Ten tips to help you decide if a non-executive director role is for you

Ten tips to help you decide if a non‑executive director role is for you In these days of portfolio careers, more and more people want to become non‑executive directors (NEDs). It’s a crowded market and a role that doesn’t suit everyone. Despite the regulation and voluntary codes surrounding a NED role, and responsibilities for those in listed companies, NEDs also have a place in family‑owned companies, those backed by private equity, and those seeking growth and development, as well as in social organisations, charities, trade associations and government bodies. Professor Ruth Bender

Here are ten pointers to help you determine if a NED role is for you:

1. Why does the organisation need a non‑executive director?

6. Ask the third question Any NED can ask a question. A good NED will repeat that question when the answer doesn’t ring true. A very good NED will ask a third (and fourth) time until they are satisfied with their understanding. Don’t be afraid to be the lone voice. 7. Is this your first NED position? Being a NED will feel very different from being an executive. You will advise, but other people will execute. Some NEDs settle into this role very quickly; for others it is always uncomfortable. Furthermore, you are denuded of previous status; generally, you have influence rather than direct power; it’s a different lifestyle. 8. Diary management If you are taking on a portfolio career, good diary management is essential. Board meetings should be scheduled well in advance, to ensure that all directors can attend. 9. What are the downsides? Legally, a NED has the same liability as an executive director, even though they know far less about the business. Do you understand your legal liabilities, and are you comfortable with taking this on? 10. A unique role Although there are many guidelines and quite a few ‘don’ts’ it is useful to understand that there is no one way to behave as a NED. You need to understand the context of the organisation and make the board work to suit that.

If it is an early‑stage business, the role might be mostly about providing advice to the executives and strategy formation. For a later‑stage business your work will involve more governance and monitoring. Are you and they clear about what the role entails? 2. Why do you want this job, and what can you bring to it? The NED role can cover a wide spectrum. You might be an ‘independent friend’, or a strategist, or a monitor, or all of these things on different days of the month. As with applying for any job, think about what makes you right for a particular role at a particular organisation. 3. Due diligence is essential The company will do due diligence on you before it makes an appointment, but you must do your own due diligence as well. Make sure you understand the business, the dynamics between owners and executives, and the people with whom you will be working. Unless the other people on the board share the same level of integrity as you, the boardroom could be an uncomfortable place. 4. Your induction On joining the organisation ask about the proposed induction programme. It should be comprehensive, giving you a clear understanding of the mission and values of the organisation, as well as its strategy and operations. This should be ongoing – make sure you keep up‑to‑date as the organisation develops. 5. A director or a representative? Sometimes the NED position will arise because a particular shareholder or stakeholder has the right to appoint a director to the board. It is important to understand that, despite this, your role is to act for the company as a whole; you are not acting as a representative of a particular interest and must avoid acting on conflicts of interest.

For a deeper understanding of a non‑executive director role and how we can assist, contact:

Vanessa Young T: +44 (0)1234 754500

E: v.young@cranfield.ac.uk For more information visit www.cranfield.ac.uk/som/neds