In this week’s guest column, Korinna Sjoholm, Partner at UK executive search firm Warren Partners highlights the importance of non-executive director diversity (NEDs). She also explains why a diverse portfolio of NEDs at this particularly challenging time will offer companies ‘enormous potential’ and will ultimately ‘pay dividends’.
The COVID-19 pandemic has highlighted the importance of agility and resilience at all levels in an organisations. Boards that take a diverse approach to their NED appointments, will be able to tap into a variety of valuable perspectives, as well as take advantage of specific expertise, as they navigate these uncertain times. Firstly, it has to be noted that when appointing NEDs, depth and breadth of experience and diversity of thought is vital – in other words, the ability to contribute to a full range of commercial and governance issues facing Boards today. However, there are four areas in particular where I believe that taking a diverse approach to NED appointments will really pay dividends. They include Human Resource Directors (HRDs), Investor/Private Equity (PE), technology and international experience.
HUMAN RESOURCE DIRECTORS (HRDs)
Throughout this period I believe there has been a greater appreciation of the importance of the HR function, and in particular, the value that HR brings to training, developing and engaging talent. For some business, the crisis has shone a light on the greater need to care and nurture their people if they are to be successful and thrive in the ‘new normal’. As COVID-19 has forced businesses to operate differently, empowering employees to be their true authentic selves (a win for diversity), there has been an increased focus on understanding employees and their employee experience more deeply; investing in employees’ personal development and their wellbeing.
We are seeing HRDs stepping up to the mark at this challenging time and demonstrating real leadership. If it wasn’t already, the role of HR is now absolutely critical, and is a reminder that people are at the heart of any business. Moving forward, I would anticipate this may lead to a greater number of NEDs who have experience of change and transformation, as well as organisational design.
INVESTOR/PRIVATE EQUITY (PE)
No one can question the economic consequences we now face as a result of COVID-19, and this will be a challenging time for many businesses. It would not surprise me if this results in more Boards appointing NEDs who have private equity experience. Injecting PE expertise at this time can offer a different, highly analytical, approach to that of a ‘traditional’ board member. What does the business have that might currently interest or deter investors? What is its greatest asset? How best to package the business for a merger or sale? What are the risks? For NEDs with PE backgrounds, this is all familiar territory and for a company grappling with uneconomic and market uncertainty that lacks this expertise, pace and agility, the value is unequivocal.
TECHNOLOGY
There is no doubt that we have all seen and experienced just how important technology has become, and this greater use and understanding of technology is here to stay. From new business models, home working and more on-line learning to the continued emergence of AI, automation and the internet of things, getting technology right at both a strategic and practical level has never been more important. For some time now, we have seen organisations seeking out younger NEDs to plug gaps in expertise and help them fine-tune their strategies.
A greater understanding of the value of technology has also been used to drive change and transformation in recent years. For example, we have seen the financial services sector having to invest in massive digital roll-outs. This evolution is set to continue across all sectors. Here, organisations are not looking for seasoned NEDs with lots of experience, instead they want serving Chief Information Officers (CIOs) and Chief Technology Officers (CTOs) who have a currency of experience, who understand the latest tech and the transformation it can bring. They seek people who are literally living and breathing what’s going on right now in these fast-moving areas.
INTERNATIONAL EXPERIENCE
NEDs with international backgrounds have long been valued by boards, and it has not been uncommon for NEDs to ‘fly in’ for board meetings. Over recent times we have witnessed more than ever, that exceptional international NED candidates are not being progressed due to a question of appropriateness, when the board has a commitment to reducing their carbon footprint. This goes to show the degree to which the world has changed in this short period – from ‘flight shaming’ to companies forced to hold their first ever-remote Board meetings. Even the government has adapted to virtual cabinet meetings.
In my view, when it comes to maximising international diversity in a business, this can only be a good thing. Any previous resistance to the idea that Board meetings cannot be held virtually has now been dispelled. There is a far more open-minded attitude towards virtual meetings now and people realise that we don’t all need to sit together physically in the same room. There’s no reason why this won’t continue moving forward, which means that companies will leverage technology to take advantage of the expertise international NEDs can offer.
It’s not just the diversity of international experience, this increased flexibility will open up opportunities for British NEDs who may have been interested in taking on a role in another part of the country, but held back because it required extensive travel to and from Board meetings. It also means that executives currently in full-time roles, as well as NEDs with quite full portfolios, may now take on roles that they wouldn’t have before – offering a far broader choice to the hiring business.
CONCLUSION
The question for Boards now is identifying NEDs who have the right experience and skillset to support them to not just get through the coming months, but to also help to re-build or pivot their businesses, moving them forward in a new and better way. This offers enormous potential to companies that recognise the value of a diverse portfolio of NEDs.
AUTHOR BIOGRAPHY
Korinna Sjoholm, Partner at UK executive search firm Warren Partners specialises in recruiting senior and executive appointments across technical, commercial and operational functions. Prior to joining Warren Partners she developed an Infrastructure and Built Environment practice within the UK’s largest executive search firm. She also has a deep understanding of the Transport, Infrastructure and wider Built Environment and Industrial sectors nationally.
Sign up for our newsletter
