Non-executive
directors need training and better pay to deal with their changing role in
company management, according to a survey by Pricewaterhouse Coopers.
The
survey, Non-Executive Directors: a Survey of Practice and Opinion, shows that
while companies are demanding more from their non-executive directors, 61 per
cent of firms do not provide training beyond a basic induction. Nearly half of
the 94 companies surveyed think the demands on non-executive directors have
risen by 25 per cent in the past three to five years.
The
report claims this problem is exacerbated by the changing role of non-executive
directors. They now perform more of a monitoring role rather than their more
traditional strategic one.
It
also shows pay is not keeping up with the increasing demands. The median pay
for a non-executive director in the non-financial sector is £25,000, with
non-executives receiving £31,000 in the financial sector. This compares to the
median fee of £100,000 paid to company chairmen on PwC’s database of 81
companies.
Ann
Cottis, partner in global HR solutions at PwC and joint author of the report,
said, "HR professionals should take a step back and look at how they can
improve the performance of their board.
"Very
few companies actually measure the performance of their board of directors,
provide appropriate training and set targets. This will ultimately make
companies more profitable.
"They
should examine the pay for non-executive directors and ensure it increases in
line with workload and responsibility."
The
report also suggests that companies should increase the diversity of their
non-executive directors, and consider those with an international perspective. www.pwcglobal.com/uk
NED
facts and figures
–
The average age of non-executive directors is 58 and average length of service
is around six years
–
Companies in the financial sector had a median of eight NEDs, compared with
five for companies overall
–
In about 8 per cent of companies, NEDs comprised less than one-third of the
board, but in 43 per cent of companies more than half of the board consisted of
NEDs
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–
Seventy-four per cent of companies had appointed a senior independent NED, but
the post is viewed by some as superfluous where the role of chairman is
separate from chief executive.
By
Richard Staines
