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Four problems you may face as a non-executive director

By Professor Ruth Bender

Four problems NEDs may face

You’ve been very successful in your executive career. As you come to the end of your current career, or consider your options for later in life but aren’t there yet, others are suggesting that it would be great to ‘go portfolio’; take on several non-executive posts and use your talents there.

You could make a fulfilling contribution to other organisations while earning money at the same time. Furthermore, if the alternative is complete retirement, which maybe doesn't appeal, this is a great way to keep actively involved in the business world.

What's not to like?

Well, I know many people who have fitted smoothly into their new NED roles and achieved great satisfaction from them. But I have also known a few who have found it uncomfortable. So before you take the plunge, here are four pointers you might find useful.


1. You're no longer at the centre of things

As an executive you knew everything that was going on and you had access to whatever information you wanted. You managed staff, controlled a budget and people listened to you.

The non-executive world is not like that. The information you receive is usually filtered through the executive, possibly just through the CEO. Unless you make the effort to create meaningful relationships within the organisation, you only get to find out what they want to tell you. The interpersonal skills you need to manage organisational relationships as a NED, with no power base, are very different to those you had as an executive, and for some, this is unsatisfactory and frustrating.

So, have a think about how you are going to handle this. When doing your due diligence on the organisation that has offered you a post, consider their culture and how you might work within it.


2. The social aspects of the role are very different to being an executive

Almost every time people get together in numbers there is an ‘in-group’ and an ‘out-group’. The in-group might bond around a common background or a shared role, or even a love of the same sports team. Whatever it is, there is a group dynamic involved. As an executive, you were part of the executive in-group, with a shared understanding and a common vocabulary. As a non-executive, you’re not.

You are moving into a situation where the executives not only know more about the business than you do, they also know each other better than they know you, or you know them. They have bonded as a tight group (If they haven’t, you might have other problems as an NED!).

Although all of your fellow NEDs are in this same position, the group of NEDs is generally not as cohesive a group as the executives. Simply because you don’t meet that often, so don’t know each other as well.

There is a level of emotional intelligence needed to deal with this, so talk to others about how they have approached the situation and how you might work most effectively within your NEDS role.


3. You have two conflicting roles

Non-executives have two roles. On one hand, you are there to promote the success of the organisation to the benefit of it and its stakeholders. In that role, you are working together with the executive, discussing strategy and performance as a team; in the UK’s unitary board system you are all equally responsible.

On the other hand, you also have a monitoring role. As a member of the audit committee you are charged with ensuring that the systems and financial reports are suitable; as a member of the remuneration committee your role includes evaluation of the pay of your executive board; as a member of the board you must always be thinking about corporate governance.

Combining these two roles (in NEDs jargon we refer to them as ‘performance’ and ‘conformance’) can sometimes be challenging and NEDs need to appreciate the different approaches that are needed.

4. You are not meant to get involved in the implementation

I had a friend whose career had been very operational. He was brilliant at sorting out problems and getting things (and people) to work. Suddenly, as a non-executive, his role was to advise on what should be done, and then stand back and let others do it. He was not allowed to be hands-on. After a relatively short time, he gave up the NED role out of sheer frustration!

For some of us, that is not a problem. My own first career was as a professional advisor, so I’m used to handing the implementation over to others. But in your approach to becoming a non-executive you must consider your own talents and attitudes, and decide where on that spectrum you sit, and then take on suitable roles that play to your strengths.



Tags: Cranfield School of Management, exec-feature, executive development, non-executive director