Executive to NED: Points to consider

The role of NED’s has changed significantly over the last 20 years with the position historically being thought of as a relatively straightforward job for a retiring Chief Executive, or a friend of the Chairman. This has altered, with most companies now looking to identify an NED who can bring relevant experience and sound judgement to the strategic direction of a company, as well as someone who can appropriately challenge the executive directors of a business, sometimes taking the unpopular line in times of crisis.

There’s a few points that I think are worth considering before embarking on a Portfolio career:-

  • Is it something you really want to do, or something that you feel you should do because your peers have? Building a portfolio career to purely maintain a certain salary could compromise your professional judgement.
  • Ensure that you pick well. One of your biggest strengths when moving into your first NED role will be your reputation, and it’s important to make sure your first appointment goes well. Get to know the current board to check the chemistry works well; do you complement the makeup of the board; are you aligned with the company’s strategy and future direction; is there a genuine appetite to bring an NED into the business as opposed to it just being a box ticking exercise.
  • Breaking into your first NED role can be tricky. Boards appointing new NED’s can often be looking to find people that already have experience of how a board operates, and the value they can add. Securing a non-remunerated NED role can be a good way to get a foothold in the market and prove you have the skills to be an active Non-Exec board member.
  • Are you suited to the life of an NED? It’s essential that you establish working relationships with the executive directors, but distance must also be maintained. The requirement to challenge and maintain independence can make the life of an NED a lonely existence. Recent operational experience can be sought after, but are you able and willing to advise and challenge a board, with the knowledge that the ultimate decision lies elsewhere?

If you’re considering NED opportunities in the future, then please contact Derrick Watson on 0161 828 3013