NEDs left to fend for themselves

Nov 11 2005 by Nic Paton Print This Article

Boardrooms are not paying enough attention to helping new non-executive directors get up to speed and prepare for their role, despite the fact the position is becoming more onerous and time-consuming, new research has suggested.

The study by board performance specialists Whitehead Mann has raised serious concerns about the level of support and coaching non-executive directors are getting in the increasingly onerous 'post-Higgs' corporate governance climate.

The analysis from 124 directors representing some 552 boards found that fewer than one in three board directors (28 per cent) were able to say whether or not they had helped their own non-execs to prepare for the role.

The research also suggested there has been a significant increase in the time taken to do the job, with non-executive chairmen in particular, once up to speed, spending as much as two to three days a week on their role (averaging almost 24 days a year).

The study also looked at what made for a bad or weak non-executive director.

More than four out of ten of those polled said "a passenger" NED who lacked a real interest in the business could prove a problem for the board.

But there were also a range of crucial "X factor" characteristics that marked out the good NED from the bad or merely indifferent, Whitehead Mann suggested.

These included being "big picture thinkers", or those who could offer exceptional value based on a wide breadth of business experience, which was valued by almost six out of 10.

As one director interviewed put it: "Sector knowledge is not important but a thorough understanding of the business environment faced by the company is vital."

Regardless of how successful an NED's own career had been, more than half of the directors polled said that NEDs needed to leave their ego at the door and ensure that they did not usurp the chief executive role.

"They know how to put pressure on people but do it nicely. As a non-exec you have to bury your ego," added another director questioned.

The best NEDs needed have the courage to ask difficult questions, to probe and to stimulate debate and change, said 44 per cent.

"You have to be straight, call a spade a spade and never be worried if you have to step away from the Board. That needs a lot of guts", observed a third director.

Report author Susan Bloch, a partner at Whitehead Mann, said NEDs needed to be "nothing less than exceptional" if their advice was to be heeded and they were to add value.

"This wisdom and flair for conceptual thinking, combined with a genuine interest in the business, will help them to successfully balance advice and support with the confidence to challenge and question Ė all without undermining the executive management," she added.