The Role of a Non-Executive Director
A Non-Executive Director (abbreviated to Non-Executive, Non-Exec or NED) is a member of the board of directors of a company or organisation who does not form part of the executive management team.
In essence, the Non-Executive Director’s role is to provide a creative contribution to the board by providing objective and constructive views. Non-Executive Directors have an important contribution to make in the proper running of organisations.
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There is no legal distinction between Executive and Non-Executive Directors. As a consequence, in the UK unitary board structure, Non-Executive Directors have the same legal duties, responsibilities and potential liabilities as their executive counterparts. Clearly, it is appreciated that Non-Executive Directors cannot give the same continuous attention to the business of the company. However, it is important that they show the same commitment to its success as their executive colleagues. It follows that Non-Executive Directors are subject to the codified duties of directors contained in the Companies Act 2006 in the same way as Executive Directors. All Directors should be capable of seeing company and business issues in a broad perspective. Nonetheless, Non-Executive Directors are usually chosen because they have a breadth of experience, are of an appropriate calibre and have particular personal qualities.
Additionally, they may have some specialist knowledge that will help provide the board with valuable insights or perhaps, key contacts in related industries. Of the utmost importance is their independence of the management of the organisation and any of its ‘interested parties.’
This means they can bring a degree of objectivity to the board’s deliberations, and play a valuable role in monitoring executive management. In particular, the board should include Independent Non-Executive Directors of sufficient calibre and number for their views to carry significant weight in the board’s deliberations.
The functions of Non-Executive Directors are expected to focus on board matters and not stray into ‘executive direction,’ thus providing an independent view of the organisation that is removed from day-to-day running.
Non-Executive Directors, then, are appointed to bring to the board:
- Wide experience;
- Special knowledge;
- Personal qualities.
Whilst not all the same, Non-Executive Directors will largely have responsibilities in the following areas:
Strategy: Non-Executive Directors should constructively challenge and contribute to the development of strategy.
Performance: Non-Executive Directors should scrutinise the performance of management in meeting agreed goals and objectives and monitoring and, where necessary, removing senior management, and in succession planning.
Risk: Non-Executive Directors should satisfy themselves that financial information is accurate and that financial controls and systems of risk management are robust and defensible.
People: Non-Executive Directors are responsible for determining appropriate levels of remuneration of executive directors and have a prime role in appointing and where necessary removing senior management, and in succession planning.
Non-Executive Directors should also provide independent views on:
- Standards of conduct;
What Organisations Look For
In order to be successfully appointed to a Non-Executive Director role, and to submit an effective application, it is important to first understand what appointing boards look for in potential applicants.
Non-Executive Directors have a unique role that’s slightly different than a traditional executive who is part of the management team. Whether you’re looking for your first role as an Non-Executive Director, or already have experience in this position, it’s helpful to know precisely what an organisation wants from you. While there can be some differences from board to board, here are some overarching qualities that are desired across the board.
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Non-Executive Directors could be considered as an outsider from other members of management. As a result, they need to be able to think for themselves and stick to their guns regardless of the situation. They need to consistently make the right decisions and use independent judgement when determining the best plan of action for a company. Otherwise, if a person is unable to think independently, it could have adverse consequences on an organisation.
Able to see the big picture and help develop sound strategies, it’s ideal for a Non-Executive Director to be analytical and able to plot a long term strategy that steers an organisation in the right direction. They should have a knack for taking a wealth of data and putting it all together and make sound decisions.
Non-Executive Directors are often required to exchange ideas with other members of the executive team and wider Board and be able to clearly express their thoughts. They should be able to critique any problem areas in a diplomatic way.
Ability to Remain Unbiased
Non-Executive Directors are expected to maintain a sense of neutrality and offer a clear perspective. That’s why it’s critical that they stay unbiased at all times and make sure that their decisions are based on objectivity. When looking for an Non-Executive Director, most organisations will want a person who can remain focused and do what’s best for the organisation regardless of their personal views.
Demonstrable Passion & Interest in the Organisation
Often working with a range of stakeholders – both internally and externally – a Non-Executive Director who can speak with enthusiasm on behalf of the organisation’s vision, mission and values is essential. Whether that is through personal experience or not, in order to build credibility and impact, the aims of the organisation should chime with those of the individual.
How to Determine Whether You Have the Skills
Consider carefully both what you have to offer a board, and what most interests you.
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Be objective. When you think about yourself, think about how your particular experience and skills will be relevant for a Non-Executive Director role. For example, do you have finance expertise which would be useful for an audit committee role? Are there particular areas of public life where your sector or functional knowledge could add value?
Time commitment. What level of commitment can you make? All boards will usually require the highest time commitment. Should a crisis arise, the commitment can increase substantially.
Support. Do you have the support of your current employer? They will need to release you for a number of days per year, and there may be little or no control over which days these will be. Some companies have very clear policies as part of their Corporate Social Responsibility (CSR) that will actively encourage and help individuals find Non-Executive Director roles; especially those that work within the communities that they serve.
Be honest. What is your motivation? Is this something you really want to do, or simply feel you should do? Are you enthusiastic about the idea of committing your time and energy?
If you find your motivation to be strong, seek experiences that will prepare you for a Non-Executive Director role. For example, you can join internal company boards or committees, or even consider getting involved on a local level with third sector organisations; maybe even your children’s school as a Governor? All of these experiences will enable you to grow and learn about the role of a board and the impact that individuals can have as part of a working party.
Crafting your CV
Writing a Non-Executive Director CV is often the best place to begin when considering your next or first board role. Whilst there is no set template for what style or format your CV should take, it must answer the central question any Chair/selection committee will want to know – ‘Why should we appoint you?’ For this reason your Non-Executive Director CV must: demonstrate your successes; be succinct and above all be readable.
A standard Non-Executive Director CV is unlikely to run over 2 pages; but if it does, make sure that the information you are providing is relevant and speaks about what you can bring in terms of the additional skills and insight required to make the role a success.
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What should you include?
Summary Profile Advice: The nature of the CV will change, especially if you are looking to break into the Non-Executive Director community and have no previous experience in these roles. This often means talking slightly more about achievements and what you can bring to Non-Executive Director positions in the summary profile. This sets the agenda and gets the person reading the CV interested and persuades them to read on. It is important to convey top-level credentials and achievements likely to stand out from others.
Career Progression: The emphasis will change by focusing on showing an exemplary track record of career progression in a clear summary, with job titles, employers and dates to make up for a lack of existing Non-Executive Director roles. Mention committee memberships or steering groups instead to make up for any perceived lack of formal Non-Executive Director experience.
Professional development: This is a good differentiator, so it is important to mention professional memberships, executive leadership programmes and specialist / industry-specific training, courses and accreditation. This adds considerable value and reinforces Non-Executive Director credentials.
Selling Current Role: Greater emphasis may be required in a Non-Executive Director CV for current and most previous roles to demonstrate clear credentials in strategic decision-making, leadership or consultancy expertise. Going into some extra detail may take the CV onto a second page, but it gives an opportunity to confidently sell credentials, achievements, skills, expertise, programme leadership and decision-making rationale using excellent examples.
Mentioning Previous Roles: For older roles it is not so important as recruiters are only interested in what candidates are doing now or in most recent roles. Keep it mainly to the current role, plus one previous role and then summarise the rest. Keep it simple, especially as a career and progression summary has already been outlined on the first page.