Non-executive directorships (NEDs) offer some very real benefits to the right candidate. If you have experience at a senior level and are looking for a new challenge, want to diversify in your career or are perhaps looking for a planned route into retirement that doesn’t mean you simply stop working one day, a NED role may be for you.
What is a non-executive directorship?
A non-executive director is an independent advisory role on a company’s board of directors.
A NED isn’t typically employed by the company, nor do they play a day-to-day role, but they take a strategic position and play an important part in helping a company achieve its objectives. This can take a variety of forms, from ensuring the company is acting in the best interests of shareholders to forming policy and providing independent perspective and experience.
What are the benefits of being a non-executive director?
While being a non-executive director might not be for everyone, if you’ve reached a senior level in your career, have a successful track record or landmark achievements and want to give something back, it might be worth considering a NED role.
You can clearly play a strong part in helping a company reach its goals. Other benefits to a company include having a fresh perspective, someone who has ‘been there, done that’ and someone who can hold them to account. At this stage in your career, you probably also have an extensive network of contacts they can leverage.
But are the benefits to you for taking a non-executive directorship?
1. Taking a non-executive directorship can be beneficial to your career
As a non-executive director, you’ll have an opportunity to help steer a company in the right direction, helping them to be profitable, perform to an optimum level and have a strategic plan for the future. For you, it can also be a good way to build your network, build your leadership skills and hone your business acumen.
Essentially, being a NED can help you accelerate your executive career to the most senior level and prepare you for your next big role in the boardroom, potentially as the CEO.
2. Professional satisfaction
Becoming a non-executive director might not only be a step in your career – it can be the opportunity to get involved in causes you care about, and this can lead to immense career satisfaction while you’re doing something worthwhile.
Not only that, but contributing to a successful business in a pivotal role is something that a lot of NEDs highly value. Using your experience and expertise to help a company grow and thrive – especially if it might have been struggling beforehand – can be extremely rewarding (as well as being beneficial to your career – see point above).
3. Financial reward
If you’re looking for a non-executive directorship, you probably have in-depth experience, buckets of expertise and strong leadership skills. This puts you in the perfect position to earn a good income from a NED role.
While not all NED roles are paid – especially in the case of charities or not-for-profits – most are paid a director’s fee and/or include stock options. This clearly varies depending on the type of company. A NED at a start-up is more likely to be given stock options, whereas a NED in a large global corporation will probably pay more (and you’ll likely have to work more days).
Your financial reward is also tied to the sector. Tech, finance and consumer sectors tend to offer better remuneration, and, according to Glassdoor, the average rate for a NED on a company board is £85,704 (although it’s not clear how many days’ work that entails).
Given the experience you need to become a non-executive director, it’s logical that many people start thinking about this option later in their careers, and it’s as you near retirement that taking a NED role can offer real flexibility.
If you’re a high-achiever with a successful career, you might not want to simply stop working on the day you retire. Taking a NED role provides a really good transition from a full-time role into retirement. You get to ‘keep your toe in’, so to speak, and the company you sit on the board of benefits from your years of experience.
Plus, you still get that professional satisfaction and financial reward.