Young players interrupt the boardroom musical chairs: The non-executive director circuit is being broken by sharing fresh talent. Nigel Cope reports

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The Independent Online
FLICK through the CVs of some senior industry figures and a lengthy list of non-executive appointments still appears at the end.

But things are changing. The game of musical chairs where the same names pass around the non- executive circuit is becoming a thing of the past. An increasing number of companies are tempting young high-flyers to join their boards from large quoted companies. And many larger PLCs are happy to oblige, seeing a non-executive role for a senior manager or divisional board director as a form of management training.

'It is a very popular idea,' says Diana Scott-Kilvert, a director of Pro Ned, the organisation that promotes the use of non-executives. 'What we are seeing is the first generation of chairmen who themselves served on another board at an early stage of their career. A lot of them found it extremely useful and want their managers to do the same.'

The view is supported by the accountants BDO Binder Hamlyn, which published a survey of the non-executive market earlier this month. Clive Reay, the partner in charge of the survey, says: 'Things have been changing in the last couple of years since the Cadbury report. There are more genuinely independent non-executives rather than chums of the chairman.'

The surge in the number of non- executive appointments - there are now estimated to be 8,000 serving in private companies in Britain - has provided booming business for the executive search companies. It has also spawned new consultancies, using different tactics to the established players.

One is Hanson Green, a London search firm founded in 1991. Hanson Green placed 100 non-executive directors in the past two years, of which 60 were through its Annex system, which it describes as a nursery for non-executive directors. Annex is a database of younger managers, typically in their 40s and just below board level in larger companies. Hanson Green teams the managers up with a suitable company, often a new management buyout, a recent flotation or a public sector organisation such as an NHS Trust seeking private sector experience in the boardroom.

'It's a form of management development,' says Hanson Green director John Brill. 'Instead of sending a manager off to Harvard or Insead for a year, they can pack them off to another company for a few days each year to gain more experience.' Users so far include WH Smith, the advertising agency WPP, and Abbey National.

The most unusual part of the scheme is the payment system, which turns the traditional fees structure of search firms on its head. Instead of charging the receiving company for the search, Hanson Green charges the 'giving' company pounds 10,000 for the privilege of having one of its number sit on someone else's board. The receiving company is charged an annual fee of pounds 2,000 after the first year.

EDS, the data systems group, is a keen user. In the past 18 months it has sent two of its divisional directors to subsidiaries of larger companies and received other high-flyers in return. 'I see it as the most effective way of rounding and developing our executives,' says Tom Butler, managing director of EDS (UK). 'I use it as a way of grooming them before they move up to our main board.'

But others in the search field are not convinced of its merits. Norman Broadbent, an executive search firm that acted in the appointment of 38 non-executive posts last year, is one. 'I think it's an extraordinary idea,' says the managing director Miles Broadbent. 'Up to the age of 45 younger managers are beavering away at their own careers. Why would they want the distraction of this?'

But competition in the market for the next generation of non-executives is hotting up. Last year a non-profit organisation called Prowess began a similar system to Annex. Affiliated to the executive search agency Jamieson Scott, Prowess invites large organisations to join its scheme as sponsors, paying pounds 10,000 each. For this they agree to offer a pool of young talent to smaller companies. Current sponsors include Grand Metropolitan, BA, Kingfisher and the accountants Ernst & Young.

According to Prowess director Mark Scott, there is benefit on both sides. The sponsoring organisation gets a more experienced, better-motivated manager who can see that the employer is developing his or her career. And the receiving company can ask the search firm to select a non-executive with specific experience that their executive directors may not have.

Mr Scott says: 'A non-executive does not have to be without portfolio. If you need a retail or technology expert, why not go out and get one? I don't know why more people don't do it.'

(Photograph omitted)