Non-executive directors are a waste of time.

They often have little involvement with the

company and are not aware of what’s really going on. Critically discuss this statement in
view of Zimbabwe’s institutions (100).

Non-executive directors refer to members of the board of directors who are not part of the
executive team and are not involved in the day-to-day management of the organisation but are
involved in policy making and planning exercises. Non-executive directors are tasked with the
responsibility of monitoring the executive directors and acting in the best interests of the
company’s stakeholders.

The Cadbury Report (1992) stresses that non-executive directors are expected to bring
independent judgement and experience to the board. These group of directors are not saddled
with operational responsibilities of running a business, this is the prerogative of their
counterparts on the board-the executive board members. The Cadbury Report (2002) further
stipulates those non-executive directors should bring an independent judgement to bear on issues
of strategy, performance, resources, including key appointments and standard of conduct.

The key role played by non-executive directors is dualistic in nature, that is, supervisory and
managerial. This is tailor-made to function actively in areas of reviewing performance of the
board and that of the executive and to exhibit independent judgement where conflicts arise
between the interests of the company as a whole and those of the executive board members.
Higgs (2003) further states that non-executive directors will monitor the performance of the
report and evaluate the performance of the management team.

Over and above the exhibition of expertise on the deliberations of the board in the area of
strategy business development, non- executive directors also ensure that there is a suitable
balance of power on the board where necessary and influences the chairman over board decision
making with independent judgement.

Non-executive directors should understand the company’s business strategy, attend meetings and
function actively in the decisive affairs of the company through compliance with legal and
corporate governance policies. There is a general consensus that the experience required of non-
executive directors could be obtained from working in similar or other industries. Non-executive
directors could executives in other companies, with relevant professional qualifications,
experience in government or hold a chairmanship or non-executive position in other companies.

Higgs (2003) argues that non-executive directors exist to ensure that the management report and
financial data are correct as well as the risk management is strong and justifiable. In this regard,
non-executive directors are the most important ingredient in the audit committee which is
mandated with the safeguard of the resources of the organisation and the assumption of
reasonable levels of risk. Non-executive directors are expected to ensure that appropriate risk
management schemes are in place and guarantee that internal control frameworks are
implemented

Non-executive directors are expected to provide value, through leveraging their network of
outside contacts that can be beneficial to the company’s business. The unique contacts that the
non-executive directors bring to the table is a clear indication that outside sources can be a
benefit to the business. Barone A (2020) posits that broadening professional networks can bring
useful individuals and organisations to the board to strengthen the business and non-executive
directors can be summoned to represent the company externally and aid the board in retaining
stakeholders, customers, suppliers, shareholders and other third parties.

Moreover, non-executive directors are accountable for setting up the remuneration packages of
executive directors and play a significant role of appointing senior management. This is carried
out through the remuneration and nominations sub-committees.

Essentially, the key role of non-executive directors is to provide objective guidance and
supervision to the company’s management, bringing an external point of view and an
independent judgement to bear on strategy and performance issues. The main contribution that
non-executive directors offer to the company is that they have a wider and more experienced
view in relation to board discussions and decision-making process.

All directors are capable of advising the company and evaluating business issues with an
appropriately broad perspective, non -executive directors are appointed because of their market
experience, professional knowledge and skills. They provide the board with useful business
insights that other directors might not perceive in the same sense, since they tend to have an
internal and direct approach to general day-to-day business decisions.
The effectiveness of non-executive directors in Zimbabwean Institutions

The Cadbury Report (1992) maintains that non-executive directors should be selected with the
same impartiality and care as senior executives. The Report further argues that the directors
should be appointed through a formal selection process which will reinforce the independence of
non-executive directors and make it evident that they are appointed on merit, not through any
form of patronage.

This cannot be said about the manner of board appointments in Zimbabwean parastatals, where
directors are appointed by the relevant parent minister and the basis of appointment seems to be
political affiliation. At ZESA holdings, for instance there has been the continuous appointments
and dissolutions of the board of directors by various ministers who were presiding over the
Energy Ministry though the latest dissolution was reversed by the president and it was the
minister who was then fired.

Furthermore, the boardroom squabbles which ensued at the power utility evidently points to the
ineffectiveness of non-executive directors in strengthening corporate governance in Zimbabwe.
The executive chairman of the board suspended eight board members when the energy minister
instructed the board members to investigate the ZESA executive chairman on allegations of
abuse of company resources for personal use. The intervention of the office of the president,
meant that the executive chairman has unfettered powers that cannot be checked by non-
executive board members.

The sub-committees of the board are in existence at various institutions. These include the audit
committee, the remunerations committee as well as the nominations committee. The existence of
such committees is supposed to strengthen the board monitoring and oversight. However, despite
the existence of such, there has been scandals especially on remuneration at Premier Service
Medical Aid Society where the chief executive officer and senior management were awarding
themselves golden handshakes in salaries and other perquisites. This was happening under the
nose of non-executive directors and against the backdrop of the entity being heavily indebted.

The Cadbury Report (1992) stresses that non-executive directors lack the inside knowledge that
executive directors have, but should be afforded the same rights of access to information. Their
effectiveness depends to a considerable extent on the quality of the information which they
receive and on the use which they make of it.

Bosch (2005) stipulates those non-executive directors are pre-occupied with other commitments
and are only involved with the company on a part time basis. Carter and Losch (2004) further
corroborates the view and maintained that the average director spends little time on work, and
this prove cumbersome to develop much more than rudimentary understanding of the operations
of the companies that they preside over. Non-executive directors are part-timers on the board,
there are concerns as to whether they can realistically give objective opinions due to information
asymmetry caused by limited involvement with the operational activities of the company, it is
argued that they are excluded from internal decision making which ‘bedrocks’ businesses. In
essence they do not necessarily avert disastrous strategic decisions and might just end up just
‘sealing’ management decisions.

Roberts et.al (2005) emphasize that non-executive directors could be effective if only they pay
attention at board meetings in challenging and questioning appropriately about the assumptions
of the managers while supporting them. The authors caution that non-executive directors must
understand about their non-executive function and must have an incremental approach with a
mindset of ‘experienced ignorance’.

Non-executive directors in most corporates and public enterprises owe their appointment to the
recommendations of the executive board. This will then compromise their role in monitoring and
supporting of decisions that are made of executive management. The executive board play an
active role in the nominations of directors and usually, they appoint friends and colleagues who
may rubber-stamp any decisions proposed by the board.

Notable amongst the many issues that has arisen since the first review of the presentation of the
consultation paper (Higgs 2002), was the expectation of the performance probable of non-
executive directors. Firstly, is the fact that non-executive directors are mostly drawn from a
particular camp which could jeopardize independent judgment. The pool network has a higher
likely hood of negativity on the experience and expertise which would have ordinarily been an
advantage for their appointment.
The majority of individuals appointed to non-executive director positions are often chief officers
in other companies and are reluctant to criticize a fellow chief executive officer. Therefore, their
functionality as a non-executive can become biased over time, due to existing informal liaison
with one another and the nagging tendency to help each other out in certain times. For example,
non-executive directors might have personal interest in the decision of the value of executive
remuneration since such information is recycled amongst them to determine their own pay as
executive directors of other companies. This kind of support may cause unquantifiable damages
to companies and its shareholders. There is also the issue of connivance in a malicious take over.

Most non-executive directors occupy other full time executive positions or non-executive
positions in other companies, thereby dedicating insufficient time to any one company. Other
important criticisms include the lack of the law to play a more enforcing role in motivating non-
executive directors to take appropriate action against executives who are insubordinate or
negligent in their duties by imposing liability personally where loss can be attributed to an act or
inaction by an executive.

In conclusion the above challenges limit the role of non-executive directors in executing the role
of oversight in the companies that they preside over. These can be summarized as lack of
experience and knowledge of industry dynamics, lack of time commitment, information, and
independent judgement. This explains why non-executive directors have failed to avert corporate
failure in Zimbabwean banking institutions as well as corporate governance breaches associated
with state-owned enterprises in Zimbabwe.
Reference List

1. Muregwi H.N (2018) Effective of Board Composition on the performance of Zimbabwe

State Enterprises and Parastatals.
2. King Mervin E (2016) The King IV Report on Corporate Governance, Johannesburg,
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3. The Combined Code on Corporate Governance (2003). Financial Reporting Council
4. CIMA (2018) The Role of the Non-Executive Director: Making Corporate Governance
Work
5. Cadbury A (1992) The Financial Aspects of Corporate Governance. Gee and Company
Limited.
6. Higgs D (2002) Review of the role and effectiveness of Non-Executive Directors,
London United Kingdom.
7. Roberts, J., McNulty, T. and Stiles, T. (2005). ' Beyond Agency Conceptions of The
Work of the Non-Executive Director: Creating Accountability in the Boardroom', British
Journal of Management.
8. Bosch (2002) Bosch, H. (2002). "The changing face of corporate governance." UNSW
Law Journal.
9. Carter, C. B. and J. W. Lorsch (2004). Back to the Drawing Board: Designing Corporate
Boards for a Complex World. Boston, Harvard Business School Press.
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Enterprises and Parastatals, Harare Zimbabwe.