Comments are closed. The risks associated with being an non-executive director (NED) have alwaysbeen there, but have become more obvious over the past few months. The HiggsReport into corporate governance will undoubtedly support the DTI’s intentionof regulating the role and responsibilities of NEDs still further. Coupled withthe lobby from institutional shareholders, individuals may reconsider whetherthe NED role is worth the time and effort demanded to add any real value toquoted companies. The Higgs Report is far too long, but the key principles are a logical nextstep and outline what is already best practice on many boards in the UK. Itwill be interesting to see if the final code of conduct will be flexible enoughto accommodate the variations in size and complexity of boards and if it willbe pragmatic enough in its transitional arrangements to encourage long-termcompliance. All the boards I sit on have already started to review thecomposition and terms of reference of their various committees in the light ofthe Higgs Report. The external perspective, guidance and coaching provided by NEDs issignificant and must be maintained, with much greater attention paid to properjob specification, induction, regular training and the time required tounderstand operations, in addition to attending formal board meetings. Discussions about commensurate compensation should then reflect theseresponsibilities and the market value that individuals bring with theirexperience and expertise. Succession planning and performance management shouldbe as much a part of an NED appointment as they are with executive recruitment.The pool from which NEDs are selected must be widened to embrace those withextensive experience of running smaller businesses or other unlistedorganisations and to introduce diversity into the UK boardrooms, which continueto be largely populated by white males. In my early portfolio days, I took on a NED position for very littlefinancial reward as a way of broadening my scope and experience. Today, I wouldnot be prepared to commit the time and effort required for such a small fee,given the growing responsibilities of the role. Remuneration will have toincrease in both the private and public sector if boards are to benefit fromthe best candidates. Indeed, headhunters tell me that it is already becomingmore difficult to attract NEDs. Like employment legislation, this is a great opportunity for HRprofessionals to initiate change. This is the golden moment to review the wholeprocess of director succession, selection, development, performance managementand remuneration – boardroom practices from which HR has frequently beenexcluded in the past. By Lesley James, Former CIPD vice-president and currently a non-executivedirector at Selfridges Higgs presents HR with a golden opportunityOn 22 Apr 2003 in Personnel Today Previous Article Next Article Related posts:No related photos.