Setting NEDs up for success

Colin Mercer | 14 June 2017

As boards evolve to reflect the rapidly changing environments they operate within, the focus has shifted to appointing Non-Executives with specific functional skills, rather than those with relevant sector experience.

The rationale here is understandable: in an increasingly challenging funding climate, organisations are keen to supplement their boards with value-adding functional expertise to help them move forward.

However, are these new skills-based board members always able to deliver the changes they have been brought in to facilitate? Before even reaching the appointment stage, there is often scepticism from candidates as to whether organisations which have traditionally been slow to change will actually appoint someone without sector knowledge. And even if they do, will they allow the new recruit to make a difference?

Follow-up conversations with recently appointed non-sector NEDs are often interesting and insightful. Whilst some settle in quickly and are able to add value from the outset, other roles do not meet candidate expectations. Where frustrations exist they are usually triggered by one primary factor – the recruit has not been allowed to utilise their skills and experience to help initiate change.

If you plan to recruit an NED, our experience suggests the following to be worthwhile considerations both pre and post-appointment:

  • Establish absolute clarity concerning the change you are seeking to engineer, and the role the board (and the new NED) will play in delivering it.
  • Explicit acknowledgement from the board that new recruits, especially those from outside the sector, are likely to do things differently. This is to be welcomed, as presumably it is the reason the organisation has gone outside the sector.
  • New people bring different strategic perspectives and new ways of working – feathers are often ruffled. Regular two-way feedback reviews are essential. These provide insight, guidance and reassurance to all parties.
  • What expertise does the board have in change management? There is a growing body of literature, lots of highly practical tips and techniques on transformation, that can easily be accessed on the internet.
  • Courage, and the ability of the board to ‘hold their nerve’, will almost certainly be required. Anticipate this, prepare for it as a team, and think about how and what you will communicate during the more challenging periods in the change cycle.
  • New NED candidates (especially first-timers) can be so focussed on securing the role, that they join without fully understanding the organisation’s expectations. This is where a good search consultant earns his/her corn. Our role, in conjunction with the Chair, is to ensure that the candidate has considered every aspect of the opportunity, and is confident they can genuinely deliver what is required of them.
  • A thorough induction process is essential in order to help deliver the change agenda. The induction allows candidates to understand the organisation’s recent history, the current challenges, and the desired future direction.
  • Whilst the current emphasis is on skills-based appointments, it is essential not to lose sight of the cultural and values fit. This is crucial to ensure the new Non-Executive has the required impact and can appropriately influence stakeholders. Whilst organisations must change, board members (new and existing) cannot lose sight of the core organisational values. Jim Collins (Good to Great) articulates this dilemma well, stressing the need to both ‘stimulate progress’ and ‘preserve the core’.

Currently, there is a healthy candidate appetite to join the boards of public sector and not for profit organisations. The best candidates want to help deliver positive change, and in the current funding climate, it is crucial that their enthusiasm and skills are harnessed and effectively deployed. Preparing well, and following the above steps, maximise the likelihood of this happening.

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