Three Golden Rules for Aspiring NEDs

Comm-update-16.01.13

Those executives who have gone on to build solid portfolio careers for themselves consistently cite the need to network feverishly, a willingness to learn and the ability to master their own ego. These three pillars are essential for success, especially as the weight of expectation and the competition for roles have increased considerably in recent years.

Unfortunately, directors are often surprised to find they’re not inundated with offers for NED positions once they’ve called an end to their executive careers. They shouldn’t be. It’s just not that easy anymore, which is why those who have made the transition freely admit to working hard to gain that first role.

Here are some tips on how to go plural from those who have done it:

1) Raise Your Profile

You must put the time in to network. Shyness is no excuse. Neither is arrogance. You have to start planning ahead – 18 months to two years as a rule of thumb – and spread the word that you’re interested in a NED role and you really do have something to offer. Cheryl Black, Non-executive Director of Southern Water, says: “Start to actively build your network before you leave your executive role. You need to let your network know that you are seeking NED roles… Once you come out of your day job, as it were, it’s much more difficult to get that first NED role and the first one is all important.”

Alastair Lyons, Chairman of outsourcing company Serco, says: “The biggest challenge is to get your first appointment. There is no alternative to working hard at getting oneself known and seeking to keep one’s options as open as possible. Alongside this, the other big challenge is knowing whether or not to take something that is offered if it isn’t quite what one wants.”

For John Ormerod, Non-executive Director at ITV, there is a growing tendency for boards to appoint the people they know have the necessary experience, which certainly makes it tougher to land that first role. “This often means people will need to draw on their previous experience to be able to capture their first opportunity,” he says. “It helps therefore if you can build a big network of contacts because people who know you more easily recognise the skills and experience that you do have.”

Alan Giles, Chairman of clothing retailer Fat Face, makes a similar point. “It’s easier to be appointed as NED in a listed company if you have current or previous experience as an executive director in another listed company. Many employers will allow you to take on one NED role, so you are best placed to begin acquiring some NED experience while in a full-time executive role. Although do bear in mind that it is quite time consuming, particularly when you are first appointed and becoming familiar with an organisation’s activities.”

2) Keep Learning

Clearly, if you’re at the top of your game as an executive then you’re no fool, but that shouldn’t lead to complacency about what it takes to be an exemplary NED. John says: “The role has got a lot more demanding since I started more than a decade ago and therefore requires people to be more skilful and experienced. Even back then, one of the things I did do was look for a charity that had perhaps a less demanding environment compared to a public company, but that had people on the board who were very experienced with governance and how boards operate, so I was able to learn from them.”

Bob Beveridge, Non-executive Director at mobile communications concern InternetQ, says you can’t underestimate the importance of standing out from the crowd in terms of knowledge, skills and experience. “You need to develop up-to-date opinions on the key issues in the NED world, such as on diversity, governance, board evaluations, ethics and so on.”

Cheryl comments: “You mustn’t think that getting one of these roles is simply a rubber stamp and you just turn up at board meetings and drink tea. It genuinely isn’t like that in my experience… There’s much more active involvement in the business being asked of NEDs, getting to know the senior team and spending time in the business.

“Currently, I see a lot of people seeking regulatory experience from NEDs but it’s more than that as, in difficult times, boards are looking for NEDs to come up with different ways of approaching business problems, whether that’s seeking to grow internationally or diversifying into a different sector. The role of the non-exec is always to encourage the executive team to think more broadly.”

3) Know Your Place

An effective NED understands when to keep their counsel and when to challenge forcefully. It requires a degree of self-control that may not come naturally to those who have been used to making decisions and calling the shots for a number of years. Nevertheless, it’s a skill that needs to be learned.

Alastair says: “A high level of emotional intelligence is needed… A good NED is typically low ego: happy to contribute only when he or she has something worth saying, with experience relevant to the role and business and who is willing to work hard, both inside and outside the boardroom.”

According to Alan, the principal quality to be a successful NED is to balance being collegiate and supportive with constructive and rigorous challenge. “It’s not easy to get this balance right, but it becomes easier with confidence and experience, and with thorough preparation,” he says.

Iain Robinson, Managing Partner of consultancy AMG and former Chairman of business travel company Reed & Mackay, comments: “A NED has to be truly relevant to the board they are part of and recognised by others – not just those on the board – as adding value that couldn’t be provided by someone else. In addition to this, a NED also has to recognise that they aren’t just there to offer opinions on an ad-hoc basis, but to be able to see further ahead than those tasked with running the business and to come into discussions with prepared opinions.”

Lines can be blurred when a NED still hankers for an executive position. “For anyone making the transition from executive to plural, it’s important that you no longer want to be an executive,” insists Neville Davis, Chairman of software and IT services company Amor Group. “If you do, you will be frustrated and will not be very effective in your job. It’s not your duty to tell the execs what to do or to second guess them. Your job is to advise, support, challenge and stimulate them.

“It’s important that non-execs understand that they’re not just there as policemen – their primary function is to ensure the business is as successful as it can be, then their secondary responsibility is in ensuring governance is correct and inappropriate risks are not taken.”

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In certain quarters, the expectations placed on NEDs have a negative connotation. That’s the wrong way of looking at it. The duty to the organisation and stakeholders should always be high – frankly, it’s a great time to take on a non-executive role as you can be a key influencer in aiding a business to reach its goals.

The competition for positions may be fierce but why should companies be looking for anything other than the very best candidates?

It’s a case of demonstrating you deserve your place on the board.

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