We are frequently asked, how do you become a Non-Executive Director (NED)?
What is the role, and what skills do you need? We sat down with our Chairman, Gareth Davage, who shared his insights and expertise.
What exactly is the purpose of a company chairperson?
“That’s an interesting question. There is a very practical purpose to the role which is around the legal standing of non-stakeholders, objectivity, and governance.
As a chairperson, you need to ensure alignment with the shareholders’ and the executive team’s ambitions and to work with them towards their ambitions. To make that a reality it needs to be clearly defined from the outset.”
What skills do you need?
“So, I know some incredibly good executives in business that know how and what is needed to run a business and they do it very well, but the skillset they have would not match the skills of a chairperson or NED.
- To be able to question in depth and to listen intently to what is being said, and then to question again and to challenge. Offering an opinion if needed is important as well. The challenge piece is the most important.
- To have an enquiring mind, one where you don’t accept the norm and picture the business, and always view the business in a 12/24/36 month periods. Not only looking at what the status is today but the impact on the future shaping of the business.
- Because the shareholders and the executive team are very much into their sector and industry, the chairperson should be able to provide a macro-overview. Knowledge and enquiring into wider business activity is essential. I keep in touch with a number of CEOs, CFOs and COOs to keep on top of the latest movements on a wider scale, allowing me to bring a wider view.”
How do you know when to question and when to offer an opinion?
“There’s a crossover there, you end up being a mentor and a coach to the CEO/shareholder and that’s where the line is slightly blurred. You know that as a chairperson, your role is to offer guidance in the form of an opinion, but you do not have a say.
On a point of governance, I would step in.”
What is your personal approach?
“Empathetic and passionate, empathetic with the individuals I’m working with, and passionate for the success of that business. I do get involved when necessary and when called on.
You should never criticise, there’s a blurred line between chair/mentor/coach which means that you’re always advising and guiding but never criticising. The advice given goes well beyond business eventually. One thing I always say when taking a chairperson role is that what the owners and executive team think they want from a chairperson never ends up being what they need, it generally ends up being different.
Open to adapting what a company/CEO need. Spending time with the business within a 2/3/4-month period. Having a really open relationship with the CEO and/or the shareholders about some of the findings and also discussions thereof.”
How do you secure a NED/Chair position?
“There are many headhunters around that can do it. If you are looking for a FTSE 250 then it has to be a headhunter. Anything outside of that would be networking and recommendation. Your networking skills have to be honed. The interview process must be one of the most important things. Not a traditional interview, they are interviewing for experience, style, a potential coach, and mentor. You’ll be interviewing with someone that they are going to share information and experiences with that they will have never discussed with others. This is something that you should be acutely aware of.
You are interviewing a confidant, being joined at the hip between the CEO and the NED – there cannot be misalignment on those messages, it’s his or her or their message, not mine.”
What do you look for in a company?
“In the past 10 months, I have had 7 interviews to date for a NED position and I have pulled out of 6 of those positions because either, 1. My experience isn’t right for their business 2. I’m not sure I can work with the owners or CEO and 3. I’m not sure the moral compass is pointing in the right direction.
The owners or CEO MUST have ambition and a willingness and WANT to change and improve, otherwise what is the point? Process, systems, governance, people, structures, winning business, that can be a whole host of things but an openness to change is essential. But before change happens, challenges happen. There has to be a willingness to accept feedback and welcome the challenge.
Non-executive/executive vs non-executive you can be very objective, and that’s part of the reason that as a non-executive chairperson you can be as objective as possible because you can walk away. Shareholding ties you in, you cannot be as objective when you’re tied in.”
Diverse board of directors and benefits thereof?
“I fundamentally believe that different backgrounds are best suited for better decision making in business. So, for example, one business I work with, I am the only English person in that business: the modern-day board/executive team is much more aware of the benefits of diversity, and if they aren’t, I would be bringing that thinking into the boardroom. It is important to understand the needs of the company and the diverse board goes a long way to meeting fulfilling and developing the company as a whole.
Successful boards do not have everyone looking in the same direction and thinking the same thoughts. Individuals that can challenge ways of thinking (age, ethnicity, sex/gender, background, class background) will always provide new viewpoints and make the business more successful. I’ve seen that going wrong too many times in the past.”
Why did you choose the NED route vs. executive?
“I was fortunate enough to be able to have a choice in the first instance. I originally did not want to go back into a 6-day week, 90–100-hour week role and the pressure that entails. Also, I wanted to try and give back knowledge I’ve picked up through my 30 years in business to people that I viewed as having all of the above and help them grow their businesses, and then it moved through to non-executive and chair roles. Some projects may only last for a year or two where there’s been a specific need for my skills on a short term basis to suit the needs of certain projects.
To be a successful chairperson or NED, you have to have broad knowledge of business, you don’t need to have really specific skillset, but you have to develop a broad understanding of what makes a company successful. You have to be able to apply those broader skills to very specific situations.”