Executive Outlook: Non-Executive Director (NED)

Executive Outlook: Non-Executive Director (NED)

Filter tag: Change Management and Executive Outplacement, Leadership Capability

Every organisation needs third-party oversight to keep it accountable, and for listed companies this is even a listing requirement. This is enacted by government, trade and regulatory bodies, the organisation’s customers, and the court of public opinion. Just as important, the organisation’s own leadership and executive board need oversight as well. While the influences that impact the organisation as a whole will steer the board, many companies choose to bring in a Non-Executive Director (NED) to keep their decision makers accountable and ensure that leadership is running the business properly.

These executives are independent, objective, and typically have subject matter expertise, commercial knowledge, experience, or excellent reputations within the industry. They are brought in to provide key insights and fresh perspectives. NEDs have a seat in the boardroom, but unlike the rest of the C-suite, they are not involved in the day-to-day running of the business. Rather, they are there to guide and advise on policies, plans, and other major decisions.

There are more than 6,000 NED’s serving on the boards of the UK’s top 1,000 firms, and numerous others within the public sector, SMEs, NGOs, and non-for-profit organisations. But what does it take to secure one of these coveted roles, and how do you succeed once you get there?


Role Overview

The main purpose of an NED is to hold the board to account, represent the interests of the organisation’s various stakeholders, and provide outside perspectives to various organisational challenges. NED’s are not involved in the day-to-day running of the business, and therefore can usually provide a different perspective on issues such as policy, compliance, risk management, corporate governance, succession planning, and so on.

Four key areas where an NED might advise include:

  • Strategy: NEDs should constructively challenge existing and proposed practices, and assist with the development of strategy.
  • Performance: NEDs need to keep an eye on performance throughout the organisation to ensure goals are being met effectively, on time, and on budget.
  • Risk: NEDs should ensure that all reported financial information is accurate, and that systems of risk management are compliant, thorough, and defensible.
  • People: NEDs play a key role in determining succession plans as well as the appropriate remuneration of executive directors. They are also responsible for taking part in the process of appointing and removing senior management, when needed.

Remuneration for the NED role will vary based on a number of factors such as the organisation’s size and type, the industry, the experience of the individual, and the time commitment required. According to Glassdoor, the national average salary for an NED is around £71,000 per year, however this tends to be based on FTSE data. In contrast, those within charitable organisations, may be held on a voluntary basis without pay. Typically, for commercial organisations, remuneration varies widely, between £12,000 to £20,000 per annum in private SME’s, moving between £30,000 to £45,000 per annum at larger private companies. In the FTSE250, the average base salary for an NED is £53,000, while in the FTSE100 it can be anything from £100,000 – £300,000.

A more competitive and challenging business environment has also altered the mix of experience, expertise and skills which organisations are looking to add to their boards, including AI and digital knowledge and skills. Therefore, the criteria for choosing an NED may vary, and businesses may seek to increase the diversity of their board by onboarding NEDs of varying genders, ethnicities, backgrounds, and even ages.


Top Attributes of Successful NEDs

NED roles are highly sought after in almost every industry, so when these opportunities arise, they attract a large number of qualified applicants. To be successful in securing a role you must be clear on what you have to offer and what value you can add to an organisation and its board. You must align your objectives with your experiences and aim to match your skills and characteristics with an organisation that shares your values and can benefit from your input.

You will have your own unique set of personal and professional experiences that will shape what you have to offer, but several universal skills and attributes will set you up for success and allow you to be most effective in the role.

Though not an official executive of the company, NEDs are members of the board and part of the organisation’s decision-making process. Therefore, strong leadership and management skills are essential. As many of those decisions will impact people outside the boardroom, an NED should be people-focused, have high EQ, and be able to make judgements and decisions with empathy. It is crucial to be analytical and think about the big picture as well as all of its smaller moving parts. Successful NEDs stay up to date with the latest industry trends, keep up with technology, have strong knowledge of governance requirements, and always keep one foot planted firmly in realistic territory when drawing up future plans. Strong problem-solving skills are a must have, as that is a central tenet of the job. And while they may technically be an outsider, an NED still represents the organisation and should conduct themselves accordingly.

The responsibilities of an NED require skilful challenge, therefore one of the most critical keys to success in these positions is communication skills. Boards look for candidates that they can confidently rely on to deliver expert advice, and expect honest opinions. However, while an NED is there to hold power to account, most of the time the role is spent working alongside the company’s executives to solve problems and make plans. At the end of the day, the C-suite and the NED share the same goal: to ensure the future sustainability of the business. There needs to be clear communication, open-mindedness, collaboration, and constructive discussion in order to reach these objectives.


A Worthwhile Position?

If you’re considering pursuing the role of an NED, you should first consider the following:

  • Time commitment: The average NED role will require a commitment of at least 10 days per year, with some requiring much more than that. Some organisations may ask for a commitment of up to three days per week, likening the position to a part-time job. Should a crisis arise, an NED may be asked to put in more time than usual, and often this does not come with additional compensation. It’s worth weighing up whether or not you have the time to commit fully to the role in addition to your other professional or personal obligations.
  • Legal liability: NEDs are still considered to be directors of their organisation and therefore may be liable in various legal scenarios. An NED can be tied up in civil action for negligence, breach of duty, or criminal action for breach of statutory duty, wrongful trading, and director disqualification. Before accepting a role, decide whether or not you are comfortable accepting this level of responsibility should things go wrong.
  • Personal Brand: Just as you are a reflection of the organisation, your association with that organisation becomes part of your personal brand as an NED. Choose a role with a company whose vision you believe in, whose values you share, and who you feel comfortable going to bat for publicly.


Practical Steps for Securing an NED Role

If, after weighing the pros and cons, you decide that an NED role is worth pursuing, you should take a proactive approach to planning and preferably start 12 to 18 months prior to when you would like your appointment to commence. This may seem far in advance, but it helps you to nail down what it is you’re looking for and what you can offer. Think critically about where you would like to be in three to five years’ time and chart a path for how you intend to get there and why it is compelling. Determine the types of organisation you could see yourself fitting into and adding value to, taking into account factors such as scale, ownership, skills and challenge. That way, you can better define your USP and hone the way in which you present yourself.

Experience is crucial, and the more you have of it, the more attractive a candidate you will be for the highly competitive roles. Consider applying for a voluntary NED position with a charity to gain a foundational understanding of the role.

If you already hold an executive position, connect with and talk to some of the NEDs on your own board to learn about their journey and experiences. If not, ask your current network if they can put you in contact with anyone for a chat, or reach out on social media. You will likely find that the vast majority of existing directors and NEDs are happy to speak about their experiences. This outreach may actually lead you to the role itself. Although a number of NED roles are advertised, many are still found through networking and it is therefore important to invest time and resources in building a network of professionals who operate at board level. Identify and meet with board members that have succession planning and decision-making responsibilities for the appointment of new directors. Training, individualised coaching and support, strategically shaping an NED CV and personal digital brand can also pay dividends.

Additionally, we regularly run virtual events focused on specific topics relating to NEDs. Visit our Events page for our upcoming dates and sessions.


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