What do non-executive directors do? Non-executive directors are appointed to a board to provide an independent oversight and constructive advice to executive board members. It is known that non-executive directors are important to the contribution of the correct procedure in the running of a company. They bring independent advice on the strategy, resources and performance of a company, including the standards of conduct.
Key Responsibilities
Non-executive directors have key responsibilities in their roles. Strategic direction is a responsibility that has significant importance; as they have an outside perspective of the company, they can view the wider external factors, such as the political environment, that could affect the company in the future. By acting as a constructive critic, they can help to strategize the objectives and business plan of a company, with little emotional investment, giving their views a more professional tone.
Another key responsibility of a non-executive director is communication. It’s important for companies to have a good network of contacts externally, resulting in non-executive directors looking into networking opportunities for the company. Non-executive directors have a responsibility to connect the company with potentially useful people and organisations.
An important key responsibility is risk management. Non-executive directors need to keep financial information confidential, and make sure the risk management of the company has a robust strategy. There are a lot of different internal and external factors that become a risk to a company; a solid risk management plan should be managed and completed in case of an event taking place that could potentially put the company at risk.
Monitoring performance of executive management is another responsibility of a non-executive director. Monitoring the success and progress that is being made towards achieving and determining company strategy and objectives. There is an important role of appointing and removing, when necessary, executive directors.
A key responsibility of the whole board, including the non-executive directors, is the audit of the company. Making sure the company has a true and honest representation of the financial situation, actions and that necessary internal control systems are in place and monitored regularly for the shareholders to review.
Essential Qualities Of A Non-Executive Director
A non-executive director must be committed to their position and have a passion and energy for the success of the company. The role itself is demanding and will take a lot of commitment towards the role. A non-executive director must take the time to get to grips with understanding the company, market, competitors, and keep up to date with all of the internal and external factors of the company to keep on top of the brief.
An independent mindset is an essential quality of a non-executive director. Within the role, as they will not have as much emotional investment into the company it is an importance that the non- executive directors make informed and the right decisions for a company. An independent mindset means that they won’t be swayed by others into a decision that may not be best for the company as a whole.
A non-executive director will think about everything as a whole, the big picture of things. It is critical that they think about everything and how decisions can impact every part of the business. They must have strategic thinking and critical evaluation skills so they can evaluate on a proposed strategy in the correct way.
Why Your Business May Need A Non-Executive Director
You may feel the need to start looking to hire a non-executive director as they can bring fresh opinion and less emotionally involved perspective to business decisions, which helps the company to determine threats and opportunities to the business that they may not have thought about previously. Non-executive directors don’t come in to tell you how to run your business, but help you find the elements and fine margins that can have a successful impact on your business.
