How to correctly dismiss a NED? on Which basis?

These days, more and more executive boards are realizing that a non-executive director (NED) can be one of their greatest assets. However, there are oftentimes situations in which a NED’s performance can and should lead to dismissal. To learn more about this important issue, be sure to review the brief guide that appears below:

When To Dismiss A NED

There are numerous reasons that a board of directors might want to dismiss a NED. Ultimately, a NED should be dismissed at any point in which the board determines that his or her presence is no longer personally and/or professionally advantageous for the group and company. However, it is also important to note that there are several specific cases in which dismissing a NED is almost always the appropriate course of action. Some of them include:

1. Ethical Code Violation.

Obviously, if a NED ever engages in a behavior that is unethical or illegal, this is a very clear indication that they need to be dismissed. There are numerous such behaviors that a NED might engage in, and some of them include sexual harassment and misappropriating funds.

2. Non-Compliance.

If a NED is specifically asked to do something (which is neither illegal nor unethical) and intentionally does not complete the action, such activity is grounds for dismissal. An example of this reality would be a board of director asking the NED to make suggestions regarding any members of senior management who should be removed only to find that the NED will not do so.

3. Non-profitability.

One of the reasons NED’s are hired is because the board believes their work will indirectly or directly increase company top and bottom lines. If this does not happen after a reasonable period of time, the NED may need to be dismissed.

How To Correctly Dismiss A Non-Executive Director?

Firing an individual can be challenging and complicated: Here are several things to keep in mind when you dismiss a NED:

1. Provide A Clear Explanation.

Once you’ve determined to fire a NED, it’s immensely important that you provide him or her with a clear explanation of why they are being dismissed. Doing so is ultimately a common courtesy and also provides the NED with constructive criticism and feedback that can help him or her for future endeavor.

2. Act Legally.

Your board of directors is responsible for knowing all of the legal rules and regulations surrounding the firing process. Thus when you decide to dismiss a NED, you should make sure that you are doing so in a legal manner.

So let me ask you a question, what do you think non-executive director should do to avoid being dismissed?

 

2 thoughts on “How to correctly dismiss a NED? on Which basis?

  1. Kim Lorrymer on Reply

    If you want to increase the likelihood that you won’t be dismissed, be sure that you always operate in excellence. Although doing so can be a challenging enterprise, the reward is worth it. In addition to making your organization more profitable, operating in excellence shows your board of directors that you are truly committed to playing an integral role in making the company as successful as possible.

  2. Paul Harris on Reply

    One of the best ways to avoid being dismissed is not to think about it. Contemplating the idea of being fired makes your thought pattern negative, and this can adversely influence your work performance. Instead of thinking about what to do to avoid being dismissed, concentrate on doing your best, familiarizing yourself with your new company culture, and keeping the lines of communication between you and the board open and honest at all times. Good picture by the way.

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