It has been said that a Non-Executive Director (NED) is a role that nobody is qualified for. The list of attributes is quite precise, yet at the same time contradictory.
Knowing how to seamlessly slot into the build of a board and perform your duties to the best of your ability – without upsetting your peers – is no mean feat.
Needless to say, senior freelancers acting as non-executive board members are prone to transgression. However, typical mistakes NED’s make can be avoided if you know your role and deliver what is expected of you.
In a nutshell, the role of a Non-Executive Director is to offer specific, objective and strategic advice at board meetings. Your responsibility is to keep the company focused, profitable and within the boundaries of the law. Considering the modest remuneration, there is a lot of pressure. Don’t add more pressure on yourself by making mistakes.
Patience is a virtue
Non-Executive Directors that are new to boardrooms can sometimes feel daunted or intimidated. It is natural to be a little nervous, but it is also a mistake to be overconfident and storm in trying to prove your worth. Whilst you may be eager to make an early impact, being too vocal can be disruptive and frowned upon by established board members.
To overcome this dilemma, strike a balance between contributing without pushing the boundaries. Remaining silent and appearing like a shadow in the background will not strike confidence in other board members, however, forcing your opinions will grate a few spines.
Offering a different perspective is the best strategy, providing your opinion is focused and in context. In the early stages, you will benefit from listening, and only interject if you have significant information to share that is relevant from a practical or legal standpoint. If your argument is a personal opinion, keep it to yourself.
Non-Executive Directors that have been appointed to the role of Chairman must understand that your duty is to lead the board. The role of other Non-Executive Directors is to think, consider, advise and support.
A lack of preparedness will not be tolerated by other board members. Being unprepared for meetings suggest a lack of commitment and is more likely to leave you flustered for most of the session.
Read documents in advance of each meeting, attend all board sessions, and arrive in good time. Non-Executive Directors who do not make a concerted effort to fully understand the company or business objectives will be noted by your peers. Asking inappropriate questions will stand out.
We can’t stress enough that it is vitally important to make sure you understand the company’s strategy, policy, performance and governance.
Also, show an interest in the meeting. Even on occasions when you are not actively participating a great deal, try to show some enthusiasm. Any signs of distraction or boredom such as constantly checking your phone for messages will cause irritation among others board members.
Leave the ego
Strong Non-Executive Directors share the long-term vision of the board. There is no room for twelve egos around one table. Your role is to act as a mentor to senior officials so don’t be too opinionated about points you do not agree with. Stick to the facts and back your suggestions up with quantifiable and actionable data.
Board members that harbour desires to further personal or political agendas will soon be found out. Whatever your views are on broader issues such as the environment, diversity and social responsibility, remember that your only interest on a corporate committee should be the interests of its shareholders.
Know your place
Whilst it is recognised that non-executives are independent of management, the legal liabilities are the same for all board members. For a non-executive acting as specialist advisors, this can be a difficult tight-rope to tread.
What is important to remember is that your role is to supervise management and provide an independent view of strategic directions. It is therefore important to make the distinction between management and governance.
Confrontational personalities do not bode well for board members. To avoid conflicts the sensible approach is to propose views that seek to protect the interest of all shareholders.
Although non-executives have the capacity to make decisions, the ideal approach is to inform board members of the facts they need to know. Present your case convincingly and back it up with data.
Failure to appreciate your role and status on a board will cause you to make mistakes. The key attributes of Non-Executive Directors fundamentally revolve around personality. The debate about your knowledge and intellect does not enter the equation – your brilliance is what got you a position on the board in the first place.