Benefits of non-executive directors

Non-executive directors (NEDs) help guide, mentor and challenge the CEO and senior executive management team, supporting them in making business decisions.

Edited 28 February 2023

NEDs should act in the best interests of the company and its stakeholders. NED’s are independent and it is sometimes said that a NED is the conscience and voice of the business. This means, you and your business can benefit from their experience and trust them as an impartial sounding board.

A business does not need to be large in order to need a NED or, what we sometimes refer to at GE, a management support person. Making sure that a business, at least once a month, thinks and acts in a strategic manner is one of the main benefits of having a NED. They will also ensure that all areas are reviewed, such as those not considered critically important by the senior executive management team, but which sometimes are.

Three benefits of hiring a NED

1. Commercial experience and knowledge

NEDs often work with several businesses or have experience running their own business, which means they can share with you the knowledge they’ve gained, including operational knowledge on running a business and related industry insights. This is particularly useful if there is a sector that your business wishes to break into.

NEDS will also guide you through any challenges and encourage you to capitalise on opportunities, as well as helping the business stay focussed towards the aspirations set down by the CEO and the senior executive management team

2. Independent

NEDs are completely independent of your business. They do not have to live with the business and therefore have no personal vested interest or relationships, which may in any way impair their high degree of objectivity. They will look at the bigger picture and provide a fresh perspective to you and your team. For example, in a time of crisis, such as during the coronavirus, they will help alleviate stress and focus the business on areas that it can control and influence.

In addition to being able to provide an objective view, a NED will support the business with its strategic vision and challenge the senior executive management team where appropriate.

3. Holds the management team accountable

Many CEOs and senior leadership teams are busy in the day-to-day running of the business, which means they often fail to action initiatives decided at board meetings. NEDs keep the senior team transparent and accountable, ensuring progress is continually being made and decisions are followed through.

Many of the partners at GE that act as a NED or in a management support capacity, will also prepare the minutes of the board meeting. These minutes are normally circulated within 72 hours of the meeting and have an in-built action plan. This means initials for each attending board member are included within the minutes giving focus to each board member to act accordingly on the actions from the previous board meeting.

Often NEDS will also help the business to set up and monitor KPIs so that the performance of the business is continually monitored, and appropriate actions taken.

Our Partners act as NEDs or in a management support capacity for clients across a variety of sectors, including hospitality, leisure, business and professional services, and retail. If you have any specific challenges or would like to find out more about how our partners can support your business, contact hello@geraldedelman.com.