A different beast! The impact of non-executives on SMEs.

Small and medium-sized enterprise (SME) boards typically differ from those of larger companies in a few key ways. They are, as many say, "a different kind of beast".

One major difference is the size of the board itself. SME boards are typically smaller in terms of the number of members, which can lead to a more cohesive and close-knit group. This can have its advantages, with more efficient decision-making and better communication among members. However, it can also have its drawbacks, as a smaller board may lack the diverse perspectives and expertise that a larger board would have.

Another difference is the level of formality and structure. SME boards may be less formal and structured than those of larger companies, which can make them more flexible and responsive to changes in the business.

A third difference is the level of professionalisation. SME boards may be less professionalised than those of larger companies, which can mean that members have less experience and training in corporate governance. This can lead to less effective decision-making and oversight.

Lastly, SME boards may also have a more hands-on approach to management, and may be more involved in day-to-day operations, which can make it harder for them to effectively monitor the company, as they may become too focused on operational issues.

Can NEDs increase the efficiency of SME Boards?

Without doubt, non-executive directors can certainly help increase the efficiency of boards. NEDs are independent members of the board who do not have an executive role within the company, and therefore can provide an objective perspective on the company's operations and performance. They can also bring a contact network which benefits SMEs. Here are a few ways in which NEDs impact SMEs:

1. One key role of NEDs is to provide independent oversight of the company's management and to act as a "sounding board" for the CEO and other executives. They can also provide a check and balance to the actions and decisions of the CEO and other executives, which can help to mitigate any potential conflicts of interest.
2. Another role of NEDs is to provide strategic advice and guidance to the company. They can use their industry knowledge and experience to help the company identify new opportunities and to navigate any challenges it may be facing.
3. NEDs can also help to improve the overall governance of the company by participating in board committees, such as audit and remuneration committees, which are responsible for overseeing specific areas of the business.

In summary, NEDs will help increase the efficiency of boards by providing independent oversight, offering strategic advice, and participating in key committees. They can bring a diverse range of skills and expertise, which can help to improve decision-making and governance.

Most certainly, SME boards nearly always differ from larger companies in terms of size, formality and structure, professionalisation, and level of involvement in management. These differences can have both advantages and disadvantages, and it's important for SME boards to be aware of these differences and to take steps to mitigate potential drawbacks.

Ian Wright is the Founder and CEO of Virtualnonexecs.com - a global non-executive director community of 16,000+ members.

Ian sits on the board of 6 UK companies in SaaS/Tech, E-commerce, Energy, Media and Sustainability/ESG.