• NEDonBoard

    Written in consultation with the NED Community, launched June 2017

  • What to Expect ​of the NED Role

  • About NEDonBoard:

    NEDonBoard is the professional organisation for non-executive directors in the UK. Our mission is simple: lead the independent director profession. We serve non-executive directors by promoting the highest standards of professional excellence, ethics and professional education for board members. We provide a professional network for NEDs, jobs board, news, events and insights to enhance our member’s non-executive director life. Our mission is not only to serve non-execs, but ultimately to improve how businesses and organisations operate in the UK. We believe that every board member is an agent of progress and each organisation should find its own way to achieve this progress.

     

    NEDonBoard’s Mission Articulates Around Three Pillars

     

    Connection: organise online and offline events, advertise board roles and enable business leaders to understand the value that they bring to a board;

    Knowledge: serve all non-executive directors or business leaders seeking knowledge, professional development or inspiration;

    Leadership: set the standards for effective governance and represent the voice of non-executive directors in the UK.

     

    If you are a non-executive director or interested to become a non-executive director, we recommend reading What to Expect of the NED Role or visiting our homepage.

     

  • More About

    'What to Expect of the NED Role'

    As well as being able to download What to Expect of the NED Role, the June 6th launch event speeches and Q&As are available to watch in the video below. NEDonBoard was delighted to be joined by the guide's primary authors, Charlotte Morgan and Jos Creese, as well as key contributor Mark Cardale that evening, and many of the non-executive directors who contributed their experiences to the guide.

    With special thanks to the following NEDs, board members and board experts for their consultation and review in the development of What to Expect of the NED Role:

     

    Charlotte Morgan

    Jos Creese

    Mark Cardale

     

    Bryan Foss

    Caroline Evans

    Clara Durodie

    Dr. Helen Glenister

    Helen Pitcher OBE

    Krystyna Nowak

    Maria Chanmugam

    Mark Curtis

    Oonagh Harper

    Dr. Sarah Blackburn

    and Steven Reed

  • The Company’s Perspective: Why Appoint a NED?

    The main reasons for appointing a NED are to bring independent perspective and objectivity to the board.

     

    External experience in the sector, or with customers or regulators, is particularly valuable as it should improve the understanding and management of the risks in the sector and help support business growth. NEDs can also bring diversity of skills and interests to the board whereas the experience of the executives may be homogeneous.

     

    What Else Does the Guide Cover?

    The Commonalities and the Differences

  • NED roles vary greatly due to factors such as

    • The sector – There are many different sectors - not just the public and private sectors, and different business sectors, but also charities, academic institutions and professional bodies, all of which have different cultures, regulations and functions.

     

    • The type of business – A family-run business or a partnership, compared with a large corporate for example, will probably require a very different style of NED.

     

    • Other factors – Such as the balance of the number of NEDs and executives on the board. Some boards have a NED majority; some may have just one NED brought in for a specific role.

    There are a variety of secondary characteristics which also impact on NED roles, such as:

     

    • The nature of business challenge – An organisation may be going through a merger or acquisition, or may be operating in difficult times, perhaps with strong competition, market change and pressure from shareholders or financial backers.

     

    • The scale of the business – A small business or ‘start-up’ will need a different skill set, which may be more intense or specific than is expected of a NED in a large and well-established, mature organisation.

     

    • The balance between UK based and international activities can make a difference as well, especially in organisations seeking a NED who understands the changes in international relationships post Brexit.

  • Types of Organisation

    1

    The Private Sector

    Many people looking for a NED role will think first of the private sector, because that is a world with which many in this position feel some familiarity and also because NED roles in the private sector are more likely to be remunerated (or perhaps better remunerated) than elsewhere.

    2

    The Public Sector

    The public sector is very varied, with NED roles found today in every area – councils, government departments, non-departmental public bodies (NDPBs), schools, colleges, universities, police and re services.

    3

    Academic Sector

    Universities, colleges, schools of all types (public, private and state sectors) and associated research bodies, often appoint NEDs. Sometimes they are called governors, sometimes trustees, but they are all in effect NEDs.

    4

    Third Sector

    The Charity or “Third sector” is diverse and complex. According to Charity Commission data, there are 167,109 (as at December 2016) registered charities in the UK.

  • Factors You Should Consider

    Before Accepting a Role

    Applying for a NED role, being asked to attend a NED interview, or indeed being offered a position, is exciting and flattering – there is often stiff competition and you will be selected because of your reputation or experience. But you should be careful before accepting a position and consider the following points in particular:

    Your level of interest and commitment to the organisation and to the role - Most appointments require review and re-election after three years but there may be an expectation that the NED will complete at least two three-year terms, or even three.

    Personal risk - It’s important to assess the risks and whether you have the requisite sector and governance skills to shoulder responsibility for them.

    What resources does the organisation offer? - Do they offer formal induction and training both before starting, and ongoing? Can they support you with appropriate professional advice, including legal advice if there are legal or regulatory challenges? While a major PLC will take this for granted, it may be more difficult for a start-up to resource this.

    Time commitment, travelling requirement, fees, and expenses all need to be fully understood - It’s a good idea to ask existing NEDs about the time commitment if you can, as well as asking the company themselves.

    Contract for services - There are sample NED letters of appointment online, or you may prefer to take your own legal advice. Bodies such as the Institute of Directors (IoD) and ICSA also have pro-formas. However, there may be little room for negotiation as the organisation is unlikely to want different contracts for different NEDs.

    The implications of the legal and regulatory status of the organisation - For example, directors of banks and insurance companies have additional responsibilities to the regulators, and some potentially onerous personal liabilities under the Senior Managers Regime.

    In summary

     

    Carry out your own personal due diligence about the role, especially in the following areas:

    • Business & sector – Strategic future, competitors, regulation, profitability
    • The Chair and other NEDs – Their integrity, resilience, openness, likeability
    • The executive directors – Integrity, understanding of the business, future commitment
    • Legal and regulatory status
    • Terms and conditions and protection available to you - Including D&O cover

     

  • The Guide Also Covers

    Special Roles a NED May Hold

    The Basic Principles NEDs Should Apply

    General Guidance for NEDs

    How to Conduct Yourself as a NED

    Appendix – Useful Further Reading

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