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Financial Director – April 2015

There’s a bit of a non-exec vibe running through the April issue of Financial Director. Granted, it’s not quite the vibe you would’ve experienced at Woodstock, or David Bowie’s last gig as Ziggy Stardust. But a vibe nonetheless.

If you’d listened to some of the digs made last month by Public Accounts Committee chairwoman Margaret Hodge at former Pearson CFO Rona Fairhead on her audit committee role at HSBC, during alleged tax evasion and avoidance, you’d know that, well, the decibels were high.

“When things go wrong in the public sector on your watch, you resign. No one has deigned to accept responsibility,” Hodge said during the hearing, calling on the government to “sack her” from her BBC Trust chair role. Meanwhile, HSBC chairman Douglas Flint apologised to the Treasury Select Committee over the bank’s governance failings.

Flybe chairman Simon Laffin writes of his frustration that the deeper roots of governance failings don’t seem to be repaired – instead, the top few people in the business get the chop while the survivors face a judicious pruning from either the Public Accounts or Treasury Select Committees.

Fairhead told the committee that “when you’re a non-exec in an oversight role, you have to rely on the policies and controls in place”. Her point seems a fair one. But showing rigour and shining a light on bad practices or culture are part of a non-exec’s makeup. In our movers pages, we write of former BP CFO Dr Byron Grote joining Tesco as a non-exec – a move designed to drive external confidence of the grocery retailer. And former Sainbury’s CEO Justin King refers to his two previous chairmen, both CFOs by trade.

The UK Corporate Governance Code places more expectations on the role of non-executives. The financial and operational experience from serving as a CFO makes their appointment as a non-exec an attractive proposition. It is both humbling and surprising that a senior finance executive by profession, Douglas Flint, is apologising.

The move into a non-exec role is a logical step for an FD – but the expectations of non-executives are growing, as is the likelihood of, at the very least, public admonishment if things don’t work out. Rightly so: taking on a non-exec role must be taken very seriously, and with very careful consideration. Only you can gauge the vibes.

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