The Accidental NED
An interview with Toby Bridges, CEO, The NBT Group
In this first in a series of interviews, Toby Bridges talks to Tracey Wilson about how an application for funding for training was the catalyst for the introduction of non-executive directors into his family business.
When Toby applied for funding from Growth Accelerator to train his senior staff, he didn’t expect that this would lead to a fundamental shift in the governance of his business, facilitating its rapid growth. Over the past three years turnover has increased from £3 million to £14 million and The NBT Group now works with global brands including Hitachi Rail, Unipres, ZF Group and Avery Dennison.
As part of the Growth Accelerator funding package, the business was assigned a coach for three days to help the business grow. At first Toby was a little apprehensive about taking up the offer:
“I thought to myself – here is a person who is going to come and help grow your business in three days!!! Three days didn’t sound a lot, bearing in mind we are almost 110 years old, and I just didn’t know what I was going to do with them and I didn’t want them”.
Part of the reason for this was down to trust and having to share information with others outside of the family business:
“I didn’t want someone else in the business at that time that I would have to share things with, I just didn’t feel comfortable with that. We are a family business and it didn’t work like that back then”
After some thought, Toby decided to use the coaching time available to set up a fully functioning board which, like many other family firms, did not exist at that point. Toby tasked the coach to run a structured board for half a day a month over the next six months. Reflecting on the experience, Toby adds:
“It helped me change my thinking on running a board. That first non-executive role gave us a bit of structure to move forward.”
The relationship subsequently developed more formally, with Toby later appointing the coach as a non-executive chair in the firm. At that time the firm began to grow through acquisition and two new external executive directors were appointed to help run the business on a day to day basis. Whist the non-executive chair moved on to take up a job in London, the Chair introduced Toby to his now “General Council” (GC), who has been with the business ever since in a non-executive capacity. Toby’s father, who is retired from the business, now acts as a non-executive chair and enjoys challenging the board each month.
While Toby acknowledges that his non-executive directors are not completely independent in the sense of the traditional non-executive director role, the set up works for him. Whilst, the two executive directors run the business on a day to day basis, his GC provides legal counsel to the board as well as governance.
“I don’t want a non-exec dropping in once a month, listening and challenging and then moving away again. I am not sure whether that is possible in a small business”
So, what does Toby look from in a non-executive director?
“I want people with experience, I want people with battle scars. I don’t want management consultants, I want people who have done it, who understand what it is like to lie awake at night worrying about the cash flow. We don’t have huge budgets to fall back on like big corporates and that person needs to understand what fits at SME level. I think that is really important.”
Fit within the business is also so important – “You need someone who you can trust implicitly, because you are going to have to share a lot about your business with that person, probably more than you have ever done before with anyone else other than your bank manager”.
Speaking specifically about his GC, he adds “He just understands the business better than any lawyer could do. He just gets the business, he gets me. I would never bring someone into the business who I didn’t like. I spent a lot of time with him before bringing him onto the board – you have to get on with them and you have also got to be prepared to be challenged by them.”
Toby admits that one of the biggest problems he faced was sharing information with individuals outside of the family, but the culture of the business has changed from one of not sharing anything to sharing everything over the past few years. Looking back, Toby views his experience with Growth Accelerator much more positively:
“It made me realise that I was going to have to open up and be a bit more trusting, and I thought let’s see how it goes. And, actually the sky didn’t fall in – in fact the opposite happened, we grew.”
Toby recognises that the costs of hiring a non-executive director might be off putting for some businesses:
“The problem with non-execs is that it looks like a lot of money. You might question what is this person actually going to do for us that we can’t do for ourselves? Its about understanding the value a good non-executive can bring to the business, and that is difficult if you haven’t tried it.”
So what advice can Toby give to SMEs in the region thinking about employing a non-exec?
“If you are thinking of taking on a non-exec director for your business, go and talk to someone who has already done it to find out what it is like. If you aren’t ready to commit fully just yet, go get a mentor to begin with. See what it is like to talk about your business to someone else, see how comfortable you are with that before stepping up.”
He adds: “You need to get out and talk to the world about your business. There’s a myriad of great networks in the North East, go out and talk to people – because along the journey you might find someone you might get on well with, and that is probably much better than judging a person from their CV. Think – am I going to be comfortable with this person? Am I going to trust them?”
The creation of a structured board has allowed Toby to leave the day to day running of the business to his executive team, which has enabled him to take up his first non-executive role which he sees as an “opportunity to help other companies grow and to develop the community.” Toby hopes that through the success of the Experience Bank, others like him will be encouraged to take on non-executive roles to help North East firms grow and prosper.
Toby concludes by saying:
“If Growth Accelerator hadn’t given me the initial kick, would we be where we are now? I think we probably would have got here……. eventually. I just think it helped us get here quicker.
And certainly, if I didn’t have the board I wouldn’t be sitting here with you now talking about getting all excited about helping other businesses, because I wouldn’t have had the time – I would just be slogging away with the business.
I hope that the Experience Bank will enable other businesses to access their first non-exec just as I found mine through Growth Accelerator.”
About the project:
This interview was conducted as part of a joint research project between Professor Philip Shrives and Tracey Wilson, Northumbria University and the Experience Bank into the value non-executive directors can bring to North East firms.
Professor Philip Shrives is Professor of Accounting and Corporate Governance and Head of Department – Accounting and Financial Management, Northumbria University.
Tracey Wilson is Associate Head of Department – Accounting and Financial Management, Northumbria University.
Peter Neal is a member of the Experience Bank Advisory Board.