How do you measure non-executive performance?

One of the executive moves that caught my eye last week was the appointment of Marks & Spencer CFO Alan Stewart as a non-executive director at Diageo. I see it as a good hire. Alan brings serious financial expertise to the business and has experience in many industries, which is a great combination for an expanding business like Diageo. With the make-up of boards coming under greater scrutiny than ever these days, it is interesting to see the choices big companies make when adding to their top-level line-up. A recent report from McKinsey analysed the things that make a board do its job well, and there are certainly some fascinating points that are unearthed!

Alan’s hire was well-received by investors and the media, with the news sending shares up slightly. Franz Humer, Diageo’s chairman, supported this in citing his “strong track record” and “experience in the retail, travel and banking industries” when welcoming him to his new role. This indicates the breadth and depth of knowledge and capability the top companies are looking for in new board members. It is no longer enough to bring a particular set of qualities as a non-exec, a new member must be able to turn his or her hand to anything! This is in evidence when we look at the appointment of easyJet CEO Carolyn McCall as a non-exec at Burberry this week. Carolyn is a seasoned businesswoman who will bring commercial expertise and a different perspective to the board in the absence of Angela Ahrendts.

So, what makes the best execs, like Sir Stuart Rose and Allan Leighton (pictured above right), so capable when it comes to juggling multiple roles? Because top leaders are always in demand, and can rarely commit much time to each post, it is vitally important for boards to be sure they are making the most out of their non-execs. Unsurprisingly, the most important metric McKinsey notes in its new report is time devoted to the role. An average reading from more than 700 different boards said: “directors reporting that they had a very high impact worked for their boards about 40 days a year, while those who said their impact was moderate or lower averaged only 19.” It’s obvious that time spent on the role is a vital statistic to be aware of when assessing directors’ performances. Paddy Power’s marketing director Christian Woolfenden, who has just been appointed to his first non-executive role at broadcaster STV, said to MBS that “it’s the time management, and how I use my time, that will prove key to understanding the role.”

As well as this, McKinsey’s high-performance examples focus on aspects that go beyond the basics, moving past the rudimentary stuff like financials and expansion strategies by drilling down into “meta practices […] deliberating about their own processes”, and other deeper assessments of performance. Judging performance like this can be tricky – every director is different, after all – but it seems as though McKinsey has hit the nail on the head when it comes to transitioning from a mediocre board to an excellent one.

Maybe one way round this is simply to increase the number and frequency of board-level hires, making sure that all bases are covered? Travel firm Thomas Cook has recently done something along these lines, announcing three simultaneous hires to its digital advisory board . Kathryn Parsons, Jo Hickson and Nicola Millard are all experienced, tech-savvy executives, and will add value to many different areas of Thomas Cook’s web strategy. And – like in the case of Carolyn – it’s always good to see female appointments at the top level of British business, especially in a tech capacity!

I think that the non-executive choices businesses make can be some of their most crucial. McKinsey’s analysis is very interesting, but what other vital components of a non-executive role can you think of? Let me know at, and have a wonderful weekend.