Serving on a public or private board is invariably a signal of a maturing business career. Non-executive directors (NEDs) have critical roles in oversight, strategy and risk. But while they play no part in day-to-day management, they do carry with them significant duties and responsibilities. In extreme cases, this can extend to personal liability for wrongdoing in an organisation.
The insights of three ACCA members who play NED roles in a range of organisations highlight both the rewards and sense of satisfaction they can bring, but also the fact that these are not positions to be taken on lightly.
Marie O’Connor FCCA built her career as an audit partner at PwC in Ireland, and is also a highly experienced board chair and independent NED, with current roles including chair of Davy Global Fund Management and chair of the UCD Governing Authority.
‘A massive amount of regulation has to be absorbed and understood; you need to have the appropriate knowledge’
‘I was fortunate in my early 30s to be invited to be a director for a number of organisations,’ she recalls. ‘I quickly learned that you had to bring your whole self to the roles.
‘For me, that included my business experience, as well as the ethics and scepticism I brought as an auditor, and of course my general accounting skills. When you are an accountant, people approach you about all sorts of issues,’ says O’Connor.
‘Life and business life have evolved, however, and the responsibilities of an NED are far more onerous today,’ she adds. ‘The topics a board has to address can include everything from digital transformation and ESG to human capital and cyber. A massive amount of regulation has to be absorbed and understood, especially in the financial services industry.
‘It’s important to have experience related to those responsibilities, even in a smaller organisation and, if you don’t have the experience, you should do a course to get it.’
O’Connor says she has encouraged many people over the years to join organisations as NEDs because the experience you gain is invaluable. ‘A few years back, I topped up my own board experience by doing a course at Harvard focusing on women in corporate boards,’ she says. ‘We ended up forming a global network where we speak once a week and share experiences and challenges. I feel you need to build a bit of a network because it can be a lonely role.’
She also believes that, as an NED, you are no longer a manager in the same way as in an executive role: ‘To get the balance right, you need to have a good overview and the appropriate knowledge or training,’ she says.
‘Boards are looking at their skillsets for their future and in terms of succession planning. They understand it is key to being fit for purpose in the years ahead.’
As head of planning and delivery, credit risk, group risk with Bank of Ireland, Imelda Buckley FCCA is also an experienced NED, and is chair of the finance, audit and risk committee of Mountaineering Ireland, and board member of the governing body of Waterford Institute of Technology.
‘You have a different mindset going into these roles and the satisfaction lies in that sense of difference’
‘The skills I bring from the ACCA Qualification, in terms of financial and management accounting, absolutely matter in my NED roles,’ she says. ‘I also lean heavily into the corporate governance, risk management and strategy elements of the qualification. Skills I have picked up from work in terms of project management and leadership are also very valuable.
‘An NED role feels very different from the day-to-day use of your skillsets. In my experience, you have a different mindset going into these roles and the satisfaction lies in that sense of difference.
‘From a career perspective, NED roles prove you can thrive in different organisations, mix with new people, and support governance structures with differing demands. I’ve grown as an individual and my leadership skills have grown from my experiences as an NED.’
Buckley reminds us that there are also legal and regulatory obligations and responsibilities to fulfil in relation to the role. ‘Fulfilling those legal obligations to the best of your ability starts with being properly prepared and properly briefed on what’s going on,’ she says.
‘You also have to recognise this represents a significant pull on your time. Choosing an organisation you have a genuine interest in is key to maintaining your focus and enthusiasm for the role,’ Buckley adds. ‘I joined the board of Mountaineering Ireland because my daughter is involved in mountaineering. This was my way to give back to an organisation that had given so much to her.’
While an NED role is typically seen in terms of career culmination, Tim Madigan FCCA is among a growing number for whom NED roles are a career mainstay. He is an independent NED for a number of financial firms in Ireland, including Waystone Management Company (IE), Utmost PanEurope and investment funds managed by Aviva Investors and HSBC.
‘The careers of many ACCA-qualified individuals lead to CFO and CEO roles, and these are a great stepping-stone to an NED career,’ he says. ‘You generally have to have had the relevant executive director experience in the boardroom before you can move on to be an NED.’
‘There is now a new breed switching from executive director to NED careers in their 40s’
Madigan believes that accountants have a key role to play as NEDs across all sectors, but are particularly important for those complex financial institutions that sit at the heart of the financial system.
‘It used to be the case that people took up NED roles after retirement from their executive career, but there is now a new breed switching from executive director to NED careers in their 40s,’ he says.
‘Being an NED is very different to being an executive director, as you are not involved in the running of the business,’ he continues. ‘Many NEDs sit on a number of boards – sometimes across different sectors and countries. Multiple boards of directors – effectively your co-workers – present many different personalities, approaches and cultures, which can be very interesting.’
Among a board’s responsibility is ensuring the financial reporting is correct, Madigan stresses. ‘Many boards delegate responsibility to oversee financial reporting and internal control to an audit committee, which is typically made up of NEDs from the board and engages heavily with both the external and internal auditors. It’s considered good practice for the chair of the audit committee to be an accountant.’
NEDs carry a heavy responsibility, as any negative events in a company where they are a director will reflect on them, according to Madigan.
‘In my experience, as a result of this, NEDs tend to be very invested in getting things right and doing the right thing. It’s an approach a finance professional needs to have front and centre in their minds as they take on their first NED roles.’
Read On board: the insider’s guide to surviving life in the boardroom, by John Tusa
See ACCA Ireland’s Members for boards webpages