A great non-executive director can have a real impact on a growing business. Their specialist expertise, connections and outside perspective can help it avoid costly pitfalls, develop capabilities and unlock new opportunities. The problem is that great NEDs – aside from the traditional (much maligned) ‘seasoned white male’ variety – don’t exactly grow on trees.
For roughly the last decade, chairs of boards have looked for more diversity of background not just because of quotas but because they believe that it improves diversity of thought, brings them closer to customers and improves performance.
When we look at gender representation for example, the proportion of women on FTSE-listed boards has more than tripled since 2010 to 40%. It’s been fantastic progress but nonetheless demand continues to exceed supply. This pattern is even more apparent when it comes to ethnic and other forms of diversity that inclusive chairs would like to see represented.
Searching outside the box
Diversity is clearly just one criterion among many. Our board practice regularly receives ‘unicorn’ requests for diverse NED candidates with great energy, relevant experience and specific technical/subject matter expertise, who fit with the board while adding fresh, innovative thinking.
As headhunters it is our job to balance competing interests and find creative, considered solutions. But the narrower the board’s criteria for its new member, the harder it gets.
Traditionally, the process involved reviewing great candidates with alternative sectoral expertise, maybe looking at alternative networks, and thinking about people who might be about to step down.
But we believe that finding a game changing candidate increasingly means not following the tried and tested. Instead, it means looking for those others might consider tomorrow’s board material, today.
Arise the first-time non-executive
Many worry about the risks of engaging people without the formal background typical of established NEDs. So how do we find those whose star is ready to rise, while de-risking these critical appointments?
It begins with auditing the requirements, going beyond the ‘wish list’ by talking to the full board and not just the chair or founder. Too much rigidity at this stage can exclude some great candidates.
We’ll look for great executive-level experience when long-listing. It sounds simple but not all executive directors have the calibre to serve as NEDs, so it’s critical to spend the necessary time and effort on due diligence.
Listening is essential. Much of the time these individuals aren’t looking for NED roles yet – they see it as further down their career journey – so we have to establish whether they are really board-ready, and can commit the necessary time each year, for the full term.
We also have to establish where a candidate is going to really add value. As any good NED knows, there’s more to the role than turning up for a board meeting, shuffling papers, offering a view and leaving, so we need to ensure that individuals do have something credible to add.
Inevitably there will still be trade-offs when you look to balance technical brilliance, intrinsic qualities and the specific requirements of the brief.
So ultimately the answer is to ensure that a rounded shortlist provides the board with options that balance the safe with the creative.
Clients may have in mind an ideal candidate who ticks every box. But real people don’t fit in boxes. So if you’re looking for an effective non-executive appointment – someone capable of big picture thinking, probity and real governance, who will change the conversation for the better – start with an open mindset.
We have recently completed chair, NED and board advisor searches. If you are looking for game changing board member, get in touch to find out how we can help.
