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10 tips for hiring an NED

10 tips for hiring an NED

Executive Grapevine | Executive Grapevine International Ltd

An effective Non-Executive Director (NED) can provide the calm head and seasoned business acumen that all Boards need, but sometimes it doesn’t always work out.

Given that few are qualified for the role, finding the correct candidate is imperative.

Speaking to Executive Grapevine, Gerry Brown, Chairman of Novaquest Capital Management and author of The Independent Director: The Non-Executive Director's Guide to Effective Board Presence, discussed the pitfalls of hiring an NED, and how they can be avoided.

“The practical outcomes of such bad or ugly NED appointments are seen in the many company scandals around the world. These have resulted in five enquiries in the UK, starting with Cadbury and ending with Walker, as well as two laws in the US: Sarbanes Oxley and Dodds Frank. Yet still the scandals continue (for example the banks have received $140trn in total fines while NED inertia has been a key contributory in the Tesco, BP, Petrobas, Toshiba and Volkswagen corporate scandals)”, he said. 

Brown’s ten tips for hiring a NED can be seen below.

  1. Involve the whole board, ideally through a formal nominations committee with a majority of NEDs and Chaired by a NED.
  2. Use a professional executive search/recruitment consultant to advise the Board, take the opportunity to discuss options for the Board membership/organisation.
  3. Use the appointment to help to diversify the Board to achieve a broad range of experience, gender and race.
  4. Aim high!
  5. Define the role clearly with the skills, experience and chemistry most needed to complement the existing Board.
  6. Consider a wider search than traditional sources. For example, divisional directors who are not yet on the main Board of a PLC; seek candidates from the public, voluntary and academic sectors (or armed forces).
  7. Seek individuals with genuine independence.
  8. Appoint for a specific term.
  9. Ensure that fees and remuneration are appropriate.
  10. Be creative and imaginative; seek agents of change who can really assist with growing shareholder value.