In the last decade, the role of a non-executive director (NED) has fundamentally evolved. In this article Women on Boards UK CEO Fiona Hathorn explains the five characteristics good board members need (that you won't find on the job specs).
Being a board member who is not part of the executive team used to be seen as a relatively straightforward function. You had to understand regulatory requirements, keep companies accountable and provide sound strategic counsel.
These are still essential skills, but the role of a NED is now much more nuanced. Whereas success used to be defined by what you knew, it’s how you work that’s becoming equally important.
The increased scrutiny that boards of publicly listed companies are facing due to poor performance highlights this fact. Just take the regulatory scrutiny around the big technology firms as a case in point. But the same is true of unlisted tech companies. If we look at WeWork’s attempted float, poor governance was instrumental in its failure. For instance, WeWork intended to go public without a single woman on its board, which sparked an outcry from investors. What’s more, shady financial mismanagement highlighted poor governance and a lack of good principles.
While we cannot underestimate the collective responsibility of boards, it’s also essential that each individual board member plays their part in driving excellence, accountability and fostering diversity of thought. There are a few traits that every board member should have to make sure that happens — and most are never mentioned on the job spec.
1. Have the right motivation
If you’re in it for the money, you’re barking up the wrong tree. Becoming a non-executive director is not the path to earning big bucks, especially in the beginning of your board career when the opportunities are often unpaid or lower paid. You need to build up the right level of experience for a paid role on a listed board. It’s therefore crucial that you have a genuine interest in the company you’re serving. You need to be actively engaged and ask “what can I contribute?” over “what’s in it for me?”
2. Lead, don’t execute
This is one of the most common pitfalls — forgetting your role. As a board member, you’re there to challenge, advise and encourage. You’re not there to implement or execute. Think about your role in terms of asking questions, not answering them. Your role is about thinking more than doing and listening more than speaking.
3. Avoid groupthink
Boards that fail to have lively and sometimes tense debates will inevitably miss red flags or opportunities that should have been spotted. The chair is ultimately responsible for ensuring a structured and productive debate. As a board member, you can help by being proactive in asking fellow members for their insights. If you notice someone being particularly quiet, ask them for his or her thoughts. This will bring out diversity of views from non-talkers.
If you ever find yourself in the position of chair, it’s important to remember that an effective chair provides leadership not to the company but to the board. According to research by INSEAD Professor Stanislav Shekshnia, good chairs don’t look for the best solution to the problem themselves. Rather, they organise a group discussion in a bid to find the best outcome for the company. From my experience, chairs who dominate discussions in board meetings are doing the company and board members a disservice. To avoid groupthink, you need a solid agenda and a chair who can facilitate discussion and, as Shekshnia’s research suggests, speaks for less than 10% of the time.
4. Challenge appropriately, even if it means voting against a friend
As a board member, you must be ready to take on tough issues and have the courage to speak truth to power. It’s essential to have healthy challenges in the boardroom. You need to be able to have candid, respectful conversations, but also the resilience to be rebuffed.
I have sat on many boards in the past and have always had a good relationship with the CEO. However, on one occasion things got tricky. I had to set aside my friendship and vote against a strategy proposed by the CEO. Nothing should be personal in the boardroom. In this instance, myself and the other board directors felt the need to turn down a new business plan as we did not believe it was in the organisation’s best long-term interests. A great board member knows that despite any external pressure you must always guide the board to do the right thing.
5. Review your own performance
The best board members I have come across are the ones that regularly assess their performance by reflecting on what’s going well and what needs to be improved. You should do this at a board level but also at an individual director level. Annual reviews and feedback from the chair should be combined every few years with regular board evaluations. You should also commit to ongoing development and learning and ensure you’re up to date with knowledge and skills such as modern governance and technological requirements.
There are of course other important traits for NEDs. But the five here are some of the key qualities every great board member should display. When companies find board members who get this right, it can be one of the most enriching experiences for a NED’s career. And it can be just as enriching for the performance of the company.
Fiona Hathorn is CEO of Women on Boards UK.
This article first appeared HERE