The Contemporary Non-Executive Director… a must-have on your board

Louis Cooper, CEO of the Non-Executive Directors’ Association (NEDA), considers the changing role of the Non-Executive Director in modern organisations and advises how Non-Executive Directors (NEDs) in the sport and recreation sector can learn from the corporate sector to ensure they adapt and add value for the benefit of their board.

“The appointment to a board as a non-executive is not a badge of honour or reward for past endeavour. It is an important role contributing considerable value and carrying great responsibility.

Today, non-executives are a vital component of good governance and management challenge. They are needed now more than ever – at a time where the ethics and conduct of a few bad apples, on occasion, spoil the public’s view of the whole [organisation] barrel.”

The words above come from the foreword penned by Sir Roger Carr for the Non-Executive Directors’ Handbook (NEDA, March 2016) and provide an excellent overview of the essential role of a NED. There is an expectation to have experienced individuals who have a range of skills and capabilities on boards. However, as the world continues to be transformed by new and exciting ideas, board members need to make sure that they can keep up to date and abreast of both current and future developments.

It is not just the world that is changing - the role of the NED continues to evolve and there are a number of areas where sports organisations can look and learn from the corporate sector. Boards need to reflect the modern world and in particular there are some critical areas which need proactive input. These include:

* Strategy… what are the tools and techniques that our board members need?

* Governance… how do we develop and nurture the right culture?

* Risk Management… how do we deal with the range of risks we have to cope with?

* Board Performance… do we need to measure it and what does best practice look like?

* Stakeholder Communication… what are the expectations of our key stakeholders?

Being a Contemporary NED means keeping up with innovation and change, considering both the threats and opportunities posed by a dynamic business environment. And through their knowledge and expertise, a Contemporary NED should help their organisation and develop a coherent response to the areas noted above.

As defined by NEDA, the NED role has an element of a ‘Life-cycle’ that considers four stages of development:

1. Pre-role planning

2. The first NED appointment

3. Building a portfolio of NED roles

4. Succession planning

Now, there is more emphasis placed on stages one and four as NEDs are no longer diving into a role that may not suit them. NEDs have the opportunity to undertake their own ‘skills audit’ and make sure that they can plug any skills gaps and gain a broader range of experience if required. An example of a new area of expertise, where this broader range of experience may be needed, is digital skills and knowledge. In the world today, knowing how to use technology to transform business is something that all organisations need but often do not have unless a board member has been brought up in the digital world.

Therefore, a Contemporary NED often favours a more diverse candidate which takes into account areas such as gender, experience/skills, ethnicity, geography and age. Traditionally, the NED role has been seen as the next logical step for ‘retired business professionals’ but such individuals can get out of date very quickly. Now leading corporate businesses are sponsoring their rising stars to go outside of the organisation and gain NED experience alongside the executive role. This tactic can have benefit for all three parties (corporate sponsor, aspiring NED and receiving organisation) but the NED must be able to balance potential competing and conflicting demands on their time.

There are other trends that are helping Contemporary NEDs add value to the boardroom and this includes flexibility in how they might be mentored. With the new emphasis on digital and other skills noted above, it may be beneficial to have a system of ‘reverse mentoring’. This is where younger executives mentor the older members of the board as they have a better understanding and appreciation of the new digital economy and related ‘business models’.

Finally, NEDs are appointed because they bring a wealth of experience to the board and to the organisation. However, once they are in post there is typically no mechanism in place to track and review their Continuing Professional Development (CPD). As part of any Board Performance Evaluation there should be a check on the board’s on-going training and education plans but often this is overlooked. A Contemporary NED will have this area under control.

In our experience, the bottom line is that all boards need to operate as well drilled teams. Boards must work together and make the right decisions, so …“the best way to improve the team is to improve yourself”… and therefore you must assess your ability to operate as a Contemporary NED and as part of a diverse board.

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