Most boards would be thrilled to recruit a former cabinet minister, celebrated CEO, or a non-executive director with a string of honours after their name.

Investors often welcome these kinds of appointments too. Our ongoing Kakabadse research consistently finds that companies announcing the arrival of prestigious directors tend to enjoy a positive bump in the markets.

Stakeholders naturally assume that successful and well-connected individuals bring with them credibility, experience, influence and also access to highly valuable networks. In uncertain times, these qualities are particularly attractive.

As organisations navigate geopolitical instability, shifting trade relationships, heightened regulatory scrutiny and the disruptive impact of artificial intelligence, many boards are keenly seeking directors who possess established reputations and proven track records. These prestigious appointments signal confidence and reassurance to the wider world.

However, this comes with an uncomfortable question that boards rarely take the time to consider – ‘What if the very qualities that make a board look stronger from the outside make it weaker inside?’

Recent corporate history suggests that this possibility deserves careful attention.

Why prestige matters

The attraction of having prestigious directors is easy to understand. Stakeholders often interpret respected individuals associating themselves with a company as evidence of quality, competence and sound governance.

For firms approaching an IPO or seeking investment, this signalling effect is particularly valuable. Investors are frequently willing to place greater trust in organisations that appear to be guided by experienced and credible individuals.

Prestigious directors may also strengthen accountability. A highly regarded non-exec with standing equal to, or greater than, the chief executive is often better placed to challenge management and provide independent oversight. Used well, prestige can act as a genuine governance asset. The problem is that prestige has a shadow side.

When status begins to undermine challenge

A consistent finding in governance research is that groups of highly successful people can become surprisingly reluctant to challenge one another.

Elite networks tend to reproduce themselves, with directors often selecting individuals whose backgrounds, experiences and outlooks feel familiar to them. As a result and over time, diversity of thinking gives way to a more comfortable consensus.

This doesn’t happen because prestigious directors lack capability. In most cases, exactly the opposite is true. They are accomplished, intelligent and highly experienced individuals but challenges faced are cultural, rather than intellectual.

People who’ve spent decades earning the respect of their peers can find it difficult to openly question those same individuals. Challenging another respected figure carries social and reputational costs. Difficult conversations are accordingly softened, awkward questions remain unasked, and emerging concerns, no matter how obvious, are given less scrutiny than they deserve.

The outcome is not necessarily poor governance in a conventional sense. Meetings continue to he held, papers are reviewed, and decisions are made. And yet the quality of challenge lying at the heart of effective board oversight can gradually weaken.

Lessons learnt from corporate failure

History offers us several reminders that prestige alone doesn’t guarantee effective governance.

The board of Enron included highly respected individuals with impressive credentials and extensive experience. On paper, it looked exactly like the sort of board investors would want to see. Despite this, prestige did not translate into effective challenge or oversight, and warning signs that were readily available went largely unaddressed before the company’s collapse.

More recently, the difficulties experienced by Credit Suisse demonstrated that even long-established institutions with experienced and highly regarded directors remain vulnerable when risk management, oversight and board culture fail to keep pace with events. The reputation of the board wasn’t enough to prevent a succession of governance and risk failures.

Perhaps one of the clearest modern-day examples is Theranos. The health-technology company assembled a board packed full with distinguished figures from the worlds of government, business and the military. Their names enhanced the organisation’s legitimacy and credibility.

However, this prestige wasn’t matched by the expertise, scepticism and challenge demanded in overseeing a complex healthcare business. The board’s reputation proved far more impressive than its ability to scrutinise management claims.

Although the circumstances in each case are different, the lesson is remarkably similar. External reputation creates confidence, but this confidence isn’t matched by the level of challenge required inside the boardroom.

The real Achilles’ heel

The greatest weakness of prestigious boards is rarely capability. It is instead a reluctance to disrupt the relationships between perceived equals.

Directors functioning within elite networks frequently share informal codes of behaviour that are built around mutual respect and professional courtesy. While these qualities might support effective collaboration, they can also act to inhibit robust debate when difficult decisions arise.

The boardroom’s most important question is usually the one which no one wants to ask. It may challenge a respected chief executive, expose a weakness in strategy, or force directors to confront disconcerting evidence. In prestigious boards, where members are conscious of their status and reputation, there can be a tendency to prioritise harmony over scrutiny.

Research into governance failures repeatedly highlights that the warning signs are often visible long before a crisis emerges. The problem isn’t usually a lack of information, it’s that available data is filtered through assumptions, relationships and collective over-confidence. When board members get too comfortable with one another, those assumptions are less likely to be challenged.

That’s why prestige is a double-edged sword. The very qualities creating confidence externally can, under certain circumstances, reduce critical challenge internally.

Moving from prestige to purpose

None of this suggests that organisations should avoid appointing prestigious directors. Experience, influence and credibility all remain valuable assets. The key challenge to keep in mind is ensuring that prestige serves governance, rather than replaces it.

Nomination committees should look beyond reputation and consider behavioural qualities, such as curiosity, humility and the willingness to challenge constructively. A distinguished CV can open the boardroom door, but it doesn’t guarantee effective contribution once inside.

Chairs also play a critical role. Creating an environment where difficult questions are welcomed, rather than merely tolerated, helps ensure that all directors contribute fully, irrespective of their status. Structured board evaluations, regular reflection on decision-making processes, and a conscious focus on cognitive diversity all help counteract the risks associated with prestige-driven conformity.

Prestige is a signal, not a safeguard

Prestigious directors undoubtedly provide value. Their networks, knowledge and credibility can strengthen organisations and create opportunities that might otherwise remain out of reach. The mistake is to confuse prestige with protection.

Reputation is a signal of potential value but not, in itself, a protection against weak governance.

Boards relying too heavily on status can find themselves vulnerable to the very risks they believe prestige guards them from: Complacency, conformity, and a reluctance to challenge.

For modern boards, the real test isn’t whether they can attract impressive names. It’s whether those individuals are prepared to question one another, challenge assumptions and place the interests of the organisation ahead of their own personal standing.

Nada Kakabadse is professor of policy, governance and ethics at Henley Business School. Her work continues to draw on and develop the extensive body of governance and leadership research she pursued jointly with her late husband, Professor Andrew Kakabadse.