“Lawyers Can Be Effective NEDs” says Korn Ferry Chair Oliver Pawle
After a summer break we are back in the swing – holding Breakfast Meetings to help our members further understand the best way to present themselves to boards as candidates for Trustee and Non Executive Director positions.
Here is a summary of our latest meeting with Oliver Pawle who chairs the Korn Ferry Board’s practice.
Oliver began by saying that he is passionate about getting UK Boards to use the talents that the Professional Services has to offer, particularly for smaller-scale Boards. In terms of ‘Life after Law’, there are only currently a small number of lawyers on PLC Boards, for example Sean Watson, Vanni Treves, Anthony Salz and Tim Clark.
Why not more? One reason is that ‘Institutional Connectivity’ is important for Chairman, SID, and most Board committee roles and most lawyers don’t have this background. Nor are they seen as ideal for Audit Committee roles. But perhaps this is changing, because of an increase in focus on Risk, and also the need to bring an understanding of the impact of Regulatory change. A Board member with a really good understanding of Risk and of Regulation can be worth his/her weight in gold!
Today’s NEDs need to have a broad commercial view, not a focus on one particular area, and not all lawyers demonstrate this. However, management responsibility (gained within the firm) can be particularly helpful and sector knowledge and contacts also help to demonstrate commercial ‘nous’.
In recent years, there has been an increase in the number of HR Directors serving on Boards, particularly because they can serve on the Remco, but often their contribution can be very limited in the rest of the Board debate. Lawyers have to overcome the same sort of concern that they have only a narrow, specialist contribution to make.
So it is critical to understand what parts of your career experience are relevant and to be able to summarise what you might bring to a board.
What makes an effective NED?
The core requirements are:
• Breadth of experience
• Integrity and independence
• Financial acumen
• Risk awareness
• Common sense
But today, we should add ‘Knowledge of technology’ (ie Cyber security etc), as all businesses will be technology-driven within 10-15 years
And what characterises a poor NED?
• a non-stop talker; ego-centric; contentious
• a single issue ‘hobby-horse’ contribution
• poorly prepared
• captives of compliance’
• ‘in over their heads’ – just not up to speed
How to get your first NED role
Think hard about what you can bring and try to narrow down the type of organisation or board you could serve on most effectively – and in what sector. You need to be able to articulate this.
In most cases, gaining some form of initial Board experience (perhaps a charity trustee or school governor role) is helpful before attempting to get commercial roles. Many charities want support and help and you can get huge satisfaction out of it too. It would provide good experience on board room politics, can help provide a new network and makes life easier for a prospective chairman to ‘sell’ you to the NEDs if you’ve got some prior board experience. But do make sure that you’re doing something that interests and inspires you.
Then…… NETWORK, NETWORK, NETWORK!
Headhunters are not particularly good at getting people their first NED role, principally because of the tight criteria they are given by the chair for the role. But by making the right network connections, getting known and mentioned, you improve your chances of overcoming that hurdle. Privately held company NED roles are useful, but again networking is vital.
Never join a board unless you have confidence in and respect for the Chairman. A weak chairman allows the CEO to go ‘off piste’ and makes the role of the NED very tricky. The collegiate nature of the board is very important to understand. Don’t risk joining a dysfunctional board – sporting bodies are a good example of what can go wrong and so can charities – Kids Company being an obvious example. If you are joining a charity board, do get to know what’s going on first, what sort of issues are going to come up at the board and what you’re walking into.
This can be a very satisfying and interesting area, as well as an investment opportunity. Oliver, in conjunction with Mervyn Davies and Nigel Rudd set up the Entrepreneurs Foundation, five years ago. It exists to assist with the ‘start up revolution’ in the UK. He thinks lawyers could offer a lot as NEDs or advisors. But you need lots of tolerance for risk and a lot of common sense!
Oliver advises considering the SEIS scheme – Oliver says it is ‘almost impossible’ to lose money! But it is probably best not to become a NED with the obvious risks attached, but rather get involved as an investing adviser. That type of experience could be hugely helpful in convincing the corporate world that you understand business at the sharp end.
Among the other entry points to the Business Angels world are:
Juno (run by Ed Rudd)
Business Growth Fund
Restoration Partners (Ken Olisa)