How to Make Additional Income: become a non-executive director
There’s no escaping the fact the economic picture has darkened in recent times and while the likelihood of a UK recession has fallen, KPMG recently reported that growth will remain weak, with the UK economy forecasted to grow only 0.6% in 2024. With this instability and negativity has come an understandable wave of professionals looking to find extra income streams in the face of cost of living increases and swathes of redundancies, even in previously thriving sectors (think Big Tech). Securing sources of extra money not only insures against negative economic conditions, but can also help professionals to achieve financial goals more quickly. Many people look to a portfolio career to help them boost retirement funds, purchase property or pursue investment opportunities. Extra income can also offer the funds to pursue hobbies or travel and even reset work-life balance, offering greater flexibility and autonomy over how and when to work.
Non-Executive Director (NED) roles can provide additional income streams
A non-executive director (NED) is a member of a company's board of directors who operates independently from the board’s executive directors. Unlike executive directors, they are not responsible for the operational, day-to-day running of the company, instead providing independent oversight and strategic advice to the executive team.
Non-executive directors represent the interests of shareholders, providing balance to the board by offering constructive challenge and helping to form the long term aims and strategy of the company. Key areas which non-executive directors lead on include (but are not limited to) corporate governance, risk management, financial oversight and stakeholder relations, through which they should aim to secure the long-term success of the company.
The role is becoming increasingly popular due to sustained economic uncertainty and professionals reassessing their priorities in the wake of the global pandemic. The flexibility and variety non-executive roles offer make them an increasingly attractive option to professionals who are tired of the 40 hour, corporate working week and who want to use their vast experience and skills to take on a role with fresh challenges and benefits.
Professionals from all industries and sectors can become non-executives, with the role appealing to a vast range of professionals, from those nearing retirement to c-suite executives and senior managers.
Because the role requires a change in mindset and an adoption of strategic skills, the crucial qualities needed to succeed as a non-executive director hinge upon the ability to transition your existing operational experience and expertise to a less hands-on and more high-level, advisory role. Many people may choose to initially pursue NED roles in industries relevant to their areas of expertise, before diversifying into new sectors with later non-executive roles. Those with skills and experience that are more sector agnostic, such CFOs, CMOs and legal professionals can more frequently find themselves entering the NED space in new industries in which they have no direct experience.
You can learn more about the fundamentals of the non-executive director role here.
The benefits of being a NED
Many professionals dismiss pursuing a non-executive career either because they feel they lack the skills, network or experience required, or because they don’t fully understand the vast range of benefits. While a certain level of expertise is required, most professionals possess the building blocks required to create the foundation for a non-exec career. The average age of NEDs has fallen over the past decade as boards seek to create diverse and dynamic boards to provide a range of perspectives.
Some of the benefits of pursuing an non-executive career include:
- Variety - non-executive roles are part-time with many NEDs working with companies for just a few hours each month. This allows professionals to take on multiple roles, across a number of sectors, creating a varied and interesting career journey.
- Work/life balance - one of the major benefits of non-executive roles is the autonomy they provide to work when, where and how much you want. Many boards now meet remotely, with maybe quarterly in-person meetings, reducing travel time for directors. How many hours a month you commit to your NED roles (or other portfolio roles) is entirely in your hands.
- Professional development - learning news skills, competencies and knowledge is central to thriving as a non-executive director, and gaining new capabilities and fresh expertise can be a real shot in the arm for your CV.
- Sharing expertise with others - it can be incredibly rewarding to share your knowledge with business leaders, especially when working with startups. NED roles allow you to take your c-suite skills and adapt them to be a guiding force for the executive board members.
- Influence - non-executives have the chance to play a key role in the strategic direction of a company, and can help to shape its future success. This is a big responsibility but one that many professionals relish. Good NEDs influence through building strong relationships and drawing on excellent communication skills.
- Building reputation - being attached to a company in whose success you have been instrumental can be a feather in the cap of a non-executive director. Non-exec roles can enhance your CV and be used to leverage your personal brand which can be hugely beneficial when seeking other portfolio roles such as fractional exec roles or advisory positions.
- Remuneration - NEDs can earn anything between £10,000 up to £350,000 per non-executive role, though this is very much dependent on the size and maturity of the company, your skills and experience and the seniority of the role (Chairs earn more than standard non-executives). Once a professional has established a portfolio containing a number of non-executive roles, they could be earning far more than in their previous corporate role, with a far smaller outlay in hours worked. NED roles allow professionals to diversify their income streams, spreading risk and offering financial security.
Myths and misconceptions about being a NED
It’s a common misconception that being a non-executive director can be a walk in the park. In reality, it is a role which comes with a lot of responsibility, requires professionals to build new skill sets and can, on occasion, require a greater time commitment than originally thought. This is reflective of the impact NEDs have on company performance and the ways in which they are instrumental in securing the long-term success of the company - while NEDs are not expected to be hands-on, they are expected to be proactive, professional and influential in shaping strategy.
The stereotype of NEDs being members of an old boys club, holding nominal roles that are rewarded with hefty paycheques is fast becoming a thing of the past. Younger non-executives are increasingly being sought by boards, and there is less emphasis on having deep and sustained corporate experience. As millennial and Gen Z consumers increasingly assert shareholder and customer pressures on companies, boards are looking to take on a more diverse and varied range of directors (both executive and non-executive) who represent the vast spectrum of shareholders, stakeholder and customers who have a bearing on their brands and their business.
NED success stories
There are hundreds of portfolio professionals who have found roles through the Connectd network. Denis Oakley expanded his portfolio to include new NED roles within months of joining the Connectd network, not only boosting his earning but also expanding his knowledge of new sectors and working within the early-stage ecosystem. Denis spoke to us to discuss how joining Connectd gave him the opportunity to work with ‘a number of very high class startups and entrepreneurs with a huge amount of talent’ - you can read Denis’s full interview here.
Want to know more? Become a non-executive director with Connectd
Connectd can help those looking to transition to a non-executive career with CPD accredited resources, mentoring, board placements, networking and events. You can learn more about how to become a non-executive here or register your interest in starting your NED journey with the support of Connectd here.