The evolution of the non-executive director

 

If you’re looking forward to being paid handsomely for attending quarterly board meetings and asking the odd probing question, with minimal responsibility and zero personal risk, then the role of a non-executive director is probably not for you.

Or at the very least you’re a couple of decades too late.

The ‘tea and biscuits’ NED role of old is all but extinct and it is certainly dead-as-a-dodo in high growth SME businesses.

 

The modern day NED

 

So who is today’s typical non-executive director?

How have successful portfolio non executive directors built up professional networks and effectively juggled the time commitment and risk management that each role brings?

Fundamentally, a business owner, managing director or investor wants their non executive directors to add value and need each party’s risk and reward profile to be aligned.

Be prepared to put your hand in your pocket. Often, non-executive directors are expected to invest as part of their appointment. And always, any NED is recruited to be a proactive force at board level in helping to drive the business forward.

 

Role

 

A non-executive role is undoubtedly challenging, but is also hugely rewarding.

It provides an experienced executive with a new challenge, an opportunity work with a fresh team, and gain experience of an unfamiliar sector.

It also provides a pathway to pass on experience and ‘give something back’ (as cheesy as it sounds). A portfolio of NED roles can function as forward-thinking succession planning for your ongoing career and can be enormously satisfying outside of the financial reward.

 

Research

 

There’s plenty of reading and information available on the benefits and responsibilities of non-executive work.

A good starting point for first-time NEDs could be the CIPD’s straightforward fact-sheet setting out the legalities and requirements of the role.

Emphasised clearly here is the crossover between executive directors and their non-executive equivalents: ‘legal duties, responsibilities and potential liabilities are the same for both; the distinction lies in the role they perform.’

In essence, your role as a non-executive director is to be an impartial outsider. Yes, you’re equally responsible for the fiscal integrity of the organisation, but your benefit is in your people skills.

• Can you listen to board members and operational staff without dominating?
• Can you bring creative thinking to the board room, drawn from a contrasting sector or organisation?
• Can you use your independent view to shine a light on operational matters which day-to-day board members might be missing?
• Can you offer constructive challenge, enabling directors to find their own strategic solutions?

 

Rundown

 

Here are a few key thinking points on how to navigate a path into a successful portfolio career:

 

Start Early

 

The average non-executive director in 2022 was 59 years old. This suggests that this is a position most applicable to those nearing the end of a ‘traditional’ career. Not so.

Whilst those in their sixties may be sought after for NED roles due to the experience and wider perspective they can bring to the table, it’s worth planting seeds within your professional networks at an earlier stage…

Actively engaging with non-executive prospects whilst working through your executive career in any field can help you plan your own progression as well as develop your skillset in your current role.

Strategic and interpersonal skills can be acquired and developed in a very different way when your involvement in an organisation is less emotional and more detached.

Simply gaining experience in a contrasting environment to that of your ‘day job’ can help you to understand aspects of your own practice and personal qualities which you might have previously taken for granted.

 

Know the Role

 

Becoming a non-executive director is a unique position in its contextual flexibility.

Whilst there are universal legal and statutory requirements, it really will depend on the needs of the business as to how your role will evolve.

In a start-up, the fundamental benefit of non-executive directors could be in coaching and mentoring skills. The advantage of having a consistent, inspirational and experienced pair of eyes to guide a business in its early stages cannot be overestimated.

In contrast, being a successful NED in an established business might hinge more on your ability to effectively lead regular board meetings; having the credibility and confidence to challenge senior management and bring value-adding ideas in this environment is essential.

And a word of advice, in a NED recruitment process whether with Blair West or other executive search firms, it’s important to be clear about expectations for the role on both sides to enable the working relationship to develop within established parameters from the outset.

Details such as time commitment, communication with the executive team and professional investment need to be ironed out early on to ensure everyone is singing from the same hymn sheet.

 

Widen your Net

 

Although you may have your sights set on the prestige and rewards of a high-profile NED position in a private equity backed business, you may find that you actually gain valuable insights and opportunities in a pro-bono role.

Building your employability as a paid NED can be tough, with competition for roles and a seemingly impenetrable invite-only recruitment process. Taking on more humble, varied opportunities such as a local school governor position or becoming a trustee for a charity can really help you develop the necessary skills and experience to become an effective NED.

Rebecca Haynes, Chief Executive Officer at Newcastle GP Services, recognises demonstrable benefits to her trustee role as Treasurer of Rape Crisis North Tyneside: ‘I can keep my accountancy skills sharp – which I would otherwise delegate at work.’

However, for Haynes, the real satisfaction in this pro-bono work is that it ‘acts as a reminder that life is fragile and kindness can be the difference. This critically keeps my work in perspective and inspires me to practice the same values I see at RCNT with my team.’

Adding value as someone who is not in the business on a day-to-day basis is very different to adding value as an Executive and, whilst these positions aren’t usually remunerated, they are rewarding.

Strategically, taking a pro-bono position will also help you meet other active NEDs who will be able to assist with introductions into fee-paying roles.

 

Utilise your Contacts

 

A tiny percentage of NED positions are found through recruitment companies, and of that minimal number, the executive search firm is invariably employed to recruit someone with niche sector knowledge.

The vast majority of NED appointments are actually about supplementing the board with good, rounded business acumen and experience and are done via recommendation and referral: it really is about who you know.

Being in the right place at the right time can be a defining factor in securing a lucrative NED role so it’s worth actively reminding people in your network (lawyers, accountants, advisors) that you’d be interested in opportunities within this market.

Shy bairns get nowt, after all*.

 

Understand your worth

 

If you’re just testing the water and considering your place within the non-executive market, now is a sensible time to do a bit of self-evaluation.

• What would your colleagues say makes you effective in your current role?
• Where does your genuine job satisfaction come from?

Once you’ve given some time and thought to your own unique value, devote some energy to mapping out which sector or scenario you could see yourself making a positive impact in.

One of the advantages of the complexity of the NED banner is the lack of direct sector experience as a precursor for the position. Companies may be actively looking for non-industry specialists in order to complement the existing faces around the board table.

Your key benefit could be in bringing your experience from a seemingly different business world to contribute an effective but contrasting commercial viewpoint.

 

Play the Long Game

 

Finally, it’s important to keep in mind that the goal of a varied and stimulating non-executive portfolio may be a way off.

The remuneration paid to non executive directors varies greatly and, likewise, the day-to-day experience of a non-executive director role can range from combative resistance to harmonious synchronicity.

You may have to look at many non-executive director roles before you find the right fit and may find yourself becoming demotivated after seemingly being rinsed for free advice and potential opportunities which never materialise.

Be patient, keep your ears open and a rewarding portfolio career could be yours.

 

Blair West Glossary

 

* Shy kids get nothing

Blair West is a successful, independent search and recruitment firm based in Newcastle Upon Tyne. We support high-growth businesses, UK-wide, as they build high calibre senior teams across all business structures. We are proud of our Geordie roots and strive to bring our North East values to our national practice. We listen and immerse ourselves in the small details of clients we work with to find the right candidate for the right role, whether on an executive or non-executive basis. We work extensively with Private Equity and Venture Capital investors to build board teams that create shareholder value and deliver successful exits.

Our Executive Search team, led by Associate Director, Chris Marshall, has managed numerous successful non-executive appointments and would be well placed to listen and advise if this blog has raised questions or opportunities specific to your career.

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