Being a non-executive director (NED) in the public sector can vary significantly, given the wide range of organisations (providing a hugely diverse range of services) on which NEDs serve.
In Scotland alone there are 222 public bodies, including 72 central government and Scottish Parliament bodies (including police, fire and Scottish Water), 32 local councils, 23 NHS bodies, 30 health integration boards, 43 other joint boards and committees, 21 further education colleges, and (currently) one European Agricultural Fund.
Public bodies do not follow the legal structures of public or private limited companies, but most engage the support of non-executive members in addition to elected representatives and public servants. Private sector experience and professional expertise are often sought-after qualities when recruiting NEDs.
Heather Logan ACA has a background in general management in financial services and has gained a reputation for being a troubleshooter. She was first approached to take on a non-executive position in Scottish government and since then has taken on a series of public sector non-executive appointments – often involving serving on audit committees.
She is now nearing the end of her second three-year term as a non-executive on the Board of Audit Scotland, sitting on the Remuneration Committee and chairing the Audit Committee.
Prior to this role, she served on the Audit & Advisory Committee of the Scottish Public Services Ombudsman for four years, and before that for four years on the Strategic Board of the Scottish Government.
Three very different organisations, all facing unique challenges and all with very different purposes. A ‘one-size fits all’ NED is not a proposition that lends itself to the public sector. A variety of skills, experiences and attributes that are fit for each specific public body is necessary to ensure the public body benefits from the individual appointed.
The appointment process itself can be different from its private sector counterpart. There are many different stakeholders involved in public body appointments and transparency of process is absolutely paramount. These appointments rely heavily on the competencies that can be shown by prospective appointees so it is vitally important that an applicant does their homework on what the organisation needs from them and can articulate that to stakeholders who may not have realised it to be the case!
A blend of skills and experience
So what skills are required of a non-executive in the public sector? Logan says the role of the non-executive director is to act as the critical friend – not taking responsibility for setting the strategy but questioning and checking that the supporting mechanisms have been properly followed. It’s being unafraid of asking the awkward or silly questions. These questions are vital to getting to the heart of what the entity is doing and why.
That means the skills or attributes required will include application and diligence (probing for total understanding, analysing issues and determining whether all solutions have been properly explored), tact (being able to influence and persuade), leadership and people management ability (recognising where strengths and weaknesses lie in the personnel base) and good old common sense.
ICAEW training equips qualified accountants to bring financial expertise to the party but the individual’s practical experience in the wider world and their personal characteristics should not be underestimated in assisting public sector bodies. Being able to metaphorically join the dots and consider all you’ve absorbed on a public body from the point of induction allows you to assist the organisation holistically rather than just being on the receiving end of a series of reports on different topics. Your performance should mean that you are constantly mentoring staff and colleagues, for instance, encouraging them to see risk management processes and complaints as positive opportunities to improve the successful outcomes of the organisation.
The public sector needs non-executives with a variety of experiences and skills achieved outside the public sector but that can still be applied within it. This is important in delivering high-quality services and protecting the public purse. Although there has been concern regarding the suitability of some recent high-profile central government non-executive director appointments, in practice most public sector NEDs are appointed based on a rigorous interview process.
In a series of webinars and articles, ICAEW will be exploring the role of a NED in the public sector and demystifying the appointment process. We will also be talking to public sector NEDs about the challenges currently being faced. There will be an opportunity to hear from a permanent secretary about what value he thinks NEDs bring to a board and about why public sector boards need private sector perspectives. How a NED fits into the overall governance structure for the public sector will also be explored.
Finally, it is not a one-way street to the public sector’s advantage. As Heather Logan has experienced, the learning opportunities for the NED in any public body are plentiful and can often translate well back into the private sector.
For information, key resources and guidance on the issues affecting practitioners working in and advising the public sector, join the Public Sector Community for free.
ICAEW is running a series of digital events looking at the role of NEDs in the public sector, which began on 24 September looking at how to become a NED. Click here for more information.
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