategic acuity and knowledge of “what could go wrong”, in addition to an energy that suits the business and the personalities in the board room.
The Private Equity Chair
The right Non-Executive Chair appointment will add value to any company but particularly so in invested businesses often characterised by diverse stakeholders, rapid growth plans and ambitious exit aspirations. A Chair with broad experience across all stages of the investment cycle is an increasingly integral part of PE and VC boards, and for ambitious management teams’ access to and contribution from individuals who have “been there and done it” is a significant benefit of PE or VC investment.
Ultimately, the right Chair will deliver value through achieving growth and maximising exit valuations. Throughout their tenure, they will :
- Provide support, coaching, and guidance and be an effective sounding board for the CEO and wider Board whilst contributing to their ongoing personal development.
- Provide constructive challenge and advice to the Board on its strategic plan, ensuring risks, challenges and opportunities have been considered and planned for.
- Oversee the composition and development of the Board, participate in the selection of future board members and ensure it is fit for purpose as the business scales.
- Promote good governance and robust reporting that can withstand external scrutiny.
- Ensure strong communication across key individuals inside and outside the board room, driving consensus and ensuring stakeholders remain aligned behind the strategic objectives.
- Crucially, the Non-Executive Chair will help to prepare the business for exit, assess potential options and maximise exit valuation.
Maximising the impact of the Chair
The potential transformative benefits of appointing the right Non-Executive Chair make the appointment process a critical element to maximising impact and achieving value for money. An independent and impartial process means that boards and founders get a shortlist of high-calibre industry experts with a track record of delivering real growth and, importantly, exit. Boards can then choose “the right fit” from a shortlist of candidates, all of whom have the required technical, industry and growth experience to add value.
Just as with industry expertise and PE or VC credentials, the Chair’s emotional intelligence and their approach to the role, is as important to a successful appointment as their track record. Utilising a breadth of cross-sector expertise, the Executive Search firm should recommend candidates based on the project brief and make an assessment of the personalities that are likely to fit with individuals in the board room. In the final selection, however, culture and personality fit are best judged by the Board.
At Blair West we combine recruitment expertise with industry, professional services and investment understanding. The most effective consultant will not only pay close attention to detail within the brief but also seek to see things from your perspective, gaining an understanding of the subtleties that make your business work.
Mapping the market, assessing competencies and aligning industry fit might “tick the box”, but providing insight into how a Non-Executive Chair can really add value to your business is the stand-out differentiator of our Executive Search service.
