How to be a great NED
Katie Jacobs, January 05, 2015
NED roles for HR professionals benefit both the individual and the board. A chairman and an HRD share their views
The HRD's view
Celia Baxter is group HRD of Bunzl. She is also an NED and chair of the Remuneration Committee at Senior
“I wanted to take on an NED role because I felt it would give me another interest. It’s good to be able to look at things from the NED side of the fence, as opposed to the executive side of the fence.
I wasn’t looking for an NED role as an HR person; I was looking for an NED in a company where I felt I had complementary business skills. All listed companies in the UK are dealing with the same corporate governance issues. [Senior] has a similar decentralised nature [to Bunzl] and some of the things they’re facing are things we also face. Sometimes [Senior] is doing something before we are doing it, or the other way around. I’ve been able to introduce people from [Senior] to people [at Bunzl] so they can benefit from networking and understanding, and vice versa. It’s about sharing the experiences and getting different views.
Remuneration experience is useful but I don’t think as an HR person you should hang your hat on [it]. You can buy in consultancy skills to get that. I felt I was bringing knowledge and experience of working in decentralised organisations and the challenges of communication and collaboration as businesses grow. Also, I have a lot of experience working in international businesses and businesses that do a lot of acquisitions. It’s a combination of all of those things, not purely an HR thing.
Boards and chairmen don’t want people who will only talk about HR. Although I have an HR hat, I talk about the business as a whole. HR is a secondary thing, just as NEDs who have a finance background aren’t just going to talk about the accounts. It’s the same for an HR person as a finance person; you’re talking about the broader business.
When I was looking for an NED role, I had a totally different CV that emphasised the areas I thought I could bring to the boardroom: the international experience, acquisition, decentralised organisations, responsibility for CSR – and yes, I can do remuneration. I think [HR is] not always the favoured area in NED selection, but the people in HR and their backgrounds are quite varied. It’s a question of making sure you look at your experience and present it so people understand what you can add. You should be trying to contribute on a broader basis, not purely on your functional background.”
The chairman's view
Andrew Higginson, former finance director at Tesco, deputy chairman at Morrisons and chairman at retailer N Brown, on what he wants from an NED
“I believe in a unitary board. There is one team, comprising executive and non-executive directors. Overall, they are charged with delivering value to all stakeholders, with a particular emphasis on shareholders. The chairman should be looking to build a high- performance team.
A good chairman looks to build a team that has all the required skills, knowledge and experience. It also needs a mix of personalities. There is no template – it depends on circumstances. Take the emergence of online retail. Many CEOs came up through stores, but having an NED who knows the digital sector may be very useful to bring around the board table.
A good HR director can be one of the most powerful people in any organisation, but it is a role that’s hard to do well. One mistake has been for HR teams to drift off core competencies in favour of a more theoretical approach. The first measure of a good HRD is whether their core responsibilities are done well: hiring great talent, devising reward schemes that drive the right behaviours, challenging organisations to nurture talent, guarding the values and reflecting employee views up to the board. Influencing and oversight skills are essential.
In an NED role, the obvious area for HRDs to make an immediate impact is in remuneration committee matters. This is one of the most contested areas in relationships with shareholders and there has been a surge in demand for senior HRDs to chair remuneration committees. It’s great for HRDs as it’s a route onto the board.
More generally, an HRD’s wider experience of business life is valuable, as with any other NED. They bring perspective; sometimes executive directors are so closely involved in the day-to-day that they lose sight of what’s important. Good HRDs are usually good judges of people, and NEDs are constantly assessing the strengths and weaknesses of the executive team. It’s a very important part of the board’s remit to assess people, and HR practitioners have that expertise.
Having specific skills, like supporting RemCo, is a big help, as is being current on all the governance changes going on in remuneration. But after that, it’s about ‘fit’ with the company and team. It’s best to be yourself. I think boards should look for HR presence. If you are looking to build a team with a broad range of complementary skills, a good HRD in an NED role is invaluable.”