Thinking about being a Non-Executive Director or Trustee?

Have you made a New Year’s Resolution to ‘give something back’ and are you contemplating becoming a Non-Executive Director (NED) or Trustee? Here are a few points to consider first.

As is often so heartening at this time of year, one only has to look around to see family, friends and colleagues embarking on a new year with a sense of renewed purpose and a notable spring in their step. Nowhere is this more evident than at your local gym on a cold dark evening in January.

Many of us will have spent time during the ‘Twixmas’ period pondering our greater purpose, and reflecting on how we might enrich our own lives and the lives of others during the year ahead. For many, the question of how to ‘give back’ might be answered by taking on a role as a NED.

Whilst a noble pursuit – particularly for those seeking roles with not-for-profit organisations – there are some key considerations to ponder before ploughing headfirst into the hunt for your first / next NED position. This is not designed to put you off, but I do feel it is always worth taking a little time to conduct a sense check, and to make sure you understand what you’re getting into.

With that in mind, here are a few home truths for the aspiring NED’s out there:

1. What are your motivations?

Because the time commitment can be substantial, and many board positions are voluntary, you’ll want to give some thought to your primary motivations, and which type of NED role would be worth pursuing.

Are you doing this solely for altruistic reasons, to ‘give something back’? If so, roles with charities and not-for-profits in areas of personal interest could align well. Likewise, if you are looking to gain your first NED role as a way of building out your portfolio, an unpaid position with a small charity or even a local school can serve as a practical stepping stone.

2. Speaking of the time commitment, it can often be more than advertised.

Not always, but often (particularly for roles in the NHS) the recruiter will have had open discussions with organisations to properly calculate realistic time commitment estimations, but it’s always worth checking. We would always advise you to should ask yourself whether you can realistically give the full stated time commitment, and then some.

3. Have you considered the legal responsibilities and risks?

Becoming a NED carries legal responsibilities and reputational risks. Think about whether you are truly comfortable with this. Whilst NEDs are usually insured to protect against personal liability, you will have legal responsibilities and there is also a reputational angle to consider, particularly if issues should arise. It’s always worth undertaking some proper due diligence into the organisations in question, to make sure you are genuinely content with the above.

4. Are your general business skills up to scratch?

It’s important to make sure you are comfortable with the idea of stepping into a broad governance role, whilst bringing your own subject matter expertise. Whilst you don’t need to be an expert in everything, you are expected to be able to follow discussions and get up to speed where necessary with a very broad range of topics, and this can be mentally demanding.

You need to be able to understand financials (but you don’t have to be the expert!), scrutinise board papers (these can be very lengthy in some organisations) and grasp risks from cyber to regulatory. The quality of onboarding and induction processes can vary hugely, and some organisations do a better job than others. You may find you have to self-teach to develop the breadth of knowledge necessary to contribute fully.

5. You will need to spend time nurturing new relationships.

As a NED, your relationship with the Chair in particular is critical. Try to spend some time with them during the recruitment process to get a sense of whether you could work well together. A 15 minute call is often enough to put you at ease, but you’ll want to trust your gut on this. The Chair sets the agenda, the tone, and the culture of the board. A strong Chair can make your role significantly easier, and enable you to contribute as effectively as possible. Building a solid working relationship with the Chair, your fellow NED’s and the executive team requires time and effort, but will pay out in dividends.

6. Understand that walking away from an organisation can be just as hard as securing the role in the first place.

This shouldn’t put you off, but it is an under-appreciated reality that after investing time and energy into something in this way, you may build a sense of loyalty to the organisation and the executive. It’s unwise to feel it’ll all be plain sailing, so when issues arise, will you be ready and willing to step up? There can be substantial pressure on NED’s should things go awry, and sometimes these issues take months or even years to resolve.

These are just a few points to consider as you think about developing your NED portfolio this year. For further advice, do get in touch with Elyse Turner-Pearce at elyse.turner-pearce@andersonquigley.com.