The Non-Executive Director Role

The last twelve months have shaken up the world as we once knew it, and it should be no surprise that, in this uncertain climate, the specialist experience and skillsets of NEDs have been needed more than ever. Non-Executive Directors (NEDs) play an important role in achieving strong corporate governance and promoting the performance of the company.

In an increasingly dynamic environment, the importance of diversity of perspective on boards has also been shown to really matter. Diversity of perspective can only come from a diverse group of people, and the recruitment of a NED offers businesses an additional opportunity to diversify their board. With a focus on gender, there has been a significant amount of change regarding women in the boardroom over the last decade. According to the final Hampton Alexander Review, women now make up around 40% (in aggregate) of the non-executive directors on FTSE 350 boards. But this is not about gender, rather a broader subject of how diversity in the boardroom leads to a good dynamic and better governance. NEDs offer invaluable independent judgement on issues faced by companies, and they have the ability to bring a specific, needed perspective. In today’s article, we discuss the role of a Non-Executive Director, what they can bring to a business and the benefits of becoming a NED.

What is a Non-Executive Director?

A Non-Executive Director sits on the board of directors – alongside other NEDs and executive directors – of a company or organisation but is not a member of the executive management team. The main focus of a NED is to act as a ‘critical friend’ to the organisation: they should support the executive management team by challenging business decisions and providing independent oversight, creative input, scrutiny and mentorship to the board. NEDs don’t have daily management or operational responsibilities within the business; they are there to make sure that the company is governed properly. Typically, executive directors know the ins and outs of a business, and it is the NED’s job to maintain a level of distance and be able to offer impartial advice. What makes a NED stand out from an organisation’s executive directors is their independence of thought; they have no pre-existing loyalties to the company or anyone on the board that may interfere with their judgement. 

What skills and/or experience do I need to become a NED?

There are several key skills and qualities that an executive board will seek when looking to appoint a NED: Stakeholder management is absolutely crucial. They will need to work closely with other NEDs and, more importantly, the CEO and CFO. An effective NED will be open-minded and a good listener; whilst also possessing the strength of character and business acumen to challenge the senior management team and ask the right questions. No two NED positions are the same, and therefore no two NEDs will have the same skillset. However, NEDs are often sought after to fill in the gaps – with, for example, an emerging skill set or particular knowledge and experience – and balance out the board’s overall capability. 

Organisations will look for an individual with unique knowledge, expertise and experience that differentiates them from other existing directors and is also beneficial to the business. A NED should be able to provide boards with invaluable insights and one-off business knowledge that they may not otherwise be privy to. 

Cultural fit is vital to the success of any placement. When looking to appoint a NED, organisations will seek an individual whose core values, attitudes and behaviours complement their own. An organisation will consider how an individual might position themselves within the board of directors and whether they possess a work ethic and style that will complement that of the existing board. A NED should show passion for the company or sector the business operates in. They must also be fully conversant with the latest regulations, policies and governance to ensure that they remain well-informed about the multitude of risk and compliance issues that businesses now face.  

What are the benefits of becoming a NED?

The position of NED will give you the opportunity to learn from other similarly successful individuals and broaden your current skill set. It will also enable you to build an esteemed network of connections from a multitude of industries and backgrounds. The role of NED will enable you to utilise your existing expertise to contribute to the success of an organisation whilst also offering you exposure to different working practices. In the turbulent environment of the last twelve months, how businesses respond to the resulting disruption is heavily reliant on the industry and experience of its senior management team. This presents NEDs with the opportunity to invoke their alternative experience and suggest new approaches. 

The long-term benefits of becoming a NED are significant: the knowledge, network, and practical experience you will develop as a NED will help to achieve further NED roles, support career progression and create the opportunity to explore new career paths. On a day-to-day basis, it can also allow you to take different approaches in your work. It is often the case that you don’t know the assumptions you work with until they are challenged; the role of NED will allow you to develop new practices and ways of working that can benefit you and your current employer.

How do I become a NED?

A lot of NED opportunities are not advertised. In the majority of cases, a potential NED will be approached by an Executive Search firm or existing board member. It is also often challenging to get that first NED role – so how do you get started? 

Firstly, you need to decide which type of company you want to work for. The route taken will be different depending on whether it is a public or voluntary sector appointment, or whether you opt for a private sector company. Public Sector NED vacancies (particularly in the NHS and housing associations) are frequently advertised, certainly more so than private sector roles. It is also worthwhile considering taking on a voluntary role as a Charity Trustee or School Governor, where you can obtain some very useful experience. Boards operating within the public and voluntary sector are well known for being ahead in regard to corporate governance, so this experience will prove invaluable for further NED roles. 

The market for NEDs in the private sector is highly competitive, and the opportunities are rarely advertised. Extensive networking and raising your profile to be seen as an expert in your field are both recommended.

Would you like to know more?
For more information, email info@grgexecutivesearch.com and a member of our team will get in touch to arrange a confidential conversation.

Get in touch

We'd love to hear from you.

0121 631 1751
info@grgexecsearch.com

Contact Form

Need help with your search?

Make an Enquiry

Looking for opportunities?

Live Roles