Non-Executive Director (NED) roles - questions to ask

A number of our members have expressed an interest in Non-Executive Director roles as part of their longer-term career development, particularly as the composition of boards is changing over time to become more diverse across many dimensions including gender, background, and age. ​​

In support of these members’ ambitions, this post shares some questions individuals can ask before considering a non-executive directorship. ​

Boards of organisations (companies and other) consist of two main types of directors. The first is those who work for the organisation on a day-to-day basis, making decisions, leading the organisation, and implementing the organisation’s strategy. They are executive directors, and we’ve previously written about lessons learnt from shadowing executives. Executive assistant / business manager roles are a great way for ambitious talent to gain exposure to executive decision-making at an earlier stage in their careers.

​The second is those who are appointed by the organisation on a non-executive basis i.e. they don’t work within the organisation, and instead provide guidance and challenge from an external perspective. Via board meetings, they participate in the strategic decisions of the organisation, holding the executive directors responsible for execution. Often, non-executive directors perform this role for a few days a year (as part of a portfolio career), and hold multiple non-executive director positions across non-competing organisations. They use their stakeholder management skills to steer the organisation over time. As David Duffy, founder of The Governance Company based in Dublin, describes it on LinkedIn: “A NED role is a shift from the day-to-day corporate responsibilities to leveraging one’s own skills and experience in the boardroom environment”. In that way, they are almost like a mentor for the business, except that they have a regulatory responsibility too (as they are officially directors of the organisation, rather than consultants or advisors).

David further expands on the role of NEDs in the boardroom:

• challenging accepted board wisdom
• asking the right questions
• utilising the board’s collective knowledge, experience and diversity of thoughts, including industry-specific knowledge, emotional intelligence and common sense

Above all, a NED needs to ensure that they know what the role entails and the duties, obligations, liabilities and risk that go with it. David counsels: “Becoming a NED is not for the ill-informed.”

​David’s LinkedIn post describes a number of questions individuals should ask when considering a specific Non-Executive Director role. We feel they are also helpful for others preparing themselves to take on these roles over the medium-to-long term.

1) What do I need to know about the company and its industry, including:

• Future company strategy?
• The company’s marketplace and key trends?
• Regulations governing the industry?
• Accounting and reporting methods used within the industry?
• Risks within the industry?

2) How has the company performed over the last three years and what are its plans for the future (in the context of its past performance)?

3) Can I speak to previous members of the board and management team to ensure that I understand the ethics, values and culture of the organisation and to ensure that they are in line with my own?

4) What is the company’s record in relation to corporate governance?

5) What are the competencies, capabilities and weaknesses of the board, and how can I complement them?

6) Why, specifically, am I being asked to join the board and can I add value to the company?

7) What time commitment will the position require and can I meet it?

8) What risks am I potentially exposing myself to?

9) What information do I need to satisfy myself that this organisation is being properly managed, e.g. management accounts, internal audit reports, external audit post-audit memos, staff turnover, legal cases, risk management reports, etc.

10) How are the members of the board and the executive management team perceived by the business community?

While these would be specific to a given company and NED opportunity, we find it useful to consider David’s questions in the abstract to guide our members’ thinking about the types of companies and industries that would suit them, and how they can prepare for future opportunities. For example:

• What you would be able to add to an industry/organisation in future given your unique experiences (past and desired)?
• What can you do now to improve your understanding of the key trends affecting the industries of interest (including their regulations and standards)?
• How can you practise the competencies and capabilities necessary to succeed as a NED, including volunteering for opportunities to provide external input and challenge to a group? e.g. a community organisation or a charity

David’s original LinkedIn article can be found here:
https://www.linkedin.com/pulse/10-questions-individual-should-ask-before-considering-david-w-duffy/

A range of Protagion’s mentors have done both executive and non-executive roles, and have experience in managing the transition, including preparing themselves for NED opportunities. Please do make contact if you’d like to discuss with us.