The Shortcomings Of An Agency Non-Executive Director

A lot of agency founders we meet who get to 20, 30, 40 or 50 employees feel a massive pressure to get everything right. The responsibility of so many livelihoods can be a little scary. The problem is if you’ve never done it before how do you know what is right and what is wrong? How do you create an agency that is future proof, but not too rigid that you end up dismantling the whole thing at the next stage?

You can either continue making things up as you go along or you can get external help. Saying that, there will always be an extend of guess work stepping into unknown territory. Your compass just calibrates when you get external advice. Right now agency founders are getting help to run their agency by either appointing a single agency non-executive director or joining a peer community. Although these solutions have some benefits in specific circumstances, there are also shortcomings. Especially in the case of an agency non-executive director.

Here’s what we’ll cover in this article:

• What is an agency non-executive director?
• How much does an agency non-executive director cost?
• What are the pros of an agency non-executive director?
• What are the shortcomings of an agency non-executive director?
• In a perfect world agency founders would get their advice this way…
• The solution: Polymensa
  

What is an agency non-executive director?

An agency non-executive director is often abbreviated as agency NXD, agency non-exec or agency NED. An agency NED provides independent advice (an outsider's perspective) to your agency on topics such as finance, operations and sales & marketing. They sit on your board alongside your other directors and are typically present during monthly board meetings. But unlike your executive leadership team, they do not get their hands dirty in the day-to-day operations of your business. 

In the agency industry, non-executive directors are typically people who have successfully built their own agency. Or people who have worked at board director level in an agency - typically a large agency such as those part of the WPP, Omnicom, Publicis, Dentsu networks. They aim to help agencies not make the same mistakes as they did, by most commonly sharing the solutions they implemented in their previous roles. 

You can find a more formal definition of a corporate non-executive director here.

How much does an agency non-executive director cost?

The price spectrum of how much typical agency non-executive directors charge is wide, because it depends on many factors such as their skill level, demand and their reason for doing the job.

But most commonly agency NXDs will charge between £1,000 to £5,000 + VAT per month for their services. The mean being around £2,000 + VAT per month.

This price will typically include the following services:

• An initial analysis of your agency
• A plan to help you reach your targets
• Their attendance and advice in a monthly board meeting with you and your co-directors 
• General support via call or email
• Holding you accountable to your objectives

In some cases agency non-execs will also ask for equity in your business - often tied to very specific growth metrics for example if your agency reaches a specific amount of fee income.

What are the pros of an agency non-executive director?

• Good agency NEDs will bring a truck load of experience to the table. If that experience is relevant to a problem you are trying to solve right now, then they might have an immediate solution that could work for your agency.
  
  
• Good agency non-executive directors will never be as emotionally tied up in your business as you are. This doesn’t mean they don’t care about your agency, it just means they can sometimes be more objective than you about the people or processes in your agency.
  
  
• You might find yourself constantly missing your targets. There may be many reasons for this. An agency NXDs will work together with you to help you figure out the right targets to set and will hold you accountable. This kind of pressure can certainly help some people to perform better.

Here are some of the non-ego agency advisors that have helped our agencies at Polymensa.

What are the shortcomings of an agency non-executive director?

• In the previous section we mention several pros to having an agency non-executive director. Unfortunately our industry has too few of these really good agency NXDs for the amount of agencies that are out there who need help. It is estimated that there are more than 16,000 in the UK alone - those that are categorised as ‘ad agencies’. That means these non-execs are rarely available.
  
  
• A single agency non-executive director is a single human being with one perspective. This means they only can share information and experiences through the lens of their biases. Unfortunately this can lead to believing that the advice is accurate without knowing what accurate advice is - you end up with an anchor bias. We found a great article on Farnham Street about this topic “the map is not the territory”. You also only get the perspective of someone who has worked in our industry, yet there is so much innovation in other industries that we can adopt and help us build a competitive advantage. Unfortunately unless you know all agency NEDs you will probably only ever come across those that do the most marketing. While some of the best agency non-execs are quietly being referred between a few agencies (why would you want to reveal your secret weapon, ey?).
  
  
• We mentioned earlier the benefit of agency NXDs carrying a truck load of experience. This is fantastic when that person is equally willing to unlearn knowledge that may be out of date. Unfortunately you get a lot of agency NXDs who are comfortable with basing their advice on knowledge obtained years ago. Perhaps missing the crucial changes in how agencies are run today.
  
  
• The biggest shortcoming of some agency NEDs is when they have a cookie cutter consulting approach. “Here’s my way of doing it, because it worked for me and if you do everything I say then it will also work for you!” Then try to fit your agency into their “formula of success”. Please please please be aware! That approach can cause your agency to go bust. Unfortunately in public you only ever hear about the success stories of these agency non-executive directors and never about their failures - read more about this problem in our blog post: Learn From The Winners And The Losers - Survivorship Bias.
  
  
• In thankfully only rare cases some agency NEDs go through a major identity crisis if they sold their business. Like a performance athlete who’s done nothing else the last 20 years other than strive in their sport, they are suddenly stripped bare when retiring. They no longer have a position that defines them. For those agency non-executive directors that are yet to find their new identity, might try finding it in your agency. Unfortunately this means they prioritise their needs over yours. You end up constantly arguing with the ego of your non-executive director and not about the problem your agency is facing.

In a perfect world agency founders would get their advice this way…

In a perfect world agency founders looking for external help to run their agency would be able to access a wide variety of advisors:

Agency experts (such as agency non-executive directors), experts from other industries & walks of life and agency peers. The advice they would receive is relevant to their agency needs and size. Finally their peers would run similar size agencies. Just be nice and humble people that wouldn’t be afraid to admit they’re struggling too.

Agency founders would be able to pick and choose the advice from multiple advisors that works best for their agency - rather than be dictated by a single person what to do.

The solution: Polymensa

While there are a handful of outstanding agency non-executive directors and agency peer communities, none of them combine the following:

• Access to multiple experts from within our industry and outside of our industry.
  
  
• Advice that is specific to the size of 20 - 50 employee agencies and your agency’s needs. Getting the support from a tight knit peer group that are running similar size agencies. People who are like minded, humble and not afraid to admit that they sometimes struggle too.
  
  
• We believe all these components are critical in getting real information on how an agency is run and it’s the reason Polymensa exists.