Resting on past laurels will only get you so far when looking to forge a portfolio career as a non-executive director (NED). Invariably, the biggest mistake is to assume that you will easily walk into such roles based on your reputation and former glories as a career executive.
Bob Emmins, Finance Director at ABF Ingredients, says: “To build a portfolio career does not happen overnight… You have to let the appropriate people know what you want to do and the skills you have on offer to achieve it. You need to make sure your network is aware of what you want to achieve and generally market yourself accordingly.”
That’s why the groundwork needs to be done early. Robert Drummond, Chairman of renewable energy company Acta, says: “Make sure you have NED roles before giving up your executive position. This gives you three advantages: firstly, you know what’s involved and the income you can expect; secondly, you have experience of being a NED, which some companies appreciate; thirdly, you will need to build a portfolio fast since it is difficult to go up the ladder once you have been out of an executive role for a long period.”
Robin Paxton, a Criticaleye Associate and NED of a variety of companies, says: “With hindsight, I would have planned at least 12 to 18 months ahead and attempted to source at least one NED role while still in full-time employment. It’s essential – though difficult – in a challenging executive position to make the time and the head space for your own personal development, but towards the end of your executive career you must create time to make yourself a priority.”
To be brutal, too many people are past their sell-by-date when they start to think seriously about developing a portfolio career, especially if it’s in the plc arena. Richard Laing, a Non-executive Director at the London Metal Exchange, says that you “should start well before you are 60 and get a NED role while you are still an executive director”. He explains: “Many plcs these days want NEDs to do their full terms – three lots of three years – and also want people with relatively recent executive experience.”
A touch of arrogance, not to mention complacency, can mean you’ve missed the boat. Richard says that, when researching the pros and cons of building a portfolio career, he spoke to people who, after retiring in their 60s, had not been successful in getting one position, let alone several: “Many of those regretted not having set up a NED role before they retired and they found it difficult or impossible to get their first NED position in their 60s.”
Apart from age, there’s the question of reputation. Steve Richards, Chairman of QualitySolictors and a number of other private-equity backed businesses, recalls that when first looking at a portfolio career he bagged three chairmanships in a short space of time as he was held in high-esteem based on a successful exit.
“The reality is it’s like winning the Premiership,” he says. “Any football manager could get a job the following season but, two to three seasons down the line, that’s old news. This is the same for building a portfolio career – it’s much harder work once that big deal has faded. Try to start out when you are at the top of your game and get as many jobs as you can trading from your recent success.”
Call it a results-based business. Steve warns that it’s crucial to choose the right companies once an opportunity does arise: “When you’re at the top of your game you have a huge amount of self-belief and [that can blind you] to making a decision with the right level of objectivity.
“As I’d been successful, I thought it was kind of inevitable that success was going to continue. However, if you look at any PE portfolio, then there are two to three very successful companies and two or three that go bust or are close to it and have been losing money… Just having that in your head when selecting roles is important.”
It’s a fine line to tread. David Harding, Chairman of eco-friendly detergent company Aquados, comments: “It’s probably much easier to make a list of things you definitely don’t want to do, rather than be too firm about what you want to do. If you’ve been successful in your executive career then opportunities will arise, but you should resolutely turn down roles which don’t seem right.”
Given that your reputation as a NED can rise or fall rapidly, the number of roles taken on needs to be carefully managed. Orna Ni-Chionna, Senior Independent Director at entertainment and books retailer HMV Group plc, says: “In terms of the number of hats to wear, probably four to five is about right but some people can do more and others should really do less. It also depends on the nature of the roles – FTSE 250 can be very demanding as the companies have the same corporate governance requirements as larger companies, but don’t always have the infrastructure to support the board as much as larger ones.”
Lifestyle choices are clearly an important factor too. Bernie Waldron, a Criticaleye Associate and NED at IPPLUS plc, a provider of tools and services for contact centres, comments: “First of all, you’ve got to step back and be really honest about how much time you want for yourself and the family and then look at what other things you want to do. However, in broad terms, I honestly think that the right number is three to four at any one time as I believe it’s hard to be effective if you have many more that that.”
Mary Jo Jacobi, another Criticaleye Associate and NED of Mulvaney Capital Management, says: “To me, the number of hats varies based on the individual and on the size of the companies on whose board your serve. I think one can manage a larger number of smaller-company boards, but FTSE 100 boards present more demands, such as attending board and committee meetings, reading [documents] and undertaking site visits.”
It requires no small amount of self-discipline and organisation, which can come as something of a shock for those who have grown accustomed over the years to a diligent executive PA. Rob Wirszycz operates at the entrepreneurial, smaller company end of the market, holding six chairmanships and ten NED roles. “I work by making sure every business has a plan,” he says. “This is key to how to manage the business as you can hold everyone to account. I own it, running the meetings, writing both the agendas and the minutes. I make sure I meet with the CEO every month for at least an hour, hopefully two and have a call every week with lots of follow-ups by email. The challenge comes when there is a mini-crisis or an event like fundraising or a sale. That tends to take a lot more time.”
If you’ve been the big cheese in an organisation, trying to build your profile and standing as a NED can prove to be a slow and somewhat ego-deflating process. Kelvin Harrison, who holds a number of NED roles for technology and media companies, says: “As a successful executive… you have become accustomed to success. When you start looking for NED roles you need to be prepared for a lot more rejection. You should expect to explore many more opportunities before you find companies that entice you or that want you. It’s very unusual for them to fall into your lap.
“When you’re weighing up a new NED position you may have to examine 50 opportunities; in your executive career, there might have only been five. The role is much more about chemistry and ability, rather than purely ability; far more so than in the executive role.”
Advance planning makes all the difference. Chris Stooke, Chairman of commercial and insurance broker Miles Smith and former FD of Catlin Group, says networks are vital when building a portfolio career. “Just using agents does not get that first opportunity, whereas using contacts that you have built up over your executive career so far does. You should sow the seeds in your contact base, saying that you’re thinking of this move and so when an opportunity does arise they remember you.
“With all of my decent NED opportunities, I’ve had the inside track via some recommendation or contacts within a company. Of course, you have to be careful how early you sow those seeds while you’re an executive because it might suggest you’re not committed to your job.”
Provided it’s managed and planned correctly, there’s no reason why you can’t have the lifestyle you want while also being able to share the knowledge and experience that has accrued over the years to help organisations achieve their goals.
Please get in touch if you have any comments about the issues raised here.
I hope to see you soon.