When is it the right time to start exploring an NED role in my career? – part 2
We have spoken to two ACCA accountants, who shared their points of view, from their own experiences, on the right time to embark on the journey. In this series of two articles, we shall explore the reasons and factors to be considered when deciding on the right time.
Oliver Colling FCCA and non-executive director
At what stage in your career did you decide it was the right time to become an NED?
About two years ago I decided to move to a two-partner management consultancy business with the aim of working with organisations that I felt passionate, giving myself more time to obtain NED roles. In my view, the right time is when you have built enough skills and experience that an organisation will use, value and can benefit from but before you cease to be relevant in the industry and out of the work place.
I know that some people believe you should wait until you are approaching retirement or have retired and perhaps this is the traditional approach. In contrast, my advice is that you should not leave it too long. The fact that I started earlier is an added bonus because of the fact I am still in industry. As long as you recognise you have a set of experiences that industries are looking for and have an interest in and passion for the sector, for example the voluntary sector, this becomes relevant as you can apply your commercial experience and be effective in the NED role.
What was your strategy towards acquiring your first NED role and how long did it take for you to obtain your first appointment?
As I said, I made a strategic move to a smaller business that would give me the flexibility for working on my NED roles. It took only around eight weeks before I received the first appointment. I think this was because these were a close match to my existing skill set.
What is your advice on factors to consider when making this decision, for example, the investment of time and effort needed for attracting NED opportunities?
My NED positions are through referral and networking, so I advise aspiring NEDs to keep their networks up to date because you never know where the position will come from.
You also need to consider why you want to become an NED. If you are financially motivated, you may be disappointed:, given the time and commitment required to fulfil the role, the monetary reward is not always great. Your motive should be about using your skills and experience in a business in which you have an interest. You should also think very carefully about whether you can commit to the time needed for the NED opportunity. It is not just a matter of attending board meetings - you have to consider whether you can balance the time between your main job and what is required in the specific role.
When seeking out an NED role, you need to be very specific about the industry or sector in which you want to get involved, and speak to people about your experience. It is important to be realistic about what you can actually do and the type of industry in which you believe you could work, because the NED role will be based around your skills and the value you can bring to the board.
I agree with Allan Johnson [see part 1 of this article here], that experience of working with or being a part of an executive team is useful. I have participated in many board and committee meetings and have experienced the dynamics of the board and what is required when taking part, such as giving reports to boards and interviewing board members on projects. This is when you see how boards work, including approaches that work well and those that do not.
Understanding the board dynamic is key because NEDs have to ensure there is good reporting and governance. You have to understand when to make your points or press further on sensitive issues. NEDs may have the authority to remove executive directors and so they must be independent from the day-to-day operations. This should not be a deterrent - people just need to understand you may have to ask awkward questions and say “no” when it is right to do so’.
Using ‘head-hunters’ or recruiters could help aspiring NEDs to gain an understanding of what is required in a role. In practice, how useful they are depends on each situation. The important thing is that you understand the NED role and its requirements, for example, learning from the experiences of others.
In your view, is there anything that aspiring NEDs typically get wrong when deciding when to become an NED and seeking out NED opportunities?
People often assume if you have 30 to 35 years’ experience as an executive board member, you will be successful at getting a NED role. This is not always enough as a board will have specific requirements and you have to meet the specific set of skills needed.
Some people may make a number of attempts to gain an NED role and not be successful. This goes back to my previous point about being very specific - if you are not an exact match, you will not get the role. It can be disheartening if you pursue 30 to 40 roles and you are still not successful. My advice is you need to be more selective when you are approaching anyone about a NED role and use your skills to sell yourself. For example, if you have experience in import and export for overseas markets, it is far better to pursue six roles that have this exact requirement, rather than 20 that do not, and increase your chance of obtaining at least one interview.
People often make the mistake of believing that because they have previously held an executive board position, they will be successful in any NED position. This is not necessarily the case. In the NED role, you are deemed the critical friend, coach, mentor, but you have the responsibility to hold the managing team to account. You are not there to tell the board what they should do. Some NEDs act like executive directors but, in my view, they really need to keep some distance from the day-to-day operational side of things.
In some organisations, the NEDs do not always understand their legal position. Many organisations do not do enough to educate them about the specific legal obligations of their role. Some NEDs are shocked when they discover they are jointly (with the executive board) and individually responsible. I believe organisations could do more to help NEDs understand and appreciate their legal position, but it is the individuals’ own responsibility to understand it for themselves.
I am also passionate that the makeup of the NED community should improve. In my view there is a need for more gender diversity among NEDs. It is a very male-dominated community and more needs to be done to introduce, for example, more females or the business will forgo the value and benefit of having a diverse board membership.