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Appointing a great Non-Executive Director
An article by Warren Partners|
Contact: Katie Wise Date: 19 Jan 2012 |
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Times have changed since the non executive directors turned up once a month for a cozy meeting, a good lunch and then disappeared to the golf course. The performance of board members is under greater scrutiny than ever before and it’s not just the updated UK Corporate Governance Code which reflects an increasing emphasis on the ‘how’ rather than just the ‘what’ regarding directors’ performance in their role. Working with a third of the building societies, Warren Partners is becoming increasingly involved in recruiting non-executive directors for their boards and has drawn a few conclusions for boards to consider when making these appointments.
- Balance within the team – gender diversity is high on the agenda at the moment but a diverse team in its broadest sense is a common feature of effective boards, which means considering how you broaden your traditional talent pools; to misquote Mark Twain, if you look where you’ve always looked, you’ll get what you always got.
- Breadth of experience – great NEDs must certainly be financially smart, with a good understanding of business processes and models but we are concerned that the demands on building society NEDs will lead to a narrowing of the skills and experience on boards to financial people from a financial services background - great NEDs need to have broad experience to be able to assess and comment on a full range of commercial and governance issues.
- Time – building society boards are usually requiring a two to three day commitment per month for their NEDs as opposed to a day a month of just a few years ago, and there is pressure on remcos to review the remuneration of NEDs to reflect this. But NEDs also need to have time to prepare thoroughly (the board packs tend to be heavier than a telephone directory landing on your mat and I have been in meetings where NEDs have opened the pack in the meeting, and their contributions showed it) and be available by phone for the executive – this commitment is becoming increasingly difficult for full-time executives.
- Independent judgement – we’re looking for candidates with the self-confidence to challenge constructively, recognising that the executives are usually trying to do a good job, but prepared to ask tough questions and disagree if necessary - there’s been much press speculation in recent years as to ‘what if’ NEDs of financial institutions had been less prepared to be fobbed off with placatory answers - good boards are not always comfortable places.
- Behaviours – we’re looking for team players with small egos, good listeners who can help create a culture conducive to good decision making; men and women who seek to be great in this role just as they will have sought to be in their executive role, who seek feedback to improve as an individual and collectively to ensure they’re part of an effective board.
- Values – it is the board which sets the Society's values and standards and we have seen many successful appointments as building society NEDs from plc world, but where candidates struggle to support mutual values once these have been understood, there is an inherent conflict.
Great boards are created by good chairmen but a key part of their role is making good appointments to the board. Working with the best chairmen to make NED appointments, we’ve found they follow these broad guidelines.
For more information about Warren Partners please visit www.warrenpartners.co.uk.
