“The days of turning up for a quick hour and a good lunch are long gone,” declared Sir Bryan Nicholson, former chairman of the Financial Reporting Council not so long ago.
He was referring to the shifting dynamics that have seen increasing demands placed on the shoulders of non exec directors (NEDs) in recent years.
But for all the talk of growing pressures and tougher targets, the rewards of non exec directorships can be great – career-wise as well as financially.
Perhaps the most prolific NED in Yorkshire is Suzy Brain England OBE – regional head of the Institute of Directors and currently non exec to Barnsley Foundation Hospital and welfare to work group AVANTA, as well as chairing two housing companies.
She’s had almost 20 more NED positions previously and is a firm believer in their value to both the organisation and the individual.
Joining her to chat to BQ about NEDs from either side of the boardroom table, is Jo Haigh, winner of this year’s Peel Hunt and Sunday Times NED of the Year award in the ‘unquoted or private equity’ category. Jo (pictured above with George Hall of Jermyn Consulting, which she became a NED to earlier this year) is a partner at fds Corporate Finance in Wakefield.
Also on our NED panel is Peter Craddock, group operations director at national financial advisory organisation Perspective Financial Group – and a seasoned NED.
BQ: In this climate, where we are seeing small signs of recovery, why are NEDs important?
SBE: Non-executives often see things from different angles. They offer unique experience gained in varying fields and can think outside of the box to help with problem solving. They are in the business of finding solutions so only see difficulties as something to be overcome. They encourage entrepreneurship, innovation and growth. They like to see businesses developing their people as an investment in the development of the business for the future. The focus is wholly on leaving behind a better business than they found.
JH: A NED is the voice of balance and challenge. A good one brings outside perspective and a black book of contacts. Whether you are in growth retrench or stabilisation a good NED helps the board focus on the strategy and keeps them out of operations. They make the exec directors accountable for their actions and bring perspective to situations.
PC: Appointing NEDS is important in any economic climate. They provide objective challenge, insight, see the bigger picture, have extensive networks. NEDs may be needed for their skillset in financial turnaround, cost control, governance for example, which are all important in today’s climate.
Can start ups or young businesses tap into the power of NEDs? Where should they look?
JH: A start up probably needs a mentor rather than a NED - this is a very different role as it's supporting the MD rather than the board. But the choice of a NED is about chemistry, trust, likeability and a black book contacts. It’s not about industry knowledge but experience.
SBE: Young businesses can often attract unpaid help of business angels, or old hands who are willing to mentor new kids on the block. But if you rely on people you know to advise you as a favour, you cannot be sure that it would have the rigour and independence of a paid NED. The IoD runs non-exec finding services (see iod.com); all the recruitment agencies and head-hunters are raring to help. But often all it needs is a little note into your networks with a person specification and person profile and you will find it gets passed around, promoted through emails and social network channels, and experienced directors will actively put themselves forward. Some of the best NED recruitment comes from one passing to another a role vacancy with the famous line: "I saw this and thought of you". LinkedIn is also an increasingly popular way of hunting new talent.
PC: A start up would need to reflect on where the skillset was most missing around the board table, for example, sales growth, HR or governance. They should get guidance from other boards on how they conducted their selection process, and should make sure they due diligence the person thoroughly.
What new trends are you seeing in Yorkshire in terms of the engagement of NEDs with businesses?
SBE: There is evidence to suggest that non-executive directors are better for business than the occasional use of consultants. They are an all-round resource and are quite low cost for very high-calibre contributions. You could get a NED for £1,000 a month. A consultant could soon use up the annual equivalent, then not be around either to implement their recommendations or see if they have worked. I recommend that NEDs are recruited for three year terms, and that they can be re-selected twice, not exceeding nine years in the same organisation. The key is to remain the Critical Friend of the Executive, not become the Friend!
JH: I can’t specifically comment on Yorkshire, but I know there are lots of wannabe NEDs who have no concept of the role and who are glorified consultants at best.
Personally, what do you get out of your life as a NED?
PC: Great networking and learning about other business sectors and models. Learning about how to stay out of the detail and look at the bigger picture. Confidence in staying close enough to the exec team to show you care, but distant enough to evaluate performance and transparent decision making.
SBE: I’ve noticed as an independent chair of a board and a NED that more people thank you and praise you for your contribution. The diversity of holding more than one role at a time is energising. It is always possible to transfer knowledge skills and experience from one role to another. A pick 'n' mix approach to a non exec working life means you always work at a very high level; there is never a dull moment.
JH: Every time I have a meeting I learn something even if it's how not to do something. I love the variety of industries I work in but by and large most problems in business concern people and how you treat them, be that a customer supplier funder or an employee.
What tips do you have for business leaders looking to take up their first NED post?
JH: Get out there as it's not just who you know but who knows you. Speak and out be brave. Remember it's not all about the money – if that's why you are doing it it's not for you. It's about making things happen and steering and guiding and, more than ever, supporting. If you can't be available when your client needs you this won't work. Understand the corporate governance, principles understand your legal role and be prepared to share your experiences. Be open to learning and never, ever give up as Churchill said. With greatness comes responsibility
SBE: Businesses much prefer to appoint NEDs who really know the difference in the role of an executive and non-executive. That is why NEDs should get some experience as volunteers before they go on to look for paid NED roles. They can get this as a governor on a school board or college, through a church or political party, through other community groups such as Scouts and Guides, or especially by becoming a trustee on a charity board. Then once you have had your first NED role, and got an appraisal by the chair on record, then you can look for your second with good references to back you up.
PC: Work hard on finessing your CV to suit the target audience. Make it clear that you are on the market. Network hard. Research the sectors you are interested in. Be properly informed on organisations and individuals before you meet them. Work out for yourself what value drivers you can bring to the organisation and make sure you persuade them of those skills.
How we chose our NED...
Nuneaton business continuity and information security adviser Jermyn Consulting appointed Jo Haigh as its NED earlier this year. Here Director Gary Donlon explains how that decision was made.
What we needed was somebody who had the commercial acumen and networking links to add value and become a critical friend for our business.
We are a stable business with a very high customer satisfaction and retention rate, but havenot grown in turnover or profits. As the recovery is underway, we want to make sure that we can maximise our growth potential.
Whilst we have always had lots of good ideas, we often would not implement them. An NED gives us an objective challenge to force through the implementation of our agreed action plan and helps us take managed business risks.
In terms of the person, we wanted somebody who could be impartial, has the relevant experience and could understand our business/ market. A NED needs to be easy to work with but unafraid to provide constructive criticism when necessary. For us it was also important for the NED to register as a director with Companies House so that the relationship was closer than simply being a business adviser - and our experience of these has not been particularly good in the past.