The old boy network is alive and well

Nov 23 2004 by Brian Amble Print This Article

The old boy network remains the key to landing a non-executive directorship. New research has revealed that the majority of non-execs still secure their boardroom place through business associates and personal contacts.

Research by and Ernst & Young has revealed that almost two-thirds (64 per cent) of non-execs found their most recent position through 'traditional' channels.

The findings come more than a year after the Higgs Review called for the pool of candidates to be widened.

In his report, Derek Higgs found that almost half of non-executives were recruited through personal contacts or friendships. He was concerned that it could lead to an “overly familiar atmosphere in the boardroom”.

Betty Thayer, chief executive of, said: “The Higgs Review challenged UK boardrooms to widen their selection process and be more open to diverse candidates. It’s disappointing that there are few signs of them being adventurous in their candidate-search efforts.”

The research is derived from two independent studies commissioned at Bath and Oxford universities. It focused on FTSE 350 non-execs and looked at the impact non-executive directors have on business performance.

Its findings echo a study carried out for headhunters Odgers Ray & Berndtson earlier this year which found that one in three firms use nominations from the board to find non-execs while more than four out of 10 use a mix of informal networking and 'the personal approach'.

One respondent said that while Higgs had led to greater recognition and appreciation of the non-executive role, “there has been little movement towards more open competition and little evidence of new blood being sought”.

Another key finding is that how long a person has been a non-executive appears to make little difference to their perceived impact on business performance. This suggests that when selecting new board members the individual’s skill set is more important than prior experience as a non-exec.

The research team also found that any move to tighten corporate governance regulation is likely to scare off the best non-executives. Most were seriously concerned about the amount of time they spend dealing with red tape and they worry that future trends will only accentuate the problem.

It also emerged that risk to reputation is the key reason why directors would refuse to take on a non-exec position.

Gerald Russell, senior partner at Ernst & Young, said: “If the government is intent on expanding regulation - and prosecution – it is highly likely that many good non-executives will opt out of listed company roles.”

Betty Thayer added: “The best non-execs are the ones with most to lose. Our survey shows that these skilled contributors to our most important companies and the UK economy are not prepared to put their reputation on the line if there is tougher boardroom regulation.”