Unsurprisingly, all sectors, Commercial, Government, Private, and Not for Profit, offer different sorts of board governance opportunities. While the overall role of governance will have commonalities, the responsibilities and level of risk vary substantially. So too can the levels and types of rewards. This article examines the types of boards, or governance bodies, and the individual roles or titles typical in the UK. This will help determine which roles are right for you and provide more insight on how to find them.
The role of governance
The UK Corporate Governance Code states, “Corporate Governance is the system of rules, practices and processes put in place to manage and control a company”. Whilst this refers to governance at the top commercial level, the concepts and practices of good governance should apply to all organisations, regardless of size, sector, and source of equity. Some organisations are required by law to follow a governance code. Others, like charities, voluntarily adopt codes such as the Charity Governance Code to ensure they remain compliant with the law and applicable regulations and provide the best outcomes for their organisations.
To oversee governance, organisations appoint a board to act as a governing body for all stakeholders (internal and external), safeguarding people, finances, resources, and property. Depending on the type of organisation, a board may also be referred to as a committee, council, board of trustees, or board of governors.
Types of Boards in the UK
Company Boards
Company Boards are usually referred to as the Board of Directors. The makeup of these boards will depend on the type of organisation and how it is funded. In the UK, it is a legal requirement that all public companies have a board of directors; it is optional for private companies, however, many will have a board of some form.
Publicly listed companies must follow the UK Corporate Governance Code, which stipulates that at least 50% of board members, not including the chair, should be independent or non-executive directors (NEDs). Although there is no mandatory rule for board composition in private companies, many choose to include several non-executive directors for various strategic reasons.
Sub-Committees
Sub-Committees are usually composed of a combination of board members, executive directors and independent committee members. These committees are established by and report back to the board, and the board retains ultimate responsibility for any actions made by the committee. The role of these sub-committees differs from that of the board, as they are more specialised, task or project-driven. The most common board committees include:
- audit
- risk
- remuneration
- nomination
- governance
Other board sub-committees include:
- compliance
- fundraising
- diversity
- technology
Advisory Boards
Advisory Boards are groups of people selected by the organisation’s owners or management to help or advise on specific business matters. Advisory board members do not have to be formal company directors listed through Companies House or the Charities Commission because they generally do not have the authority to vote on corporate matters or carry any legal fiduciary responsibility.
Councils and Committees
Committees are also known as a ‘council’, or just a ‘committee’. The organisation’s membership elects committee members to represent and advance their interests. Committees are usually found instead of a board in not-for-profit organisations such as community and sporting organisations.
Trustee Boards
Trustee Boards serve a similar purpose and role as a Board of Directors, but are typically found within not-for-profit entities. These include museums, universities, public facilities owned by the government, charities, and certain financial services organisations. They are responsible for holding “in-trust” the funds, assets or property that belong to others with a fiduciary duty to protect them.”
Boards of Governors
Similar to a board of trustees, a Board of Governors is a group of volunteers responsible for the governance and leadership of a school. These boards consist of members from within or related to the school community and independent members with no connection at all. The Board operates with the school’s local authority or within a trust. They will have formal governance activities, duties and responsibilities.
Government Boards and Committees
Government boards may take the form of a formal board, but they can also take the form of appointed advisory committees, commissions, or task forces. All central government departments have boards that provide advice to the relevant departments and ministers.
Government boards and committees consist of civil servants and independent directors or members. They operate with defined goals and established guidelines and have no direct responsibility for departments or decisions. Mandates usually require government officials to approve all appointments to boards and committees, with some appointments requiring ministerial or cabinet approval.
Different board roles
This list of board roles and titles given to those roles is not exhaustive; it does cover the most common governance titles in the UK. This will help you when searching for board opportunities.
Board or Committee Chair
As the highest-ranking individual on the board, the chair has the key responsibility of guiding and managing the board team’s activities. This includes the strategic planning and facilitation of board meetings. The chair plays a crucial role in acting as the main point of contact and spokesperson for the board during interactions with the executive management team, various stakeholders, and the general public.
Board or Committee Vice Chair
The vice chair assists and backs up the chair in fulfilling their duties and responsibilities. They must also be capable of taking on the chair’s duties and responsibilities should the chair be unavailable.
Executive Director
Executive directors are board members who are also employees of the organisations. They usually hold senior executive positions and are members of a senior executive team. As employees, they are involved in and responsible for the day-to-day running of the organisation. However, as board directors, they face additional legal duties, responsibilities and potential liabilities associated with their director duties.
Non-Executive Director
Non-executive directors (NEDs) are only known as independent directors because they are not employees of the organisation. Nor should they have conflicting interests that could affect their ability to provide independent judgments, input and conduct.
NEDs have fiduciary responsibilities to shareholders, which carry the same risk of liability as for executive directors. Non-executive directors are appointed to boards for several reasons, including:
- to provide independent oversight
- to challenge the executive board director
- to give knowledge or experience not represented by the executive board members
- to provide specialist knowledge or expertise to tackle challenges or mitigate risk
- to provide diverse insights and experiences
Board Member
The board member title is a generalised term for a member of a board. They may be executive directors or independent directors.
Advisory Board Member
Advisory board roles can be leveraged to gain governance experience or even progress to a public company board appointment if the company’s launch is an Initial Public Offering (IPO). Unlike the other types of board roles, advisory board members do not have a fiduciary duty. If you join an Advisory Board, be clear about what your role is and what is expected of you.
Trustee
Trustees have independent control over and are legally responsible for the organisation’s management and administration. A trustee’s role will vary depending on the organisation’s size and purpose. Although these roles are voluntary, individuals are still expected to fulfil their duties with the same diligence as paid directors.
Company Secretary
In the UK, public limited companies must appoint a company secretary who is responsible for the company’s formal and legal administration tasks and communications, as well as liaising with the directors and ensuring compliance. They are responsible for communication between the board, management and external stakeholders. It is an optional role for private limited companies.
The role of the company secretary will vary depending on the type and size of the organisation. It is an optional role for private limited companies. The legal implications also vary if they fail to fulfil their duties. A legal background or company secretary qualification is required for the role.
Value Add Director
Value add director is a title sometimes given to individuals who have invested in a business and gained a seat on the board as a result. Whilst they do come with legal fiduciary responsibility, these appointments do not carry the same weight as an advisory board or non-executive appointment when seeking subsequent board roles.
In Summary
Board Appointments offer many rewards, some of which can be life or career-changing. So, regardless of your level of experience and scale of your aspirations (a paid, voluntary, commercial or government board role) and whether it is your first, a subsequent or a more significant board appointment that you desire, there is a board role for you.
What type of board is an important question you should ask; the answer must balance your aspirations against the reality of your appointment. Having a plan before you embark on your board search is crucial. If you are struggling with your plan or having trouble figuring out exactly where you want to take your board career, we specialise in helping people realise and achieve their board aspirations.
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About the Author
David Schwarz is CEO & Founder of Board Appointments – The UK’s leading board advertising and non-executive career support firm. He has over a decade of experience of putting people on boards as an international headhunter and a non-executive recruiter and has interviewed over one thousand non-executives and placed hundreds into some of the most significant public, private and NFP roles in the world.