Been there, done that: In conversation with Director, Danny Malone
What better way to find out about the pros and cons, highs and lows of being a director than to ask someone who has done it all? So, we did.
Danny Malone is a Chartered Accountant and has been in financial services for over 30 years as Finance Director, CEO and, more recently, an independent non-executive director. He has worked for banks, bank subsidiaries and under private equity in the UK and European lending space (loans, mortgages and cards). In 2006, Danny founded Everyday Loans as a new start-up with £30 million backing from private equity. The company was acquired by Secure Trust Bank in 2012 and then on-sold to NSF PLC in 2016 for £235 million (enterprise value). Since 2017, Danny has worked in various roles as interim CEO and is currently an independent non-executive director.
Danny kindly agreed to give us an insight into what being a director actually entails, the risks and challenges that directors face and what it takes to be an effective director.
1. What do you look for in a new director?
First, I consider why we’re appointing a new director. This is probably because there’s a gap in the board’s experience or because we want to cover a perceived weakness in the executive or to address a specific issue. A new director has to have to the relevant experience to meet that requirement.
A director also needs to be able to make decisions. If you can’t make a decision quickly, you probably shouldn’t be a director in the first place. That said, directors need good inter-personal skills. You have to be able to get on with others and listen to their opinions; dominating others reduces diversity of thought and minimises options.
I also want to see at least one character reference for a potential new board member. Basically, if in doubt, don’t hire them.
2. What are your top tips for running an effective board meeting?
Having an agenda with reasonable timings and sticking to it is key. Occasionally, exceptional circumstances may arise but generally, don’t go off on a tangent. One way to help with this is to circulate papers well in advance of the meeting so everyone has a reasonable chance to read them properly. Don’t be tempted to read the papers out in the meeting itself; instead, discuss key points where necessary and ask for comments. Any minor points, such as typos, grammar and other minor corrections can be dealt with outside of the meeting.
I also rotate the order in which I ask people to speak so that everyone has a chance to opine and tend to speak last myself so as not to sway others. To make sure that everyone gets heard, asking quieter board members to speak first also works well.
3. You’ve had experience as both an executive and non-executive director. What do you consider to be the key similarities and differences between the two roles?
As an experienced executive, you generally know the detail already and are simply trying to get on with the job with as little “interference” as possible, whereas less experienced executives may be looking for more help and direction in relation to past issues.
In contrast, non-executive directors are unlikely to know the minutiae and probably don’t want to; they should be focusing on the issues, rather than the details, although at times, it may become necessary for them to understand the intricacies. Generally though, non-execs need to ensure that all issues raised are properly addressed before closing and are more reliant on third parties, such as compliance, the audit teams and so on, to check the actual detail.
4. How has the legal risk landscape changed since you first became a director? In your opinion, is this change for the better or not?
It has definitely become more risky to be a director. Whereas in the past, you could only really be liable by commission, now you can be liable by omission and penalties are both more likely and more severe than they used to be. A director has to ensure that the whole risk landscape has been assessed and kept up-to-date.
5. Have investors’ expectations changed at all in terms of the role of the directors and the board?
Nor particularly in my view. Investors are generally more interested in risk / reward of proposition rather than more detailed risks within the business. Their concern over risk will be in relation to the big picture issues, i.e. “what could shut the business down and cause the write-off of my whole investment?”.
6. In your opinion, what, currently, are the main challenges for a director?
For an executive, I would say it goes back to legal risk; in particular, the scale and complexity of the risk universe and staying on top of it.
For a non-executive director, it’s probably having sufficient high-calibre executives that you can rely on so that you don’t end up trying to run the business (which is their job) and the availability of a talent pipeline for the future.
7. What do you wish you’d been told before you became a director?
I think I would have benefited from someone explaining to me the rationale and need for having non-executive and shareholder directors.
I became a finance director relatively young and couldn’t really grasp why non-execs or shareholder directors needed to be so involved. Life was busy and I was often thinking “Why can’t they just leave us to get on with it and stop wasting our time?”.