Becoming a Non-Executive Director - Paul Munden - YouTube

Well a non-executive director is normally seen

as a director that, number one, doesn't work for the company,

so is not an employee, but they are an officer of the company nonetheless,

and number two, are usually part-time, so not full-time employees,

and thirdly, and perhaps most importantly,

they don't have an executive function in the organisation.

However,

non-executive directors come in all sorts of hues

and they do a lot of quite different things in different companies, so for

example, a non-executive director of an FT100

listed company

is likely to be very much about oversight of the executive,

ensuring good governance,

ensuring good internal controls,

whereas perhaps an investee director of a small company,

who's also non-executive, might very much get involved in the management of the company

a lot more. The non-executive role is extremely important in business today,

but if we think about a non-executive director in terms of independence,

I think, then, it's easier to understand the importance of the role.

So,

having an independent voice on a board is absolutely important.

An FT100 listed company, for example, is required

to have half their board as independent non-executive directors,

but any other company isn't required to have any sort of independence or a non-exec

contribution on the board.

In my view, I think it's crucially important for all companies to have that

sort of independent voice.

Independent from its members, or shareholders,

independent, perhaps, from major stakeholders, that can just balance the view sometimes

of the executive. So I see that, really, in 2013

and forward, as being the real role

that non-executives can play.

Non-executive positions are really attractive, actually, to senior managers and

executive directors.

In fact, companies have, big companies have for many years

encouraged their senior executives

to go get a job as a non-executive on a charity board, or a public sector

company board,

just so that they can get a different experience of how boards

work in different sorts of sectors.

The board that they join, of course,

gain a great deal of experience and a great contribution from

the executive director, he brings his, or she brings her good

experience to the board.

But the executive, of course, sees how governance works in different sorts of

organisations.

It makes a huge difference to their

experience as a director. So, the question we're often asked is 'Who can be a

non-executive director and do you need any qualifications?'

So in the UK, as it is in most jurisdictions across the world,

anyone can be a director.

It's a bit like being a parent, I suppose, you don't need a qualification

to be a parent,

but it helps if you know what you're doing.

Although you don't need a qualification, the law does

fix a certain degree of competence on directors

and if you fall below that degree of competence,

then you can be fixed with liability.

So the law requires that a director has adequate experience and skills to

serve in the particular company that they're on

and to bring to the board any experience they, in fact, say that they have.

Any director, or most directors, that find themselves in difficulty, i.e. they're fixed with liability,

or being disqualified, it's usually because they fall below that, sort of,

competence test.

So, although you don't need a qualification, you really ought to be competent. In terms of improving

your chances to become a non-executive director,

experience, of course, always counts.

So, have you been on a board, either as an executive or non-executive?

Our advice often is that individuals that want to build a portfolio career

of non-executive positions,

look to find non-executive positions that they can add to their

CV.

So, positions on housing associations, charity boards, the public sector are

crying out for really good directors, people with some commercial experience.

On those boards, you'll really gain some good governance experience

that you can put on your CV and

like everything else, I think with a full CV there's

more opportunity of you

securing those other non-exec roles that you're looking for.

So, how do I prepare for an interview for a non-exec position?

I suppose, at the outset, I ought to say that the non-executive director is the

last bastion of the tap on the shoulder.

So not every job that you'll go for will be available via open interview.

So, if you're fortunate enough to secure an interview

for a non-exec position,

just bear in mind that perhaps the interviewer doesn't really know

what a non-executive directors does or what they can offer to them in the

organisation, so just think about your experience,

what you can bring to the board,

what skills you have and how you're just really going to make a difference

on that board and how your experience might address some of the issues that the company

is facing.

Secondly, if you get the opportunity, we'll always advise you, go and speak to the

chairman beforehand to really understand the board that you're joining,

the issues that they face as a board and they face as a company,

any big risk items that, perhaps, you should know about. And I think that will just make

your interviews far more rich and you'll be able to bring in your experience in a

much more structured sort of way. I recently interviewed for non-executive

directors for quite a large organisation.

And one of the questions I asked is, sort of, governance, what does it mean

to this particular organisation?

And I have to say, of twelve non-executive directors or aspirant

non-executive directors, not many could answer the question particularly well.

So, bone up on that, understand

this, sort of,

what you can bring to improve the

governance or the direction of the organisation.

So I think those two things will stand you in good stead.