Search
Close this search box.

Board composition  |  Governance

Do you need a Non-Executive Director?

boardroom
SHARE
LinkedIn
Twitter
Facebook
Email

According to NEDonBoard, “Non-Executive Directors challenge, question and monitor the CEO and senior management; they bring an independent perspective to decision-making; they hold senior management to account; they also support and mentor the CEO and senior management. They are a “critical friend” and must act in the interests of the company’s stakeholders (e.g. shareholders, employees, pensioners, suppliers)”.

The UK corporate governance code suggests that “at least half of the board directors in larger companies should be non-execs. Smaller companies should have at least two.”

 

Most businesses can benefit hugely from specialist and senior expertise, but this is not necessary or affordable on a full-time basis. Non-execs have many years of experience behind them, often specialist expertise that is lacking in the executive and management team. They typically spend 20 – 25 days per annum with their clients, advising the executives and managers and attending management and board meetings. This can cost a fraction of the amount required for a full-time employee at that level and still provides access to 100% of that expertise. So what are the 5 key benefits of appointing a Non-Exec to your board?

 

  1. Continuity

Consultancy provides an intense period of involvement but can leave a business struggling to maintain momentum when the assignment is ended.

A Non-Executive Director has a longer-term commitment and can monitor progress and can support the trickier challenges of implementation and change.

 

  1. Focus

Business owners and leaders are often pulled from pillar to post managing multiple business issues and “fire-fighting”. They can struggle to sustain their focus on specific business challenges.

A NED is one step removed from the day-to-day leadership and management of a business and can support the business leader in their focus on specific, long-term aims and avoiding direction and activity that is not aligned with strategy.

 

  1. Challenge

Salaried executives are understandably reticent when it comes to challenging the boss. It’s not always good for career progression. As a result, a business leader can find themselves surrounded by “Yes” people.

A Non-Executive Director has no political agenda or axe to grind and can “tell it like it is.”

 

  1. Confidentiality

It’s lonely at the top. Business owners and leaders cannot always share their worries, doubts and concerns with those they lead and this can lead to stress and poor decision-making.

A Non-Executive Director will listen and the conversations will be confidential.

 

  1. Coaching

Business leaders achieve their exalted position from a variety of career paths. They may lack the expertise and experience to guide subordinate executives in their specific discipline.

A NED with expertise and experience in a specific discipline such as marketing or human resources can provide that essential insight.

 

What are the top 5 reasons for bringing in a NED?

  1. Commercial experience and knowledge
  2. Strategic vision for your business and a challenge for current strategy
  3. An objective view of your business
  4. Setting and monitoring key performance indicators
  5. Oversight of the executive board and hold them accountable

 

Related post: What are the key differences between an executive and a non-executive director?

Related post: NEDonBoard calls for SMEs and large private companies to draw from its pool of talented business leaders

Related post: How to select the right Non-Executive Director?

 

If you are a company looking to appoint a NED, post your vacancy on the NEDonBoard jobs board. As a membership organisation, NEDonBoard has a deep and diverse pool of talented, experienced and influential professionals keen to contribute to the business successes of SMEs and large private companies in a variety of sectors. If you have questions, please contact us at [email protected].

 

Mark Walmsley is a Consulting Non-Executive Director with 25 years’ experience in brand, digital, marketing and business development across several industries.

 

 

 

Events