A Non-Executive director (NED - or sometimes called a NXD), is a member of the board of directors of a company or organisation, but not a member of the executive management team.
A NED is therefore not part of the day to day management of a business, however as a NED you are responsible as part of the board for the success of the company (why not read 'How to run effective board meetings' next?). Here we set out ten qualities that are sought from an ideal Non-Executive Director that will help make this happen…
A NED should be objective when assessing the company’s performance. Can you look at the information provided with a dispassionate eye and get to the heart of what is required?
Objectivity can be surprisingly hard to achieve as soon as you care about something - and caring about something is often the hook that encouraged you to engage in the first place! Always keep objectivity at the forefront of your mind.
Managing Directors (MD) or Chief Executive Officers (CEO) will use a NED as a sounding board.
As a NED the MD/CEO will seek advice from you about a range of issues. It is your role to provide advice and support, but also help them stay focused on the strategy that has been agreed. Whatever the MD/CEO discusses with you as a NED should always remain confidential.
A NED should bring with them to the company their experience and knowledge of other companies or industries.
Your specialist knowledge is invaluable to a company, particularly if the company is experiencing a period of growth or is at a stage in their development that is new, as you can help navigate the company through this.
While anyone working for a company can try to be objective in assessing how well the company is performing, being independent ensures that you are.
A Non-Executive Director will support Directors as needed, sharing wisdom and guidance, however, your independence to a company is crucial; it provides reassurance to Directors yes, but also to the company’s stakeholders.
It is important in the role of a NED to keep an eye out for things that could be a problem area or cause for concern.
Identifying these is a skill in itself, but once you have the ability to continue pushing for answers and not letting things go until you received one is a really valuable characteristic – no snowflakes required.
Again, similar to tenacity, resilience is a trait which is very essential to the role of a NED. You should be prepared to hold firm to the views you share, especially if you are put under pressure from others.
Being a NED isn’t simply a title on paper. If you have signed up to be a NED for a company you should be prepared to commit time and effort to really understand the business, whether that’s in the boardroom or further afield at exhibitions or events. You cannot really help a company work towards their goals if you don’t fully understand the business.
8. Attention to detail
Being well prepared for board meetings is more than simply reading the board papers, although you should definitely do that!
Take the time to prepare properly – look at the items for discussion on the agenda, do you have specific experience in this area, what can you bring to the table? If you are unsure of a topic or area do your research before you attend the meeting; arm yourself with as much information as possible so you can add value.
Being a good communicator is key to most roles in business, there aren’t many roles that can execute their responsibilities without communicating well.
Remember good communication in the role of a NED is about listening not just to hear, but to understand. Conducting yourself with empathy will help you achieve a better understanding of what a person is telling you, and therefore how you can help.
Some of the most difficult board meetings can often be in hindsight some of the most productive – without challenge and adversity we do not grow.
A NED must be confident in challenging and reviewing company strategy, not simply for challenges sake, but if your experience is telling you something is not a good idea, or you don’t understand why a strategy has been proposed, then speak up!
Remember, should your actions be questioned later down the line, ‘I didn’t know’ doesn’t hold any water. You are accountable for making sure you know, so have the confidence to ask.
Read our blog ‘What are conflicts of interest in a business’
Try the Gov360 academy module on Different Types of Director.