Celebrating role of non-execs

Jul 4 2008 By Andrew Mernin

In today’s challenging business climate, having an experienced head on the board has never been more important. This year, as part of The Journal’s Business Executive of the Year awards, we are introducing a new category to celebrate the role of non-executive directors. Andrew Hebden reports

FOR many, they may be thought of as the preserve of only the biggest plcs; a luxury rather than a fundamental part of any boardroom. But times are changing and so is the role of non-executive directors.

No one has ever questioned the value of experience in the day-to-day running of a business. But non-execs bring more to a company than lessons learned from years gone by – they can also provide a fresh pair of eyes, an alternative perspective and a source of new ideas.

The new category in The Journal Business Executive of the Year Awards aims to celebrate the contribution that non-executive directors can make to a business.

A host of leading names from the North East business community have joined forces to back the award, united in the belief that the role of non-execs is increasingly important. They are Muckle LLP, North East Chamber of Commerce, CBI, the Alchemists, Barclays, North Star Equity Investors, UBS Wealth Management, Newcastle University, Baker Tilly and Miller UK.

Andrew Davison, partner at law firm Muckle LLP and chairman of the judges, said the new award was designed to promote the important role that non-executive directors can play in businesses, as well as charities and public sector organisations.

And Simon Lenney, area corporate director for sponsors Barclays Commercial, said the size of the business in question was not important.

“From a banking viewpoint we place significant importance on the role of a non-executive director,” he said. “He or she can provide a broader knowledge of a particular sector having often experienced issues and problems that the incumbent board of directors are yet to encounter – all of which cannot fail to be of value to any company whatever its size.

“Furthermore, they act as an independent voice on strategy and planning while also being familiar with the day-to-day operating issues that present themselves to the various departmental heads.

“There is no doubt that in the current economic environment, their value is even greater as they often have a wider experience when operating under difficult trading conditions.”

Sarah Green, regional director of the CBI in the North East, which is also backing the award, said there was no question that the experience provided by a non-executive director could be crucial.

“Studies have shown that companies benefit significantly from having independent, non-executive directors on their boards,” she said.

“They bring a fresh set of eyes to your business as well as a wealth of experience. A good non-executive will provide independent challenge at a strategic level that complements the role of executive directors and focuses attention, allowing others to see beyond the immediate operational issues.

“A combination of skills in the boardroom gives an organisation the best opportunity to succeed in today’s business world.”

James Ramsbotham, chief executive of sponsor the North East Chamber of Commerce, said: “It is about the ability of bringing specialist knowledge or broader strategic skills to the business. Almost all of the better businesses in the region have engaged in some form or another with non-executive directors both from within and outside the region.

“For a number of years we have produced really good business people who continue to have non-executive roles outside the region and it’s about time we picked up and used those skills back here in the North East.”

Lucy Armstrong, chief executive of entrepreneurial consultancy The Alchemists, which is also sponsoring the award, said that non-executives were a valuable resource to help grow a business.

“As a business develops, it is increasingly important that it uses its non-executive directors well,” she said. “They focus the board’s attention on strategic rather than operational issues and they make sure that robust processes are in place.

“As the board becomes more experienced in working with independent non-executives, it comes to value positively other professional advisers rather than viewing them as a cost and therefore uses them more effectively.

“The non-executive director can play a vital role in separating the interests of the shareholders and directors. This distinction can become blurred in private companies, when they are often the same people.

“The mark of a good non-executive director is when the board continues to listen to him or her even when they disagree strongly. Their opinions are valued and they are respected as a valuable sounding board.”