By John Knight

If a local authority has ambitions to grow a trading company further, it is of paramount importance that the Board provides maximum value. The best performing Boards invest resources in their own development. Of course, this does not always mean financial resources; investing time and energy can be just as important to ensure that the Board members are adding as much value as possible to the company.

High performing organisations, whether in the private or public sector, prioritise the continuous improvement of the Board and set its careful governance as a corporate priority. If a Council sets ambitious growth targets for its commercial operations, it needs to ensure it has a high performing, committed and skilled Board to drive the strategy and support the delivery of that growth. We believe that a highly effective Board is a critical success factor for the successful operation of a service when delivered at arm’s length from the day to day operations of a council.

Optimising the make-up of the Board

When it comes to the make-up of the Board, you need to look at what skill sets are required, both currently and moving forward. The Board needs just the right mixture of knowledge, skills and expertise. The quality of the Board is also enhanced by diversity in terms of industry and professional background, a well as diversity of gender, personality and opinion. This will enrich the culture of the Board and greatly reduce the likelihood of ‘group think’, which can inhibit effective outcomes.

To achieve this perfect blend, there are various options as to the composition of a Board, which may include a mix of executive and independent, non-executive directors (NEDs).

What do non-executive directors do…and not do?

NEDs bring additional capacity and insight into key areas of the business and balance Board level skills and expertise, support succession strategy and diversity. NEDs are appointed to bring industry and technical strengths, as well as governance knowledge. Crucially, NEDs are ‘non-executive’ because they are not meant to participate in the day to day running of the organisation and should not do so. Their role should remain purely strategic. They also should not have any significant relationship with the organisation, past or present. So this tends to rule out former employees, a major client or a majority shareholder representative, for example.

What should non-executive directors do?

Non-executive directors should:

  • constructively challenge and help proposals on strategy
  • scrutinise management performance in meeting agreed goals and objectives and monitor reporting
  • be satisfied as to the integrity of financial information and that financial controls and systems of risk management are robust and defensible
  • be involved in appointing (or removing) executive directors and determine appropriate levels of their remuneration
  • spend time developing and refreshing their knowledge and skills
  • have high standards of integrity and support the rest of the Board in instilling the right culture, values and behaviours within the company

Are you interested in exploring a non-executive director role for a local authority trading company? Speak to us to find out more.