Boardrooms failing to break with tradition over non-exec recruits

The majority of non-executives continue to secure their boardroom place through business associates and personal contacts, new research has revealed.

The findings show 64 per cent of non-execs found their most recent position through these traditional channels.

They come more than a year after the Higgs Review called for the pool of candidates to be widened. In his survey, Derek Higgs found that almost half of non-executives were recruited through personal contacts or friendships. He was concerned that it could lead to an ìoverly familiar atmosphere in the boardroomî.

Betty Thayer, chief executive of exec-appointments.com who led the latest research, said: ìThe Higgs Review challenged UK boardrooms to widen their selection process and be more open to diverse candidates. Itís disappointing that there are few signs of them being adventurous in their candidate-search efforts.î

The research, in conjunction with Ernst & Young, is derived from two independent studies commissioned at Bath and Oxford universities. It focused on FTSE 350 non-execs and looked at the impact non-executive directors have on business performance. (See notes for research details.)

One respondent said that while Higgs had led to greater recognition and appreciation of the non-executive role, ìthere has been little movement towards more open competition and little evidence of new blood being soughtî.

Another key finding is that how long a person has been a non-executive appears to make little difference to their perceived impact on business performance. This suggests that when selecting new board members the individualís skill set is more important than prior experience as a non-exec.

The research team also found that any move to tighten corporate governance regulation is likely to scare off the best non-executives. They found that risk to reputation emerged as the key reason why directors would refuse to take on a non-exec position.

Gerald Russell, senior partner at Ernst & Young, said: ìIf the government is intent on expanding regulation - and prosecution ñ it is highly likely that many good non-executives will opt out of listed company roles.î

Betty Thayer added: ìThe best non-execs are the ones with most to lose. Our survey shows that these skilled contributors to our most important companies and the UK economy are not prepared to put their reputation on the line if there is tougher boardroom regulation.î