Non-executive directors (NEDs) are an enigma to many non-board personnel. Outside the boardroom, the lower employees are in the company’s ranks, the lower their understanding of a NED’s role in the company. But when NEDs work to their potential, the impact can be felt throughout the company – regardless of level.
So how can NEDs be recruited to move their role from informative to indispensable?
NEDs should not be recruited to fill competency gaps
It can be tempting to look at a NED vacancy as an opportunity to plug a skills gap. For example, bringing in a senior leader from an advertising firm if a board lacks marketing representation. But in cases like this, the unfortunate truth is NEDs often become the de facto executive in their area of expertise.
The NED is unable to interrogate decisions, challenge assumptions or offer fresh perspectives as per their function – because they are the authority on their subject in the room. Whilst effective executive/non-executive relationships are of course collaborative rather than combative, a NED should be able to act as a foil to the board, particularly in their area of expertise.
This can lead to NEDs fulfilling a role they are neither willing, nor being paid, to fulfil – leading to friction throughout the board. NEDs should be recruited to consult and challenge on what a board does – they cannot hold a mirror up to something it does not.
NEDs can be champions of diversity
Board-level diversity, after pay, is perhaps the most contentious issue for the public when it comes to corporate boards. It is hard to imagine a company today that does not have equality and diversity practices in place, and harder still to imagine the issues being discussed by the board.
At a time when Brexit and uncertainty of future trade deals with countries such as the US are front of mind for boards, companies can too soon assume their Equality and Diversity Officer has things in hand. But countless studies have shown the competitive edge diversity can lend companies, and boards may soon find they need that edge more than ever.
Recruiting a NED with experience and passion for diversity can ensure equality practices don’t simply make a company compliant; they can sharpen procedures, spot overlooked ideas and places for recruitment to strengthen what a company has control over in very uncertain times. A board cannot always guarantee consistent minority representation among its ranks – but it can take steps to ensure it’s possible with the right NED.