Becoming a Non-executive director is a step some people consider taking later in their career, using their boardroom experience and success to help other businesses. Having a presence in the boardroom to bring governance, guidance and advisory support can be a difficult step as transitioning from an executive role and all time demands of running a business is a good foundation but completely different to becoming a non-executive director.
The NED role balances low time commitment with a fractional salary, so for many is opted for as part of a phased approach to their retirement plan, utilising their knowledge while stepping away from a hands-on role. However, it can be financially rewarding with the average NED salary having increased around 40% in the last decade alone.
What makes a company want to appoint a NED (Non-Executive Director)?
There are numerous typical reasons for an organisation to appoint a NED, though every case is different. A theme throughout is the need for a broader perspective and reliable, and varied input. In SMEs and larger enterprises the NED role, often provides governance, and insight and ensuring that the decisions in the board room are challenged constructively with rigor and some degree of external viewpoint/”stage of separation” from the business. The NED can also be useful for objectively holding the board accountable for their behaviour and apply pressure to match the businesses’ values and ethics.
Often with early stage businesses, but even SMEs of all sizes, there can be a desire to appoint a NED to bring credibility and gravitas to an organisations brand, proposition and market profile. Often a NED is brought into an organisation as either their name will open doors for business development opportunities, and/or they will have their own black book of contacts that the hiring organisation wants access to.
What makes a good Non-Executive Director?
A good NED will have an informal relationship with chairman or CEO, this relationship allows them to act as an advocate, supporter and challenger. Questioning and interrogating ideas and decisions is key, this is one of the many reasons that having a slight distance from the company is an important factor in choosing the ideal position for yourself as a non-executive director. It is also of note that UK corporate governance code states that a NED should not be an ex-employee of a company, nor should they have a material interest in the company. Physical time commitments are minimal, usually 1 day per month, but it’s important to bring your all to that one day and make sure the company is gaining the wealth of your experience and opinions, without forcing them upon the board. This comes from a balance of diplomacy and emotional intelligence which should guide the actions of any good NED.
How to establish yourself as a NED?
There is a large variety of specialist NED networking sites and subscription models, these do have their place but provide more of a community forum than an actual route into your first NED role. These can be an excellent tool for developing as a non-executive director but are not the best way necessarily to build a brand and reputation that will lend itself to you becoming a NED.
Although there are many ways to build your personal brand, I have found in my over 20 years of working in executive boardroom search that the most valuable route to building a portfolio career, and attaining an NED role is through carefully thought out and mutually beneficial personal networking with business leaders and entrepreneurs typically; chairmen, chief executives, private equity partners and other NEDs. Its commonly felt that a realistic number of attainable and manageable close and valuable business contacts, that one can realistically sustain, is 150 people. Building a trusted network of 80 – 150 people that you can genuinely call “friends in business” at the right level over a period of circa 10 years will provide you with a strong collaborative network. It is from this self-built and managed community that most experienced business leaders will be approached directly for a NED role. As the founder of an executive search firm, with experience of appointing non-executive directors, I do personally however, suggest to clients they should always first examine their own network of people they trust in business as a primary route to sourcing non-executive advisory talent or gaining referrals for business advice or NED talent.
Conclusion
Overall there is a lot of thought that goes into any appointment for a non-executive director, both from the company requiring the NED, and the NED themselves. The process should never be rushed, as a good non-executive director can do incredible amounts for the right company. For organisations or individuals wanting to know more about the value of appointing a NED, please get in touch at This email address is being protected from spambots. You need JavaScript enabled to view it.
