A company’s board is its heart – and what goes on in the boardroom will have a significant impact on the health of a company.
Companies need to ensure that the makeup of their board provides the best possible combination of experience, expertise, enthusiasm and ability. It is no use if every director is ‘gung-ho’ and determined to follow the latest trends, if it means that the company’s history, values and even committed customers are left behind. Having a range of people with different skills and viewpoints leads to broader debate, thus reducing the room for these types of mistakes.
A long-serving director can add huge value to boards, companies and employees. Fully understanding these advantages can help boards be pro-active about retaining directors and preventing them being prematurely dismissed simply because they are seen as the ‘old guard’.
In an article for the Harvard Review, Jeffrey A Sonnenfeld said: “Michael Dell (Dell Computer placed tenth on Fortune’s 2001 list of most-admired companies) told me that when he incorporated in 1987, as a 21-year-old college dropout, he found it invaluable to have then 70-year-old George Kozmetsky, Teledyne’s visionary founder and the former dean of the McCombs School of Business in Austin, Texas, serve on the board.”
The Companies Act 2006, imposes certain general duties on a director of a UK limited company including: acting within their powers, promoting the success of the company, avoiding conflicts of interest, and exercising reason, care, skill, diligence and independent judgment.
Figures from Companies House show that as of June 2021, 4.7 million companies are registered in the UK, with the average age of a company 8.5 years – a decline from 10.7 years in March 2000. That means a lot of companies may be missing the experience of a long-serving director.
Here we look at seven key benefits:
1. Sound knowledge base of company’s culture, products and services
Top of the list is expertise, a long-serving director’s company knowledge. As someone who will have attended many board meetings, over many years, a long-serving director provides a sound knowledge base of the company’s culture, and its products and services. They will know what works – and what doesn’t – within the organisation, and can provide insight about previous successes or failings that can inform future developments.
Long-serving directors can also pass on their knowledge to new directors and provide additional support during any onboarding – decreasing the time it might otherwise take for a new director to become familiar with different facets of the business.
2. Continuity for employees
If a director has been part of a business for a long time, they will not only have insight into board members past and present, but also the employees that they work with. Keeping lines of communication open between directors and staff is critical for business success, and employees need to know and respect that those at the top of the company structure are as invested in the business as they are. It is also reassuring to know that there is some long-term guidance and continuity at the top on matters such as recruitment, pay, promotions and dismissals.
3. Support long-term thinking
Long-standing directors may be more comfortable with thinking long-term than other members of the board. While younger or newer board members may be happy to look at short-term benefits, a long-serving director can often present arguments for the bigger picture and help the company plan for the long-haul.
4. Help wider stakeholder engagement
Insight and background knowledge of the company and its employees can help long-serving directors engage more easily with other stakeholders. Their experience helps them understand what stakeholders need or expect, which communication tools work best, the resources required and how to resolve any conflicts.
5. Influence board behaviour
An experienced director will know the ins and outs of company processes and board protocol and can help provide a steady hand if there are conflicts within the board.
6. Enhance board credibility
A respected long-serving director provides credibility that can be invaluable for positioning a company within the market, reassuring potential business partners and customers, and helping provide trust in the company and its products.
7. Provide stability
Regular attendance at board meetings (real or virtual) and being prepared for the issues under discussion, are key expectations for a company director, and long-serving directors will be well aware of their importance and hopefully lead by example. Providing stability and a firm foundation for the board and the company itself is a critical role for long-serving directors to fill.
How can you be pro-active about director retention?
To help retain the positive presence of a long-serving director, it is important to provide an environment that is challenging, engaging, and fulfilling. The best and most successful businesses put their people first, and a director who is happy with the way they are treated and their role on the board is more likely to stay.