PILOTpartners announces the launch of its Chairman and Non-Executive Practice (CANE)

Why CANE and why now? Three main structural reasons for this initiative:

First. Whichever way you look at the economy, it sends shudders up and down the spine. Whether it's the retail sales decline of July, the projected "double-dip" in house prices, the increase in VAT and other personal taxes, the likelihood of a growing unemployed number, or just the worry that "Red Ed's" union backers will want to cause trouble for the sake of causing trouble. Everything points to a year or two of choppy waters where companies will be looking often at static sales lines and pressure on margins. A lot of highly leveraged "apples" of the private equity industry eye of a few years ago might be looking a bit wobbly on the bough.

Second. There has been a major shift in the way private equity is working. It's now less about seeking out sleepy assets and/or neglected opportunities and more about using the traditional skills of financial analysis and understanding of risk to evaluate the future viability of portfolio companies or the possibility of improved performance via turnaround management modus operandi. To follow this through, the private equity investor or other stakeholder will usually need particular assistance:

• A Chairman to analyse a business and develop rapidly a cogent plan for either disposal or growth. This individual could, of course, be a consultant but an in-house Chairman is likely to get into the guts of the business faster, to have greater commitment and to secure the help and support of the internal team (all but the very best consultants can be partially frozen out by a hostile team, and the very best consultants come at a very high cost!)
• A Chairman to take the business forward when the analysis reveals potential for development and growth. Often a rather different character than the "analyst Chairman"; more a leader, team builder and doer.
• Non–executive directors either with deep sector experience to assist in a particular market situation, or a generalist who will support the Chairman and stakeholders in monitoring the executive team, and in ensuring best Board practice.

Third. PILOTpartners have been up and running for two years (and the Partners are steeped in private equity and turnaround experience). In that time we have met, analysed, recruited, trained and/or placed many hundreds of senior UK executives, many of whom hold existing directorship portfolios. In that time also, we have developed our own ideal pro-forma of those qualities that mark out the best non-executives in differing situations, but almost always when a company is under some stress.

Of these many hundreds of executives, we are inviting those who match the pro-forma to join our Chairman and Non- Executive Directors Practice. As members of this panel, they will be kept fully up to date with issues of corporate governance, personal liability and legal responsibility of Directors. They will, of course, be available to our clients, backed by the full resources of PILOTpartners.

Now, specifically, what characteristics do we look for in our candidates? Clearly they have to share the characteristics required of all Board members:

• Provide entrepreneurial leadership within a framework of controls and risk management
• Set strategy and enable its achievement by ensuring the appropriate financial and human resources
• Set the values and standards for the enterprise

Non–executives, in addition to these must be able to add serious value to a Board in the following areas;

• Ability to challenge strategy as well as contributing to its development. A questioning mind is an imperative.
• Experience in and innate ability to monitor performance. This involves an instinct for knowing when meaningful information is being supplied to the Board
• The ability to ensure that proper financial and risk management controls are in place, and that they are sufficiently robust
• An understanding of organisations and how they work, alongside strong mentoring skills
• Knowledge of and ability to promote the highest standards of corporate governance

So, in essence, what is a good NED; part policeman, part consultant, part mentor, part mediator. Deeply experienced in the way organisations work and the functions interrelate, and having operated in conditions of stress for a business. Not an easy role to fill, but a good NED can add enormous value in good times, but particularly in challenging circumstances.

Corporate Governance
As an additional service to its clients, PILOTpartners is now undertaking Board Reviews to assist clients in getting the most out of their Boards. This takes the form of a series of semi-structured interviews with each Board member across a range of issues bearing on the ultimate efficiency of the Board as a Board. A full report to the Chairman or stakeholder covers:

• Identification of key Board roles
• Definition of governance roles within the Board
• Executive/Non-executive relationship and communication
• Chairman/CEO relationship
• Improvement of Board processes, including timely and adequate management information and the workings of the committee system if in place.
• Plan for continuous improvement

The FRC's combined code of corporate governance (2006) lays great stress on the importance of these issues to the health of a business, and the FSA handbook legally enforces the reporting of FTSE companies against the code. It is also critical for businesses dealing in the public sector to have bi-annual reviews of their corporate governance status. PILOTpartners will conduct the interviews and produce the report usually within two weeks (subject only to the availability of Directors)