Why Having a Female Non-Executive Director (NED) Is More Than Just a Diversity Move

Now more than ever, ensuring your business’ Board of Directors is diverse and inclusive is vital to your success. So why are we still not seeing this in action? My latest post explores the reasons why we’re not seeing this happening quickly enough and what business owners/Directors can do about it!

If there’s one thing my peers know about me, it’s that diversity is one of the favourite aspects of my work.

No, I’m not just talking about diversity in my day-to-day (although that certainly plays a role too), but diversity with the types of businesses and professionals I partner with too. I work with a wide range of clients from many different industries including STEM, Manufacturing and Engineering, Marketing and Creatives and Automotive, which gives me the opportunity to work with wildly different perspectives each and every day.

So when I discovered that there was a typical NED (that’s Non-Executive Director – more on that later) stereotype, when I attended the IOD’s NED training, I’ll admit I was a little taken aback. After all, I didn’t quite fit into the “male, pale and stale” stereotype that someone mentioned jokingly. As someone who’s always enjoyed the presence and qualities of both male and female professionals, it had never occurred to me that there was such a divide. But what I’ve learnt since then, has starkly proven otherwise.

Ensuring you have a diverse range of directors can present some very real benefits…

Let’s start with the basics

You’ve probably heard of a Board of Directors – you’ve likely worked with one or two in your time, but if you’re still scratching your head wondering what exactly they do, you’re not alone.

The role of a Governance Board

Most established, larger businesses will have a Governance Board in place. Let’s start there. Governance Boards achieve a lot of different things, but namely, they exist to support the policy, structure, operational or financial matters of a business.

And when it comes to building a Board, the UK Corporate Governance Code provides a pretty specific criteria. At least half of your Board must be independent, Non-Executive Directors to avoid internal bias or corruption. The Chair presiding over the Board must also be an independent figurehead, and the roles of CEO and Chair cannot be exercised by the same individuals. Moreover, any Board should be unitary, meaning decisions must be made as a collective.

The role of an Executive Director

To put it simply: an Executive Director’s responsibility is to support the board and those key decisions I’ve mentioned above. An Executive Director will also have their own responsibilities in the business, such as leading a team, or producing certain deliverables or results.

Just like any other member of a senior management team, they’ll have been recruited based on their skills, experience, knowledge, emotional intelligence and the value they can bring to the business. They’ll have their own individual KPIs, likely a team to lead and competing priorities, as well as their commitments to the board.

Yes. It’s about as demanding as it sounds.

The role of a Non-Executive Director

For a Non-Executive Director (or a NED), the outlook is slightly different: to challenge. Unlike an Executive Director, a NED won’t have the day-to-day responsibilities within that business – such as managing a team or providing certain deliverables or results – but rather to stand as an independent body. In short, their priority is to offer an alternative opinion.

NED’s are asked onto a board specifically to provide an independent, impartial point of view in the best interests of the company, its stakeholders, and employees. They question and monitor the decision-making of CEOs and senior executives and can act as an invaluable mentor and pillar of support.

So when all is said and done, what’s one thing to take away about a Board of Directors?  That balance is paramount.

Getting the balance right

We’re all familiar with the “critical friend”. The one who enacts tough love; who offers the greatest advice from a very different perspective. When it comes to a business’ Board, a NED is their critical friend.

In recent years, the demand for NED’s has increased as many businesses recognise the value an impartial and operationally detached NED brings to their business. And don’t be fooled into thinking they have it any easier than an Executive Director, merely because they aren’t  involved in the day-to-day operational matters of the business.

In fact, a NED is still held accountable to the same legal duties, liabilities and responsibilities that an Executive Director is, including a fiduciary and moral duty to the company, but unlike an Executive Director, a NED may have numerous roles or Boards they’re presiding, and will spend a considerable amount of time and effort balancing those carefully.

Let’s face it: just like any successful decision-making body, a Board needs to have the right mix of the right people in order to function properly. And this doesn’t just include Executive and Non-Executive Directors. It means the right balance of skills, experiences, knowledge and behaviours. And, importantly, emotional intelligence.

The case for emotional intelligence and inclusive Boards

If you’re new to emotional intelligence, author and founder of TalentSmart, Dr. Travis Bradberry sums it up nicely. His traits of emotional intelligence range from curiosity and self-awareness, all the way to resilience and even having a “robust emotional vocabulary”.

Now, it’s no secret that business has evolved from the archaic, cut and dry, “business is business” rhetoric many of us grew up hearing. More than ever, we’re beginning to see how our emotions are playing a role in key decision-making – from buying to recruitment to long-term strategising. And with that, many professionals are tapping into emotional intelligence to be, well, better. But as with any skill set, when it comes to emotional intelligence, not all of us were created equal.

In a recent study carried out by Thomas, who have a Trait Emotional Intelligence Questionnaire (TEIQ), female leaders possessed significantly higher levels of Emotion Management – measured on your perceived ability to manage other people’s emotional states. What’s more, on average, they possessed higher levels of Emotion Perception – measured on your personal emotion perception as well as in others. Tehergore having a female NED on your Board, will add a different dynamic and perspective yo your decision making. The femail NED will be considering the impacts of your decisions on your people and how to manage their reactions to decisions and change, plus they will spot the potential people issues either within the board or elsewhere, before the majority of their male counterparts.

And yet the gap between female and male NEDs is far from bridged. In FTSE 250 companies, the percentage of female NEDs is a mere 33% – the percentage of female Executive Directors even less. What’s more, in 2018, the average age of a NED was reported as 61 years old and on the increase. With a younger, more diverse workforce and customer-base entering the game, this does pose many significant questions. Can a Board of predominantly older men really make unbiased decisions and with the best interests of the business and its changing demographics? And why aren’t we seeing more female NEDs and Executive Directors– and senior decision-makers in general?

Unfortunately, I don’t have the answer to these questions, but what I can say is that the results of Thomas’ study show a clear need to change that. While emotional intelligence may come naturally to some, for others, it’s a careful cultivated skillset, and one that is invaluable. Emotional intelligence balances perception, observation and self-awareness, with a company’s vision, values, culture, strategy, and, importantly, their people. And who wouldn’t want a different, female perspective in these areas?

Can digitisation broaden inclusivity in Boards?

Of course, inclusivity doesn’t stop at gender. We’re seeing a multi-generational workforce and customer-base like no other, and in order for Boards to accurately represent their company and business model, broadening the demographics of their directors should be a priority.

Take the coronavirus pandemic. If there’s one thing we know for certain, it’s that greater digitisation and online operations are being rolled out across the world. In fact, 87% of senior business leaders say that digitalisation is now a company priority, with 66% of CEOs expecting their company to change its business model in the next three years as a result of Covid-19.

So as businesses scale their digital capabilities and strategy, what does this mean for diversity and inclusivity on Boards? Well, for starters, the need for younger professionals with a solid technical knowledge and different business experiences than your typical “male, pale and stale” director.

And there’s certainly something to be said about how greater digitisation can support disabled professionals. While there are significant blockers to travelling and participating in Board meetings, we’ve all had to adapt and use technology with Covid19 to conduct meetings and operations online, which I feel can now open wider opportunities for those living with physical disabilities, or chronic or long-term health conditions.

Changing the business landscape

I’ll be honest: I’d never heard the expression “male, pale and stale” until my NED training. But I’d never realised the worrying lack of diversity in these senior roles either. A divide that, in my honest opinion, is making businesses suffer.

As a NED for several businesses, I can say this is one of the most valuable, fulfilling and diverse aspects of my role and I love being a NED! From an independent school with a values-led education model, to a rapid growth inbound digital marketing agency, to a STEM startup – suffice to say the Boards I preside on are incredibly diverse.

In the last few weeks, I’ve felt prouder than ever before to play a role in vital business decisions in extraordinary times. Business decisions to protect their employees, their stakeholders, their assets and their strategies. And as a NED, I’ve been there each step of the way to offer balanced input and support considered decisions.

The crux of having a balanced Board. Emotional intelligence, a wide range of backgrounds, experiences and perspectives, and an ability to adapt to change, will all support your business’ drive to make informed, well-rounded and purposed decisions.

Isn’t it time you thought about having a younger, female NED in your business? If you would like to discuss a NED opportunity with me, then book a quick call with me and learn how I can help transform your business key operations and decision-making.