NED

Non Executive Director Part 2

Non Executive Director Part 2 – Challenging and Supportive

The outstanding Non Executive Director balance their strong view points with a supportive style in the board-room. They are able to probe and challenge the executive team on thorny subjects without creating conflict. While asking the difficult questions is the primary task, next on the list is offering support and guidance on problematic issues. Maintaining a constructive and diplomatic style is important.

“Good NEDs have the ability to stand up to the executive and demonstrate their role, which is to hold the executive to account for managing the delivery of the business.”

Sir John Armitt, Chairman, olympic delivery authority

“NEDs need to bring a truly independent perspective, champion their area of expertise but not hide behind it.”

Cristina Stenbeck, Chairman, Kinnevik

“NEDs need impeccable integrity and to focus only on what’s right for the business and stakeholders.”

Sir Peter Gershon, Chairman, National Grid and Tate & lyle

Effective challenge was a dominant theme in our interviews, as it has been in political and regulatory circles. As the Walker Review made clear, in the run-up to the?financial crisis, the failure of the NEDs to challenge the ?executives on substantive? issues was a serious shortcoming.

The Financial Services Authority echoed this complaint, and the then CEO Hector Sants has said, “The structure of governance in financial companies does not need radical overhaul. The attitudes and competence of the individuals who conduct that governance does. In particular we need to create governance that fosters challenge without creating conflict.”

Challenging the executive team, however, requires one to build trusting relationships; they are two sides of the same coin.

It is not just different language or conversational style that is needed. Board debates and processes will have to evolve to address this need. Financial services companies may have been pushed to the forefront on this issue, but it is clear that simple nodding in agreement is not an option for NEDs on any board.

Bob Evans – Your Ideal Business Partner

Research for this article came from the Korn/Ferry Institute

About The Korn/Ferry Institute

The Korn/Ferry Institute generates forward-thinking research and viewpoints that illuminate how talent advances business strategy. Since its founding in 2008, the institute has published scores of articles, studies and books that explore global best practices in organisational leadership and human capital development.www.kornferry.com Non Executive Director

CEO

Non Executive Director Part 1

Introduction

This is a ten part series on what makes an exceptional independent non executive director. The ten parts are:

  1. Independence, courage and integrity
  2. Challenging but supportive
  3. Thoughtful communication
  4. Breadth of experience
  5. Deep understanding of the business
  6. Time commitment
  7. Feedback
  8. Risk
  9. Finance
  10. Technology

Part 1 – Independence, courage and integrity

The primary purpose of a NED is to bring objective scrutiny on behalf of the shareholders.

The importance of true independence of thought cannot be overstated. The best NEDs are reflective and thoughtful in their approach, and ask the tough questions and offer considered advice based on sound judgement.

Successful NEDs must maintain integrity and have strong principles. They insist that the right thing is done for the company. They must have sufficient wisdom to perceive whether a course of action is morally dubious or financially risky. If so they should exhibit the courage to disagree, and if the problems are systemic, agree to leave.

By Bob Evans – Your Ideal Business Partner

Research for this article came from the Korn/Ferry Institute This is a ten part series on what makes an exceptional independent non executive director and non executive chairman

About The Korn/Ferry Institute

The Korn/Ferry Institute generates forward-thinking research and viewpoints that illuminate how talent advances business strategy. Since its founding in 2008, the institute has published scores of articles, studies and books that explore global best practices in organisational leadership and human capital development.www.kornferry.com