EDITORIAL: NAVIGATING A NEW ERA FOR THE NED

Last month saw the publication of a fascinating piece of research from the professional services firm BDO and leading recruiter, Norman Broadbent.

The research involved 200 board members ranging from SMEs to large private and listed companies (mostly sub-FTSE 250) and found that the role of the NED has evolved significantly. There are much higher expectations that NEDs will actively contribute to strategy and will be aware of an increasingly broad range of topics than previously – cyber security, climate change, geopolitical uncertainties to name but a few.

The research also suggests that NEDs feel they do not get the support they should have for the role – 36 per cent of respondents have not conducted an internal board evaluation, 42 per cent have not conducted an external board evaluation since Covid (or ever) and 45 per cent do not have a formal process to provide feedback to NEDs.

The survey respondents were asked what they consider to be the top three areas where they feel NEDs add the most value. By far and away the key area was providing an independent perspective – helping the board to avoid groupthink, challenging the status quo and helping with more holistic decision-making, closely followed by strategic thinking. The third area was industry expertise. Norman Broadbent says that, unsurprisingly, this correlates with the attributes companies are looking for when looking for fresh NED talent.

Overall, the report found that there was too much emphasis on short-term elements, and excess firefighting rather than future-proofing the organisation. There also needs to be more emphasis on succession planning, with boards taking a more structured approach in their search for new NEDs. And finally, the research team were surprised to find how little use was made of regularly evaluating their board performance and providing high-quality feedback – the hallmark of a high-performing board.

The full report is well worth reading and it can be found here.