New Report Heralds the Death Knell for the Passive Non-Executive (NED)

In a report, `What Makes an Exceptional NED` launched today by Board performance experts Whitehead Mann, a new and highly engaged Non-Executive role emerges as the era of the passive NED comes to an end.



The report, designed to help build high performance Boards, highlights ten crucial `X Factors` that mark out the exceptional NED from the average in a more open and competitive landscape which is poised to push aside the `old boy` network.

It also highlights the fact that Boards are not paying enough attention to helping new NEDs get up to speed. In light of the Higgs recommendations and increased responsibility for NEDs, it is concerning that fewer than one in three Board Directors (28%) were able to say whether or not they had helped their own NEDs to prepare for the role.

The in-depth analysis includes frank feedback from 124 Directors representing some 552 Boards (includes 46 FTSE100 and 66 FTSE 250 companies).

The top three `X Factors` as voted for by senior UK Board Directors are:

1. Big picture thinkers - Top marks are awarded to NEDs who can offer exceptional value based on a wide breadth of business experience. ìSector knowledge is not important but a thorough understanding of the business environment faced by the company is vitalî, said one Director interviewed.î Almost six out of ten (57%) put a premium on this ability.

2. No room for egomaniacs - Regardless of how successful their own careers have been, NEDs need to leave their ego at the door and ensure that they do not usurp the CEO role.

ìThey know how to put pressure on people but do it nicely. As a Non-Exec you have to bury your ego,î according to another Director. Again, more than half of interviewees (55%) listed this as a key quality.

3. Courageous - The best NEDs have the courage to ask difficult questions, to probe and to stimulate debate and change. ìYou have to be straight, call a spade a spade and never be worried if you have to step away from the Board. That needs a lot of gutsî, observes a third Director. Just under half (44%) voted for the ideal NED as a challenging and independent advisor.

Commenting on the Report, author Susan Bloch, Partner, Whitehead Mann says:

Todayís NED must be nothing less than exceptional if their advice is to be heeded and they are to add value. The ten `X Factors` provide a framework
for this exceptional Non-Executive performance. The best NEDs have all these factors in the right mix to suit their particular profile and situation.

ìThis wisdom and flair for conceptual thinking, combined with a genuine interest in the business, will help them to successfully balance advice and support with the confidence to challenge and question - all without undermining the Executive Management.

The research also highlights a significant increase in the time taken to do the job with Non-Executive Chairmen in particular spending as much as two to three days a week, averaging almost 24 days a year, once familiar with the role.

Finally, interviewees were asked what characterised weaker NED performance. More than four out of ten (44%) said that a passenger NED who lacks a real interest in the business can prove a problem for the Board. Based on this feedback, ten weaknesses where NEDs show irritating or inappropriate behaviour were identified.