Privately-owned firms and companies hire NEDs to be part of their board members. This has been the trends with many companies, which raises the question, why hire a non-executive Director?
Bring in a fresh perspective
Having a new board member in your company brings about several advantages – one of these is that he/she gets to ask questions many other members would have taken for granted. In addition to this, the NED brings a set of different experiences and perspective to the firm.
Having someone with authority to question decisions and steps being made, and even bring about a new perspective on how everything is handled/done adds value to the company too. Many business owners and entrepreneurs see NEDs as the best friend who doesn’t shy off from asking critical questions and even help steer the company in the right direction. Although NEDs may not have executive powers, they do have specific roles to play in the company. Here are four functions that Non-Executive Directors play.
Agree on a strategic direction
One of the main reasons many companies today hire NEDs is so that they can help steer the company on the right course, be fitting to the market, and also have a competitive edge over rival companies. Although the role doesn’t need to be outlined in the contract, this is the first role that the NED needs to presume, and have a clear articulation of where and how the Board can get the business achieve its goals.
Ensure required resources are in place
It is the NEDs responsibility to ensure the required/needed resources are in place to support plans laid out by the Board. The resources range from financial resources to physical assets such as plant, employee/staff, shops, factories, debt and or equity. In addition to this, the NED needs to ensure the resources are adequate, and that the right persons are doing the job.
This may mean re-evaluating employee functions and capabilities to ensure everyone gives their best to the project. This can however bring necessary, yet tricky conversations of team management. If you are looking for your next non executive director role then our suggestion is to brush up on this.
Advise on opportunities and/or problems
Although such responsibilities reside with the chairman, a good NED should be able to advise on opportunities or problems that the company faces. The role of the CEO (leadership, team building, motivation, vision, and running the business) is one of the loneliest positions in the company. The CEO too may need to seek advice or insight from one of the board members, someone knowledgeable enough about how the business should be run. A competent and responsible NED should fill this position quite comfortably. The chairman may also need to come in to help support the CEO as well as provide mentorship when needed.
Draw experience from all sectors
The NEDs experience and knowledge base is subject to discussion for many company owners. Nevertheless, many people believe that the Non-executive Director needs to have a far-reaching understanding of the industry, and also have an extensive network or contact book that can benefit the company.
Most NEDs are individuals that have held managerial positions before, and fully understand key requirements of a leader. Their experience is what differentiates them to all other board members.
The job of a NED can be a challenging one. This especially comes when he/she has to mentor and support the CEO. Nevertheless, a good NED will be able to balance all these exceptionally well while helping make a difference in the company’s performance.