The Non-Executive Director, no longer a role that is associated just with large organisations. There is a growing awareness of the NED role and more and more organisations are appointing NEDs of various types, and specific specialities, often within technology and digital transformation, to enhance the effectiveness of their boards as standard practise.
With the pressure on organisations to compete globally, deal with digital transformation and respond to rapidly changing market conditions, new skills are needed at board level. This leads to the role of the NED diversifying and introduces a need to refresh the NEDs as circumstances change, bringing in new specialities, experience and challenge when the organisation needs it.
A good NED can, and should make a substantive and measurable contribution to the effectiveness of the board. Do not see a NED as a consulting advisor – a NED, within the remit of the role of a company director, play a full and active part in the success efforts of an organisation. Irrespective of the skills, experience and network contacts that NEDs will bring, they must above all, provide appropriate independent and constructive challenge to the board.
Both the organisation and the NED must understand the purpose of being a NED, within the specific organisation, for the role to be effective. This includes a clear understanding of what value the NED is expected to bring. A NED’s value goes beyond just the statutory requirements.
On appointment a Non-executive director can:
- Broaden the horizons and experience of existing executive directors.
- Facilitate the cross-fertilisation of ideas, particularly in terms of business strategy and planning.
- Have a vital part to play in appraising and commenting on a company’s investment/expenditure plans.
- Bring wisdom, perspective, contacts and credibility to your business.
- Be the lighthouse that helps you find your way and steer clear of near and present dangers.
The role of the NED
All directors, including NEDs, are required to:
- provide entrepreneurial leadership of the company
- set the company’s vision, strategy and strategic objectives
- set the company’s values and standards
- ensure that its obligations to its shareholders and others are understood and met.
In addition, the role of the NED has the following key elements:
- Strategy: NEDs should constructively challenge and help develop proposals on strategy.
- Performance: NEDs should scrutinise the performance of management in meeting agreed goals and objectives and monitor the reporting of performance.
- Risk: NEDs should satisfy themselves on the integrity of financial information and that financial controls and systems of risk management are robust and defensible.
- People: NEDs are responsible for determining appropriate levels of remuneration of executive directors and have a prime role in appointing, and where necessary removing, executive directors, and in succession planning.
“In broad terms, the role of the NED, under the leadership of the chairman, is: to ensure thatthere is an effective executive team in place; to participate actively in the decision–takingprocess of the board; and to exercise appropriate oversight over execution of the agreed strategy by the executive team.”; Walker Report, 2009
A non-executive director will bring the follow benefits to your company:
- strengthen the board and provide an independent viewpoint
- contribute to the creation of a sound business plan, policy and strategy
- review plans and budgets that will implement policy and strategy
- be a confidential and trusted sounding board for the MD/CEO and keep the focus of the MD/CEO
- have the experience to objectively assess the company’s overall performance
- have the experience and confidence to stand firm when he or she believes the executive directors are acting in an inappropriate manner
- ensure good corporate governance
- provide outside experience of the workings of other companies and industries, and have beneficial sector contacts and experience gained in previous businesses
- have the ability to clearly communicate with fellow directors
- have the ability to gain the respect of the other directors
- possess the tact and skill to work with the executive directors, providing support and encouragement where difficult decisions are being made
- have contacts with third parties such as financial sources, grant providers and potential clients
Looking for a NED?
Now that you understand what a NED can do – What are you waiting for?
Contact Renier Botha if you are looking for an experienced director with strong technology and digital transformation skills.
Renier has demonstrable success in developing and delivering visionary business & technology strategies. His experience include Mergers & Acquisitions (M&A), major capital projects, growth, governance, compliance, risk management as well as business and organisation development.