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In the sunset of their careers, many Executive Leaders seek to line themselves up for a "couple of Non-Executive roles”. Imagining a limited involvement but at the highest level, without the daily grind of delivering results, they look forward to a contribution in which their wisdom is applauded and some remuneration comes their way. More recently younger executives have made the lifestyle choice of quitting their full-time jobs and seeking a portfolio career to include some NED appointments. All very cosy - but is it worth it for all concerned? NEDs were introduced to UK boardrooms to provide impartial and independent oversight, offer strategic guidance, and act as a check on executive management. The Cadbury Report (1992) and subsequent governance reforms reinforced the importance of NEDs, emphasizing their role in mitigating corporate scandals and enhancing shareholder confidence. So has this worked? Despite these lofty expectations, NEDs have repeatedly failed to prevent high-profile corporate disasters. Cases such as Carillion, Thomas Cook, and Patisserie Valerie underscore the limitations of NEDs in the UK. In these instances, the directors appeared either ignorant of the issues or unable to prevent the car crash. The problem lies in the inherent conflict between NEDs' need for independence and the practical realities of how they are used. Their part-time status and multiple commitments limit their ability to fully engage in their duties. Even more practically, It might be asked whether the regular board meetings they attend are the best vehicle for their involvement. Too many I have observed have been strangely structured, veering wildly between vague strategic debate and micro-detail discussion of operational matters. Outside of the FTSE 100, NEDs seem, as much as anything, a source of cheap consultancy. They are recruited as much as anything for their functional experience rather than a genuine appreciation of good strategy development, decision making or execution. Someone is much more likely to be there because they were a brand or finance leader than because they had overseen a significant culture change initiative or have a track record of brilliant problem-solving and innovation. Appointed by the very executives they are meant to oversee, NEDs often face subtle pressures to conform, compromising their impartiality. Moreover, again possibly more outside of the FTSE 100 and 350 - there is still a lack of diversity among NEDs, with appointments often mirroring the 'old boys' club' syndrome. This homogeneity stifles fresh perspectives and perpetuates groupthink. There seems to be little institutional ongoing monitoring of the effectiveness of NEDs and a willingness to question their value. It might be time to rethink all of this. The wisdom and independence of non-employees are potentially a massive resource for an organisation. But do we know how to use it well? Perhaps there is a need to more clearly differentiate the advisory from the supervisory aspects of the role. It is also high time that organizations reached beyond the biographical cv for their NED recruitment. The fact that someone once worked for KPMG, Asda, or Coca-Cola is neither a necessary nor sufficient qualification for the role
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