Entrepreneurs See Boards of Directors as a Threat
Byline: By Sion Barry Western Mail
Entrepreneurs typically have little interest in having boards of directors in their companies. A study of small and medium- sized enterprises from the Association of Chartered Certified Accountants, also shows that entrepreneurs believe that non-executive directors would simply put constraints on them running their own businesses.
The research, carried out by Colin Coulson-Thomas, Professor of Direction and Leadership at the University of Lincoln, found that few SMEs even had working boards, and the handful of non-executive directors were usually relatives.
Business owners liked to take the key decisions themselves and feared losing control and being constrained by "outsiders".
Even those who acknowledged that additional directors could fill existing skill gaps, did not believe they would be able to afford them.
The study found that operational issues typically took priority over strategy with "getting through the next couple of years" the key driver.
Hardly any of the businesses studied had working boards which met regularly or addressed longer-term strategic issues.
Boards and non-executive directors were seen as a "large company" issue, dealing with compliance rather than adding value to SMEs.
Professor Coulson-Thomas said, "Directors in many cases only tended to act as directors when required to do so, at AGM time, or when approving the audited accounts.
"But in the absence of independently-minded non-executive directors, whose duty is to the company rather than particular individuals, many found it difficult to step up from discussion of short-term operational issues to provide strategic direction.
"What was most striking - and sad - about my findings were that virtually no entrepreneurs were able to sum up succinctly what was special about their business or what their vision was.
"Some of them had real potential, which independent advice in the shape of new directors could help them realise, but they could not see it. …