Not so long ago, being a non-executive director (NED) meant showing up for lunch half a dozen times a year and offering a few informed opinions about corporate strategy.

Now, NEDs are expected to have both a breadth of experience and specialist expertise that can add tangible value. They are bound by corporate governance in the same way that executive directors are and are answerable to an ever-growing army of stakeholders.

But this isn’t just about NEDs. It’s also about the business world, which is changing faster than ever. Technologies such as cloud computing, robotics and artificial intelligence are supercharging the pace of this change. Business shifts that used to take decades now take just a year or two. Soon they may happen in a matter of months.

But what does this mean in practice? To shed some light on the issue, we convened a panel of experienced NEDs and asked them: “What will the role of the non-executive be in 2020 and beyond?”

Bringing constructive challenge

Peter Elwin, a partner at Augmented Solutions who has 20 years of financial markets experience, said: “These days, non-executives need to challenge executives and ask far more questions. They need to bring an outsider’s perspective while having a deep understanding of the business.”

This is particularly important in today’s environment, added John Foley, who currently holds several non-executive chairmanships and has been working in boardroom-level roles for 30 years. “The demands placed on businesses by stakeholders are growing, especially in areas such as sustainability,” he said. Non-executive directors can help companies navigate fast-changing markets, explained John. However, they need to understand the context in which a company operates and have broad networks and expertise. “They should bring a broader and critical – but still constructive – view to the table.”

NEDs also need to keep a strategic eye on longer-term threats and opportunities that may have a material effect on the business. This is important because executives can get very bogged down in short- and medium-term thinking, particularly when times are difficult.

Encouraging true diversity

The age and gender of NEDs are also pertinent issues today. At a Q&A event with the panel, several members of the audience noted that white male accountants in their late fifties are very well represented in the NED talent pool. Indeed, according to executive search firm Spencer Stuart, the average age of a non-exec at a top UK company is now 60. But by focusing mainly on the kind of experience that comes with seniority, companies may be depriving themselves of valuable viewpoints from younger businesspeople and from women.

If non-execs are to bring a true breadth of perspective, they must be more diverse themselves. Instead of appointing another 50-something man, the panel audience said, boards should be talking to female CEOs in their thirties, who would bring valuable experience and diversity. Younger NEDs are also more likely to have a feel for what many customers care about. “I’d like to see more diversity among NEDs,” says Patrick Woodall, who sits on the boards of several international businesses. “If companies want to stay relevant, boards need to reflect the diversity of the world around them.”

Engaging with business culture

NEDs also have to recognise that younger people in businesses may think differently and be able to work with those differences in perspective. “Adaptability is key. People in their twenties and thirties make decisions in very different ways,” said Peter. NEDs, he adds, need to take an almost anthropological approach to learning about the brave new world of work, where corporate cultures are changing.

This is especially important as corporate culture has become central to business success and the role of the NED. As Grant Thornton partner Jessica Patel says: “Non-execs must take the time to understand how a business’s culture works, right down the ranks, and how it can be improved.”

It’s essential that non-execs adopt a genuinely independent viewpoint. Some businesses are simply looking for NEDs who will support them through thick and thin, says Patrick, but this is not the job NEDs are meant to do. Instead, part of their remit is to point out uncomfortable truths, however difficult this is for executives, in order to deliver benefits to a company.

Preparing to add value

Finally, stresses Patrick, NEDs should challenge themselves as hard as they challenge the executives they hold to account. “If you’re going for a non-executive role, you need to start by asking yourself what value you can add. You then want to interrogate the business – really find out what they’re looking for. By doing so, you set yourself and the company up for success.”

But, NEDs must also be adaptable and recognise they can’t prepare for every eventuality – sometimes unexpected and seismic events happen.

As John Lennon once sang: “Life is what happens when you’re busy making other plans.”

For more information, please get in touch with Nick Watson.

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