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What it takes to be a non-executive director

Velvet glove over iron fist – those with soft skills are most likely to gain the trust of ‘difficult’ executives and simultaneously protect the company from self-serving behaviour.
The role is not for everyone but can be a deeply rewarding experience. Image: Martin Leissl, Bloomberg

Did you know there is a way to encourage economic growth, elevate employment rates and root out inequality when you take your seat on a board?

Taking on the role of non-executive director (NED) at a company allows senior executives with the appropriate qualifications and experience to give back against a backdrop of socio-political and economic uncertainty, a volatile market, digital disruption, and the heightened demands of shareholders and stakeholders.

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In fact, says Leila Ebrahimi, director in PwC’s People and Organisation department, co-lead of the Reward Practice and editor of the 13th Non-Executive Directors Report 2020, those seated on JSE-listed boards are centrally placed right now to drive a shift in the right direction.

Gift of the gab

But the role is not for everyone. According to a piece in The Financial Times, the ideal NED is “quiet, knowledgeable and competent”. In such a role, there’s no room for an egocentric or dogmatic approach – in fact “modesty is a virtue”.

Other skills, qualifications and background nuggets include having “full balance sheet responsibility and experience of strategic development, [along with] mergers and acquisitions”. Plus, you should not be a former employee or have any sort of “material business relationship” with the company on whose board you are considering sitting.

This is where executive search firms enter the picture, as they are perfectly placed to tweak and perfect your CV, highlight which of your characteristics make you a suitable candidate, and suggest appropriate reading material on the corporate governance codes and guidelines you will be expected to use as a template for your duties. They may also assist you in choosing a course that will help you up skill in any areas that are lacking.

Diplomatic corps

Smaller companies are likely to need the most input (read: time) from their NEDs; they are also not likely to have the budget to remunerate too well. But the reward will be worth the effort.

Whereas a bigger firm may only require 15 days of input from you over a 365-day cycle, the smaller firms may need 25 days or more.

And yes, your former financial and/or human resources acumen will be valuable, but you’re also going to need strong emotional intelligence and the ability to hold the in-house executives to task, while communicating with them in a diplomatic and polite fashion.

Holding that CEO to task 

An important role that a NED plays on a board is that of mitigating and managing the common personality traits of its chief executive officer, reveals Chapter 5 of the NED Report 2020.

A range of studies have shown that CEOs are psychologically different from the average executive – the very traits they are often applauded for (“bold aggressiveness, seeking to dominate others, lack of empathy, and uninhibited impulsiveness”) are the same ones observed in the psychopathic personality disorder.

Whereas in the business world these characteristics are often lauded, they can also be seen as manipulative, impulsive, aggressive and/or overbearing.

NEDs with the appropriate soft skills are therefore most likely to gain the trust of such “difficult” executives and will, at the same time, be able to protect the company from any self-serving behaviour that could put its operations at jeopardy.

Tipping the scales

Remember that once you are appointed, you are there to both support and challenge. In this way, you should be able to help guard against practises such as ‘groupthink’, in which poor decisions are made because everyone is too scared to mention the controversial aspect of any topic that is brought to the table.

Against today’s backdrop of uncertainty and constant change, says PwC’s Ebrahimi, “companies are being asked to take the lead in some of society’s most complex and challenging issues”.

These include taking action to ameliorate climate change, finding ways to streamline the workforce when it is disrupted (as has happened with the Covid-19 pandemic), and dealing with stakeholder whims.

Recommended reading

The 2020 NED Report Ebrahimi authored therefore focuses on practices and fee trends for wannabe NEDs and companies with boards, revealing an average tenure for NEDs in South Africa of four years; and that a median NED’s fee has recently seen a 6.8% increase across the JSE, versus the median increase of 5.9% for a chair’s fee, as just a few pertinent examples.

The NED role will always challenge the brave individual who takes it on, but will ultimately provide great reward and use of their mentoring clout. If you go for it, just keep the words ‘productivity’, ‘innovation’, ‘competitive’ and ‘inclusive’ in mind at all times, and note that you’re paid to never lose your cool.

Thuli Nkosi is director at BossJansen Executive Search.

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Being a politically connected crook will be good enough. Nothing else required.

Good article.
I recall, a few years ago, I was appointed to the board as NED of a UK Insurance company and had to be vetted by the UK Regulator (FSA at the time).
I had to submit to two days of interviews and scrutiny before I was approved.
In SA, the Regulators (FSB at the time) had a cursory glance at my CV and never bothered to even talk to me – and I served as chairman on three boards in Financial Services arena.

First-be clueless about the industry.

Second-believe everything that the CEO and executives and their accounting people say( Steinhoff, Tongaat Hulett etc)

Third-be female and BEE compliant

Fourthly-limit your contribution to requesting the sugar at the board meetings

Fifthly-actually believe that your presence justifies a colossal rate of income and first class travel -all reimbursed

Sixthly-Have as little skin in the game as possible ie never back yourself by investing the company

Sam the taxman, spot on, 7yh option is usually to put in one of the “non execs” as the CEO as well, so fire the competent one and put a useless disinterested, self serving one, I could name a few….

What about the downside ? Directors can be held liable criminally for many acts within a company – there is little distinction between executive and non-executive directors. I know many people who would rather avoid that risk especially for company’s in first world jurisdictions and some people who have lost everything for diving into the roles that you are touting. With respect to SA you would have to be daft to get involved in that capacity considering all the shenanigans.

Further, the risk that a company carries for appointing non-executives is very real – they can bind the company in many agreements.

End of comments.

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