Reflections on being a NED in the private and public sectors

12 March 2019

John Roome is a successful non-executive director based in London. In this article he shares his experiences and reflections on what it’s like to work as a NED in these very different sectors.

Why did he decide to take on private and public sector NED roles?

After qualification with PKF, John joined Touche Ross (now Deloitte) in London where he spent 9 years specialising in banking and insurance audits. He left the firm in 1994 and worked over the next 22 years for UK, US, Australian and Japanese insurance companies based in London, ending his career in 2016 as CFO for the Japanese insurer, Mitsui Sumitomo.

While at Mitsui Sumitomo an opportunity arose to look for a NED role. Having come from a family with a strong public service commitment, particularly to medicine, and having studied health economics as part of his university course, John had a natural interest in public health care management and decided to use the NED route as an opportunity to have direct experience of working with the NHS. In 2015 he took a NED and audit committee chair role with the North East London NHS Foundation Trust (NELFT). NELFT is one of the largest community and mental health trusts with around 6,000 staff providing services across north east London, Essex and parts of Kent.

A year later, following a change of ownership at Mitsui Sumitomo in 2016, John took the opportunity to leave the company. Having enjoyed the NHS NED role, he decided to increase his NED portfolio rather than return to full-time employment but decided that he would also like to have the experience of being a NED in a sector closer to his professional home. In 2018 he became a NED and audit committee chair at Aspen Managing Agency Limited, a Lloyd’s insurance underwriter, and an external nominee director at the European Bank for Reconstruction and Development, both in London.

How do the private and public sector NED roles compare?

In short, John has found them both to be fascinating but very different experiences and advises that navigating them effectively requires adjustment and flexibility on both sides.

John feels the private sector – and certainly the financial services sector - is much more comfortable working with NEDs. He explains that in the NHS, ‘it sometimes felt to me as though NED involvement is treated as an interference, rather than as a welcomed source of constructive challenge and oversight, which is how NEDs are viewed within the private sector’. John thinks the reasons for this more unsettled or tense relationship stem in large part from the very different historical evolution of governance structures and experiences of external regulation between the private and public sectors.  Whereas in the private sector and certainly the financial services sector, the role of NEDs and the governance structure is more long-standing and has been developing and evolving for decades, the role of boards and NEDS in the NHS is much less well established. ‘The legislation to create NHS trusts was only introduced in 2003 giving them greater decision-making autonomy and creating entities similar to private enterprise within a national regulatory framework, including the introduction of boards with NEDs. Compared to the private sector and heavily regulated sectors like the financial services sector, the concept of boards and NEDs is still relatively new to the culture of the NHS’. 

A second big difference John experienced in his different roles relates to the level of NED involvement. ‘In the private sector, the NED role is more clearly defined and better understood. NED involvement is essentially focused on membership of the board and its sub-committees’. In the NHS, the NED role is much more varied and expansive and can even extend into what comes very close to the operational life of the trust. John explains that ‘in addition to the normal responsibilities of board and committee membership at NELFT, I have chaired serious incident investigations, employee interview panels and various appeal panels and was regularly invited to attend visits to NELFT facilities’. He adds that ‘while not all NHS trusts require this level of commitment, it is not unusual’. As a result, John feels that sometimes the boundaries between NED responsibilities and operational activities in the NHS can become rather unclear, which he thinks contributes to the wider sense of unease he experienced with the role of NEDs.

John says that another big difference relates to the varying level of willingness that exists amongst the executive teams to engage with NEDs. ‘In my financial services’ experience as a NED and working with NEDs as a CFO, there is a much more established culture of collaboration and transparency between executive and non-executive teams and a very high degree of wanting to share information with NEDs because they need to be kept fully informed of key activities. Often their opinion is sought to assist in problem solving. This level of interaction is second nature in the financial services sector, but is not an automatic reflex within the NHS, perhaps because the role of NEDs is still not fully understood and appreciated’.

John also points to the very different levels of time commitment he has had to devote to his NED roles in the two sectors. ‘In the NHS, the time commitment involved in attending the public and private board meetings, educational workshops, plus the time required to read the substantial volumes of associated papers, along with the other responsibilities, adds up to a very significant commitment if the NED is to fulfil the role appropriately’. He adds, ‘do not underestimate the amount of papers that require reading for NHS meetings – attendance at the meetings themselves may not be the biggest time commitment’.

Two other big differences John points to are the levels of remuneration and the public participation dimension to board meetings. Not surprisingly, remuneration differs considerably between the two sectors with the private sector generally paying significantly more than the NHS even without taking account of the additional hours required to fulfil the NHS role.

However, on a more positive note, the NHS’ requirement to hold public board meetings, which is unheard of in the private sector in the UK, exposed John to the experience of routine, direct engagement with service users, members of the public, even the media (as happened at one of John’s board meetings) all of whom have the right to attend and ask questions. Although it took a bit of getting used to, John says this feature of being a public sector NED gave him a fascinating new professional experience, reinforced his commitment to the vital role played by the NHS in transforming individual, family and community wellbeing and a much deeper understanding of the challenges of running a professional, accountable and compassionate public health service.

How do the distinctive challenges faced by the public and private sectors impact NEDs?

One of the biggest challenges facing the NHS is the rapid pace of regulatory change. ‘I thought the insurance sector and its regulation was complex until I worked in the NHS’, John says. ‘While insurance services have remained in a relatively stable regulatory environment following the introduction of EU wide regulation in 2016, the NHS has been buffeted annually by significant regulatory change on top of major ongoing changes in government policy. While all of this is understandable, absorbing the implications of constantly changing regulatory standards poses a very real challenge to NEDs. ‘You can never get bored as a NED in the NHS!’

In addition, John says that ‘coming into the NHS with a non-medical and non-public sector background meant that to be an effective NED I had to put in additional time to get a better understanding of the structure, business and pressures facing the NHS overall and the specific issues facing NELFT itself.’ By comparison, John comments ‘it was easier to fulfil my NED role at Aspen given my many years’ experience in the insurance sector.’  Being an effective NHS NED meant regularly attending NHS conferences, external policy, political and financial briefing sessions and reading technical reference material.  Quite apart from regular private study, John says that ‘for me the most important aspect of my efforts to be an effective NHS NED was to get out and see the trust in action. Without this commitment of time and energy I felt I would be failing in my role’. That said, John also emphasises that his investment in learning about and engaging with NELFT and the NHS very much added to his enjoyment in the role – to quote the old adage – ‘I got out what I put into the role’.

What does he feel that he can contribute as a public and private sector NED?

Not surprisingly John points out that ‘my career in the private and financial sectors enables me to  share my 30+ years of corporate experience to add value to strong financial management private and public sector organisations’. He explains that ‘at Aspen, this means increasing shareholder value where my role is largely strategic, finance and risk focused’. However, he also points out that ‘those same skills and professional background are needed to add significant value to a NHS NED role.’  

However, perhaps more surprising John thinks that while the cultural differences he experienced as a NED in the public sector were sometimes frustrating, his NHS role made him more aware of his deep commitment to and knowledge of the enabling conditions for effective public sector governance.

In conclusion, John considers that he gets a huge amount of satisfaction from working in both sectors but in different ways. ‘Financial stability is an imperative in both sectors and playing a NED role in achieving that outcome especially in challenging times is rewarding’. However, on a wistful note John adds ‘but there is nothing more satisfying than hearing from a service user how the NHS has made a positive contribution to their wellbeing’.