Four steps to the top

Professor David Gilchrist and Penny Knight plot the four stages you need to pass on the road to becoming a professional director.

“Emerging” is the somewhat nebulous term gaining currency as a way to describe directors who have yet to make their mark on the world. But in reality, our research shows that this is just one of four distinct phases in the evolution of a director’s career.

An understanding of each is essential, not just for those looking to develop their skills and experience in a focused and strategic way, but also for trainers and policy makers tasked with providing effective support and education.

Curtin University conducted the Directors’ Social Impact Study on behalf of the Australian Institute of Company Directors in both 2012 and 2013. The most recent research included a series of focus groups with more than 120 Company Directors members, including directors from some of Australia’s largest listed organisations and smallest not-for-profits (NFPs).

We heard a range of interesting and thoughtful anecdotes illustrating the many and varied professional career paths these directors had trodden. We also heard from some who had just been appointed to their first non-executive director (NED) role.

From these discussions, and data from the quantitative survey, it emerged that there are four distinct stages to achieving recognition as an established director.

For boards, a better understanding of the stages involved in director’s growth is helpful in defining job descriptions, recruiting appropriately and providing feedback to applicants.

For policy makers, trainers or other support providers, a more detailed understanding of the stages of development leads to a more accurate segmentation of the director market, enabling better targeting of training and the development of more nuanced strategies and services. And, offering participants training or support appropriate to their current needs should lead to a better return on investment in scholarship funding, education and mentoring.

The time spent on each stage can vary, and some, either by choice or circumstance, don’t make it to the next step.

Stage 1: The candidate

There are two basic types of director candidates: those who are actively looking for a directorship and those who get “roped in”.

Candidates looking for directorships can be any age – from their early 20s to past retirement. But, as might be expected, there is a high proportion of under 35s in this group. These candidates often undertake specific training, such as the Company Directors Course and actively engage in networking with a view to getting their first role.

Our research shows that many candidates are surprised and frustrated by the amount of time and effort required to get their first directorships and the types of boards that may be interested in them.

It is important for candidates to remember that directors are chosen for a variety of reasons, including professional expertise, knowledge of an industry sector and governance experience. These attributes take years to develop.

Indeed, the average age of NEDs participating in the Directors Social Impact Study is 55, with only five per cent under 40 years of age.

While balance and a greater representation of younger people on boards are important, the number of opportunities for 20 to 30 year olds is inevitably smaller. A board’s level of experience, skills and professional networks correlates to better outcomes. This is not likely to change and arguably it shouldn’t.

For younger candidates, and those new to governance roles, getting to the top could take years. It’s not personal.

The experience of those who get their first gig by being “tapped on the shoulder” will have been quite different.

In the past, NFPs which struggled to get people onto their boards and smaller or privately-owned organisations have used this approach, but the chance of being talent-spotted is reducing as boards increasingly take a more professional approach to the recruitment of members.

Not all candidates will get a directorship role because they lack the time, persistence or skills to be successful or simply decide it is not for them. The number that drop out at stage 1 is not clear.

Stage 2: The apprentice

Apprentices are people in their first three years of their first NED role. Regardless of their age or experience, they are usually on a steep learning curve and will need support, formal and informal. This is a clear leverage point for training and mentoring and, unlike candidates, apprentices have the opportunity to apply immediately knowledge from training to experience, and vice versa.

Some drop out of NED roles after their first appointment and this can be a mature and wise decision. Directorship, like many things, can look different from the outside. Their decision may result from a lack of fit, disinterest and, especially in the case of NFP boards, a lack of time availability. Again, this is a clear leverage point for skills development, mentoring and other support.

Stage 3: The emerging director

Our research suggests that the term “emerging” is best applied to directors who have had actual experience, usually between two and five years. Some may have had more than one NED role.
 They are gathering skills and experience across a broader range of areas – many talked about this stage as a time for improving interpersonal skills, including negotiation and patience. They also have established networks and continue to build them.
The questions asked by emerging directors and the problems they face are becoming more individualised. They are likely to get the most out of their professional development when talking in small groups to peers and established directors. For some, this is as far as they want to develop their careers. Others are keen to develop their skills further.

Stage 4: The established director

The established director is likely to have had at least five years’ experience and more than three NED roles, including with large organisations. Nearly all have had experience of being board chairman. They are recognised by their peers as being at the top of their game and are described using terms such as loyalty, leadership, authenticity, intelligence and integrity.

Note: established directors have reputations, not brands.

Established directors are as likely to be training or mentoring others as they are to be receiving training. Their professional development time is usually spent in keeping up-to-date with changes in their sector or learning about specific emerging issues – for example, social networking.

In recognition of the time and skills they bring to a board, established directors are the most likely to be paid (many also take unpaid roles on NFP boards).

Interestingly, our research found that there isn’t a correlation between levels of payment and level of respect.

Stage 4 ½? – The professional NED

There are two types of professional directors. There are the established directors who work full-time as NEDs when they no longer have the constraints of a day job. These directors often talk about “giving back” or “supporting the next generation”. There is also a very different group that could be called the “career NEDs” whose goal is to become a paid professional NED so they can give up their day job. 

Established professional directors are mostly held in high esteem, but career NEDs do not always attract the same respect. It is not entirely clear why this should be the case. Perhaps those who choose to be career directors are deemed to have more of a personal agenda.

What was evident was that those using an organisation as a stepping stone to something better, particularly an NFP organisation, were not well regarded. Given this fine dividing line, it’s critical for anyone seeking to build a career as a professional director to get their strategy right.

Where next?

This framework provides the basis for more structured conversations about directors’ skills and development and how these can be developed more strategically.
 
It also helps individual directors understand and plan their careers and it improves a board’s understanding of its competence and supports its recruitment.  

Understanding why people want to be become an NED, and their subsequent path to becoming a skilled practitioner, helps individual directors, boards, membership bodies, trainers and policy makers – and ultimately enhances organisational effectiveness and success.

For individuals looking for a first directorship, or to move on to their next role, this knowledge ensures that discussions around skills, experience and fit are to the point and expectations are evenly matched on both sides.

Achieving the most senior positions may take many years.

Understanding and taking charge of personal development is essential, both to ensure the greatest benefit to the organisation and to identify the positions that will facilitate personal growth.

Having a structured approach may also help to relieve the anxiety that comes from being rejected, actively or passively, from selection.

Often it’s not about the individual director, or the organisation, it’s about achieving the best professional fit.

Our work raises some interesting questions that we plan to answer over the next few years. For example, how many candidates progress to their first NED role and how many drop out? Is gender, or other factors such as ethnicity or age, a factor? How can sector resources be best applied to ensure that training and support at all levels is appropriate and cost-effective? Is there a difference between the skills and experience of the candidate and apprentice directors that drop out and those who progress? Is this an effective form of natural selection? We will publish our findings as they emerge.