Derek Higgs, who wrote the UK government review into the effectiveness of non-executive directors (NEDs)in 2002, noted that NEDs had acquired something of the same aura about them as the role of the monarchy to British government, repeating Bagehot’s famous quote that “we must not let daylight in upon magic”.
Higgs’s report did not subscribe to this view, and in the decade and a half since, the role of non-executive directors (NEDs) has become less one of old boy networks and behind the scenes dealings. However, it is still far from transparent what goes on in Boardrooms, and while the make-up of corporate Boards is no longer the exclusive preserve of middle-aged, white men of a certain background, it still has plenty distance to travel to reach the levels of diversity many would like to see.
The Higgs Review identified that there are four key areas for NEDs to oversee: Strategy, Performance, Risk, and People. Their tasks being primarily to challenge and scrutinize the organization’s senior executives, their plans and financial paperwork and ensure that the organization operates in a healthy and legal framework.
With greater focus on the role of NEDs has come greater responsibility too. The demands of the role have given rise to programs that cover the duties and liabilities of the role; one such program being launched by Bath School of Management will provide such an introduction to the position, but as Jan Stiles, Director of Executive Education at the school explains, it is also aimed at expanding the breadth of diversity of potential NEDs, on the basis that a wider range of inputs and thinking can only improve the scrutiny applied to the way a business operates and the opportunities it can grasp.
Stiles describes the new NED program at Bath as being designed to be entirely practical, with plenty of focus on issues around the increasing regulation and higher risk accountability – and not the areas where most senior executives are already well-versed in such as finance, marketing or people management. But, she stresses, it is the rehearsing of constructive challenges, preparing for crisis moments and building resilience in the face of unexpected and high-pressure events that sets the program apart.
The Bath program uses specially trained actors to simulate Boardroom discussions, particularly those where NEDs are facing strong-minded and powerful executive directors, who will inevitably have more information on operations than the NEDs. Stiles notes, often actors are used in executive scenarios like this, with the participant placed in amongst them and having to react in real-time, and then explore their reactions and behaviour afterwards with the group or a coach. This approach, while effective, can be draining and embarrassing or even undermining of participant confidence; so the Bath program takes a variant of this, where the participants observe the scenario and critique it, as well as being able to interject and suggest alternative approaches to change the direction or tone of the discussion to achieve more beneficial outcomes.
The final part of the three-day Bath program is centred on enabling participants to find and acquire NED roles. As Stiles explains the capabilities needed as a NED are significantly different to those of the full-time executive officer, and as such the presentation of what the prospective NED can offer needs to be equally different to their previous CVs and interviews.
Under-pinning the Bath NED program is the determination to broaden the pool of potential NEDs for British industry. The program has as one of its objectives to draw in experienced and talented people from all walks of life who may have never considered being a NED previously, or who have not had the confidence to put themselves forward before.
The structure of the program is such that it fosters confidence and advisory capabilities – and looks to produce a new diversity of highly capable, high-performing NEDs that can offer new perspectives and different approaches to make British businesses more innovative and able to break new ground. The opportunity to bring new thinking and understanding of new markets, products or opportunities lies at the heart of being a NED – and the greater the variety of NEDs on the Board, the greater the chances of that occurring will be.
The Bath Non-Executive Directors program is offered at the University of Bath's London campus. The program wil next be run 28-30 November 2017