F.A.Q- Non Executive Director (NED)

A non-executive director (abbreviated to non-exec, NED or NXD), independent director or external director is a member of the board of directors of a company or organisation, but not a member of the executive management team.

Part of the role is to provide an impartial and independent view to support the executive team. The non-exec is to be engaged with the businesses landscape but with a certain detachment although they share the same legal responsibilities as the executive directors. This allows a different perspective to provide valuable insight into the business and the surrounding landscape.

Instead of being involved in the day-to-day operations of the business, they are employed for their neutral oversight and reach. They can give a specialist advice regarding corporate governance, risk management and succession planning for an organisation.

The nature of the NED role requires certain qualities from the candidate for their appointment to be successful. According to research carried out by Roffey Park, the attributes or qualities most desired in a NED are:

“Analytical, Articulate, Confident, Decisive, Honest, Integrity, Good judgement, Persuasive, Self-aware, Emotionally intelligent”

Performance:
The NED monitors the executive management and play a key role in succession planning.

Auditing:
The NED has a duty to ensure the company accounts properly to its shareholders, presenting a fair reflection of itself.

Remuneration:
The NED has input towards deciding the appropriate levels of remuneration of executive directors.

Strategy:
The detached position of the NED allows them to survey the opportunities and threats to the organisation.

Communication:
Their contacts and opinions can connect the business and board with networks of useful people and organisations.

Risk:
Ensuring the integrity of financial information, controls and systems of risk management are dependable.

Every client’s situation different and our job as recruiters is to establish the needs of the business and their future plans. The reasons for Non-Exec recruitment are varied but usually fall into one of two categories:

Those looking for transformation and embrace a very different future, by disruption, innovation, and growth

Clients are searching for assured leaders that can provide stability in times of fluctuation

Often a business may be seeking to simply strengthen and diversify their Board skills. Other organisations hire a NED in readiness for some specific corporate activity such as an IPO.

One client said that they wanted a NED to share a drink with around the fireplace and openly discuss the issues that the business was facing. A good NED will identify problems and then the Board can begin to create solutions.

Alternatively, the business may wish to refocus their strategic plans or seek challenge and intervention from an external Director to counter the danger of ‘Group Think’. Our Clients also sometimes seek sector experience or relevant knowledge of a supply chain.

Other key areas for the NED would be to further develop commercial and marketing affairs, strategy, operational management, organisational structure, and corporate governance.

Other NED hires are based on adding top line strategic help to the executive team. Identifying and filling skill gaps within a leadership team can make a huge difference to the effectiveness and profit of an organisation.

Some appointments are based on the clients recognising the importance of robust corporate governance practices, with strict fiduciary adherence with audit and risk at the heart of the search.

One client wanted to ensure that their incoming NED would bring a high degree of independence to the Board, offering guidance, support, challenge, expertise, and an objective perspective on the key matters of financial services. Other key areas for the NED would be to further develop commercial and marketing affairs, strategy, operational management, organisational structure, and corporate governance.