Recruiting directors

Structuring the board

Start-up companies often have one director, the minimum required by law, who may also be the main shareholder and who manages the business.

Appointing directors with specific responsibilities for parts of the business is a valuable way of organising the business, by splitting responsibilities and identifying lines of command. For example, the sales and marketing teams could report to a sales and marketing director who is responsible for the sales and marketing strategy.

Owners of businesses coming to the end of their start-up phase, and who need to delegate some of their responsibilities, often find this a useful way of structuring the business. Many growing companies appoint finance, operations, and sales and marketing directors.

Such companies might have a board comprising:

• A chairman - oversees the whole business.
• A managing director - employed by the company, runs the business and draws a salary - the managing director reports to the chairman and oversees the board of executives.
• A team of three executive directors - sit on the board, draw a salary and manage key areas of the business, such as finance, sales and operations.
• Two non-executive directors - advise on the strategic direction of the business and decide remuneration of executive directors. They may be paid fees.

Having a clear structure allows shareholders to understand the roles of and reasons for appointing executive and non-executive directors. It is a good idea to have a senior, independent director as a point of contact for shareholder grievances.

Staff need to know who is responsible for which business areas and who they can go to if problems arise. In smaller companies staff may well work alongside directors but as the company grows they may have less day-to-day contact.

Subjects covered in this guide

• Introduction
• The different types of director
• Structuring the board
• Choosing a director
• The recruitment process
• Appointing and remunerating directors
• Get the most from your directors
• Here's how I recruited directors with different and complementary skills

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