The role of the non-executive director

Directors' responsibilities | First-time NEDs

The role of the non-executive director

December 16, 2022
Elise Perraud

In this blog, we remind you of important themes for non-executive directors that define the role and responsibilities of those serving on a board.

Ensuring effective business governance. Non-executive directors play a key role in ensuring that a company has strong and effective governance and decision-making practices in place. This includes overseeing the work of the executive team, providing independent guidance and advice, and ensuring that the company’s policies and practices align with its values and mission.

Managing risk. Non-executive directors are responsible for helping the company identify, assess, and manage risks. This includes both operational risks, such as those related to the company’s day-to-day operations, and strategic risks, such as those associated with the company’s long-term plans and goals.

Providing independent oversight. Non-executive directors provide independent oversight of the company’s activities. This can help to ensure that the company is being run in the best interests of all stakeholders.

Supporting the CEO and executive team. Non-executive directors provide valuable support and guidance to the CEO and the senior executive team. This ensures that the organisation is making progress towards its goals and objectives. It can also help to identify and address any challenges or obstacles that the company may be facing.

Fostering good relationships with stakeholders. Non-executive directors can play a key role in building and maintaining good relationships with the company’s stakeholders, including shareholders, employees, customers, suppliers, and the wider community. This can help to ensure that the company is able to operate effectively and achieve its goals.

To be an impactful non-executive director, you need to have a combination of relevant experience, expertise, and skills. This may include experience in a leadership or management role, and/or expertise in a particular industry or area of business. Professionals with an expertise in ESG, sustainability, stakeholder engagement and digital are sought after because boardroom composition has had to evolve to address ever-changing challenges and seize the business opportunities associated with them.

In addition to this, you need to have strong communication and interpersonal skills, high emotional intelligence to work as a team, debate constructively and achieve consensus. Strategic thinking, financial literacy and the ability make sound decisions are also crucial to the non-executive role.

Written by Elise Perraud, NEDonBoard COO.

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NEDonBoard, Institute of Board Members is the professional body for non-executive directors and board members. We provide the knowledge, skills and opportunities for future and current board decision-makers to achieve non-executive director status, responsibility for the strategic direction of businesses and ensuring the best business governance practices at the highest level.

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