Non-executive directors are expected to have a range of skills and experiences that benefit the company they serve. Some of the key skills and attributes are commonly sought by organisations:
- Strategic thinking and decision-making: your ability to understand the company’s strategy and vision, and to provide constructive input and guidance to the board on key decisions.
- Financial and numeracy skills: your understanding of financial statements and your ability to analyse financial data.
- Industry expertise: your knowledge and experience in the industry or market in which the organisation operates and competes.
- Governance: your understanding of governance principles and your ability to provide oversight and hold management accountable.
- Risk management: your knowledge of risk management principles and your ability to identify, assess and manage risks to which the organisation is exposed.
- Independent judgment: your ability to provide independent opinions and advice to the board.
- Communication and interpersonal skills: your ability to communicate effectively with other board members, management, and stakeholders.
Related post: What does a firm want from their NEDs?
In recent years, the role of non-executive directors has expanded. Professionals with expertise in specific areas are sought-after to meet the complex and evolving challenges faced by organisations. For example, the pandemic, the great resignation, and quiet quitting have highlighted gaps in HR knowledge in the boardroom. Digital transformation and cyber threats have also evidenced the need for some IT and digital expertise.
Organisations are increasingly seeking to appoint non-executive directors with expertise in specific areas such as digital, human resources, and environmental, social and governance (ESG) issues.
- Digital transformation: non-executive directors with knowledge of the digital landscape and digital technologies such as cloud computing, big data, and the Internet of Things can help the company to stay competitive in the digital era. Experiences in areas such as digital strategy, data analytics, and e-commerce are equally valued.
- Cybersecurity: Cybersecurity threats are a major concern for organisations. Non-exec directors with expertise in this area can help identify, assess and mitigate cybersecurity risks, and also understand and comply with relevant regulations and standards.
- Human resources: Organisations also look for non-executive directors with expertise in human resources management, including recruitment, retention, and performance management.
- Environmental, social and governance (ESG): Organisations are increasingly focusing on ESG issues, such as sustainability, social responsibility, and ethical business practices. Non-executive directors with knowledge and experience in these areas can help understand and manage related risks and opportunities.
As the business environment continues to evolve, new boardroom skills are emerging:
- Artificial Intelligence and Machine Learning: As the use of artificial intelligence and machine learning becomes more widespread in business, a few organisations have started to seek non-executive directors with knowledge and experience in these areas to help them understand and leverage the potential benefits and manage the associated risks.
- Business model innovation: directors with experience in business model innovation can help the board to understand the market changes and to develop new business models to stay competitive.
There is no one specific type of person or set of qualifications that makes an individual the best fit for a non-executive director (NED) role. Different organisations have different needs and priorities. However, individuals who have a combination of the commonly sought and specialist skills are best placed to win the competition and be appointed.
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Written by Elise Perraud, NEDonBoard COO