Neither time constraints, increased accountability nor a slowdown in the economy have diluted FDs’ support for company directors taking on extra responsibilities as NEDs for other companies, according to this week’s Accountancy Age/ Reed Accountancy Personnel Big Question survey.
Of over 300 responses from FDs of small and medium-sized companies, 60% agreed full-time directors should be allowed to hold NEDs. Twenty seven percent disagreed and 13% remained neutral.
Northamptonshire Chamber of Commerce FD Julian Aldridge said: ‘Yes, so they can spread their expertise to those who can’t afford it.’ Another said: ‘NEDs are only really about an investment, it’s not extra workloads. If someone has earned enough money to be able to do this, then let them.’
Following the rise in demands on non-executive directors, companies are beginning to look at the extra work senior managers are carrying out for other companies.
US companies have already taken steps to limit the number of directorships managers can hold outside of their jobs. These were some of the concerns voiced by many respondents. ‘If you have a full-time job this should occupy your thoughts. I am not convinced you could do justice to yourself, your company or your second company if your time is split,’ said one FD.
Another said: ‘In this day and age if you are doing your job correctly at this level you wouldn’t have time to get involved with other companies.’
Other comments included:
Comments from those who said Yes, definitely
‘I think they should. It is fine if you take on the directorship as long as it is not in direct competition with your company.
Sunil Patel, Financial Director, Ovid Technologies.
‘It increases the experience of individuals within the company and other companies benefit from the varied experience of their directors.’
‘Yes, so they can spread their expertise to those who can’t afford it.’
Julian Aldridge, Financial Director. Chamber of Commerce.
‘They can pass on their knowledge to the company that they are the non-executive director for and also gain knowledge from them.’
Paul Barrett, Financial Director, Charles Walker Consolidated.
‘Yes, as it is shared experience and benchmarking with other companies.’
Malcolm Hardy, Financial Director, MCB University Press.
Comments from those who said Yes probably
‘The number of directorships should be limited to around two or three.’
‘It depends on individual circumstances. In principle I think it is fine. We have one ourselves on that basis.’
‘What they learn from other companies can help their own.’
Jonathan Harris, Financial Director, Information Resources.
‘Non-executive directorships are only really about an investment, it’s not extra work loads. If someone has earned enough money to be able to do this, then let them.’
Comments from those who were neutral
‘Directors should follow the rules that they impose on their employees.’
Matthew Stone, Financial Director, Harro Foods Ltd.
‘It would depend on the workload of the individual director. If the director is running the company to its full potential there is no reason why they couldn’t take on other roles. Only if the current company would not suffer.’
‘It is a good idea as it would broaden a directors’ experience which will benefit the individual and the company. It is a bad idea due to a conflict if interests.’
‘This should be a common sense matter which is up to a board to decide for themselves.’
Comments from those who said No probably not
‘No probably not, however, it should be down to personal choice rather than being ‘allowed to’ for example, part-time directors may have time for additional commitments.’
‘It would be inadvisable due to time issues, you cannot allocate time to more than one company.’
‘It should be a voluntary code.’
Peter Fairman Bourne, Financial Director, Cham Ltd.
Comments from those who said No definitely not
‘They should only be allowed to take on these directorships on a part-time basis.’
‘In this day and age if you are doing your job correctly at this level you wouldn’t have time to get involved with other companies.’
‘If you have a full-time job this should occupy your thoughts. I am not convinced that you could do enough justice to yourself, your own company or your second company if your time is split.’
‘They should concentrate on their own job as they are paid to do that!’
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