Non -executive administrators and SME growth

In developing a public market for PMEs governance rules cannot be as costly as in the case of companies listed in the main market. For SME, governance has to allow agility, be a guarantee of an ambitious but sustainable growth rate, but it can never be a brake on this growth. The role of board and non -executive managers varies significantly according to the company’s characteristics in terms of size, complexity of the business model and operations, on the one hand, and the complexification of the shareholder structure by the other. The following 4 administrator roles can be distinguished:
CEO steward. In companies recently admitted on the scholarship, with scholarships up to 25 million, the main focus of the non-executive administrator is to support and develop the founding CEO. Generally, there is only the CEO and another more senior executive, most decisions through the CEO. However, the CEO often has little management experience, despite displaying a high domain of the product and some markets and underlying technology. The proximity between the non -executive administrator and the CEO at this stage of the company is large, because a great articulation and confidence is needed to deal with emerging aspects and especially to challenge the founder not used to governance. The non-executive administrator is there to help the CEO develop, seek to avoid errors that compromise the company (but let the CEO make mistakes in uncritical aspects or early process phases can be useful), and complement the CEO in processes where they have particular experience and skill, often assuming executive processes.
Executive team steward. At the time the company may need to grow its executive team to respond to the growth and complexification of the business. The CEO is confronted with his limits and has to surround himself with other senior executives, having a different role of coordination and delegation. The non-executive administrator remains here in his role as Steward, but now extend this role to the entire executive team. The key issue is to ensure that there is a robust and high performance executive team with greater autonomy. This is not only for ensuring hiring executives with proper profile, but also, while Board, ensuring that the team works by maintaining contact lines with different executives to advise and adjusting the structure and processes.
Risk supervisor and strategy execution. Some companies grow rapidly based on a relatively simple product, and well -delineated markets. Despite being high -growing companies, there is a very large clarity as to the following strategy and the basis of competitive advantage. In these cases, the role of the board and non-executive administrator focuses on supervising the big risks and the execution of the strategy. The idea is that the CEO and his team ‘do not fall asleep at the wheel’ of a successful but unconstant business. Challenging the dominant status and logic is particularly important to be alert to disruptive risks and reduce compliance.
Supervisor of the complexity of interests and strategic direction. A fourth category of companies assumes a great complexity in the operations, business, technological base and dimension model. This is usually accompanied by a great shareholder complexity with divergent interests that seek output to their investments. The non -executive administrator has a high demand challenge here. Having to navigate the complexity of interest and ensuring that strategic direction is certain for the company implies the ability to supervise very involved, being able to go deep into many aspects of the company, but maintaining objectivity in the analysis. L

Governance teacher, Henley Business School, United Kingdom, and Partner at Amrop