Operators and Hotel Management need to make good decisions during periods of crises. A key area of focus for Owners is to ensure the General Managers and the Operator is focusing on the following areas.

• Ensure Cashflows are planned and maintained with sufficient cash retained to meet requirement in the forced lock down period and start-up
• Don’t let short term thinking get in the way of longer-term strategy. Coming out of the COVID-19 crisis requires staffing resources ready to go and strong communication between customers and management
• Utilise the opportunity to re-consider business mix and re-engage staff to a common goal. Well prepared teams will grow back to retain same or even greater levels of market share
• Re-assess the cost base and ensure that sustainable cuts are implemented to maximise flow through when revenues re- turn
• Identify short-term tactics that require action, such as Government support, staff and customer communications etc
• Ensure marketing strategies are in place for the re-opening particularly for corporate clients
• Where Hotels have been used for COVID -19 isolation or medical accommodation ensure proper cleaning processes have been undertaken
• Ensure services have been maintained or are subject to a pre-opening maintenance check
• The focus should be on keeping the Hotel operating wherever possible with scaled down resources; this is critical to a successful

Oversight should be done through either the Owners internal Asset Management team or external Asset Managers.

I am often asked what makes a good Independent Director. After many years of sitting on Boards and advising Boards I have found there are a number of key skills that sets you apart from the rest….unfortunately, there are also some traits that are best not seen in the Boardroom.

The Good

1. Broad experience – this is sometimes overlooked in the pursuit of specific industry experience. However, I think the need for an Independent Director to be able to draw upon varied experience gained in a variety of industries can enable them to think outside the square, and not necessarily accept what is supposed to be the “norm” in a specific industry. However, NEDs who are not from the same industry are expected to gain a strong understanding of the industry and the Company. If a Board can absorb the cost of two Independent Directors I would certainly try and make sure the second one did have sound industry experience.
2. Independence – yes, I know it sounds obvious, but it is amazing how many time I see so called Independent Directors that conflict their position. Independent Directors must bring the integrity that comes with independence into their decision making.
3. Strong communication skills – there is nothing worse than a NED that does not get to the point. Strong verbal communication skills are a must if one is to bring the thought process along a decision path and to influence without being dictatorial. You must be able to explain your point of view in clear and concise terms.
4. Financial Skills – there have been a number of recent cases where Non-Executive Directors have been heavily criticised, and in some cases charged, for financial negligence. Whilst an accounting degree is not required, the ability to read and understand financial reports and the willingness to seek clarification on any item, is required. Furthermore, an awareness of financial markets is also becoming a desired skill.
5. Time availability – the days of rolling up to Board Meetings unprepared are a thing of the past, even though in reality they should never have been deemed acceptable. The expectation from other Board Members, Shareholder and the authorities dictate that sufficient time is allocated to understanding and analysing Board Papers. Furthermore, the expectation is that Independent Directors will lead or sit on Committees such as Remuneration, Audit and Risk. The combination of these demands means that anyone accepting a NED role must be able to commit the necessary time.
6. Understand and manage Risk – this has become a major focus area for Independent Directors. Risk comes in many forms: financial; operations; compliance; and reputation. You need to be able to identify and understand the risk and then ensure the board deals with the mitigation on a timely manner. Ensuring Boards have the right approach to these matters provides the foundation for a risk management culture to permeate through the company.

The Bad

As to the traits I prefer to see left behind, here are my key “no goes”:

1. Big Egos & Secret Agendas – are at the top of my list. There is no place for this in the Board room, the focus should be on the Company and other Directors should not have to manoeuvre around political agendas and profile seeking NEDs.
2. Overpowering personalities – often runs in conjunction with the above trait, and typically comes with a dogmatic approach seeking others to agree to all their points of view. This totally undermines any collegiate relationship between board members.
3. NEDs that think they are Executive Directors – whilst in many cases this occurs without intent, it should be kept in step, as not only will the independence be lost but it can also undermine the relationship with other Executive Directors and CEOs.
4. Lack of understanding the business – as stated in the desired characteristics this is one of the worst failures. If you want to accept a NED role you must make an effort to understand the business.

These are some of the key areas Axsia Advisory looks for in assessing potential Independent Directors for clients. For more information contact us at info@nonexecutiveboard.com.au.

Being the Managing Director and also the major shareholder of a private or family company can be a lonely role. Staff are sometimes reluctant to voice their opinion and even when they do the viewpoint is often influenced by the subservient employee position. An Advisory Board brings independent, considered advice without the negatives, for either party, of a statutory Non-Executive Director.

Whilst having an external party involved in the business as a Non-Executive Director works well for public companies and for many larger private companies where there are numerous shareholders, it is not always easy for an entrepreneur to accept the rigours of a non-executive director on their statutory board.

You can always hire advisors, however, this can be a costly exercise and their availability and commitment are not always aligned. This is where having an advisory board provides a viable alternative as it brings independent advice from people who have spent the time to understand your business, whilst still enabling you to retain the ability to make unimpeded decisions.

When deciding upon an advisory board there are number of factors that need to be considered. Some of these are:

1. Define the profile of the composition of advisory board members that you require. What expertise do you need to bring to the board room to assist you.
2. Understand what you want – a mentor or just experienced advice; do you want sectorial knowledge or just experienced business people that bring diversified knowledge; do you need someone with a strong network that is able to open doors for you.
3. What are your expectations of the individual advisory board member.
4. What is the frequency of meetings – monthly, bi-monthly, quarterly?
5. What availability do you want to have of the Advisory Board members in between meetings?
6. Contribution or names – do you just want their names on your website and in promotional material to bring credibility to your Company or do you want real contributors as well.
7. Start small, a two to three man Advisory Board, plus the owner/managing director for a small company is probably the right mix. As the business grows you can always add specific skill sets with new Advisory Board Members or change the existing mix.
8. Flexibility – if you think you may need to change the mix as you grow, make sure your Advisory Board Members understand your intentions. Remember, you want to retain them as allies after they leave the Advisory Board.
9. Get your pitch right – when approaching parties, as with all business dealings, get your pitch right.
10. Compensation – research and understand what the market rates are for members of the type of Advisory Board you are creating. Typically Advisory Board members are paid cash for their services. If the business is a start-up then potentially shares or options could be offered as part (or all) of the compensation.

Once appointed you should build on the relationship seeking advice and their opinion. Once they fully understand your business and you have established trust you can ask for favours such as introductions – remember don’t be too eager, this should evolve as relationships and knowledge are bedded in.

Find the best way to communicate, this is critical as they will have other obligations and commitments, your engagement of them does not give you 24hr access. Make sure you include them in internal communications, this will assist in keeping them appraised of what is happening in between Advisory Board meetings. Appraise your staff of the Advisory board, its purpose and who are the members. We have found this to be viewed by staff as a progressive step in the company’s development.

If you are looking at an Advisory Board as a means of getting cheap advice, although this may in fact be one of the outcomes, you are approaching it from the wrong perspective. Treated the right way an Advisory Board can be a very effective way to introduce a governance structure and a methodology of making decisions that will underpin your long term goals and strategies well into the future.