Press Coverage
A Fresh Perspective
Professional Recruiter - 2002-03-27
In a young, sales-driven industry such as recruitment, having someone on the board of directors who can bring a fresh, objective perspective and fill any gaps in expertise is an invaluable resource. Non-executive directors are a growing force within the industry, helping agencies in all sectors confront difficult times and make the most of opportunities.
Among quoted companies the rules on corporate governance and market expectations demand the presence of non-execs. Fairly or not, cynical commentators point to the "non-executive gravy train" with directors collecting "cushy positions and fees". Of course most agencies are not quoted. So, in the private sector, what is a non-executive and what can they do for an agency? Quite a lot if David Hughes, MD of Executive Connections, is typical. In Hughes' agency headcount has increased fourfold and profits by 900% since 1997. He is blunt about non-execs: "They are invaluable".
Different Skills
Non-execs are part-time directors of and advisers to the company they act for. The nature of relationships can vary legally and operationally but, in essence, non-execs bring skills, views, abilities and objectivity to complement those inside the company.
Many agency owners are young and sales driven. Understandably enough, some lack certain skills. The smart ones recognise and remedy this. Zena Everett of Perriam & Everett is living proof - her board includes two.
"While a managing director should see business from broad perspective, sometimes - especially in an owner-managed agency - everything becomes too close and personal. Good non-execs bring different skills and impartiality and are not afraid to challenge you", Everett reflects.
"Good non-execs challenge the status quo without the baggage of a private company executive," agrees David Hughes. He believer non-execs fulfil another important role: "They should act as confidant and sounding board for the MD."
Bernard Lardner, non-executive director of AIM-quoted IT recruiter RDL, values this support. "A managing director is often isolated, particularly in IT recruitment where MDs tend to be young with few contemporaries to turn to. As a non-exec, I expect one day to be a moral booster and the next to have to curb natural excesses that sometimes creep into a sales-oriented environment!"
Lardner believes the non-exec role extends further than this. "There are major strategic issues, but likewise some companies must make the infrastructure break. Agencies need to be persuaded to recruit and adequately remunerate "non-contributors" - typically a strong finance director - to strengthen the infrastructure. It often falls to non-execs to push this."
A useful resource
So a non-exec brings objectivity. The might see risks and opportunities overlooked by management and they might act as sounding board for the managing director. While non-execs cannot possibly fill all gaps, and nor should they, many are employed for specific expertise in sales, marketing, IT, finance or legal - or because they have particular contacts.
"Good agencies have strong sales bias, usually dictated from the top, but a good agency will never be great without a broad range of skills at the top," says Irene Friedman of Numerica's recruitment group, which advises a wide range of recruitment businesses.
In terms of employing skills, Paul Johnson's company ECI Human Capital is typical. He employs a non-exec who, although possessing wide business experience, is particularly strong in finance. "The fit is perfect," he explains. "My partner and I have certain skills which are complimented, and challenged, by our non-exec. His appreciation of finance in particular and business in general has made an enormous contribution to our strategy and success."
Another IT agency owner, who prefers to remain anonymous, displays frankness. "Our non-exec is incredibly well connected. With the issues surrounding preferred suppliers lists and the difficulties of opening new accounts, he can open doors previously closed to us."
Many agencies already gain from advantages offered by good non-execs. They provide long-term, cost-effective relationships and help and guidance. Others use non-execs to ride transitions. A non-exec brings specialist knowledge, invaluable for challenging times, when making acquisitions, expanding overseas or if contemplating a trade sale, management buy-out or flotation.
Finding the right person
So where can agencies source a good non-exec? It is important to remember that non-execs right for some industries might not be right for others. A cultural appreciation of the industry may be crucial.
There is a range of sources for good non-execs. Traditional agencies, professional advisers (Numerica's recruitment group is frequently asked to advise on appointments), bodies such as the Institute of Directors or industry contacts can all help.
Given the varied roles sought from non-execs, personality is as important as skills, so take time making any appointment. Speak to competitors and advisers with experience of appointments.
Zena Everett comments: "In a non-executive, value comes from independence and ability to challenge. Never pick a non-exec who needs the money. He might lack the courage to question your approach."
Executive Connections' David Hughes is similarly forthright. "You need honesty and objectivity. I suggest complete outsiders, not friends or acquaintances. This makes recruitment more difficult, but more worthwhile."
Hughes also has strong views on tenure periods. "Non-execs are like cars. They need changing every few years if your journey is to be as swift, comfortable and economic as possible."
Those appointing directors and directors accepting appointments must be well advised - and well insured. "Everything needs to be put together properly and fully serviced. All parties need to know where they stand legally, and, in particular, their responsibilities to the rest of the board, to the shareholders, stakeholders and wider business community. Oversights can be costly," explains Kevin Barrow of specialist solicitors Tarlo Lyons.
As with most areas of business, getting it wrong can be financially damaging but, as more and more recruitment agencies are finding out, good non-execs can make a huge difference and bring real benefits.
