What is the role of a non-executive director, or what should it be?
Capital | Consultancy | Corporate
How can an NED help your business?
We have seen Boards come under scrutiny in recent years – particularly in the wake of some major corporate governance failings. In response to this, our trust in the boardroom publication explores how important the role of the Board is in ensuring that an organisation has a future – and more importantly – a sustainable one.
Non-executive directors play a critical role on any Board by providing oversight, challenging the executive team and flagging any concerns to stakeholders. Their independence together with the importance of the role cannot be understated.
There is no legal division between the executive and non-executive team in the Companies Act 2006 and so non-executive directors are required to fulfil the same duties as any director of a firm. They therefore cannot take their role lightly, nor view it as just another income stream without properly considering their obligations in the role.
The UK Corporate Governance Code calls for there to be clear division between a Board’s and an executive team’s leadership, and so being clear about who is responsible for what is an important step to take for the Board and Executive leadership.
What do non-executive directors need to bring to their role?
Expertise: non-executive directors are often appointed because they have in-depth knowledge on a particular topic – for example finance or technology.
Experience: non-executive directors need to have experience, otherwise it is difficult to spot opportunities to challenge.
Independence: non-executive directors should not have other roles in the same organisation, this can often skew perception.
People skills: being a critical friend is difficult and non-executive directors have to be able to navigate difficult and sometimes uncomfortable conversations in a productive and constructive way.
Marc Mazzucco – Partner RSM 8th October 2019