Jane Mason, a strategy consultant has criticised the FT for its attack on Sir David Walker’s 39 steps to better corporate governance. She is certainly right, that the pool of NEDs could be drawn from a wider range of talents. She’s also right that if NEDs had to work harder at each company, they would hold fewer posts and so there would be more vacancies.In conclusion, she suggests that every company should have one NED who has never been a non-exec before.

I struggle with debates about corporate governance reform which focus on the role of non executive directors because of my experience of their limitations. I am accountable to a board, have attended the board meetings of three different organisations in the last month, and have also served on two others, in addition to being a vice chair of a school governing body – as neither parent nor teacher.

As individuals, non execs can be incredibly valuable. I’ve never worked with a single one that hasn’t added considerably to the overall knowledge of the organisation. They can bring gravitas to an organisation, a sense of credibility to key customers, balance a range of experiences and ask questions I couldn’t have dreamed of being asked. Every non executive director I have worked for has had a particular set of skills which I have been able to tap in to.

Collectively, I’ve never found non executive directors to be particularly valuable. They don’t know each other well enough for the group to become cohesive. They have too little time, or too many practised ways, to mould themselves into a single useful group dynamic. And when a board does become cohesive, it loses its independence, so non executives lose their value.

None of this excuses poor corporate governance. And I’ve no doubt that better corporate governance would have avoided many of the problems we’ve seen with large companies over the last 18 months. However, any sensible set of reforms has to pass some basic tests:

• would the NED have sufficient knowledge to understand the proposal without being so knowledgeable that they are too close to it?
• would the NED be sufficiently close to the company to be able to uncover a hitherto unknown risk but sufficiently distant that they could objectively assess the risk?
• would the NED know enough about the business/market to bring extra skills on board or enough about another business/market to apply wider knowledge to the relevant task?
• how many NEDs does it take to acheive this, and how can that number be balanced appropriately for a board of directors?
• is this a work-around for failure elsewhere to ensure executives are transparent and fully accountable?

Ultimately, non executive directors are only as good as the information they are given, combined with their past experience. They are not the answer to run-away executives or regulators asleep on the job.

Related posts:

1. Institute of Directors: whingeing middle managers