| Only 23% of SME's companies have independent non-executive directors on their boards |
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According to a recent survey by the Boardroom Centre many small and medium sized Irish companies do not hold regular board meetings and most do not have independent non-executive directors on their boards. The survey indicates that only 23% of companies with employees ranging between 10 and 500 have independent non-executive directors on their boards. According to Kevin O'Connell, director of the Boardroom Centre, the contribution that the right non-executive director can bring to the smaller company is likely to be disproportionately greater than in the case of a larger company, which may have available to it a much higher level of resources at board and management level.
Family owned companies could benefit particularly from the objectivity that a good non-executive chairman brings. The ability of a non-executive chairman to separate emotive family issues from business issues at boardroom level can be vital to the good management and even continued survival of such companies.
Non-executive directors also contribute with an objective and independent external view on all the key issues the company faces while acting as a soundboard for senior management. Specific tasks that a non-executive director can perform include ensuring where necessary that regular board meetings are held with an appropriate agenda and constructively querying assumptions used for budgets and planning exercises.
It is possible to select a non-executive director on the basis of personal contacts and recommendations. However from O'Connell's experience there are many advantages to be gained by dealing with it in a professional, arms-length way that involves screening and matching. |
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| Article appeared in the June 1999 issue.
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