What is a Non-Executive Director (NED)?

A Non-Executive Director (or ‘NED’ or ‘Non-Exec Director’) is an individual appointed to a company’s Board of Directors, by the Chairman or the Business Owner. They are not employed by the company but act as independent advisors to help the company achieve its goals. This is similar to role that a Business Sounding Board like me would perform, but on a more formal basis.

Non-Executive Directors provide independent oversight and are usually paid a salary (although not always) for their services, but are not regarded as employees. Whilst a NED is not a part of the day to day running of the business, they can have a profound impact.

Non-Executive Directors are usually chosen because of their independence and initiative, are of an appropriate calibre, have the right experience and have particular personal qualities.

According to the UK Institute of Directors, Non-Executive Directors are expected to ‘focus on board matters and not stray into ‘execution’ thus providing an independent view of the business that is removed from day-to-day running‘.

What should a Non-Executive Director bring to the board?

• Independence
• Impartiality
• Wide experience
• Special knowledge
• Personal qualities

In addition to the above five key qualities an effective Non-Executive Director should influence the achievement of balance of the board of directors as a whole as well as commitment, perception and a broad perspective of the area or industry. More key responsibilities may include:

• Contributing to the strategic direction of the corporation
• Efficiently solving problems that arise
• Communicating with third parties
• Ensuring all the audit requirements are satisfied
• Remuneration of the executive directors
• Appointing the board of directors.

The Top 10 traits to being a great Non-Executive Director (NED)

Ian Wright – founder of VirtualNonExecs, recently wrote an article listing his personal choices as to what a Non-Exec Director should display in the boardroom;

• Big Picture thinker
• Governance knowledge
• An independent mind
• Potential be an ambassador
• The energy and commitment to make an impact
• Have a wide professional contact network
• Promote diversity from board level down
• A diplomatic approach
• Confidentiality
• Empathy and confidence in equal measure

In addition, the following qualities are also identifed as important within the role of a NED;

• The courage to speak out
• Patience and emotional intelligence
• The ability to value and safeguard the truth
• the strength and courage to hold executives to account
• the ability to empower executives (and not do an executive role)
• Question, challenge but ultimately to support

How do I find a Non-Executive Director?

There are a number of ways that you can find a NED for your business but most the most common ways are either personal connections, advertising the role, via recruiters/head-hunters or simply doing your own due diligence and making approaches to directly to someone.

However, apparently 65% of Non-Executive Directors are appointed to a board via a personal connection. Therefore if most NED roles are found through networking, it is really important to invest time and resources in getting out there and building a network of professionals who operate at board level. Ideally you need to identify and target current Board-level executives, with specific experience relating to a your business’s future journey, as well as people who are already NEDs, often with recent and up-to-date full-time executive experience.

The first 90 days as a Non-Executive Director

Ian Wright also wrote this article on what you should do, as a Non-Exec Director in the first 90 days. have a read, but in summary the topic areas are as follows;

• Create your own plan
• You’re a Barista now
• You are the weakest link
• One or two big wins
• Learn from the mistakes of others
• Numbers, Numbers, Numbers
• Good press
• Identify the challenges
• Be the ‘critical friend’

What is the difference between Non-Executive and Executive Directors?

Most executive directors are employees of the company. Non-Executive Directors are not involved in the day-to-day running of the business. They are not employees of the business.

What next?

Let me know what you think about this simple overview of Non-Exec Directors. Do you have one? What would you add to the above? Let me know if you have any other suggestions.

If you’d like to discuss how I could help you on your journey as a Business Owner, or even if you’d like to discuss me becoming a Non-Executive Director for your company, then please give me a call, drop me an email or connect with me on LinkedIn. Details below. However, you might find a peer-to-peer business mentoring group is better for you.

I’ll be happy to have chat with you to explore how I may be able to help you. I’ll be honest and I may not be able to help you myself and in that scenario I’ll try and point you in the right direction.

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