Non-Executives: A changing landscape for the boardroom
The changing landscape for the NED (non-executive director) is becoming one of great demand and possibility. A non-executive director – someone who is a member of a company’s board yet not on the executive team – is one that doesn’t necessarily engage in the day-to-day runnings of a company but, ultimately, through board membership, has a large voice when it comes to direction, aim and change.
The NED has always been required to act as somewhat of a guardian for the boardroom. They must ensure good business practice is being adhered to and encourage better governance, improving the bottom line for shareholders and empowering diversity in directorship. They must have the ability to manage conflicts of interest, study the performance of management, ensure any goals are met and voice any concerns they have regarding the company.
Shifting Responsibilities
Recent changes to the role of a NED have largely been driven by the risks that companies are now facing, such as cyber attacks and climate change. These tangible risks have only been around for the past decade or so. Unfortunately, this means that any director with a more traditional approach will view such issues through a particular archaic lens, which will only provide them with part of the picture. What’s more, demand for the necessary skills and expertise to deal with these risks has risen, and it’s fallen to the younger generation to be the experts here – because mindsets that focus on technology and digitisation are in power now. Next-Gen board leaders are pushing for change at a rapid pace, and NEDs have the ability to encourage this.
NEDs are now tasked with considering factors like sustainability, climate change, digitisation and artificial intelligence, inclusion, diversity and better employee workplace ‘Future of Work’ policies for culture performance. They must have a greater ability to adapt quickly to changes in technology and be able to balance their current skills with the progression of the new world around them. Organisations are encouraged to have a higher sense of purpose and authenticity, because they’ve recognised the importance of such in their clients and stakeholders. But the bottom line has become deeper than the delivery of returns. Every NED has the chance to be engaged in something truly meaningful, rather than just being another suit in a boardroom.
Differing Perspectives
For the old-school NED, it can be hard to have to answer to the younger members of a board, but intergenerational relationships can encourage greater diversity and growth. The different perspectives and opinions that are being discussed in boardrooms across the world are becoming more robust than ever. However, the basic expectations of a NED remain the same. They are still required to put in extra time in order to completely comprehend the issues a corporation is facing – time that extends beyond the commitment of monthly board meetings – to ensure their contribution is of high value, and to encourage greater overall board and company performance.
The challenges ahead are immense, with so many disruptive economic models presenting, when an electric vehicles is forecast to be $22,000 in 3 years, the internal combustion engine is obsolete, what happens to oil and coal industries? When A.I will shed millions of jobs worldwide, how do Boards manage oversight of human resources and cultural change? When cyber attacks are imminent for all industries and quantum computing breaks any password, how do Boards mitigate technology risk?
These are questions that the experts are the younger generation, just like in the US, 50% of board appointments on S&P500 company boards in 2017 have never been in the boardroom. Is your company ready to consider the futures NED who can navigate the future of governance?
The NED marketplace consists of globally experienced non-executives with publicly listed experience through to startups that have scaled globally, it’s a new breed of director equipped for the future of governance. NEDS Global