How to incorporate financial independence into a non-executive director portfolio
Transitioning from an executive career to a portfolio of non-executive director roles is an exciting opportunity for senior professionals, but it also presents several challenges. One of the most significant shifts is moving from a steady, predictable pay check to a more variable income stream.
In many cases, building a paid NED portfolio takes time. Aspiring NEDs frequently start with non-remunerated roles, such as charity trusteeships or school governorships. While these positions offer valuable experience and networking opportunities, they do not always contribute to financial stability. Therefore, careful planning is required to ensure financial security during this career transition.
The relationship between non-executive director pay and NED independence
The level of financial stability required when transitioning into a NED career will depend on various factors, such as your career stage, your reasons for pursuing board roles, and the other income streams within your portfolio. For some, joining a board is a way to give back to society or fulfill a personal passion. For others, it is a part of a career strategy that may include a level of income generation. Understanding your motivations is crucial for designing a NED portfolio that aligns with your financial and professional goals.
As a non-executive director, the organisations you serve may vary widely in terms of financial health and compensation. Some boards, particularly those in early growth stages, may offer limited non-executive director pay. Others may involve scenarios where difficult decisions—such as resigning from the board—are required. In these cases, financial independence becomes a factor in safeguarding your ability to make unbiased decisions.
Given typical remuneration of non-executive director role, it is important for individual to plan accordingly. This will ensure that decisions are always based on what is right for the organisation, rather than being influenced by personal financial considerations.
– Elise Perraud, NEDonBoard COO
Structuring a NED Portfolio
A strategy for success as a non-executive director is to carefully consider the mix of boards you serve on—balancing both paid and non-paid roles to ensure financial resilience while gaining experience across sectors.
Building a diversified NED portfolio helps mitigate the financial risks associated with relying on a single source of income. Some roles, particularly those in the charitable or public sectors, may not provide financial compensation, but they offer unique opportunities for networking, skill development, and contribution to society. On the other hand, remunerated NED roles in established or growth-stage companies can offer financial stability while allowing you to leverage your corporate expertise.
By approaching the development of your NED portfolio strategically, you can navigate the transition with confidence. It remains important to acknowledge that the process to secure paid non-executive director roles is competitive and that you may have to start your non-executive career with pro-bono positions.
Key takeaways as you consider a transition
- Transitioning to variable non-executive director pay requires thoughtful planning.
- Whether your board roles are paid or pro-bono, ensure you have a financial strategy.
- Structure your NED portfolio with a mix of remunerated and non-remunerated roles to support both financial and professional goals.
- Financial independence helps maintain objectivity and integrity in board decisions.
To go further
To secure a first board role and fast track your journey to the boardroom, visit the NED Accelerator® Programme, a dedicated non-executive director training for first-time non-executive directors.
