A Non-Executive Director (also known as an “NED”) is a part of the board of directors, without being an executive. They tend to focus on strategy, processes and planning.
The right non-executive director can help a business grow effectively and develop the organisation. The wrong NED can result in internal conflict and inefficiencies.
An effective NED provides a seasoned business acumen and higher levels of strategic input. He should be aiming to match the organisation’s strategic plans.
The role of a non-executive director is to provide constructive challenge and independent oversight to the executive directors, safeguarding the integrity of the business and its duties to shareholders.
A good NED typically:
– Brings an external, independent perspective;
– Assists in setting and revising strategy;
– Challenges executive directors on decisions he disagrees with;
– Advises on risk management;
– Successfully motivates senior management;
– Communicates clearly, verbally and in writing;
– Is IT literate;
– Satisfies himself as to the quality and integrity of financial, performance and other company information;
– Ensures that they receive adequate information in the form that they specify, when they they specify it.
– Participates in relevant committees as and when necessary.
He or she also:
Regularly updates and updates their skills, knowledge and familiarity with the business, current, medium and long-term risks to the business and the current regulatory environment in the jurisdiction(s) the company operates in.