Leadership Breakfast: Have you got what it takes to be a NED?

Wednesday 27 November 2013

David Doughty

• Chartered Director• Chair Thames Valley HIEC• Chair The Centre for Sustainable Healthcare• Chair Future Healthcare NI• Non-Executive Director Oxfordshire Learning

Disability NHS Trust• Director Oxfordshire Business First• IoD Chartered Director Interviewer

What is a Non-Executive Director?

Case Study

You are a newly appointed NED in a small engineering company about to attend your first Board meeting. Last year the company had its best ever year in terms of sales and profit and all staff and executives received a profit related bonus. This year, performance has been poor, sales are down and the company has made a small loss. There is no staff bonus, there is a pay freeze and some staff have been laid off.In your Board papers you see that the Remuneration committee are asking the Board to approve bonus payments for the executives at the same level as the previous year.

What do you do?

Companies Act 2006

• The seven general duties– To act within powers– To promote the success of the company– To exercise independent judgment– To exercise reasonable care, skill and diligence– To avoid conflicts of interest– Not to accept benefits from third parties– To declare interest in proposed transaction or

arrangement with the company

Companies Act 2006

To promote the success of the company - having regard (amongst other matters) to:

• The likely consequences of any decision in the long term;• The interests of the company's employees;• The need to foster the company's business relationships with

suppliers, customers and others;• The impact of the company's operations on the community and the

environment;• The desirability of the company maintaining a reputation for high

standards of business conduct; and• The need to act fairly as between the members of the company.

What skills do NEDs need?

• Integrity - high ethical standards• Sound judgement - willingness to challenge• Interpersonal skills – listening, persuasiveness, ability to communicate ideas,

sensitivity, openness and awareness of non-verbal communication, co-operation and team-working, facilitation skills

• Leadership and self-awareness, ability to gain respect and attention, confidence• Critical thinking, creativity and strategic awareness - the ability to take the wider,

strategic view• Business acumen, ability to identify new business opportunities, embrace change

and innovation• Ability to assimilate, assess and analyse information, especially financial

information• Political astuteness, diplomatic, able to deal with conflict• Determination, with the tenacity and drive to succeed• Keenness to gain new knowledge and skills to develop competences further

The Chairman• The Chief Executive leads and runs the company• The Chairman leads and runs the Board• The Chairman is elected by the Board and has the same duties

as all directors• The Nominations committee will oversee the search for Chair

and NEDs• Key qualities

– Intellect, leadership, team-building, relationship-building, integrity, critical friend, collaborative, knowledgeable, respect.

• Key responsibilities– Mentor, entrepreneurial, clarity, effective

• Relationship between Chair and CEO– Transparency, Trust, Sounding-board, Supportive

IoD Chartered Director

• The professional qualification for directors

• Awarded under Royal Charter• Assesses the practical experience gained

by a director• The interview is based on a portfolio of

evidence • The interviews are conducted by

experienced peer reviewers• The designatory letters C Dir are

conferred on individuals who successfully pass the peer review.

Have you got what it takes to be a NED?

Questions