Non-executive directors are independent, non-management board members. They provide a fresh perspective and act as an additional pair of eyes to the business. In smaller businesses, non-executive directors are usually independent professionals such as accountants or consultants. Working as a non-executive director is not the same thing as being a non-executive employee, which usually means you don’t have responsibility for managing staff; instead you’ll focus on advising the executive team on a specific area of expertise. Non executive directors play an essential role in any organisation and they help management teams to direct and steer businesses efficiently by providing objective advice, challenging assumptions, and effecting change. Here is all you need to know about non-executive directors – their roles and responsibilities, skills needed to become one, typical responsibilities of non-executive directors.
What is a Non-Executive Director?
A non-executive director is a member of a company’s board of directors who does not take part in the day-to-day management of the business. Non-executive directors typically provide strategic advice and oversee the performance of the executive team. In the UK, non-executive directors are required by law to act in shareholders’ best interests. The role of a non-executive director is distinct from that of an executive director, who typically holds a management position in the business such as CEO or CFO. The main duties of a non-executive director are to oversee the performance of the chief executive and the rest of the management team and to provide oversight for the board of directors as a whole.
Why have a Non-Executive Director?
The role of a non-executive director is to help steer the company in the right direction and to ensure it stays on track. Having an independent non-executive director on the board provides a fresh perspective that can help to address challenges and obstacles that may arise. A non-executive director can also help to identify areas of opportunity and growth that may otherwise go unnoticed. Non-executive directors can help to build and maintain trust with key stakeholders such as employees, investors, and suppliers. Having a non-executive director on the board can help to demonstrate to stakeholders that a company is being held to a high standard and operating with integrity.
Skills Required to Become a Non-Executive Director
The skills and experience you need vary depending on the company that requires the non-executive director. However, in general, they need to demonstrate a strong track record of success in your field and have a strong commercial understanding of the business landscape. Non-executive directors must demonstrate strong leadership skills and be able to provide critical and constructive feedback. They should also be mindful of the reputation of the business and how their reputation aligns with it. Non-executive directors must also have the capacity to dedicate time to board meetings and provide the board with ad hoc advice, which can be anywhere from 1 to 2 days per month depending on the business and its current needs.
Typical Responsibilities of a Non-Executive Director
A non-executive director may be responsible for a variety of tasks, including:
- Ensuring the company’s mission and values are aligned with its strategy - they may be tasked with helping to set the company’s direction, including its strategic objectives and priorities. In some cases, they may also be required to help create the mission and values for the company.
- Providing strategic advice - they may be required to provide strategic and financial advice to the company’s management team and board of directors. This can include helping the company to forecast future growth and profitability, as well as providing insight into competitive analysis and the market landscape.
- Overseeing the performance of the management team - they may be tasked with evaluating the performance of the company’s management team. This can include assessing the company’s risk management practices, evaluating the company’s financial performance, and helping to implement any necessary changes to improve performance.
- Engaging with stakeholders - they may be required to engage with a variety of stakeholders, including customers, suppliers, investors, and employees. This can help to build trust and transparency within the company and the industry as a whole.
Conclusion
In summary, Non-executive directors are independent, non-management board members who provide a fresh perspective and act as an additional pair of eyes to the business. The main duty of a non-executive director is to oversee the performance of the chief executive and provide oversight for the board of directors as a whole.
Stepchange Business Growth provide non-executive support with expertise from Commercial Finance Directors, Sales and Marketing Directors, Technical Standards Directors and Operational Directors. Should you wish to find out more then please contact us.