NED Wanted - no crooks, cronies or cowards need apply!

You are recruiting a NED, what should you be looking for?

1. Relevant experience
2. Adequate knowledge of the company (can be gained through induction and in-post)
3. Integrity and high ethical standards
4. Sound judgement
5. Strong interpersonal skills
6. High levels of engagement
7. Independance of mind

It's not a new list (see the Tyson reprt on the Recruitment and Development of Non-Executive Directors 2003), so why do we still seem to be struggling? Is it that these people are just not there, or is it more likely that we are not casting the net widely enough? Do we in many cases have too narrow a definition of "relevant experience"?

The barriers to entry for NED postions, especially in listed companies, are artificially high. You can trawl through the annual reports on line and the "old boys network" still screams at you with deafening veracity.

"The best boards are composed of individuals with different skills, knowledge, information, power..." (Conger and Lawler, 2001)

Cast the net wider, seek out diversity but stick to Pehr Gyllenhammar's suggested guidelines for the selection of NEDs: no crooks, no cronies, no cowards.

They are out there!

Risk Management and the KISS principle

A chart from some research RBS commissioned from the Econimic Intelligence Unit. (Management Today "In Focus").

There was not much detail from this "global" survey, but the chart is never the less interesting.

How would you align your risk management strategy against this basket of "Big Issues"? Are they really all that different to the normal cycle of problems that face business regularly?

Paul Howard (former head of group insurance and risk management, J Sainsbury) is quoted as saying "You can take away the risk from risk management and say it is just good management"

I agree with Paul, however, the discipline of risk management does give us a framework and a methodology for identifying; managing, mitigating and monitoring risk in a structured way that was not previously the case. It also affords us a way of setting our risk appetite and boundaries.

The Executive and senior management still have to "walk the talk", set the example, model the behaviour; but risk management systems allow us to draw on knowledge throughout the organisation, capture and analyse those thoughts, set the agenda, develop the action plans and responsibilities and then cascade that back through the whole management structure.

Too many I have worked with in organisations see risk management as just a "pain in the neck" that gets in the way of doing the job. It's not, as Paul Howard says "it is good management" - it is the job!

Where it can be a pain in the neck and get in the way of the job, is when it is over complicated, shrouded in jargon and seen as the domian of some pedantic experts. You could read endless books on risk management, go on courses and seminars, pay consultants a fortune - or, you could run it back to the principles of good management and have a simple, understandable, jargon-free system that integrates with the organisation's current management and reporting cycles and systems.

Let's apply the KISS principle to risk management and help CEOs sleep at night, rather than give them something else to keep them awake.