How to become a Non-executive Director

The research we’ve accumulated at ORESA in recent years has shown us that the mismatch between skill sets at board level and the new, often tech-based challenges that companies are constantly facing, is growing rapidly. Problems and challenges arising from marketing and brand development, digital, and talent management have increased massively, but few boards ever seat representatives from those specific disciplines. This should work in the favour of non-executive directors who, when brought in from outside, can deliver new solutions from a specific background skill set. However, we’re forever being told that NEDs are either unprepared or too inexperienced to make an impact.

Clearly there’s a gap in the market for talented individuals looking to develop a flexible portfolio career, so what makes a good NED?

The role of NED

Let’s start by outlining just what the role of a NED is: simply put, NEDs do everything that executive directors do. In fact, there is no distinction in law between executive directors and non-executive directors so the same duties, responsibilities and possible liabilities apply equally. So why the need for NEDs at all?

Where NEDs can add true value is in their ability, as outsiders, to come in and challenge the assumptions and methods of the current executives. That is the NED’s raison d’etre. Rather than get caught up in day-to-day operational tangles, the NED is afforded the space to view the organisational machinations from a distance and thus better spot the inefficiencies and deliver answers. For companies that have hit a plateau in some aspect of their business, the objective expertise of a talented NED can be the difference between standing still and delivering the next phase of significant growth.

Typically then, a NED will work closely but not exclusively with the executive directors to oversee business performance and strategy within and without their area of expertise. They will often come in to verify the accuracy of financial information and market data to ensure that the company’s strategies are being formed upon solid information. They will also be expected to play a role in appointing and removing executive directors. Clearly, it’s a very broad role and thus can be extremely rewarding but requires someone who is a brilliant all-rounder.

The skills of an NED

Here at ORESA, the main problem we see is that very few candidates can offer a complete repertoire of skills to become a NED. Only the most experienced, often in their 50s, can tick all the boxes required, but the irony is that these NEDs have little specialist expertise in the areas where today’s organisations are struggling to keep pace with change – technology. Of course, young potential NEDs are often far more dialled in to tech and digital but lack the management experience, maturity and boardroom gravitas. It’s a dilemma that is perhaps best solved by adopting more modern (read flatter) organisational structures, but that’s another article.

NEDs we’ve worked with and seen thrive typically boast a similar skillset: they have a great understanding of what actually drives revenue and growth for a specific business and can bring to the table a strong financial pedigree. You can have the greatest intellect or the most creative ideas, but without a plan to deliver bottom-line growth, you’re impotent. That said, candidates without a business or financial background needn’t be overlooked for a NED position. It all depends on the company and the challenges it faces. This is why the appointment of NEDs can be so tricky – there isn’t one clear job spec. The onus is on the company to be very clear about the challenges it is facing and to think very carefully about the type of expertise that is needed in order to overcome them. The benefits of a great NED can be manifold, offering greater perspective and objectivity, broader experience, specialist expertise, an injection of new personality (and quite often prestige) and a whole new contact book. For the potential NED, a rewarding and well-remunerated portfolio career beckons.

For a confidential discussion about how to become a NED, or how to get most value from bringing NEDs into your business, please get in touch for a confidential discussion.

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