Non-executive independence should not only be about avoiding conflicts of interest, but also include “independence of mind” and “cognitive diversity”, according to a special report from the Institute of Directors (IoD).

The report also warns companies that they should be “less conservative” in their approach to non-executive recruitment, “moving beyond the traditional pipeline of former executives”.

The IoD’s NEDs Reimagined report comes from a special commission headed by Baroness Natalie Evans of Bowes Park, a non-executive and former head of policy at the British Chambers of Commerce.

The IoD says the report—which comes more than 20 years after the 2003 Higgs Review looking at the role of non-execs—reveals that the “time has come for boards to evolve from a model of periodic oversight to one of active, informed and adaptive stewardship”.

Evans says: “Given today’s complex business environment, what made for a good board in 2003 is not necessarily what makes for a good board in 2026. It’s time to rewire the boardroom.”

She adds: “However, improved NED effectiveness cannot be solely mandated by government. It depends on a change in mindset—where curiosity, courage and commitment define the boardroom of the future.”

‘Spend more time with the company’

The report also calls on non-executives to “bring greater energy and curiosity to the role” and “spend more time with the company”.

When it comes to independence, the IoD report says organisations may need to choose non-executives who do not meet all “formal” criteria for independence.

“The ‘comply or explain’ nature of independence disclosure exists to support such decisions, with the CGC (corporate governance code) already allowing boards to ‘explain’ a candidate’s independence even if they do not comply fully with CGC independence criteria.”

The advice comes on the back of regulatory efforts to remind companies that ‘comply or explain’ continues to be an important element in the corporate governance code.

The Financial Reporting Council has also moved to clarify that non-executives can receive part-payment in shares without threatening their independence.

Recent calls have also focused on higher rates of pay for non-executives. The IoD report has sympathy. “NED remuneration should better correspond with demands, complexities and responsibilities of the role.

“Currently there is a widespread perception amongst NEDs that compensation falls short in this respect, especially outside of large, listed companies, making it more difficult to recruit and motivate good NEDs.”

The commission interviewed non-executives for its report. One revealed NEDs spend too much time on compliance.

“Nowadays 70% of board attention is given to compliance and procedures, and only 30% to genuine stewardship. These percentages should be reversed.”

An IoD survey shows the biggest obstacle to “effective” non-executive directorship is “reticence” to “robustly challenge” management and shareholders (48.7%). The next biggest problem is poor information flows from management (44.7%) and lack of non-executive engagement with the wider organisation and other stakeholders (40%).

Non-executives function in uncertain times with era-defining changes underway. It’s a good moment to consider the role of non-executives.