News
What it means to be a non-executive director and the importance of diversity
Whether on the board of a publically quoted company, charity or other non for profit body, the role of the non-executive director is increasingly challenging and demanding.
Since the financial crisis all boards are under greater scrutiny from shareholders, regulators and the media. Taking on a non-executive role requires more time and commitment; getting to know the sector, the organisation and its people sufficiently to make a broad and informed contribution across a range of issues. Working harder than ever, the current environment is causing both experienced and newly appointed non-executives to think hard about the number of appointments they hold with many reducing their portfolio.
Working alongside the executive management team the role of any independent non-executive is to ensure effective Corporate Governance and corporate disciplines are employed. More widely they should add value to decisions, bring a fresh perspective to strategic debate, question robustly and act as a ‘critical friend’ to the executive team. Perhaps most importantly, the ability to stand back and retain independent judgement at all times remains at the heart of the role.
A copy of the Corporate Governance Code, revised in June 2010 is available as a PDF below.
The importance of a diverse board has received much publicity with the emphasis on increasing the number of women. More broadly it is important to widen the pool of available non-executive candidates, female and male, and think beyond the existing pool of NEDs who already sit on the boards of several companies. It is incumbent on search consultants to break this pattern and introduce outstanding candidates with relevant executive experience who will make a strong contribution as part of a balanced board. Chairman should be encouraged to insist on new talent as part of any search rather than allow the executive search firm to ‘get away with’ recycling their existing contacts. That is not to deny the importance of experienced non-executives, merely to encourage a wider candidate pool and broader outlook in constructing a strong and effective board.
To quote from the Davies Report – Women on Boards:
“Corporate boards perform better when they include the best people who come from a range of perspectives and backgrounds.
The boardroom is where strategic decisions are made, governance applied and risk overseen. It is therefore imperative that boards are made up of competent high calibre individuals who together offer a mix of skills, experiences and backgrounds. Board appointments must always be made on merit, with the best qualified person getting the job. But, given the long record of women achieving the highest qualifications and leadership positions in many walks of life, the poor representation of women on boards, relative to their male counterparts, has raised questions about whether board recruitment is in practice based on skills, experience and performance”.
A full copy of the Davies Report can be accessed through the link below.
At The Orcid Partnership I lead our Board Practice. We encourage clients wherever possible to consider a diverse shortlist. We offer tailored support and advice to those seeking to build a non-executive portfolio or take on their first appointment.
If you are chairing a board or nominations committee and would like to discuss how we can help build a more effective board or if you are a candidate looking for advice or support please contact Judy Atchison - 01904 481186 or Susan Ryder - 01423 568432
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Davies Report: Women on Boards (February 2011) | 2Mb |
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Corporate Governance Code (Revised in June 2010) | 160Kb |
Posted 24.01.2012