Mentoring tales – The difference between a director and a consultant

Posted on Posted in Mentoring

A couple of years ago, long before I knew I was a mentor, I was advising a colleague with whom I had invested some considerable amount.

His business was growing slowly, so to gain faster traction, he was considering taking on a Non Executive Director (NED). I thought this was a good idea as his management skills were lacking, so taking on a new director with fresh ideas and more experience would be a good idea. I offered to introduce him to a contact of mine who was probably the foremost industry leader in the country. After a couple of meetings, my colleague announced he would be taking on the new NED and looked forward to working with him. I therefore kept an eye on the trade press and social media to await the formal announcement, I heard nothing.

Fast forward a couple of months and I get a phone call from my colleague complaining that his new Super NED was not being very effective, he wasn’t giving great advice, no new industry contacts were forthcoming and therefore no new business was being conducted. I consoled him, while being surprised that the relationship was not bearing fruit.

Another few months and I get a call once again, the super NED had accepted a non-exec position at a direct competitor. What was my colleague to do?

I was very surprised, I explained that as a Director, his NED was obliged to act in the best interests of the company at all times and taking a NED position at a rival company without consulting the board of his existing business was not only a dismissible offence, but was tantamount to corporate espionage and liable to extreme penalties.

We discussed it at some detail and worked out a course of action and the options available to the company. When I asked some pertinent details about the nature of his NED contract, the conversation stalled and further information was not forthcoming.

Then I asked a direct question: Is the NED employed as a Non Executive Director? A short silence was followed by the full disclosure that, in fact, he was not a NED, but on a short term, part time consultant contract for 1 day a week.

OH DEAR, OH DEAR, said I. That completely changes the landscape and everything I have advised you is wrong as a consequence. As a consultant, he has no responsibilities to you outside of the hours worked. He does however, have full responsibility to your competitor which includes divulging any or all information that may be helpful to them.

“Oh”, said my colleague, “I didn’t want to take him on as a director as I didn’t want anybody interfering in my company.”

“That’s exactly why you needed to take him on, you need the expert council.
Now, you’ve given all you trade secrets to your competitors.” Said I

Oh and by the way, this is the same person that is trying to sell the commercial premises outside of our contract (mentioned in a previous blog).

I have agreed to meet him as, by pure coincidence, an opportunity to buy a commercial premises at Silicon Roundabout has come up, so liquidating that property may possibly be beneficial. However, based on previous conversations, I’m taking nothing at face value.

 

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