New national register provides crucial support

A new national register of non-executive directors is being launched to give independent, expert information and guidance on all issues relating to becoming or finding a non-exec.

The register, available through www.exec-appointments.com from April 15, was announced by Betty Thayer, chief executive of exec-appointments.com, at an Institute of Directors conference on non-execs.

She said the aim was to provide much-needed, useful and up to date information about non-executive vacancies, guidance on how to find the right non-exec, training and courses available, and useful contact sources.

The IoD conference on March 20 was sponsored by exec-appointments.com and
extended the debate on the Higgs review of the effectiveness of non-executive directors. A number of interesting and challenging issues emerged including the legal liabilities of non-execs, their insurance cover and how the recommendation to bring in fresh blood would be achieved.

Fulfilling the Higgs recommendations will mean three times the existing number of non-executive directors will be needed, Ms Thayer said. The Higgs review found that almost half the non-execs surveyed were recruited through personal contacts or friendships, only four per cent had a formal interview and just one per cent obtained their job through answering an advertisement.

Ms Thayer urged companies to cast the widest net possible in their search for new non-exec directors, to interview at least three candidates, preferably conducting a formal and an informal interview with each and, importantly, to take account of achieving diversity on the board.

ìDiversity is a big topic at the moment. Finding qualified, diverse candidates can take a long time because there are just not as many out there. But it is worthwhile, particularly if you look at the composition of your company.î

She quoted a company she had been involved with previously as a management consultant where the board was entirely male but the workforce was 90 per cent female. ìItís important to consider the signals the board make-up will be sending to employees,î she said.

Rhidian Jones, non-executive director of the Britannia Building Society and Serco Group plc, warned the conference that reshaping boards in the light of Higgs would be a lengthy affair. ìTo change this overnight is going to be extremely difficult. I think it is going to take a long time. We must ensure that there is time to rebalance boards and that comply or explain will be possible.î

He said there must be proper methods of recruitment and selection and referred to the 3Cs when recruiting non-executive directors. There had to be chemistry ñ one director who doesnít fit in can absolutely destroy the working effectiveness of a board - commitment to the company, and the capacity to be able to fulfil the role.



One of the controversial requirements of appointments to a board audit committee is that the person has significant, recent and relevant financial experience. Mr Jones said that from his experience some of the best people on audit committees were not accountants but were people who asked ìdirect and simple questionsî.

ìWhen I chair audit committees itís not about numbers - although we all have to have a familiarity with the shape of the numbers - itís about judgements, itís about the way in which you recognise profits and the conservatism with which you provide for expenses. It is business judgements of prudence and foresee-ability.î

Dan Mace, a consultant at international law firm Lovells which specialises in corporate law, looked at the legal responsibilities of non-executive directors. He said one of the legal ìsafety valvesî was the directors and officersí insurance.

ìIt is now vital that you are offered directors and officers liability insurance by any company that you are a non-executive director of,î he said. îI think it is a vital protection but it is not a panacea. Its scope of coverage is not as extensive as you might expect and its cost is high.î