How to become a non-executive director
One of the first questions many people ask when considering becoming a non-executive is ‘What exactly is a non-executive director?’ Non-executive directors work across a number of industries, and within a vast range of companies from early stage startups to massive FTSE-listed companies but there is a commonality to the role, whatever the sector and stage.
A non-executive director (NED) is a member of a company's board who is not involved in the day-to-day running of the company and instead provides independent oversight, constructive challenge and strategic advice to the executive team. Non-executive directors are typically appointed to represent the interests of shareholders and to provide a balance of power on the board. They also play a key role in governance, risk management and financial oversight, helping to ensure the long-term success of the company. You can learn more about the role and responsibilities of non-executive directors here.
So now you know what a NED is, the next step is to learn how to actually become one….
Non-executives bring the skills, competencies and knowledge they’ve amassed throughout their executive careers to the companies they join, but one of the main challenges for those embarking on a NED career is transitioning these skills to a role which requires a different approach and mindset. There are many stages to becoming ready to apply for your first NED role.
Non-executives will typically be required to be competent in governance, fiduciary matters, financial oversight and strategic guidance. The good news is that, even if you have some gaps in these areas of expertise, you can acquire these skills through a combination of personal and professional development. Whether that be through undertaking learning and development programmes to provide theoretical knowledge or gaining skills on the job, there are many avenues to building the competencies needed within the non-executive role.
As a starting point, many professionals choose to enrol on a learning and development course focused on building NED skills, such as Connectd’s Transition to Portfolio programme, before striking out into the world of applications. However, if you feel that you’re ready to start applying for roles, there are a number of steps you can should take to boost your chances of landing your first NED position.
Creating a stellar CV
Your executive CV will likely be unfit for purpose when applying for NED roles and a comprehensive overhaul could be hugely beneficial. While your executive CV will focus on commercial and operational performance, your new NED document should reinforce the skills and qualities that differentiate the role from that of an executive director. You can, and should, lean heavily on relevant experience and skills but be sure to demonstrate your personality, values and independence of thought. Boards will be looking for strategic thinkers and those that are willing to provide quality oversight, not day-to-day to input.
Gaining Experience
It’s worth considering gaining experience through other similar roles before gunning for your first NED role.
A trustee role with a charitable or not-for-profit organisation can provide aspiring NEDs the opportunity to learn how boards function, and are especially useful in terms of building hard skills in board governance and finance. Charity boards are often small which means you will have the chance to wear many hats and acquire a range of skills. Most trustee roles are unremunerated which will prove your commitment to working on a board and your willingness to do what it takes to gain valuable experience and skills.
Board advisory roles do not have the same liability as non-executive roles so they’re a great way to test the waters of working with executive teams without the same legal responsibility. You’ll likely be working on a slightly more operational basis but you will get to offer strategic advice, understand the mechanisms of board governance and finance at first hand, and become used to working in a role that is neither full time nor as hands-on as your executive career.
Mentoring can also be hugely beneficial to anyone considering a NED career. Tapping into the experience of a seasoned board professional can help you to not only learn what it takes to be a board member, but also expand your network and help you to refine your NED proposition. Connectd has a bank of experienced board members who have helped hundreds of professionals to launch a portfolio career by sharing their personal insights and knowledge.
School governors have much the same responsibilities as NEDs and with the advent of MATs, school boards have far more complex budgets and governance to manage and execute. This experience and level of responsibility could significantly boost your suitability for a non-executive role.
Does a non-executive director get paid?
Typically, your first non-executive role will be unremunerated; even the most successful c-suite executives can struggle to find a paid role for their first foray into the NED world. Consider this as a stepping stone, the experience from which you will be able to leverage when going for paid roles further down the line. Once you’ve cemented your reputation as a capable board member, you could be looking at earning anything from £12,000 up to as much as £300,000 dependent on the size of the company, and your seniority and experience.
Is it worth being a non-executive director?
Being a non-executive comes with rewards that go far beyond the paycheque. Most NEDs report enjoying a much better work-life balance than in their executive careers and an ability to control when and how much you work can be an emancipating experience. NEDs also enjoy the altruistic aspect of the role, helping businesses to grow, while also taking on fresh challenges, learning new skills and building a rewarding network of professional relationships.
How are non-executive directors appointed?
Previously, many NED appointments were facilitated through the ‘old boys club’ of recommendations and close network connections. Greater transparency, inclusivity and a desire for a range of perspectives has seen non-executives being appointed from a far more diverse range of backgrounds and experiences. In SMEs, NEDs are typically interviewed by the existing board members, both executive and non-executive, while larger companies may have a dedicated nomination committee, selected from their main board.
Typically, you will be invited for first and second interviews which are ordinarily in a Q&A panel format. While questions will certainly be asked about your skills and experience, this is as much about the recruiting board getting to know you, your personality and your style of leadership. You will be expected to demonstrate an ability to provide challenge, think laterally and communicate effectively and even-handedly. Remember this is also a chance for you to ask questions and make sure the board and the wider company are the right fit for you.
If successful, the terms of your appointment will depend on the company you have been invited to join. Following changes to changes to the Off-Payroll Regulations, commonly known as IR35, which came into force on 6 April 2021, NEDs will often work on an employed basis, rather than contracting their services to a company. It’s also worth noting that many companies may build in a maximum term limit for non-executive directors to promote diversity of thought and fresh perspectives.
Non-executive director skills, qualifications and expertise
There are no mandatory qualifications required to become a non-executive director, with the focus instead being on the skills, experience and expertise needed to provide deep strategic oversight and guidance. Throughout an executive career, professionals build up a vast range of competencies, knowledge and experience all of which can prove invaluable in a non-executive role.
That said, there are certain hard skills which will make a candidate more attractive to companies hiring non-executive directors. Knowledge of corporate governance, financial acumen and an understanding of risk and compliance are all highly prized and could aid your route to landing a NED role. Similarly, companies are increasingly seeing stakeholder pressure (from customers, investors and suppliers) to build inclusive, sustainable businesses, so those with skills in diversity and inclusion and/or ESG (Environmental, Social & Governance) are much in demand as NEDs.
More broadly there are skills and qualities that are prized in NEDs, including :
- Communication skills: NEDs should be effective communicators, able to express their ideas clearly and concisely. They should also be good listeners, able to ask probing questions and actively engage in discussions.
- Ethical standards: NEDs should adhere to high ethical standards and demonstrate integrity in all their actions. They should be able to identify and manage conflicts of interest, and act in the best interests of the company and its stakeholders.
- Independence of thought - NEDs are required to be impartial sounding boards for the executive team, offering constructive challenge and representing shareholders’ interests.
- Industry experience - this can often be an advantage although many NEDs may start their non-executive career within their own industry before broadening their portfolio to take in roles outside of this.
- Leadership experience: NEDs should have experience in leadership roles, either as a CEO, board member, or in other executive positions. This includes the ability to build and manage effective teams, motivate and inspire others, and make tough decisions.
- Strategic thinking: NEDs should have the ability to think critically and strategically about the company's direction and long-term goals. They should be able to provide alternative perspectives to ensure that the company is making sound strategic decisions.
It is worth noting that in the UK, NEDs with specific roles within financial institutions, such as banks and insurance companies, are required to be approved by the Financial Conduct Authority (FCA) and/or the Prudential Regulation Authority (PRA).
Some companies may have specific criteria for their NEDs, such as a certain level of education or professional certification but these are left to the discretion of the company's board of directors.
Learning & development
Gaining the competencies, skills and behaviours required of non-executive directors can seem like a daunting task. That's where learning and development can come in to its own. Connectd’s Transition to Portfolio programme is designed to help executive and C-suite professionals build the portfolio career they want. We have a range of CPD accredited learning modules which cover everything from crafting a board level CV to tackling board level finance. We also regularly release research papers and guides which offer insights into the early-stage space for NEDs and board advisors. You can visit the guide section of our site to access these resources.
There are many organisations who offer training for those looking to build their knowledge of the NED role, including the IoD and the Financial Times. These courses are highly respected but provide theoretical learning-based programmes; Connectd’s Transition to Portfolio programme provides a hybrid model, with a strong emphasis on gaining practical experience through guaranteed board roles, expert mentoring and peer-to-peer networking, all alongside our CPD learning resources.
Non-executive job descriptions
Knowing what to expect from a NED job description can be a tricky task. While most NED roles will be looking for the standard competencies and skills already discussed, there will be significant differences. You can access three examples of NED job descriptions at the links below. You will see a vast range of differences in what each company is asking for, from level of education and experience, to company values, remuneration and responsibilities. This really reinforces how important it is to read and absorb job descriptions, ascertain if and how you can fulfil the remit and whether the role is the right one for you.
CVs & cover letters
You’ve seen a role that you’d like to apply for - which usually means submitting your CV and cover letter. The latter is a great vehicle for showing your personality and passion, and demonstrating that you understand the values and aims of the organisation. Your CV should highlight your relevant skills and experience, clearly signal that you understand the requirements and responsibilities of the roles, and amplify your achievements. And, as previously mentioned, make sure you are embodying the skills, attributes and attitudes required of a strategic non-executive, not an operational executive.
You should tailor both your cover letter and CV to each individual role for which you are applying. What’s more, it’s not enough to simply reflect what you think the company wants according to the role description - you need to learn more about the wider company, the current sitting board, its financial performance, its markets and its suppliers. This will give you an idea of the key people, where you can add value and whether the way the company operates tallies with the kind of organisation and role you want.
Use Companies House, LinkedIn and other publicly available information to paint a fuller picture of your prospective employer, which you can utilise both in your CV and at the interview stage. Many NEDs actually reach out to the company prior to application for an informal chat with a member of the board. Not only is this a great opportunity to uncover information that you’ve been unable to find, it also means you will be fresh in the mind of the board as a proactive and engaged candidate.
You can access a template NED CV, with guidance and tips, here - all NEDs should have one ‘master’ CV which they adapt and amend for each application. That said, there are many different style and types of CV, from chronological to functional, and even hybrid CVs, and choosing the right one for you could be crucial. If you’d like to learn more about the job search, CV and application process for board roles, the Connectd Academy has 10 dedicated modules focused on this topic.
Whatever your career transition aspirations, Connetcd has the resources and network to support you. You can hear from some of the board professionals on our network at this link.
