In my experience the NED is still seen as an outsider and NED’s also view themselves as outsiders. Whilst their degree of detachment from the day to day life of a business can be a healthy thing, the detachment caused by episodic intervention can be very unhealthy and greatly restricts the ability of the NED to deliver value and exercise their governance duties.
The first 100 days is something of a cliche for executives, but for NEDs it is assumed that they just step straight in with their ‘experience’; listen in and contribute when they see fit. For the first 100 days and beyond to work, the executive board must know 100% why the NED is there and what the NED plans to contribute. Any board must be serious about taking on an NED and unless they are it should not happen.
Assuming that the board has accepted the NED and their role then what should the NED do?
1. Meet each board member face to face to understand what their roles are and how they see their role. This is also the time to find out the ‘elephants in the room; the ‘sacred cows’ and the underlying strengths and weaknesses of an organisation that don’t appear on paper.
2. Meet each board member’s direct reports or at least some of them to see where the pressure points are in middle management. If the organisation is stressed it will be most apparent at this level, not, paradoxically at the board level.
3. Spend some days at the ‘coal face’. Meet a number of people and spend some time with key new employees and long standing employees but not those in between to gain the perspectives on changes over time and the fresh eyes of new people. From this the NED will gain invaluable insight that even other board members will not have on the strengths and weaknesses of each function be it, sales, marketing, finance, HR, IT, operations, logistics, legal etc.
4. Start as soon as possible testing the board members with the NED’s impressions of the organisation from the inside. This might not sound like the most popular move but an NED’s authority is so often weakened because they are not seen as having a real understanding of the business.
5. NEDs tend to have specific domain expertise and be expected to comment on the technical side of that domain quickly. However, the NED must gain very quickly a sense of the strength of leadership by the board and next levels down.
6. Understand the strategic plan. This is not just the 12 month business plan, this is the longer term roadmap of achieving step changes in commercial performance and place in the markets. This should be thoroughly interrogated and challenged for robustness of examination and thought for reality rather than fantasy.
7. Having learned about the people and the functions the NED must consider the operating structure and whether this is fit for the purpose of meeting the objectives.
8. The NED must look at the ‘informal organisation’: the behavioural norms, patterns of influence and communications, politics and other aspects of the team culture. This provides the framework within which guidance should be executed and indeed a set of aspects of the business that may also need to be challenged even if they are mostly not spoken about.
9. NEDs should act and think as if they are full time executives in order to take the role to the level of suitable responsibility but stop short of accountability.
10. Heed the red flags and shout early. The NED is expected and most able to anticipate or spot problems early on. While this can be a tremendous strength, it can be a double-edged sword if taken to the extreme. They must refrain from taking on all the issues and resist the tendency to be the organization’s saviour.
In the end the executives must listen and act. This will be most effective when the NED has spent the first 100 days establishing knowledge, respect and understanding.
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