A Force For Good - Captains Of Industry Say That Non Executive Directors Will Become Increasingly Important And Valuable

Enron situation will only give further impetus to extending the role

A MORI survey for Ernst & Young of 94 board members from the UK's leading 500 companies suggests that with the increased interest in corporate governance issues, the role of non executive directors will become far more important.

Key findings of the survey included:

• 96% of respondents believed the role of the non-executive director was either fairly valuable (40%) or very valuable (56%).
• When those who value non-executive directors were asked specifically what it was they valued, 79% mentioned their insight or experience, 74% their independence and 70% the challenges they make.
• 64% of respondents said that the influence of non executive directors will increase with only 5% saying they will become less influential

Those surveyed explained it was a combination of push and pull factors, as one respondent said, "the pressure from corporate governance will require companies to have a strong independent set of non-executive directors." Another added, "they (the non-executive directors) can each make an individual contribution to the Board, based on their experience. It is their breadth of view on strategy which can help the execs."

Respondents also believed that the twin pressures of globalisation and difficult economic conditions would ensure that non-executive directors would have more of a prominent role within an organisation. It may also be a more risky one as another respondent commented, "the legal responsibility of non-execs has really come to the fore over the last year and they are directly in the firing line."

Gerald Russell, a managing partner in Ernst & Young's London office, and who leads the joint Independent Director Initiative with the IoD, said, "It is interesting that this survey was carried out before all the Enron problems received such widespread coverage. Captains of Industry already recognise the enormously valuable role that non-executives can and do provide. Now the Enron situation will give further impetus to extending the role that non-executives will be expected to play in the effective running and control of businesses."

Technical details

MORI interviewed 94 senior board directors of Britain's leading companies selected from the FTSE top 500 and UK top 500 by turnover; 63% of the interviews were with the Chairman, Chief Executive Officer, Managing Director or President. Interviews were conducted face-to-face, between 5 September and 12 November 2001.