What SME Owners Really Look for When Hiring a NED
What do SME owners really want from appointing a Non-Executive Director to their business? And what do they look for in a potential NED appointment?
As an investor who has appointed NEDs to portfolio companies and as an advisor who has helped executives secure these roles, I've sat on both sides of the table and noticed something fascinating about SME NED hiring.
The Hidden Decision-Making Process Behind SME Board Appointments
The decision-making process for bringing a NED into an SME is far more nuanced than most realize. When speaking with business owners in my SME NED Network, I've discovered their selection criteria often extend well beyond what appears in any formal job description or initial conversation.
In fact, many of the most decisive factors in hiring a NED remain completely unspoken.
Recently, after a particularly candid dinner with several business owners within my network, I asked them to share what influenced their NED appointment decisions. What I received was unfiltered truth—insights that could transform your approach to SME board opportunities.
Here are four revealing insights from the SME owner's perspective that could change how you position yourself for these valuable roles.
Insight 1: They Assess Your Understanding of Their Business Rhythm and Realities
Every SME operates with its own unique cadence and constraints, and business owners are hyperaware of how this differs from the corporate environment. They're constantly evaluating whether someone understands the practical realities they face.
One manufacturing business owner in my network explained: "When we had supply chain issues last year, we needed to find alternative suppliers within days, not weeks. I need a NED who appreciates that sometimes, quick decision-making is our day-to-day reality."
Another shared: "I'm watching to see if they grasp that my financial constraints mean we have to be resourceful with limited tools. I need practical solutions that work within our budgets, not 'ideal' corporate systems we simply can't afford."
This insight goes beyond simply acknowledging that SMEs are different. NEDs working with SMEs must demonstrate they genuinely understand their operational tempo, resource constraints, and decision-making environment.
Instead of positioning yourself as someone who will bring "corporate best practices," focus on showing that you understand—or seek to understand—the dynamics of their business and can adapt your expertise to their reality.
Sync with their rhythm, not yours, when pursuing SME board roles.
Insight 2: They Seek Evidence You Can Handle Uncomfortable Conversations
SME owners are looking for someone who can deliver uncomfortable truths without destroying relationships—though few will tell you this directly.
In SMEs, especially founder-led businesses, the lines between the business and personal identity often blur. Critical feedback about the business can feel like personal criticism.
One founder who recently appointed a Non-Executive Director shared: "What finally convinced me was watching how she handled a disagreement during our third meeting. She pushed back on my expansion plans with clarity and conviction, but did it in a way that made me feel supported rather than criticized."
This delicate balance—challenging without alienating—is crucial in SMEs where the owner may have limited experience working with boards. Rather than just emphasizing your expertise, demonstrate your ability to communicate difficult messages effectively.
As one business owner told me: "If a NED can't challenge my thinking, they're not worth the investment. But if they can't do it in a way that preserves our working relationship, they become a liability rather than an asset."
Truth with tact wins trust in SME NED appointments.
Insight 3: They're Evaluating Your Willingness to Roll Up Your Sleeves (Occasionally)
The theoretical line between governance and operations often blurs in SMEs, particularly during times of challenge or transition. Business owners value NEDs who understand when to maintain governance boundaries—and when hands-on intervention is appropriate.
One manufacturing business owner shared: "What impressed me most was that during our supply chain crisis, our NED maintained proper governance oversight while still connecting us with three industry contacts and helping to implement an emergency response plan. He knew exactly when to step beyond the traditional NED role without overstepping."
This doesn't mean becoming an unpaid executive or consultant—it means recognizing that strict adherence to governance boundaries without any flexibility can sometimes come across as rigid or unhelpful in the SME context.
SME owners value Non-Executive Directors who understand that occasionally, in specific circumstances, rolling up your sleeves to provide more hands-on guidance isn't mission creep—it's often exactly what the situation requires.
As one business owner brilliantly put it: "I need a NED who knows the difference between stepping in and taking over."
Being flexible creates value in SME board positions.
Insight 4: They Assess Whether You Bring Perspective Without Pretension
Perhaps the most revealing insight from my conversations with SME owners is their sensitivity to how you position your experience. They're looking for the perfect balance: someone who brings valuable perspective from larger organizations without any hint of condescension about the SME environment.
One tech founder explained: "I'm looking for someone who can help me see around corners based on where they've been, but who also appreciates the incredible complexity of running a business with limited resources."
Another shared: "The moment I sense someone sees my business as 'small' or 'simple' compared to their corporate experience, I know they're not the right fit—regardless of their credentials."
This doesn't mean downplaying your accomplishments. It means framing them in a way that demonstrates respect for the unique challenges of building and running an SME.
The most successful NEDs approach these roles with genuine curiosity and appreciation for what the business has achieved, rather than focusing on what it lacks compared to larger organizations.
As one owner summarized: "I want someone who sees working with my business as an opportunity to apply their expertise in a dynamic environment, not as stepping down from the corporate world."
Respect earns respect in SME NED hiring.
Understanding the Personal Nature of SME Board Appointments
The primary takeaway from these insights is that SME owners are making deeply personal decisions when appointing Non-Executive Directors. These businesses represent years of hard work, personal sacrifice, and emotional investment. The decision to bring someone into the boardroom is rarely made on credentials alone.
Through my years of experience working closely with business owners, I've seen that the most successful NED appointments happen when there's alignment not just on expertise, but on these more subtle, often unspoken factors.
Understanding these perspectives doesn't mean fundamentally changing who you are or what you offer. It means presenting your valuable experience in a way that resonates with the context of SME leadership.
This approach has helped dozens of executives I've worked with secure rewarding board positions with businesses where they can make a genuine impact.
Positioning Yourself for SME Board Success
Have you noticed similar patterns in your experience with SME owners? Or have you discovered other unspoken factors that influence their decision-making when hiring a NED?
Understanding what SME owners really look for can significantly improve your chances of securing rewarding SME board opportunities where you can make a meaningful difference.
