Recent reviews, recommendations and legislation have made the role of NED a much more accountable and legally liable role. It is therefore no longer a trophy appointments of yesteryear.
- Understand what the legal framework and codes of practice are now for NEDs: you are part of the governance and the stewardship of the company and its stakeholders.
- Understand the key functions and responsibilities of a NED; Independence, impartiality, monitoring and providing general counsel and guidance to the board.
- For most people a FTSE 250 or 100 NED role is unlikely, so look at other markets such as AIM but also SME and even start-ups. The latter are not mandated legally but are emerging markets.
- Undertake essential training on being a NED, perhaps including finance and investment. Just being a director or businesses owner is not enough, you must transition into a role.
- On the latter point, you need to profile yourself as an advisor and NED, engage with the right networks and companies and show credible knowledge, skill and abilities.
- Do your due diligence on the company and the board. Is the company legitimate, structured correctly and are directors focused and the board composition balanced?
- Can you see evidence of good governance and can you spend time in, and be, connected to the business? Is there a letter of appointment and induction process that gives you the best start?
- Small companies will have less structure and defined responsibilities, whilst personalities and culture maybe very strong. Ask yourself does this fit with me and can I truly add value?
- A NED can professionalise a company, bring extra capability, greater confidence to investors and stakeholders. You therefore need to properly assess your skills and personality. Do you have sound judgement, the ability to manage conflict and conviction to challenge effectively and skills to be a good coach and mentor?
- There is a bigger time commitment than just the classic one-day per month for which you are paid. Also, it’s always a bigger challenge than you first think. But the latter is one of the rewards of being a NED. Finally, beware high fees from some agents (not the best place to find a role) who offer guaruntees of success. So, my advice is to join a strong network that focuses on NEDs and get properly trained.
Steve Gilbert BSc, MSc, MBA, MBPsS, FlnstLM
Steve Gilbert’s background is in corporate business development where he has focused on technology and consulting services mainly in the financial services sector. His background also includes SME and start-ups leading to him becoming investor, advisor and NED. firstname.lastname@example.org