How the NED game changed
It is often said that the hardest non-executive director (NED) role to get is your first. Whilst there is still some truth in this, one of the positive changes in the market over the last few years has been the democratization of NED roles.
Traditionally, when executive search firms used to look for NEDs for their clients, they would scour the boards of similar businesses, and approach the usual suspects – those high-profile NEDs and Chairmen who had plenty of existing board experience. These were the safe choices – and if it didn’t work out no-one could accuse you of having made a risky choice. No-one gets fired for buying IBM after all.
Unfortunately, this often missed the point – these NEDs were typically men at the tail end of their careers. Whilst many of them were distinguished executives who had held impressive careers, they often had been “plural” for many years, and sometimes had lost touch with the challenges facing a modern CEO. Some lacked motivation due to their other commitments and prior success. Boards were generally pretty male, pale and stale, filled with older, corporate leaders from large, high-profile companies.
“NEDs were typically men at the tail end of their careers. Whilst many of them were distinguished executives who had held impressive careers, they often had been “plural” for many years, and sometimes had lost touch with the challenges facing a modern CEO”
Thankfully, this dynamic is increasingly becoming a thing of the past. Two main factors have contributed to this – a desire for greater diversity and inclusion on boards, and a greater appreciation of recent and relevant executive experience.
Valuing Diversity and Inclusion
NED roles had been an old boys club for too long; companies started to realize that they were massively undervaluing underrepresented groups like women and people from ethnically diverse backgrounds. As in all fields, hiring from a small demographic of older, and generally white men was obviously suboptimal when looking for the best talent. It also created the impression of an old-fashioned company, and hurt the brand of the company. Why would you want to work for a company where only a narrow demographic of society can make it to the very top?
The traditional, conservative approach of just hiring those people with a bunch of existing and historic board seats didn’t suit people from diverse backgrounds who had been largely excluded in the past. As greater diversity and inclusion became a priority for companies, we’ve seen increased representation for women and other under-represented groups on boards. Whilst there is still undoubtedly much more work to be done, it’s clear that progress is being made.
The importance of relevant executive experience
Being a CEO can be a lonely experience. You have responsibility for a whole business but no true peers. You’re faced with a number of strategic, ambiguous decisions and it’s not always clear what the best course of action is. Having a NED or Chairman who has been in a similar position recently can be tremendously helpful. They can help you to anticipate problems before they occur and navigate ambiguous decisions based on their previous experience. They can advise you on how to manage your investors, fundraise and prepare your business for a successful exit event. In this context, having a NED or Chairman with recent and relevant executive experience in a similar stage of business in a similar sector can be extremely additive.
“Now, companies increasingly realise that it’s the skills and experience that a NED or Chairman can bring that is more important than having been on many boards before”
In the past, NED searches often rather narrowly focussed on the usual suspects of high profile NEDs, but ignored executives without many board seats but who could bring a wealth or relevant industry experience. Now, companies increasingly realise that it’s the skills and experience that a NED or Chairman can bring that is more important than having been on many boards before. It’s much easier to get your first board role than it was in the past.
How to get your first board role
Generally, board roles are either filled through the network, or through executive search (headhunting) firms. Building your network with relevant headhunting firms in your industry will help, and make you more likely to be thought of when these opportunities occur. Similarly, building relationships with venture capital and private equity firms is often helpful too. Many of these funds like to find NEDs and Chairman from within their network, and if they are successful in their roles, use them for other NED and advisory roles within their broader portfolio. Getting “in” with VC and PE firms can therefore be very helpful in this regard. Many VC and PE firms have a “Head of Talent” or “Head of Network” who manages their relationships with potential candidates, and these are great people to network with.
Think about what value you can bring to the table. Remember that many people want to be an NED or a Chairman, and you’ll need some highly relevant industry and functional experience to secure this type of role.
It’s been great to see the NED game open up, and if you’re interested in pursuing a NED career in the future, don’t hesitate to get in touch. Our headhunting firm, Neon River, specializes in working with VC backed software, internet, games and broader technology companies. hello@neonriver.com