Last week I attended a conference organized by Cityzone for non executive directors. The discussion was on the importance of NEDs and how important it was for NEDs to be informed on what was happening in the company. The challenge is that when something is going wrong, do NEDs know about it and can they take action.
The lawyers and to some extent the accountants present felt that there should be strong regulation to ensure that mission critical information gets through. Fortunately an experienced NED stood up and pointed out that regulation would not help. If management did not want certain information to get through, then they simply would not pass it on. This might be against the regulations, but the consequences would be too late to take any action.
I will call the experienced NED Frank, mainly because that was his name. He sensibly said that as a NED he would have regular contact with senior management outside the Board meetings to ensure he got maximum information. I added two things, one of which I learned from my first non executive Chairman, who was absolutely brilliant.
My first Chairman would show up for Board meetings half an hour early and head for the kitchen where he would make himself a cup of coffee. While he was doing this he would chat with the various people walking into the kitchen. Over time he built himself a nice little network of people in the company who would relax, seek his company and talk with him and that way he would find out all kinds of interesting information. Information that helped the Board and me make better decisions for the future of the company.
Since that time smoking has been banned from offices and smokers gather outside the building in what I affectionately call Death Row. Smoking has become a real equalizer as people who share their addiction chat outside over a cigarette. So I recommend every NED to become a smoker and to head for Death Row. There you will find out what is really happening in your company and you will be able to support your management team better, or in the worst case, you will find out what you are not being told.
So, to be an effective NED Frank and I recommend regular contact with the management team outside Board meetings, preferably weekly, make your own coffee or tea in the kitchen and make sure you are a regular visitor to Death Row.