Should a company board be made up of those who have experience from within their specific industry, or with those from other industries too? We are seeing a shift in NED makeup: from boards almost exclusively appointing retired individuals from an industry, to boards now recognising the benefit of bringing in Non-Executives from other sectors.
So, how can NEDs joining a board with little-to-no industry-specific knowledge, use their transferable skills to benefit the boards they serve on? We look at three ways their learnings from different sectors can be invaluable to any board.
Abisola Barber-Sherwood covered this topic in a recent Dynamic Boards NED Community talk:
Fresh ideas
A group of Non-Executive Directors with a range of industry experience and skill-sets will be able to look at the same set of challenges and offer different perspectives, which can result in more effective decision-making and better outcomes. This diversity of thought is essential for enabling a business to be agile and innovative in a way that enables them to constantly adapt and reposition themselves to remain competitive and stay robust.
In the last five years, many industries across the UK went through some kind of digital transformation as a direct response to Covid-19. Faced with an unprecedented event, companies were forced to be agile and continuously adapt their business strategies to cope and adjust to the changing environment. “I think Covid is a fantastic example in recent years of where it’s been so important to be adaptable and to leverage the skill-sets of people that are adaptable, to ensure that we are resilient,” highlights Barber-Sherwood.
Fresh questioning
Execs or cross-sector NEDs are more likely to be curious and ask questions to thoroughly understand the inner-workings of a company when joining an unfamiliar industry. This forces a board to re-evaluate how and why they are doing things that may otherwise have gone unnoticed. It also challenges existing board members to think beyond familiar industry borders.
A cross-sector Non-Executive Director may consider things from multiple view-points, taking a different stance on an issue than those that are overly familiar with the industry would. Leveraging the knowledge they have gained from working across different industries, they may introduce fresh concepts, provide valuable insights into new markets or highlight customer segments that may not have been considered by the board previously.
“I love the idea of innovation and fresh perspectives that those with different backgrounds and experiences and expertise bring, especially when it comes to boards that are in other areas from where you may have an executive career or an executive skill-set,” says Barber-Sherwood. “It allows you to borrow some of those ideas, thought patterns and processes to inject into the board and really stimulate some creative solutions,” she adds.
Fresh risk mitigation
Cross-sector NEDs can highlight trends and identify challenges in other industries, helping the board to anticipate potentially unidentified risks and disruption to the business. In addition to this, taking the time to look at other industries and their approach to risk management can provide some key teaching points for any board.
“If we pay particular attention to higher regulatory scrutiny areas that have seen significant advances in the last 50-100 years, such as financial services, technology, or healthcare, and look at how they think about and manage risk, it can really strengthen our own governance processes,” says Barber-Sherwood.
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When you are applying for your next board role, don’t rule yourself out if you come from a different industry. Think about what added value you can bring to the board using your cross-sector experience and highlight that in your covering letter. Whether you are a new NED looking for your first role, or a seasoned Non-Exec ready for your next boardroom challenge, you are welcome to sign up and view our roles for free here.
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