Looming crisis over lack of quality non-execs

Jan 23 2006 by Brian Amble Print This Article

Britain's blue-chip companies have been warned that they face a looming crisis over finding and recruiting top-quality FTSE non-executive directors.

A study by Ernst & Young and jobsite exec-appointments.com has suggested that the changing demographics of the UK means that fewer younger non-execs are coming through to replace the current generation of NEDs.

The survey of 50 FTSE 350 non-execs aged 50 and under found that talent management and succession planning were key current concerns, and were predicted to get worse unless cleverer recruitment approaches were adopted.

One non-exec told Ernst & Young: "The challenge to find excellent non-execs is real and will get worse over the next five years, particularly as the pool of existing FTSE non-executives is gradually withdrawing from their appointments or retiring."

The study itself added: "The scarcity of talent will mean that innovative management development programmes and creative search mechanisms will be required to deliver the calibre and quantity of candidates to lead the boards of the future."

Betty Thayer, chief executive of exec-appointments.com, said: "The people in our survey will be the FTSE chairs of the future.

"The fact that they can see the current talent pool draining away is a major concern. They are acutely aware that boards will have to be imaginative in their approach if they are to develop the key people they need to sit effectively on their boards," she warned.

The study recommended companies tackled the talent crisis by identifying the "stars" below executive level, developing those with potential to help them succeed and stay, not rushing to source talent externally and refusing to accept mediocre performance at any level.

The research also uncovered a consistent undercurrent of anxiety over the low priority given to strategic and scenario planning.

"The overarching picture is that there is a real and worrying call for better board strategies, backed by rigorous scenario and contingency planning," the report warned.

"Few are satisfied that their board process delivers the quality of forward-looking plans that will enable them to deliver expected results," it added.

Thayer argued many non-execs were not comfortable that they were sufficiently engaged in strategy, that development strategies were not being developed which explored multiple scenarios and not enough time was being given to debate and refine proposed strategies.

"It is very worrying that the non-execs we've spoken to can't see their companies engaged in developing clear strategic policies," she concluded.