BDO alumnus John Le Poidevin is a successful non-executive director (NED) based between London and Guernsey. Here he shares his views on what to look out for when taking on a new NED role, the key attributes of a successful NED and how the NED role may change in future.
But first, how did he get where he is now?
John enjoyed a 20-year career with BDO, initially training in Guernsey before moving to the firm’s London office, progressing to become an assurance partner and National Head of Consumer Markets. In December 2012 he left the firm, seeking to return to his home island and move his career in a new direction. He currently has NED roles with four listed groups and a state-owned airline – chairing the audit committee at all of these – as well as NED positions with two Guernsey based funds. The common link is that ultimately many of these organisations lead to an end consumer – as did BDO’s Consumer Markets clients.
The largest corporation in John’s NED portfolio is International Public Partnerships (INPP), which amongst other things builds and runs schools in the UK, manages the Royal Children’s Hospital in Melbourne, Australia, and is constructing the Thames Tideway Tunnel – aka the “super sewer” through London. The other companies are BH Macro, a macroeconomic hedge fund, Stride Gaming plc – owner of the most online bingo sites in the UK - and AIM-listed SafeCharge International – a global payment solutions and risk services provider. “If you’re making a payment to an online travel, retail, gaming or other company, many of those online payment systems will be run, powered and risk-supported by SafeCharge,” John says.
The airline is Aurigny Air Services, the flag carrier of the Bailiwick of Guernsey, which runs the majority of flights into and out of the island. “The ability to influence something so crucial to Guernsey and its future has been hugely enjoyable and interesting,” John says. “Everyone in the islands has a view on it.”
John decided from the outset that he would focus on NED positions with public interest entities as this is where his background and interests would be best suited. “The role of a NED in a listed company is also well defined and well trodden with established governance codes” he says. He preferred this sense of structure to the perhaps less well-defined role of the NED in family-owned and private equity-backed businesses.
What to look out for when taking on a new NED role
When considering whether a specific NED opportunity is right for him, John starts by considering the “fit” between himself and the company. “It’s very much a feelings-based thing,” he explains. “What specific skills is the company looking for? What skills do the rest of the board bring? What are the softer skills required? What support does executive management need? Are they young and hungry but don’t really understand the listed world? Are they experts in their field but need support in certain areas? If the company has significant individual shareholders, that brings its own challenges as well. So you have to consider all of this to see what the overall fit is like.”
After that initial assessment, John likes to meet everybody on the board – ideally outside of formal interviews. “You get a real feel for how comfortable you are with each other,” he says. “Everything comes down to whether you like and trust the people you will be working with.” He follows up with research using publicly available sources of information about the company. “I look at the key messages about direction, culture, strategy, appetite for risk – then see if they accord with what the protagonists said in person,” he explains.
Assuming everything “joins up”, John finally reviews the bigger picture. “Step back and consider where the company is going, what it is trying to do and whether you think you can help and make a difference,” he says. “Ultimately, if it doesn’t interest you and you don’t think you can make a difference, why take the appointment on?”
Feelings are again important. “The reality is that some things just excite you more than others,” John says. “If you start to get that tingling passion about what the company is trying to do, that matters. Even though a NED has an independent viewpoint, it’s also important to have empathy and be aligned with what the management team is trying to do.”
How to be a successful NED
The first requirement to be a successful NED is to remember what you are there for – and that you are not an executive, John believes.
“Particularly with listed companies, you are there to consider first and foremost the interests of all the shareholders and to try and balance these,” he says. “Then you also look at and consider the views and interests of other stakeholders. And finally you are there to support the management team. Remembering those three things in that order is the key attribute for any NED.”
John also stresses the importance of remembering that, as a NED, you are not executive management. “The executives run the company; you sit on the board and advise, support and help steer the company’s direction.”
Secondly, successful NEDs need time to think about issues that won’t necessarily be on management’s daily radar. “You need the time and independence to be able to reflect on broader issues around strategy, risk, governance, values, culture and reputation,” John says. “You can introduce subjects over time. Good NEDs will persist in trying to bring their thinking and issues to a board to see if that evolves the board’s thinking. It’s not about instant gratification and you are not necessarily pushing for an immediate decision.” For example, in one company, John and his fellow NEDs looked at how the business was perceived by people in the market, how that differed from the way the company wanted to be seen, and so how it could change the way it communicated – its corporate language and the issues it talked about.
“Another key attribute of a successful NED is to not be silent,” John says. “As people get more senior, they may become more afraid of appearing stupid. But as a NED you must never be afraid of this and you must be able to ask awkward questions – perhaps ones that may expose ignorance or a lack of understanding. If you are asking what may appear to be a stupid question, it is quite likely that an investor may be thinking the same question.” One initial, apparently “stupid” question can trigger useful additional questions and potentially lead the board in a valuable new direction.
How the role of the NED might change
John is aware of the current high level of focus around corporate governance and the performance of NEDs. He expects governance around NED activities to be tightened further, with NEDs coming under even more scrutiny. “There will be more focus on whether NEDs have the time for the role, and are sufficiently independent and suitably qualified,” he says. “I suspect there will be a focus on NEDs spending more and more time on the individual companies they work on. So the fees associated with being a NED are therefore likely to rise as well. But I don’t think the underlying role will ever change – you will always be advisory, never executive.”
However, he sees the world entering a period of greater political uncertainty and macroeconomic volatility, with technological advances also driving continued change. NEDs will need to stay abreast of increased regulation, new corporate legislation and developments in global taxation, advising management on how these could impact their companies. “It’s going to be a rollercoaster for companies not just in the UK but globally over the next decade. We’ve been in a low inflation, low interest rate and high employment environment. But the next 10 years will look very different.”
This will influence the skills and experiences that NEDs need in order to succeed. “The future for NEDs is about having a broader range of experience and skills to bring to the table,” John says. “Whilst some NEDs are brought in for their narrow experience in perhaps a particular industry or the relationships they have in a sector, having a broad range of skills is going to become increasingly important for many NEDs – particularly for people in the role of chairman or audit committee chair.”
John has found his own BDO-based experience valuable in this regard. He explains: “Having a background in a major accounting practice where I worked alongside management and boards who were grappling with a range of different issues in multiple industries has helped me by giving me a broad background and range of experiences. Every time I come upon something I haven’t quite seen before, there’s something similar I can reflect on and draw upon.”