A recent report has recommended that at least half of the board of directors should be independent non-executives. Should IT directors offer their services?
The Higgs report on the role of directors, published in January, turned the spotlight on non-executive members of the board. But is such a post a good career move for IT directors or just an unhelpful distraction?
There are thought to be less than 50 IT directors currently serving in non-executive roles on FTSE 100 companies but the number is growing.
The money can be tempting. Remuneration can be between £10,000 and £40,000 a year, says JustinGilbert,who head-hunts peoplefor non-executive posts for Odgers. It depends on the company's size, whether it is a not-for-profit or public sector organisation and on how much time you put in. Most posts require at least one day a month attending board meetings.
In an FTSE 250 company expect about £23,000 a year, and in a FTSE 100 firm about £44,000 a year, says John Weston, director of development at the Institute of Directors.
But it is important to see beyond the pound signs and understand that there are risks - financial and career-related - as well as rewards, for IT managers taking on non-executive roles.
There are strong arguments in favour of IT directors serving in non-executive roles - both for their own careers and for the reputation of corporate IT overall.
Few IT directors are full board members, points out Brinley Platt of the Impact Programme, a personal development network for IT executives. This is either because the chief executive does not recognise how strategically critical IT is, or because his IT director is not main board calibre, Platt argues. Serving as a non-executive director can act as an invaluable training ground to prepare an IT director to join the board of his own company.
"It gives you valuable exposure," says Weston.
This view is echoed by former IT directors turned non-executive directors such as Chris Montagnon, former chief information officer at Sainsbury's and a non-executive director at IT company Novasoft. He stresses, however, that experience of being an IT director does not necessarily mean you will be a good non-executive director. The non-executive role requires more general business knowledge.
"Being a good CIO in no way automatically qualifies you for a non-exec role," he points out. "It's about how a business operates and how you can help it become more profitable."
Being a non-executive director does not just open your own eyes, it opens those of your own company's senior management too. There can be, says Platt, a "marked contrast" in the way you are treated once you are known to be a non-executive director with general business experience - not just a technology expert.
Understanding the competitive edge IT can give an organisation is something that an IT turned non-executive director should bring to board meetings. The Higgs report is clear that it wants to see greater professionalisation of the non-executive role, says Gilbert, so a non-executive director with IT expertise should "offer advice" on IT matters.
Such a director can even mentor the chief executive on the strategic importance of IT in ways perhaps still blocked at their own company.
Because IT disasters can be so damaging in terms of costs and reputation, employing a non-executive director whose day job is in IT can be a very useful safeguard. As an outsider, a such a director would find it easier to recommend pulling the plug on a costly runaway project, or at least focus the chief executive's attention on it by asking awkward questions.
"If an IT project is going wrong you can ask whether the board should consider cancelling it which, if it is the finance director's baby, might be hard for them to consider," says Montagnon.
But an IT/non-executive director should not get involved in too great a level of IT detail. "You're not there to check the functionality of their systems, but to check that they have covered the issue of the functionality of their systems," he argues.
The mindset of an IT-trained person is likely to be highly analytical, capable of cutting through waffle and the board's vested fiefdoms to do what non-executive directors are primarily expected to do, which is, says Weston, "to ask the awkward questions". The Higgs report said they should be highly independent-minded and ready to speak up.
But the risks are just as tangible. Just like a full-time director, a non-exec has legal liabilities that extend to imprisonment.
"I held back from being a non-exec at first. I was concerned about putting myself in a vulnerable position," admits Montagnon.
You should certainly carry out your own personal due diligence process, he urges.
Weston agrees, pointing out that the responsibilities may be the same as a full-time director but access to the information required to assess your risks may be more difficult to ascertain. You will need to be sure you are getting all the data necessary from the company, and understand what shareholder relations are like.
"You may not be told all the truth by the board," warns Montagnon. "You need to go and see what is happening in the field."
It is better, says Weston, to take a lower-paid non-executive role at a smaller company, than risk loss of personal reputation by association with a badly-performing company.
You also have to ensure that you are not risking your own job. Although CEOs should encourage their senior staff to take non-executive posts, says Gilbert, the job involves a definite time commitment - particularly to meet Higgs' more stringent requirements - which a busy IT director may find hard to meet.
"When I was CIO I had no time to sleep, let alone take on non-exec roles," recalls Montagnon.
But making adequate commitment to a non-executive directorship is vital, or you might as well not take it up.
"Whatever you do," says Montagnon, "you have to take it seriously. You can't dabble."
How to get a non-executive position
With the Higgs report, commissioned by the Department of Trade & Industry, calling for fresh talent and less pluralism, there has never been a better time to want to be a non-executive director. But how do you get your name on the shortlist?
Tell the head-hunters
"Make the head-hunters aware of your interest in non-executive directors, get on their radar screens," suggests head-hunter Justin Gilbert of Odgers. "I'd look for someone who was commercially oriented, with business acumen and a breadth of experience. International experience is a massive advantage."
The Institute of Directors runs courses on non-executive directorships for managers of sufficient seniority.
Mug up on Higgs
The Higgs report spells out the changes likely to happen to non-executive directorships, from remuneration to responsibilities. A guide to Higgs is available from email@example.com
Cast your net widely
When you are considering a non-executive directorship of a company, the critical factor is size. They will be looking at the size of the company you work for as IT director. Achieving a non-executive post at an FTSE 100 company will be almost impossible but don't reject a non-exec role at a small company that may pay as little as £5,000 a year. The experience of business management will still be valid and can be a stepping stone upwards. IT companies are often keen to employ IT directors as non-execs, but check there is no potential conflict of interest with the day job.
This was first published in April 2003