Non Executive Director

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Non Executive Director

Non Executive Directors (NED) used to be caricatured as cronies of the Chairman (who is also a Non Executive Director) or CEO. Fat cats, freeloading members of the “old boy network”, retirees who wanted to have somewhere to go other than the golf club for a decent lunch and a chat. Not an attractive scenario and for various reasons, but not least because of numerous serious corporate scandals where shareholders were left unprotected, the whole can of Non Executive worms has been subject to investigation, reappraisal and some rigorous new rulings.

Most people have heard the term Non Executive Director without actually knowing what they are, much less what they can potentially do for a start-ups or growing business.

But those who are in on the non executive secret know that they can add knowledge, contacts and general been there, done that wisdom to a company’s board. All of which cannot fail to be of value to a company whatever its size. A well chosen Non Executive director can be key to good governance but getting that first Non Executive Director appointment can be tricky.

We would advise people to look for a NED role while still serving as an executive. When you come out of your career, you can point to that NED position when seeking other roles.

A Non executive director needs good radar to fly at 30,000ft; to know when to go down to 3,000ft and when to come back up again.

It can be all risk no reward! When being approached for a role as Non Executive Director of a major company. Indeed, why risk tarnishing a so-far impeccable business career by being on the board of a company where you share all the responsibility, yet have limited information and insight into the running of the business? However, the lure of being a Non executive director remains attractive to many and, despite the perceived risks, a considerable number of successful executives take on Non Executive roles, some going on to build portfolio careers where they sit on a broad range of businesses and organisations.

The reasons often stated for taking on a Non Executive Director role are varied and change throughout an individual’s career. For many current Executive Directors, it is to gain new perspectives and insights, learning about another sector and understanding a different organisation’s approach to threats and opportunities. Others state that being a Non executive director helps them to understand their own board better and enables them to appreciate their perspective to decision taking. Indeed, many up-and-coming executives are often encouraged by their Chairman to seek out Non executive director opportunities where they will gain valuable insights and enhance their boardroom skills, developing themselves to be better equipped executives in their current company.

“Being a Non executive director meant different things to me at different times. My first Non Executive role was during my mid 40’s; I was a CEO and I was interested in acquiring different experience and positioning myself in a different place. I found this experience to be highly valuable when running my own show, recognising different ways and approaches and I learnt how to balance views and not be too dogmatic.”

For others, perhaps nearing retirement or who have recently stepped down from full time executive roles, the shift of focus tends to be on giving something back, imparting experience to younger management teams and adding value to a company. It is also a means for some to maintain their interest in business; to gain new experience and perspectives. Being a Non executive director can also provide an element of identity and a certain stature within social circles, in addition to maintaining intellectual activity and involvement.

When it does go wrong, it can go spectacularly wrong. When a company is in crisis, the time you will need to commit to sort out the problems can increase dramatically. And with increased media attention on Board governance, once “invisible” Non executive directors are often put in the spotlight and can be vilified for “being asleep on the job”, “lacking attention to detail”, and “being the puppets of an all-powerful CEO”. It is often flattering to be approached and asked to join a board. For some however, it can be a time-consuming role for little reward and, for an unlucky few, successful reputations has been tarnished.

The real measure of a Non Executive comes during a crisis when tough decisions need to be made. Whatever your reasons for taking on your first Non Executive Director role, the opportunity can be fulfilling, stimulating and fun. You need to be conscious that as a Non Executive, your reputation is your currency in the market.

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