NEDs: Where will the role be in five years’ time?
Our annual Corporate Governance Review is due to come out soon.
Increasing regulatory scrutiny, evolving governance expectations, and a shifting business landscape mean that traditional board oversight roles are expanding. Claire Fargeot spoke with a group of NEDs from the Dynamic Boards NED Community to explore the responsibilities, skills and expectations of board decision making, and how the NED role is set to change in the next five years.
Non-executive directors (NEDs) face mounting pressures. They must balance uncertainty and risks with returns, adapt to greater personal accountability, and keep pace with emerging demands in stakeholder engagement and technological fluency. Questions around board composition, capability, behaviours, remuneration and term limits are increasingly being asked and shaping the expectations of those entrusted with directing organisations.
Regulators are tightening expectations around individual director responsibility, especially in areas such as internal controls, audit integrity, and risk governance. The recently revised UK Corporate Governance Code introduced board requirements to make a formal declaration about the effectiveness of internal control and risk management frameworks. While these requirements are intended to enhance transparency and investor trust, are NEDs viewing this shift as a move toward ‘cheap regulation’, where the burden of assurance is transferred to individual directors without proportional support or clarity?
As boardrooms continue to embrace new challenges, the role of NEDs will need to evolve.
Multigenerational, multistakeholder boards?
Whilst boards historically have turned to seasoned NEDs - 60+ according to the 2024 Spencer Stuart board index - they are now looking to have more of an age mix to help navigate rapid marketplace disruption, technology advancements, and rising stakeholder expectations.
Greater emphasis is being placed on the benefits of different stakeholder voices in the boardroom, as well as multi-generational perspectives to improve decision making at board level. Boards are experimenting with how broader views can be introduced into their decision making. Younger perspectives are being heard in certain cases – not always as NEDs but as board apprentices, associates, advisory or shadow board members.
However, different lived experiences rather than generational differences are seen as the most beneficial to achieving diversity of thought and discussion in the boardroom.
"In commercial organisations… more attention may be paid to getting NEDs with a specific, potentially narrow, set of skills and people, but boards can benefit from the insights of independent thinkers with broader perspectives."
iNED
Ethics and reputational risk rising up the agenda?
Over the past few years, the NED role of protecting brand and trust has become more prominent. Safeguarding corporate reputations, boardroom ethics and tone-from-the-top are seen as core parts of today’s NED remit as stakeholder scrutiny becomes ever keener.
NEDs agree that ethics and reputational risk have always been part of the agenda. By championing ethics, they can effectively mitigate reputational risks and form trust among diverse stakeholder groups, thereby safeguarding their organisations in an era where transparency and accountability are vital.
Tech fluency as a core requirement?
Our 2024 Corporate Governance Review found roughly 25% of FTSE 350 boards have two directors, on average, with IT or technology skillsets. But does this go far enough to stay ahead of the curve?
"Our knowledge increasing ahead of the curve is vital for being an effective NED"
Gail Scott Spicer, NED, Women’s Football Board
NEDs already need to understand AI governance, data ethics, cyber risk, and digital transformation – with regulators pushing for stronger oversight – not necessarily as experts, but with enough depth to ask the right questions and spot red flags. Chairpersons are seen as key to this topic, with some NEDs citing overreliance on certain individuals and others potentially a lack of focus on strategic priorities.
"Our knowledge increasing ahead of the curve is vital for being an effective NED."
Liz Henderson, Board Advisor at Hook Tangaza via Be The Business
NED risk-reward adjustment?
Fees for NEDs typically consist of an annually based fee determined by time commitment, which is inclusive of attendance at all meetings and membership of any of the main committees. Research has shown NEDs believe the regulatory burden on their shoulders is increasing and that pay hasn’t increased proportionally.
However, most NEDs shy away from wanting to be responsible for further cost burdens on the organisations they serve, with others citing protected liability being more important than higher remuneration.
"Getting the balance right between time invested and fees is challenging – and it is a difficult conversation to have."
Liz Henderson, Board Advisor at Hook Tangaza via Be The Business
Nine years’ tenure – too long?
The average FTSE 350 chair tenure stands at five years currently, with only 10% of these companies having a chair with more than 10 years’ service on the board (2024 Corporate Governance Review). Most boards don’t retain NEDs beyond the nine-year recommended tenure period and, while the lack of independence towards the end of the NED term is acknowledged, the provision of skills and capabilities are the justification. In contrast, the housing association sector introduced a mandatory six-year maximum term in 2020.
"I think it depends on their role, their area of expertise, and can we assess them appropriately to understand if they are maintaining their knowledge and expertise."
Liz Henderson, Board Advisor at Hook Tangaza via Be The Business
While some NEDs felt a six-year tenure period was fine, others cited that this really depended on each company’s situation.
Broader stakeholder focus?
Boards need to balance shareholder value with stakeholder impact, reflecting societal shifts and a growing emphasis on maintaining the organisational social licence to operate. For boards to be effective, NEDs need to understand the eco-system they work in, engaging with a broad range of stakeholders as well as needing to be courageous and take a long-term view.
"We need more skills beyond finance: Consumer skills, strategic insight skills, people people’ who understand company culture, why it matters and how to create it."
iNED
How will AI change boards?
AI is poised to fundamentally reshape the boardroom, not just by automating minute-taking but by becoming a strategic enabler and cognitive partner. NEDs expect AI to bring efficiency and to allow for more views to be considered, hoping that AI will be an increasingly useful and reliable tool in the boardroom.
Other NEDs believe the focus on impacts of AI on boardsis misplaced.
"It will be more about how AI is impacting what the executive does and what the business is about. AI is a wonderful assistant but we will still need intelligent human questioning and challenge at the board governance level, particularly around strategic oversight and ethics. So I think it’s more important to understand how AI affects the operating business rather than how it affects the board per se."
Philip Petersen, Chair, St Leonards School
Board training to change?
NEDs are expected to engage in ongoing education to bring a useful and effective skillset to board. Fifty-one percent of FTSE 350 boards describe induction and ongoing training programmes in their annual reporting (2024 Corporate Governance Review), which are designed to equip NEDs to ‘hit the ground running’ by their definition.
"Ongoing training is essential – technical, contextual and regulatory."
iNED
NEDs believe it is their duty to be constantly updating and refreshing their skills and fortunately there is plenty of training available to them.
"You’ve got a lot of different firms, whether accountancy firms, law firms or specialised industry associations, which can give you subject matter training."
Gail Le Coz, NED and Chair of Audit & Risk Management Committees
Where will NEDs be in five years?
In an era marked by volatility and rapid transformation, the role of the NED is expanding beyond direction and oversight. Effective NEDs will need to continue to navigate turbulent times with strategic clarity and resilience. And their leadership capability will continue to be measured by their competence, insight and ability to:
- support business evolution and strategic delivery
- develop executive talent
- mentor less experienced NEDs
- oversee emerging risks
- engage with topical issues, such as cybersecurity, AI ethics, and climate risk.
What’s evident is that the role of the NED in five years’ time is likely to be even more dynamic, strategic, and digitally attuned than it is today. As the business landscape continues to evolve, we look forward to NEDs having deep fluency in:
- digital transformation, AI ethics, and data governance,
- net-zero strategies, circular economy models, and nature-related disclosures
- navigating trade-offs between profit, purpose, and societal impact
- organisational culture, wellbeing, and workforce transformation
- anticipating systemic shocks – from geopolitical shifts to cyber pandemics
- operating in fluid, project-based structures, with rotating expertise supported by digital tools.
For more insights and guidance on board’s effectiveness and achieving productive governance, get in touch with Claire Fargeot. Claire will be pleased to talk you through how Grant Thornton is supporting organisations to unlock potential by activating the power of effective governance and board effectiveness reviews to drive value.