Preparing Future-Ready Professionals

So You Want to be a Non-Executive Director?

Simon Laffin | December 15, 2021

Not many children grow up with the career ambition to be a non-executive director. However, many businesspeople, and indeed executive directors, start to think towards the end of their careers, that being a non-exec could be a next step. I nearly wrote that they might think of it as a good role for their retirement. Stop there: a non-exec role is anything but retirement.

Financial experience

But let’s start with the good news. Every company board, which has non-execs, needs a financially qualified one for their audit committee, usually to chair it. Accountants are therefore in a uniquely privileged position in getting a non-exec role. Any accountant candidate has at least one answer to the most basic question: “What do you bring to the board?”.

Of course, there are different sorts of financial experience; the ex-audit partner brings strong technical experience, whereas the accountant in industry brings more commercial. Both can work and will appeal to different boards. It’s more about how you build on that experience. No board will want you just because you have a financial or accounting qualification or certificate. Some boards may want financial experience in a particular industry (for example banking), whereas others may stress experience in financial management, treasury or internal control. Most boards however will be looking for someone who will make a strong, broad contribution to the board, but who also has a finance background.

What is the broader contribution that boards might be looking for? Any aspirant non-exec needs to think through what else they bring to a new board.

Sector experience

You will undoubtedly have some sector experience. However, nomination committees are not always interested in non-execs having experience in their company’s sector itself. The board may well feel that their own executives know enough about their sector and want non-execs from a different sector and angle, or they may already have a non-exec with relevant sector experience. The board may be interested in ‘adjacent sector’ experience (for example, a food retailer wanting food manufacturing experience or a media company wanting client experience), or it may want a particular experience (I was recruited to one board because it was being bid for by private equity and it wanted that experience).

Board experience

Sometimes a board will want a seasoned non-exec. This is often because the CEO or the CFO is new, and they would like a mentor figure who can guide them. If the board has already got a few seasoned non-execs, especially if the Chair is very experienced, it may be happy to recruit a first timer. The chances are that the nomination committee will have decided this very early on in the process, so it should be obvious what it wants.

You should take a broad view of board experience. Obviously, time served as a non-exec would be most highly regarded, but if you are a first timer, think about other board experience you have that you could emphasise. This would include time as an executive board director, but you can also talk about time that you might have observed or sat in on board meetings/committees, and membership of voluntary and non-commercial boards or governing committees. A senior finance person is very likely to have attended some audit committee meetings and may well have been a treasurer for a voluntary body.

‘Difficult' situation experience

There are two ways to look at experience that you might have gained from being in a ‘difficult’ corporate situation, such as the company getting into trouble, a boardroom disagreement, major controversy or scandal. Some nomination committees will run a mile from a candidate who has been involved in such situations (whether or not the candidate could really be held responsible for it). Other companies will be more enlightened and be willing to discuss it with candidates. If you are in this situation, above all else be honest with your interviewers. Do not assume that they know nothing. In business, it shouldn’t be a surprise that many people know other people, and you can meet someone who knows more than you realise.

You should reflect and be clear what you learned from any situation. If you can explain clearly what happened, and why, and what the lessons are, you may well find that your interviewers will think even more highly of you. This includes if you made a mistake, but learnt from it. As an interviewer, I rather like to talk to candidates who have been through the wars a bit, because the ones who learn from that are, by definition, seasoned and wiser than others who have had a smooth pathway.

Do you want to be a non-exec or just retire?

A non-exec role is no longer a retirement option, or a fee to supplement your pension. When things are going well and you have a good board, then the time commitment may well be modest. However, when things go wrong and/or you have a difficult board, then the time – and worry - that you should put into the board increases dramatically. Good non-execs are active, worrying about things that might go wrong in the future, keeping up their background and technical knowledge and always asking questions.

So, do you really want to be a non-executive director?

Finance people are in a privileged position when it comes to becoming a board director. That finance experience can smooth your path onto the board, both as an executive and a non-exec director. Think hard about how your experience can be useful to a board, be it from finance, sector, board or even difficult situations.

Think also about other life experiences that have had outside of work and build those into your thinking. Maybe you had a difficult upbringing or faced discrimination? How did you respond to these problems? Might your experience of these bring something new to a board? Boards are looking for more diversity, so don’t be shy if you can bring it.

The key things are to present yourself as someone who can build on and learn from their experience, and to show how a board would benefit from it.  

A lifetime ambition?

For the last 15 years I have worked in many different non-exec and chair roles and it has been some of the best, most challenging and interesting work I’ve ever done, but it’s also been some of the trickiest, stressful and frustrating as well.

Being a non-exec hasn’t probably been your lifelong career dream, but it can be a very satisfying and challenging later phase of a finance career. My first childhood career ambition was to be a train driver. On hearing this, my son asked me: “Dad, so where did it all go wrong?”. “They ran out of steam,” I told him.

Don’t run out of steam when you can aspire to become a non-executive director!

Simon’s book: ‘Behind Closed Doors. The Boardroom: How to Get In, Get On and Make a Difference’ from FCM Publishing and available at Amazon provides advice on becoming a board director, and what you need to know to be a successful one.

In 2020, Simon also presented to the IFAC PAIB Advisory Group on how a focus on value creation and risk are needed to improve corporate governance. This is also covered in more detail in his book.

 

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Simon Laffin

Simon is currently a non-executive director at Dentsu Group Inc (a Japanese-based global media company) and Watkin Jones plc (a listed UK property company). Previously, he has chaired Assura plc, Flybe Group plc and Hozelock Group, and served as a non-executive on Quintain Estates and Development plc, Aegis Group plc, Mitchells & Butlers plc, and Northern Rock plc (as part of the rescue team). His executive career included being a FTSE-100 CFO at Safeway plc.

  

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