“Non-executive roles aren’t for everybody,” according to Ruby McGregor-Smith, the chief executive of FTSE 250 outsourcing firm Mitie. “A non-executive role can be quite regulatory, it doesn’t suit all people,” she says.
The UK’s first female Asian to run a FTSE 250 firm is talking about the go-to topic of the moment: how to get more women on boards and keep them there. Sure, there’s been an increase in the number of women taking up non-executive posts in the last few years, following a major push by some chairmen and the government to increase diversity at the top. But the glaring lack of women appointed to executive roles on those same boards is being swept under the carpet.
By increasing the number of women in non-exec roles, are we really solving the issue of a lack of diversity – and a supposed lack of well-thought through decision making – at the top? Or are we just playing a numbers game?
What’s important is that aspiring and ambitious career women feel there is room for them at the top if and when they decide they want to pursue it. But McGregor-Smith is conscious that the repeated mantra to “get more women on boards” may actually confuse and mislead some business women about what it is they want to do in life, and where their skills would be best suited.
“There’s been a lot of discussion on women on boards recently, that’s great, but women need to decide where they really want to be,” she says. Becoming a non-executive director might sound impressive, but as she points out, the job can be quite process-driven; it can be one of checking and monitoring rather than necessarily creating and being creative.
Of course, each NED role varies from company to company. But getting more women doing these roles doesn’t solve overnight the current problem of Britain’s biggest companies not utilising women’s skills. If the majority of exec roles still go to men, then how much are companies really seeking fresh skills?
Becoming an NED is just one option in many that aspiring businesswomen can hanker after. Female entrepreneurs regularly tell me they hate the thought of sitting around a stuffy boardroom, trying to keep up with bags of paperwork and providing a second pair of eyes to something, when actually, they want to be in the hot seat themselves. This includes being in a start-up.
Why are executive roles seemingly harder to get?
But if women want to make it to an executive FTSE role, they may find it harder. Research shows that even despite the recent awareness drive on the lack of women at the top, companies still tend to recruit exec posts based on financial experience: which men tend to have more of. Companies are less likely to take a chance giving an executive job to a woman without that experience, but they would take that chance on her for a part-time non-exec role.
As board sizes diminish – partly in response to increasing accountability and imrpoving corporate governance in wake of the financial crash – there are simply fewer exec posts going, which makes it even harder for women to fill the few core, exec jobs going.
McGregor Smith encourages budding career women to research both the industry and the type of role they think they might like to end up in future, to make sure it will be stimulating enough and utilise their skills. She says that in her industry, outsourcing, there are plenty of opportunities for women (and men) to make their mark. Equally, she highlights the UK’s growing start-up scene as being a great place for women to forge and own their careers.
“Why would you choose to work in an industry that hasn’t embraced flexible working and will hinder your path to the top?” she says. In other words, don’t necessarily go for a job working in a company that has not regularly promoted women – or simply got around the thorny issue of ‘women on boards’ by recruiting more NEDs, but has made no effort to stimulate its own pipeline of female executive directors.
Most of all, young career women should “stop this idea of trying to have everything at the same time; you can have it all but over your life,” she advises. “We should all worry less,” she says.
It’s true that a bit of NED experience can lead to an executive job further down the line: but the two roles are actually quite difference, as we outline below.
According to the Institute of Directors, non-executive directors are expected to focus on board matters and not stray into ‘executive direction,’ thus providing an independent view of the company that is removed from day-to-day running. Non-executive directors, then, are appointed to bring to the board:
• wide experience;
• special knowledge;
• personal qualities.
Chairmen and chief executives should use their nonexecutive directors to provide general counsel – and a different perspective – on matters of concern.
Non-executive posts are usually part-time roles and directors can have multiple roles at different companies on the go at once.
According to the Chartered Institute of Personnel and Development, non-executive directorships can offer lucrative recompense along with opportunities for broadening cross-sector exposure. However, the legal duties and responsibilities should not be underestimated, either by those considering such directorships or the companies seeking to appoint them.
It is recommended that within all listed public limited companies (except those below FTSE 350) at least half the board should comprise of non-executive directors.
Executive directors (often just called ‘directors’)
Executive directors have a more hands-on role in designing, developing and pushing through strategic plans for the business. Typical roles include chief executive; finance director and IT director.
Company law dictates that a private company must have at least one director; a public company must have at least two directors.
According to the CIPD, directors are responsible for the day-to-day management of the company. In smaller companies directors and shareholders may be the same people but the roles are very different and distinct.
Directors are also governed by the Companies Act 2006 and are regulated by the registrar of companies at Companies House. Read more…
© The Telegraph/Louisa Peacock