The ways UK NED appointments are made

Boards can take several approaches when appointing a new Non-Executive Director (NED). Therefore, it is no surprise that the majority of NEDs I speak with tell me that they were appointed to a board role directly or indirectly through a personal connection. What continues to surprise me is how many prospective NEDS do not take the time to consider what pathway to a NED appointment is best for them. By this, I mean the pathway and actions that will yield the best return on their time and effort to secure a NED appointment. For many, the more obvious and frequented pathways only lead to frustration and disappointment.

How UK NED appointments are typically made

Over the years, I regularly conducted surveys asking current UK non-executive directors “how they were appointed to their most recent board”. The results have always been much the same, even with a push for more transparency and diversity on UK Boards.

Typically, my studies and observations have found that NED appointments occur via one or more of the following four pathways:

1. 65% of people are appointed (directly or indirectly) through a personal connection;
2. 15% were appointed after approaching the company or board on which they wanted to sit;
3. 10% were appointed via a recruitment firm;
4. 10% were appointed in response to an advertisement.

This is by no means a perfect study. It does not take into consideration the different types of roles and organisations to which the respondents were appointed. Nor does it take into consideration multiple pathway scenarios to attain the same role. It does, however, show trends that prospective NEDS should consider when pursuing a board role.

What is clear is that for most UK non-executive directors (or similar) appointments, personal connections play a critical role, and the more formal pathways (recruitment firms and responding to advertisements) may directly account for around 20% of all board appointments.

Different UK Organisations require different appointment processes

I believe that many, if not all, of these four pathways play a role in most instances of board recruitment. However, the processes, formalities and emphasis placed on them will differ by industry, organisation type, board type and board role. For example, the recruitment of an independent chair for a public company will likely follow a strictly formal process administered by an independent recruitment firm.

Publicly Traded Companies

For listed companies, the UK Corporate Governance Code states that the board should comprise a mix of executive and non-executive directors, and that at least half of the board, including the chair, should be independent non-executive directors. No individual or small group of individuals can dominate the board’s decision-making.

The code also recommends that independent appointments to the board (Chair & NEDs) should be subject to a formal, rigorous and transparent procedure. This includes open advertising and/or engaging an external search consultancy or recruitment firm.

Private Companies

During the initial setup, a private company will submit the required paperwork to Company House, declaring the identity and consent of the directors. From then on, the appointment of any new directors and non-executive directors will be governed by the Articles of Association and approved by the shareholders or the board.

In general, during the initial process of appointing a new director, boards will follow a procedure:

• • Step 1 – The current board will meet to discuss the appointment of a new director and develop some recruitment methodology – how they will find this person.
  • Step 2 – Identify and detail the skills, experience, qualifications and qualities they seek. Agree on the terms and conditions of the director’s appointment.
  • Step 3 – Refer to the Articles of Association to ensure that all necessary processes are adhered to, including whether formal advertising and/or engagement of a recruitment firm are required.
  • Step 4 – Conduct an open discussion to determine if board members have someone in mind for the role, even if they have to invite them to apply formally. Many boards and chairs are willing to save time, money and effort on formalities if suitable candidates are available.

Not-for-Profit Organisations

Not-for-profit organisations can vary significantly in terms of purpose, size, and scope. Whilst some may have a governance charter that stipulates a formal recruitment process when recruiting new board members, committee members or trustees, others do not have the human or financial resources to conduct a formal and/or external process. It is not uncommon for some organisations to have open-standing vacancies and are always keen to speak with new potential board members.

Where should you be focusing your time and efforts?

Most aspiring NEDs I work with spend too much time on activities, strategies and pathways that are unlikely to result in an appointment. Gaining a NED appointment is not a numbers game. Churning out application after application is not the best use of your time, let alone the emotional drain of rejection after rejection.

Others believe that, since they have spent many years building their careers, professional reputation, and social standing, it is only a matter of time until they receive that tap on the shoulder with an invitation to join a board. There are an elite few, lucky enough to receive a call out of the blue from a board headhunter, encouraging them to apply for a board position. However, for most, the path to a NED appointment is a planned and proactive process.

Based on how UK NED appointments are made, here are some key considerations to guide your decision on the best approach for you.

Be clear about your Board Aspirations

The foundation for successful board career planning and gaining a NED appointment is having clear and realistic aspirations. You need to establish a list of boards that you want and can realistically be appointed to. From there, conduct your research to determine which approaches or pathways (both short-term and long-term) are required to secure the appointment.

Networking and connections matter

65% of NEDs tell me that they were appointed, directly or indirectly, via a personal connection. Regardless of your aspirations, whether you need to go through a formal or informal recruitment process, connections matter. Connections can recommend you for roles, alert you to vacancies, make introductions to those who can help or act as referees. The key here is making and nurturing the right connections – they are weak ties.

Ensure your NED CV is up to date

Regardless of which of the four pathways to UK board appointments is most likely to bring you success, you must have a NED CV. Your NED CV must:

• • articulate your board value proposition (what you have to offer at the board level),
  • always be up to date,
  • separate from the competition, whether that is one or hundreds of other candidates.

In Summary

Whilst traditional routes can lead to a NED appointment, they can be a long and arduous process with little guarantee of success… There is a better way.

If you spend 100% of your time working with recruiters or responding to advertisements, the statistics show that you may be working at it for a long time before you see success. There are other, more successful paths by which UK board appointments are made, and you must spend a substantial part of your time creating and nurturing personal connections.

In saying that, you must be clear about the types of board roles and organisations you should target. Some of these options may favour one of the four pathways over another. For example, suppose you are pursuing a UK Government Public Appointment for a chair or non-executive director. The vacancy will be advertised, and government ministers will formally appoint candidates to the positions through a recruitment process. Your time would not be best spent by directly approaching suitable boards.

Regardless of which of the four ways UK board appointments are made you decide to focus on, you must have a NED CV and be able to articulate your value proposition in writing and person. If you would like me to write your NED CV, consider becoming an Executive Member.

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