Posted by Andrew on 29th April 2013Top Teams expert Professor Andrew Kakabadse believes short term profiteering and corrupt markets are placing impossible demands on non-executive directors.
Non-executive directors are being stretched more than ever before, to the extent that their roles offer little more than status value to the businesses they are supposed to serve.
Many non-execs hold anywhere between four to 30 such positions, making it impossible for them to fully understand what is happening at the heart of an organisation. They simply don’t have the time and so avoid challenging their counterparts on core issues affecting a business.
Non-execs are also quite naturally concerned about legal liabilities. Their risk-taking capacities are minimised by the likelihood of serious mistakes which could result in the redundancies of thousands of people. This pushes them towards supporting chief executives by not addressing the information placed in front of them.
Global industry is under increasing pressure from bribery and corruption. Another key challenge for non-execs is that they simply don’t know what to do when faced by the need to secure a vital business deal which bypasses ethical and legal behaviours.
These pressures are increasing across sectors including food, pharmaceuticals and natural resources, and non-execs are overlooking serious misuses of governance because they fear the consequences of attempting to confront unwelcome practices in foreign governance regimes and cultures.
The key mentoring influences that should be on offer from a boardroom – support, stewardship and leadership – are becoming wildly negligent in this respect, particularly in the UK and US. A consequence of this lack of accountability means that it is managers, rather than board directors, who go to jail when things go wrong.
So what can be done to address this overwhelming problem and how should boards go forward?
An important starting point needs to be in our Business Schools, which must prepare the next generation of executives for the realities of world trade. Graduates need to be fully equipped with an understanding of boardroom behaviours and the values offered by an ethical operating culture.
The selection criteria for non-execs is unclear and boards are suffering from a debilitating clubbiness which must change. Our research indicates around 96 per cent of searches in the US are a foregone conclusion carried out for appearances’ sake. The equivalent figure in the UK is around 80 per cent.
More than anything else non-execs need to be clear about their own purpose. If they are to genuinely add value to an organisation they must understand and respect that engaging management teams and workforces is paramount, and this can only be achieved through an ongoing and honest dialogue with stakeholders.
Click here for more from Professor Andrew Kakabadse on this topic in the Financial Times







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