A Shift in the NED ‘Demand’
Over the past decade, the role of non-executive directors (NEDs) has undergone a remarkable transformation. Today, the demands placed upon NEDs reflect the significant challenges faced by organisations worldwide be they geopolitical, economic, environmental, technological, reputational, regulatory and so on, not to mention the wider stakeholder regard that has come to the fore.
In our world of non-executive search, the Board Practice is seeing shifts in the briefs we're receiving from clients:
Skills and Experience Sought: specific skills or experience, such as technology expertise, international exposure, or customer service acumen are frequently requested attributes in NED searches. However, boards increasingly seek a “T-shaped” individual who can contribute with a breadth of knowledge and not just as a subject matter expert. Not to mention the capability to chair committees or act as a designated NED for the workforce for example. Perhaps not even T-shaped but π-shaped?
Diversity: Boards are still very focused on enhancing diversity, but there are signs that this is increasingly moving beyond just gender (although still a focus), with search requirements now extending to ethnic, neuro-, age and socio-economic diversity. It also used to be more challenging for candidates to obtain their first NED role but increasingly we see requests for ‘currency’ – individuals either still in their executive career or recently stepped off.
The Performance/Reward Perspective: the days of biscuit-crunchers are over… boards are more focused on the value-add that individual NEDs should bring and whether the board overall is high-performing. On the flip side, NEDs are spending far more time on their roles and sometimes express that the financial rewards do not match the time spent. For example, the proliferation of committee responsibilities and new roles such as the Designated NED for Workforce Engagement and Consumer Duty Champion have increased the demands on NED time (and skillset required).
A Green Agenda
As we explored at an event earlier this year with BDO LLP and Women on Boards (A Green Agenda: Integrating Sustainability into Board Decision-Making), as organisations adapt to the climate change context, so must boards, but how they respond varies: an ‘ESG NED’ (but see the T-shaped leader comment above), an ESG committee, embedding ESG into another committee’s work (e.g. the Audit Committee), separating out the E, S and G… no one approach suits all. I recently came across a Chair whose company looks at climate change issues in their Risk, Operational and Resilience committee. Nomenclature is also important: ESG, sustainability or another hat?
Lessons from Poor Practice
As stewards of corporate governance, Boards need to recognise the importance of learning from past mistakes. The recent Post Office Horizon scandal serves as a stark reminder that boards must remain vigilant, continuously improving their practices, and ensuring robust oversight by asking for the right information (not to mention setting an appropriate culture and holding executives to account). Peter van Veen, Director of Corporate Governance & Stewardship at the ICAEW, sets out his thoughts on page 5 of this newsletter on what boards need to be aware of where there is a business-critical risk such as a legacy IT system, which includes a link to another useful read: “The Horizon scandal: seven lessons for boards.”
Bridging Generations
Whether causation or correlation, the evidence shows that the boardrooms of today and tomorrow will benefit from being ever more diverse and inclusive, drawing from a rich tapestry of experiences and perspectives, including intergenerational voices. Younger directors often bring fresh ideas, digital fluency, and a keen understanding of emerging trends. By fostering dialogue across generations, boardrooms may be able to create more resilient and forward-thinking strategies. There are of course many ways to achieve this voice in the boardroom: Patrick Dunne OBE, Chair Royal Voluntary Service, Visiting Professor of Cranfield and author of the award winning book “Boards” has written an article on page 6 about so called ‘NexGen’ or ‘Horizon Boards’ with some practical tips for how to set one up.