As the spotlight intensifies on Britain’s boardrooms – particularly when it comes to executive pay and relationships with shareholders – the Financial Times is launching the first professional qualification for non-executive directors.
Accredited training on the unique role of NEDs
FT Non-Executive Director Certificate. Accredited by Edexcel
David Dekel had plenty of experience calling the shots as a chief executive before being named a non-executive director of a listed property company around the time of the global financial crisis in 2008. He quickly realized he was in a very different arena.
“I was used to calling the shots, having the final word, but as a non-executive director I found myself in a new situation as a consultant and not a manager,” says Mr. Dekel, CEO of Amsterdam-based Endeavour Enterprises NV and a non-executive director of Nanette Real Estate Group NV. “The financial crisis had hit, so it was also a time when the role of non-execs had changed, because regulators were now expecting non-execs to check everything a company is doing.”
The changing, hefty responsibility of being a non-executive director (NED) was a key reason why Mr. Dekel, 46, enrolled in the just-launched Financial Times Non-Executive Director Certificate, a six-month course designed for current and aspirant NEDs.
Key distinction between power and influence
Based on the U.K. Corporate Governance Code, the new certificate is accredited by Edexcel, Pearson’s awarding body, and is aimed at ensuring that NEDs understand the unique nature and responsibilities of a role that entails a mixture of support and scepticism, diplomacy and toughness, independence and collegial persuasion.
Boardrooms run best, the course emphasizes, when NEDs forensically probe rather than divisively grate.
“The fundamental job of non-executive directors is to see that a company is properly run, but not to run it,” course director Murray Steele tells the 40 students in the first course, who gathered at the FT building in London. “How do you make that transition from being a CEO where you have power and influence to an NED where you only have influence?”
In other words, he suggests, NEDs need to leave some – but not all – of their ego at the boardroom door.
Modules range from audit to risk management
The course covers five modules: being an effective NED; duties and liabilities; board structure and performance; audit and financial reporting; and risk management and internal control. The cost for the course, which includes 1,000 pages of online material, two-and-a-half days of mandatory workshops, and a three-hour exam in March, is £3,950 plus tax.
The first course’s students range from bankers to entrepreneurs, consultants to executive recruiters. Some have extensive NED experience, while others view the course as preparation for NED roles in the future.
“The fact that it’s an accredited course was a real attraction,” says Mike Foy, who retired earlier this year as assistant chief executive of St. Helens Council, a local government body near Liverpool in northern England, and now seeks to use his experience in such areas as housing on private sector boards.
“As a consultant, I present facts in a clear and concise manner so a client can make decisions,” says Vanessa Gunner, managing director of gg Management Consulting Ltd. in London. “It’s similar to what an NED does.”
The inaugural session of the course underlined that proper boardroom behaviour depends on the context, with an eye always on the bottom line – results.
“Behaviour can be learned, and we hope that you’ll think when you’re in a boardroom, ‘How can I manage my behaviour including constructive challenge?’” says the online tutor for the course, Rob Dransfield, a senior lecturer in business and education at Nottingham Trent University. “What we want is appropriate outcomes in boardroom situations.”
Most NEDs lack formal training
The course was developed following a survey among the 1,350 members of the FT Non-Executive Directors Club, which found that 72% of those responding said they never received formal training to be an NED.
“We knew there was interest when we included a brief mention in an FT newsletter to subscribers, and had 50 inquiries the next morning,” says Steve Playford, managing director of recruitment solutions at the FT.
The maximum 40 places for the first session sold out in three weeks, so to meet demand a second session was added for 2011 and the number of sessions in 2012 was increased to five from three.
In devising the course, Edexcel looked at what non-executives should achieve from the course, including knowledge of company accounts and softer boardroom skills, and how they should be assessed, through a combination of exam and case study. The content was then loaded into an eLearning format through eCollege, part of Pearson’s Learning Studio business, and self-assessment tests were included at the end of each module so students could assess their knowledge.
Content and technology from Pearson’s education business
For Pearson, the FT’s use of content and technology from the company’s education business in order to serve business professionals illustrates how Pearson’s different businesses complement and strengthen each other.
In a similar collaborative vein, the FT recently launched a republishing database with more than 100,000 FT articles, along with guidelines to make it easy for Pearson’s educational publishing business to use FT articles.
The new FT certificate is exciting because it unites the “assessment and pedagogical capabilities” of Pearson’s education business with the FT’s brand and financial expertise, says Rod Smith, managing director of vocational and applied learning at Edexcel.
In so doing, he says, “We have created something distinctive and compelling in the corporate development market that we could not have done individually.”