- We believe that FDs generally make the transition from FD to NXD very well as they are used to working with the board as opposed to directing it. It also helps that finance is often the language of the board.
Many businesses do believe that it can be of benefit to them for their finance directors to take an external directorship to broaden their commercial knowledge and experience how other boards operate. It is a good idea to discuss this with the Chairman/CEO of the business as you join it and to have the option to take an NXD position written into your contract (with all the caveats that it is not competitive and not too time consuming).
It can be a challenge to identify NXD roles while consumed in a full time role, finding the time to network is a struggle. However, it is worthwhile letting your contacts in corporate finance and legal teams (along with recruiters) know that you are interested in hearing about NXD opportunities as they will often get asked to make recommendations.
Only you will know when you are ready to take the plunge and go plural and this will usually be when your executive role has come to a natural end (i.e. as the result of an exit). Before you jump headlong into the pursuit of an NXD career take some time to make sure you are ready for it and have the right set of skills for it.
Make sure you understand why a business might need an NXD (aside from the corporate governance reasons):
- To provide expertise the business may otherwise not be able to afford;
- Ensure financial information is accurate and robust controls are in place;
- Set strategy and focus management to deliver it;
- Add credibility;
- Act as a conduit between management and investors;
- Provide constructive challenge;
- Bring networks and contacts.
And what personal skills does the role require:
- Sound judgement and objectivity;
- An ability to influence through clear communication;
- Strong interpersonal skills and an ability to manage conflict;
- Integrity and independence of thought;
- Commercial awareness and insight.
As you think about building your non-executive career:
- Look for opportunities alongside your current FD role (as long as you have permission to do so). Gaining experience of how other boards operate and the commercial issues they face can bring great value to both of the businesses you work with;
- Choose your first NXD well: do the same amount of diligence you would if it was a full time role;
- Remember you have as equal a legal obligation as an executive; and
- Ensure there is sufficient Directors & Officers cover (or take out your own).