An investigation into the role, effectiveness and future of non-executive directors

Citation

(2006), "An investigation into the role, effectiveness and future of non-executive directors", Strategic Direction, Vol. 22 No. 4. https://doi.org/10.1108/sd.2006.05622dad.005

An investigation into the role, effectiveness and future of non-executive directors

An investigation into the role, effectiveness and future of non-executive directors

Dixon R., Milton K., Woodhead A. Journal of General Management (UK), Autumn 2005, Vol. 31 No. 1, Start page: 1, No. of pages: 21

Purpose – to review the purpose and future development of the non-executive director (NED) role. Design/methodology/approach – identifies recent reports and their associated codes, i.e. Cadbury, Greenbury, Hampel and Combined, reviews NED literature describing NED roles of monitoring, strategy development and conflict resolution, links corporate governance to company performance, and suggests that NED effectiveness should be gauged in terms of corporate performance, and the effectiveness of their monitoring role and sub-committee work, and discusses NED independence, and separation of chairman and chief executive roles. Interviews two executive and two non-executive directors, an auditor, a lawyer, a regulator, and an institutional investor, and draws on responses to the Higgs review, to assess the effectiveness of NED. Findings – tabulates an extensive range of analysis results, concludes there is uniform support for continuance of NED, reports that all respondents believed the current system to be sound and effective, and summarizes that the Combined Code and the unitary board system should be retained, that NED recruitment should be formalized, and that NED should be protected from liability, but only when they have acted in good faith and in accordance with best practice. Originality/value – reinforces previous findings.Style: Research paperISSN: 0306-3070Reference: 34AZ079

Keywords: Corporate governance, Directors, Non-executive directors, Role ambiguity, Role conflict, Senior management