Becoming a Non-Executive Director (NED)

When negotiating settlement agreements for senior executives I often seek payment from the employer to cover my client getting support from an outplacement specialist like Heather Greatrex of GatenbySanderson.  After working with Heather for a number of years, she inspired me to create a resource for anyone wanting to become a non-executive director, or at least learn about the rewards, challenges and common pitfalls of becoming a NED.

But what are these rewards, challenges and common pitfalls felt by anyone who is looking at becoming a non-executive director? Being a non-executive director (NED) can broaden your perspective, develop new networks and provide board-level experience. It’s also a great way to follow your passions and possibly extend your working life. Many organisations recognise the benefits and may allow you to take a NED role upon request.

Clients who are heading towards retirement are often interested in learning whether building up a NED portfolio is an option.

In the article below Heather, partner career coach/outplacement/recruiter gives us the inside track on why NED roles can be appealing.

If you would like to discuss any aspects of Settlement Agreements with me (David Greenhalgh, Settlement Agreement Solicitor), please call me now on 020 3603 2177 or Click here to make a free online enquiry.

HOW TO BECOME A NED

Heather Greatrex – Partner, GatenbySanderson

A non-executive director (NED) provides independent oversight and guidance and constructive challenge to the executive directors of an organisation.

There are many different opportunities to become a non-executive director.  These include publicly listed and unlisted companies, Government/public sector Boards, Foundations/Trusts and the NHS.  Many charities and other not-for-profit organisations and associations provide non-executive opportunities in the form of Trustees or, for example, School Governors.  These roles are unpaid but enable you to develop great experience being a non-executive.

All the above provide opportunities to broaden your experience and see organisations from a different perspective. NED roles can provide a stimulating and rewarding alternative to the day job/retirement scenario. Employers often recognise the advantages of NED experience for senior employees and their organisations’ social responsibility agendas. If you are not applying to a competitor, they may support your search for a NED/trustee role.

Most senior executive employment contracts include a restriction on any outside interests (which will include NED/trustee roles) and hence you should always seek permission from any current employer before applying for such a role.

WHAT ARE A NON-EXECUTIVE DIRECTOR’S ROLES AND RESPONSIBILITIES

Within the non-executive world, a wide range of roles are available. Most Boards have sub-committees which, in many cases, include Audit, Appointments, Remuneration and Finance Committees which require specialist professional skills as well as cross-cutting expertise in, for example, Strategy, Digital and HR. This includes an increased involvement with CSR and well-being. 

To keep abreast of increased regulation, other skill sets are sought, for example, expertise in UK GDPR. Additionally, there is a drive to increase the diversity of Boards and using NEDS can help a business achieve this aim. Hence most organisations will want to attract a diverse NED candidate field to ensure better representation of any currently under-represented minority groups.

HOW NON-EXECUTIVE DIRECTORSHIPS ARE USED TO PROMOTE DIVERSITY

Alok Sharma, the former Business Secretary said in September 2020, “Research shows that diverse leadership teams are more innovative and make better decisions. As the UK economy continues to recover from coronavirus, increasing representation of women on boards represents a golden opportunity not only to rebuild but build back better.”

The Parker Review, set up in 2017 to improve ethnic diversity on the boards of UK-listed companies, has found that, in 2020, 37% of FTSE 100 firms still had no non-white members on their boards.

So, there are many opportunities for you to develop a non-executive career and here are some of the reasons why you may be interested in these NED roles:

• They offer the opportunity to expand knowledge and cross-sector networks. NED roles provide developmental experience and effective ways to gain skills for senior-level challenges. This might include getting a broader perspective of the whole organisation outside of one’s professional field, getting involved in the strategic development of the whole organisation, and influencing where one doesn’t have executive authority.
• They can allow you to follow a passion;
• You will use your knowledge in a different way – contributing to the development and effectiveness of the organisation’s strategy and how it is delivered, whilst also gaining board-level experience;
• They can enable you to prove yourself in an entirely new arena – many organisations recognise the benefit of their staff undertaking a NED role alongside their day job and may allow you to do so upon request;
• They can contribute to an extended working life in an area that may be more personally meaningful.

Although some non-executive roles are remunerated, many more are not and money will often not be the main motivator.

SO WHAT ARE THE BENEFITS OF A NON-EXECUTIVE DIRECTOR ROLE?

There are thousands of trustee roles which are both unremunerated and can take up an inordinate amount of time. However, these same roles can also be incredibly rewarding.  So, it is important to be very clear about why you want to take on a NED/trustee role as this will have an impact on the choices that you make.  I know Chairs of charities who can spend two days a week in their role, with no remuneration and, in smaller charities, there can be significant scope creep.

At the other end of the spectrum, if you are targeting paid NED Board roles, you will need to consider the ‘rule of thumb’ being that you are unlikely to be successful in achieving a NED role that is more senior than your highest executive role.

If you are interested in Board roles, here are some links which you may find useful:

• Women on Boards
• Becoming a NED/Trustee | WIG 
• Non executive directors | Roles, duties, responsibilities | ICAEW
• The NED Exchange
• Information and Advisory Service | Business Resources | IoD
• Membership – NEDA Global

GatenbySanderson has a Board/NED practice along with a number of other recruiters:

Board Practice | GatenbySanderson 

MORE ADVICE WHEN APPLYING FOR NON-EXECUTIVE DIRECTOR ROLES

Now that we have covered the roles and responsibilities of becoming a non-executive director, as well as the benefits of taking on a NED role, we have put together all of the considerations of how you can become a NED. 

• Look for non-executive roles in organisations with which you have empathy and an understanding of what they are trying to achieve and that play to your strengths;
• Do consider organisations within your local home geography. Not only can this have practical benefits but many public and third-sector organisations have specific requirements for local representation on their boards;
• Do your homework – find out as much as possible as you can about the culture of the organisation;
• Gain experience in non-executive roles by volunteering for roles within your industry;
• Have a clear and concise NED CV and ensure that you are keeping abreast of opportunities being advertised – creating targeted alerts with recruiters, LinkedIn and the media;
• Use (and build) your own personal network and identify sponsors;
• Speak to people in your network who are NEDs to get their perspective on being a NED (time commitment, governance, challenges and skill sets);
• Treat NED/Trustee applications in the same way as you would executive ones – these roles can be extremely competitive;
• Your employer may see a value in you becoming an external NED/trustee but always check with your employer or any other organisation you may work for and seek permission first;
• Be realistic; the first NED is the hardest one to get so be prepared to compromise – it takes time to build a NED presence;
• Be prepared to walk away – if you are not sure, don’t do it!

Heather Greatrex is a Partner at GatenbySanderson which has a highly respected Board/NED practice. She has many years of experience in supporting individuals to develop both executive and non-executive careers.  As a Director of Executive Action, she co-created and for 10 years co-presented a very successful workshop for aspiring non-executives with the Whitehall and Industry Group.

If you would like to know more about being recruited to Board positions (either executive or NED), please contact Heather at heather.greatrex@gatenbysandserson.com.

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This article/blog is for reference purposes only. It does not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking or deciding not to take any action.