Effectiveness of Non-Executive Directors Essay -- Senior Management, N

The durability of non-executive directors is becoming to be seen as critical for the contribution to the speciality of corporate governance in providing investor protection.Relevant situational and sectoral experience enhances the effectiveness of non-executive directors. Jebb (1998) cited in Ahwireng-Obeng, Mariano and Viedge (2005) suggests that it is a better strategy to hire non-executive directors who have experience in similar as well as other sectors and situations that the company is in all probability to face than search for a particular expertise in a director. According to Pincombe (2000), this enables the utilisation of specialist skills in different fields and the turnout of experience (Ahwireng-Obeng, Mariano and Viedge, 2005).To a certain extent, the tenure of service also has sham on the effectiveness of non-executive directors. Feldman (1992) is of the view that a board that services a business well today may not be capable to lead it five years from now as mar kets and products evolve. Therefore, the appointments of non-executive directors should be for a specific term and new-sprung(prenominal) subdivisions should be appointed as and when needed. angiotensin converting enzyme suggestion is that by serving for more than ten years, the board member tends to become in like manner close to senior management to provide fair game oversight (Ahwireng-Obeng, Mariano and Viedge, 2005). However, this could provide the in-depth knowledge and institutional memory that a new board member has to work hard to acquire (Fleming, 1998 cited in Ahwireng-Obeng, Mariano and Viedge, 2005).As for the selection and appointment, good boards do not just happen they ar carefully constructed working teams (Vennat, 1995). In other words, it is by selecting and developing enamor indiv... ...m their duties, particularly those sitting on the Nominations citizens committee, Remuneration Committee and Audit Committee on an irregular basis, meeting only a few me asure a year (Pass, 2008). Due to limited time of involvement, non-executive directors could be too remote from internal decision-making processes to make an effective contribution and lack of information. The effectiveness of non-executive directors would be undermining when they are uninformed about the challenges they face. Hurley (2000) cited in Ahwireng-Obeng, Mariano and Viedge (2005) suggests that making the interest list of information available to non-executive directors can contribute to their focus and productiveness board policies, committee guidelines, board minutes, authority annotations, contract summaries, organisational charts, member surveys and analyses, and broadcast or project analyses.