Most ads for non-executive directors state how many days a month or year the role is expected to take. This is not as simple as it sounds, because the work of the NED doesn’t generally fit neatly into standard days.
In one month, for example, you might spend:
- seven hours preparing for a board meeting
- a full day attending the meeting
- two hours answering emails (including thinking time)
- one hour speaking to a board director on the phone.
But another month might look very different.
Since NEDs don’t generally keep time sheets, it’s very difficult for boards to state exactly how much time their current NEDs commit to the role, let alone guess how much time the role will require in the future. No-one can know for sure what will happen in the organisation during the coming year, so the time commitment required may turn out to be greater than expected.
In general, organisations — other than listed companies — ask NEDs to commit to between one and four days a month, and ask chairs to commit to between two and nine days a month.
Some sectors demand greater time commitments than others. For example:
- Professional bodies and regulators specify, on average, just over a day and a half a month.
- Private companies require a commitment of just under two days a month.
- For non-executive directors in the NHS, the average requirement is just over three and a half days.
The stats for listed companies are difficult to find, as many of them don’t advertise their NED roles.
How the time requirements have changed
A common misconception is that NEDs earn a large fee in exchange for just a few days of their time each month. The reality, though, is that many NEDs are working more hours than ever, often exceeding the time they initially committed to the role. In a recent survey, 60% of NEDs said that the demands on them had increased over the past year.
The reason why NEDs are having to work longer and harder is that the scope of board responsibilities has been increasing for some time.
Today’s salient issues include:
- pressure to meet regulatory requirements
- expectations for stakeholder engagement
- cybersecurity
- disruptive technologies
- human capital management
- company culture
- environmental, social and governance (ESG)
- equality, diversity and inclusion.
Addressing these issues very often requires extra meetings, additional committees, more prep time to cover unfamiliar topics, and continual investment of money and time for learning and development.
NEDs’ fees are paid at a flat rate for the year, with no bonuses. While executive boards might feel that any additional effort they have put in is rewarded at the end of the year, non‑executive directors don’t receive a pay increase to cover the extra hours they have completed.
So, if the time requirement increases substantially, NEDs see a reduction in their hourly earnings.
In extreme cases, a non-exec’s hourly rate over the year may equate to minimum wage or less.
How do non-executive directors spend their time?
A good way of analysing an NED’s time commitment is to break it down into:
- planned contact time for events such as board meetings and strategy days
- preparation and personal time for activities such as reading board papers and researching the company’s marketing efforts
- unplanned contact time for phone calls, emails and extra one-to-one meetings with executive directors.
Planned contact time
Make sure you will be able to set aside this time alongside your other fixed commitments, particularly if you have a full-time job from which you will need to take time out.
- Board meetings and AGMs. Dates and timings for these are usually set before the start of the year. Boards may list them in their ads, or disclose them during the interview or offer. Most boards meet for between three hours and a full day, four to ten times a year.
- Strategy days. There will likely be one or two of these each year, to develop and debate the organisation’s strategy. They may be in the same place as the board meetings, or somewhere else that involves an overnight stay.
- Subcommittee meetings. Most non-execs will join a subcommittee and attend its planned meetings, which tend to be shorter and less frequent than board meetings.
Preparation and personal time
You’ll have a fair amount of freedom to schedule the following:
- Board meeting prep. NEDs receive board packs in advance of meetings. Such packs sometimes run into hundreds of pages, particularly if the organisation is subject to higher levels of regulatory scrutiny. NEDs dedicate a large portion of their time — anything from a couple of hours to two days — to pre-meeting preparation.
- Personal thinking time. Sometimes it’s not what’s in the pack, but what isn’t, that you need to think about. You should allow time to reflect on the organisation and its senior team, and their performance and impact.
- Research. You won’t have all the answers, nor will you be expected to. However, you will need to play a part in discussing a range of subjects and making important decisions on various matters.
Inevitably, there will be some topics on which you are less confident. You’ll need to swot up on these, through independent research or pre-meeting conversations with board members.
Even if you’re not an expert in a certain area, you’ll need to know enough to make an informed decision that you are comfortable with. Remember, in the event of a problem, the liability for these decisions will ultimately fall on all board members collectively. - Continuing professional development. Dedicate yourself to constantly developing your skills so that you can operate as an effective NED. For instance, you may need to hone your governance skills, study the market in which the company operates, or learn more about a relevant topic such as cyber risk or AI.
Unplanned contact time
The liability and responsibility that characterise the NED role mean that you’ll be expected to contribute whatever is needed for you to perform it effectively — 24/7, 365 days a year. This involves certain activities for which it is difficult to plan:
- Ad hoc meetings. Many boards conduct regular conversations outside of formal board meetings — for example, when a time-sensitive matter arises. You’ll need to be prepared to allocate time to these sessions.
- Emails. You’ll be expected to keep up to date with communications among board members.
- One-to-one meetings with the executive directors and other NEDs. This will help you learn more about the organisation’s culture and build rapport with the senior leadership, who may well wish to use you as a sounding board for their ideas.
- Induction. Expect to commit additional time for a thorough induction process when you first join the board. Because board meetings are infrequent, it can take a while for you to feel like an established board member unless you make a big effort as soon as you take on your role. Don’t be afraid to offer suggestions as to what measures might be helpful.
- Networking and attending events. As well as challenging the board when necessary, a good NED will encourage and support other executives. Attending the company’s events or important conferences is a great way to show such support.
- Annual appraisals. These will probably involve a one-to-one session with the chair. You may also take part in a board evaluation process and a board skills review.
Key points to consider
When you are thinking of applying for a non-exec position, ask yourself the following questions:
- Do I clearly understand the requirements of the role, including both planned and additional contact time?
- Can I fulfil the time requirement alongside my other commitments?
- Can I cope with the mental gymnastics of jumping between multiple roles and email inboxes?
- Do I believe in this organisation and its people enough to keep going if/when my duties demand more than the expected hours?
- Do I need any permissions from my current appointments to undertake this role?
- How can I reassure the board that I will be committed to my NED role, and that I have fully thought through how I will manage my multiple responsibilities?
Despite all the caveats mentioned above, taking on a non-executive director role can be a fulfilling and rewarding step. If you’d like more guidance from an experienced NED, email me or call me on 020 7099 2621.