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Board IncliNED: Careers of Non-Executive Directors - Part One

8/10/2020

2 Comments

 
Today we start a new multi-part series showcasing the careers of some independent Non-Executive Directors (NEDs). Our intention with this series is to share examples of journeys in practice across different markets and different industries within financial services to inspire you to reflect on your own careers and aspirations. We trust that these features will also complement our previous articles on:
  • Questions to ask when considering a specific NED position (per David Duffy) plus additional ideas on how to prepare for future opportunities
  • Advice for future NEDs from the Institute of Directors (IoD), including attributes required, interview preparation, and adding value once on board
  • Mentoring for NEDs: the IoD’s views on the why & who of NED mentoring, areas where it can help, and skills required of mentors

The Institute of Directors operates in a number of countries, and provides helpful resources to those performing or aspiring to such roles. Examples are the United Kingdom and Southern Africa, and similar bodies in the United States and Australia are linked to later in the article. Also, if you are an actuary, the Institute and Faculty of Actuaries has a NED Member Interest Group (MIG) that I’d encourage you to join. Their LinkedIn presence is accessible here: https://www.linkedin.com/groups/7430820/ Please do let me know if similar groups exist in your professions, and I’ll mention them too.
As described in previous articles, the main role of NEDs is to guide their organisations in a statutory capacity. Seamus Creedon, NED MIG chair, writes in "The Actuary" magazine that “corporate governance is the toughest of team sports” and explains that “good NEDs will use their skills and experience to aid the collective understanding of the whole board. A good board will be diverse [ito its members’] backgrounds, experiences and genders.”

For brevity, our shorthand NED includes iNEDs (independent NEDs) – some countries emphasise when a director is independent but others don’t. Eagle-eyed readers may spot this series’ vignettes in magazines of some of our members’ professional organisations over the coming months – I’ve tried to align my dates of sharing them here with the magazine publications as far as possible, although their versions differ, including in length. Do let us know if you see them in your magazine.
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​Read on for the stories, reflections and suggestions of three NEDs internationally: Lusani Mulaudzi, Hazel McNeilage and Tony Lally. 
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Lusani Mulaudzi
General, Life & Health Composite, and Parastatal Insurer

Lusani Mulaudzi is president of the Actuarial Society of South Africa, a role he sees as part of his portfolio career, which also includes paid NED roles, sitting on a number of non-profit boards, and consulting. His executive career focused on healthcare: he was a consultant to medical schemes as well as CEO of a struggling health administrator he tried to turn around. As a consultant, he attended multiple medical scheme board meetings which gave him helpful experience, and his CEO role gave him insight into reporting to a board, preparing board packs and getting input from directors on the company’s direction. In 2018, Lusani was headhunted to join the board of Constantia Insurance, a composite insurer. He serves as chair of its Risk Committee.

More recently, he has joined the board of the Road Accident Fund, a parastatal insurer which provides liability cover to drivers of motor vehicles in South Africa. He chairs its Risk, Governance & Actuarial Committee. Other roles include chairmanship of a non-governmental organisation, and serving on the licensing committee for private health facilities. As part of his volunteering for the profession, he is involved with the International Actuarial Association too – he strongly encourages volunteering, explaining that roles on professional subcommittees are great preparation, allowing you to hone your skills to serve on boards.

Lusani’s motivations for becoming a NED include his interest in governance, his love for interacting with others, his desire to be exposed to different companies and how they operate, and how NED roles fit his desired lifestyle and interests. Breadth of experience is important for a NED, he says, illustrating this with his ability to “know what good looks like in a legal opinion [because I’ve] looked at a lot of them in [my] career”. Other examples he shares are accounting methods and human resources policies. He explains the importance of setting the agenda as a chair: this “gets you the information you need and enables you to make the decisions you need to make”.

Speaking about the highs of boardroom life, Lusani enjoys figuring out what the issues are, and sifting through the information to get to their core. Listening and making decisions, including convincing others of your point of view, are also pleasurable. He recalls too some impressive executives who “really know how to do their work, lead their business units, know how to present, and are transparent – how an executive should be”.

One of his strengths, Lusani feels, is in dealing with instability – he’s able to help organisations move out of those situations. But, he cautions, that can also be the biggest risk of taking on NED roles: you’re not able to influence everything, and if the company goes bust, it can affect your reputation. You can also be found to be in the wrong by regulators i.e. personal risk. Related to this, he says it is important to understand the professional indemnity insurance in place. 

Other lows, he says, can include decisions made somewhere else and then imposed on the board e.g. by a significant shareholder exerting influence. It is important to work with the principals, as opposing the government minister or shareholder won’t bring joy. Instead, build relationships and help them achieve their objectives.

Reflecting on his career journey so far, Lusani points to how executive training and coaching helped him a lot as it gave him an early opportunity to interact with general managers and executives, and build his leadership skills. He’s another strong believer in professional development: “Know what kind of person you are, and where you should position yourself. Find your place where you can blossom, and be your best”.

Lusani’s advice:
  • Add value when you appear in meetings: be prepared and know what questions you must be asking
  • Asking questions as a NED is your biggest tool. You must be able to determine which are good or bad answers.
  • Take opportunities to sharpen your skills, such as conferences and seminars
  • Stretch out of your comfort zone, meet new people and get out there
Hazel McNeilage
Reinsurance

Currently based in the United States, Hazel McNeilage has lived and worked on five continents. Her executive career spanned insurance, pensions, investment consulting and investment management, and included senior management roles at Towers Perrin (now Willis Towers Watson), Principal Global Investors and Northern Trust Asset Management. Hazel served as a company appointee on several boards too. She also joined the (US) National Association of Corporate Directors and achieved their Board Leadership Fellow designation, which she found very useful as it provided great insights into independent NED roles.

During the final years of her executive career, Hazel started to develop relationships that would allow her to explore NED opportunities. Her first independent role is with NYSE-listed Reinsurance Group of America (RGA) – for this role she was approached by a recruitment firm because her skills and experience were a good match. For her second role (with Scholarship America, a large non-profit), her name was put forward by an existing board member she’d worked with during her executive career. With a long-standing interest in governance, she relishes the opportunity to stand back from the day-to-day and provide strategic guidance and oversight, as well as the possibility to keep learning and developing. The flexibility also appeals: she aims to combine serving on 3 or 4 boards with other activities (such as her community work). Hazel is actively building her NED portfolio and is open to one or two additional corporate board roles.

Preparation for board and committee meetings “is an intensive process involving many hours of careful review of board papers”. Other ad hoc activities can include participating in senior executive forums at the invitation of management, or attending the company’s Investor Day. Hazel also emphasises that “it is important to understand the organisation from the outside as well as the inside”. To do this, she attends seminars and webinars, and reads industry reports to understand what is happening within the organisation’s ecosystem and keep up-to-date with emerging overarching governance trends. Examples of her active professional development include a 2019 Carnegie Mellon certificate in cybersecurity oversight and a 2020 Harvard cybersecurity programme.

At RGA, Hazel is on the Nominating and Governance Committee (where she takes a lead role in director professional development), the Compensation Committee, and the Cyber and Technology Subgroup (which is less formal and focuses on cybersecurity and data protection).

Hazel’s recommendations:
  • Understand and respect the difference between governance and management, and don’t stray into issues that are management’s responsibility
  • Ongoing professional development is really important as all NEDs need to be able to contribute to board deliberations across the full gamut of topics
  • Due diligence prior to accepting a board appointment is critical, and being a NED of a well-run company with a high-performing board can be an extremely rewarding experience
Tony Lally
Pensions/Retirement and Securities Brokerage

Tony Lally’s executive career covered financial services disciplines like superannuation, investment management, insurance and financial planning. He started his career in Ireland, and worked in Japan and Australia, where he is now based. His last fulltime role was as CEO of Sunsuper, one of the world’s largest superannuation funds. It was a successful period for him, as he stepped up to run a standalone organisation, after being head of businesses in global conglomerates previously. These included setting up Deloitte’s actuarial consulting practice in Japan, heading up Retail Fund Management across Asia-Pacific for Deutsche Asset Management, and a decade at Commonwealth Bank managing a fund company and life company and spearheading their entry into the superannuation market. His time at Commonwealth Bank was instrumental in his career, and allowed him to work with and learn from some phenomenal executives, he says.

While at Sunsuper, he fulfilled a number of roles for the Association of Superfunds of Australia, an industry representative organisation, including as chair. He was also a NED at the International Centre for Pension Management (ICPM), a network of the world’s largest pension funds. Both of these required strong collaboration and consensus-building skills, including an emphasis on striving to make the whole system better.

Tony found getting NED roles after his CEO role more difficult than he had expected. Reflecting back, he recommends making contacts while still in your executive career i.e. take your executive role seriously, but also give time to building credibility and relationships for your desired future. Part of network-building, he says, is letting people know what you want to do. While he has engaged with headhunters, all his NED roles have arisen through people he knew who referred him to others who were looking. Talk to existing directors and chairs, he says, as “chemistry around a board table is critical… trust and knowing the person play a huge part”.

Today Tony chairs Self Wealth Ltd and Equity Trustees Superannuation Limited, and describes himself as a “professional company director”. He emphasises the importance of a spread of skills on boards, such as distribution, IT, raising financing, accounting, legal, and investment, so that the relevant expert can lead the appropriate committee. The chair role is to coordinate the bigger picture, relying on those experts. He’s found being a NED a good extension of his industry experience and knowledge, and has enjoyed mentoring CEOs through his boardroom roles. Asking the right questions and challenging management is crucial in NED roles, he says, as is drawing on your own background to ensure the strategy is right and the executive team is working effectively to it. It’s important to use all your knowledge and training and pass on your guidance to others.

Seeing your senior executives developing, growing and learning, and becoming the executives you want them to become is success for Tony. One of the most difficult challenges, though, is getting rid of a CEO where they don’t have the abilities the business needs for its future. Overall, Tony highlights that being a NED is a very fulfilling and rewarding career.

Tony’s suggestions:
  • Don’t limit yourself – opportunities will come from directions other than where you’re looking
  • If you don’t trust the board or management team, don’t join the board
  • A preparatory course (like that offered by the Australian Institute of Company Directors) helps you to understand the laws of the country the company is operating in, and also how to add value to a board
  • Don’t commit to too many NED roles – be sure you can really dedicate the time to be a sounding board for executives, recognising that chair roles are more time consuming
Conclusion
We wrap up part one of this series by drawing out some similarities in the reflections and suggestions given so far. Asking questions is a significant tool to add value and your ability to pass on your guidance to others was highlighted. Also, ongoing professional development is crucial for NEDs to contribute meaningfully to their boards.

Overall, while it’s necessary to recognise the potential risks and perform due diligence, NED roles can be personally fulfilling and rewarding career options.
2 Comments
Bradley
12/10/2020 11:46:14

Tony, Hazel and Lusani are also profiled in an article I wrote for the Institute and Faculty of Actuaries' "The Actuary" magazine. Titled "Careers: Guiding lights" by the magazine, it appears on pages 37-39 of their October 2020 edition.

Reply
Mark
14/10/2020 10:27:06

Look forward to the rest in the series

[This is a repost of a comment on the LinkedIn shares of this article]

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