Within the final decade, the function of a non-executive director (NED) has essentially advanced.
Being a board member who will not be a part of the government crew was once seen as a comparatively easy perform. You needed to perceive regulatory necessities, maintain corporations accountable and supply sound strategic counsel.
These are nonetheless important abilities, however the function of a NED is now far more nuanced. Whereas success was once outlined by what you knew, it’s how you’re employed that’s turning into equally vital.
The elevated scrutiny that boards of publicly listed corporations are dealing with as a consequence of poor efficiency highlights this reality. Simply take the regulatory scrutiny across the massive expertise corporations as a living proof. However the identical is true of unlisted tech corporations. If we have a look at WeWork’s tried float, poor governance was instrumental in its failure. As an illustration, WeWork meant to go public and not using a single girl on its board, which sparked an outcry from buyers. What’s extra, shady monetary mismanagement highlighted poor governance and an absence of excellent rules.
Whereas we can not underestimate the collective duty of boards, it’s additionally important that every particular person board member performs their half in driving excellence, accountability and fostering range of thought. There are a number of traits that each board member ought to should be sure that occurs — and most aren’t ever talked about on the job spec.
Have the fitting motivation
For those who’re in it for the cash, you’re barking up the mistaken tree. Changing into a non-executive director is not the trail to incomes massive bucks, particularly to start with of your board profession when the alternatives are sometimes unpaid or decrease paid. You have to construct up the fitting stage of expertise for a paid function on a listed board. It’s subsequently essential that you’ve a real curiosity within the firm you’re serving. You have to be actively engaged and ask “what can I contribute?” over “what’s in it for me?”
Lead, don’t execute
This is without doubt one of the most typical pitfalls — forgetting your function. As a board member, you’re there to problem, advise and encourage. You’re not there to implement or execute. Take into consideration your function when it comes to asking questions, not answering them. Your function is about considering greater than doing and listening greater than talking.
Keep away from groupthink
Boards that fail to have vigorous and typically tense debates will inevitably miss crimson flags or alternatives that ought to have been noticed. The chair is finally accountable for guaranteeing a structured and productive debate. As a board member, you may assist by being proactive in asking fellow members for his or her insights. For those who discover somebody being notably quiet, ask them for his or her ideas. This will convey out range of views from non-talkers.
For those who ever end up within the place of chair, it’s vital to keep in mind that an efficient chair offers management to not the corporate however to the board. In line with analysis by INSEAD Professor Stanislav Shekshnia, good chairs don’t search for the perfect answer to the issue themselves. Somewhat, they organise a bunch dialogue in a bid to search out the perfect final result for the corporate. From my expertise, chairs who dominate discussions in board conferences are doing the corporate and board members a disservice. To keep away from groupthink, you want a strong agenda and a chair who can facilitate dialogue and, as Shekshnia’s analysis suggests, speaks for lower than 10% of the time.
Problem appropriately, even when it means voting towards a buddy
As a board member, you have to be able to tackle powerful points and have the braveness to talk fact to energy. It’s important to have wholesome challenges within the boardroom. You want to have the ability to have candid, respectful conversations, but additionally the resilience to be rebuffed.
I’ve sat on many boards previously and have at all times had relationship with the CEO. Nonetheless, on one event issues received difficult. I needed to put aside my friendship and vote towards a technique proposed by the CEO. Nothing ought to be private within the boardroom. On this occasion, myself and the opposite board administrators felt the necessity to flip down a brand new marketing strategy as we didn’t consider it was within the organisation’s finest long-term pursuits. An amazing board member is aware of that regardless of any exterior strain it’s essential to at all times information the board to do the fitting factor.
Assessment your personal efficiency
The very best board members I’ve come throughout are those that commonly assess their efficiency by reflecting on what’s going effectively and what must be improved. It is best to do that at a board stage but additionally at a person director stage. Annual evaluations and suggestions from the chair ought to be mixed each few years with common board evaluations. You must also decide to ongoing growth and studying and make sure you’re updated with data and abilities reminiscent of fashionable governance and technological necessities.
There are in fact different vital traits for NEDs. However the 5 listed here are a few of the key qualities each nice board member ought to show. When corporations discover board members who get this proper, it may be some of the enriching experiences for a NED’s profession. And it may be simply as enriching for the efficiency of the corporate.
Fiona Hathorn is CEO of Ladies on Boards UK.