Non-Executive Director FAQs
Non-executive directors (NEDs), like executives, have a duty to the businesses and companies they work with and must act in their best interests. However, unlike executives, they are not responsible for the day-to-day management of the business, which means they are independent and therefore impartial, helping executives to step back and look at the bigger picture.
To understand more about NEDs and the support they provide, we have put together the following FAQs.
What are the benefits of a NED?
NEDs support CEOs and executives in making business decisions. From their experience (often working with serval other businesses in similar sectors) and their impartiality, they ensure the board members focus on the longer-term goals of the business, hold board members accountable for progressing initiatives and ensure all areas of the business are reviewed, including those not always considered as critically important by the senior management team.
My business is a start-up, do I need a NED?
A business does not need to be large to need a NED. If your business is a start-up or in the early stages of growth, a NED could help you to ensure your business is thinking and acting in a strategic manner. From working with similar businesses, they will also be able to share their commercial knowledge, ensuring your business avoids mistakes and capitalises on opportunities that you may not even be aware of. However, it is often easier to hire a NED once the business is established and profitable.
If you do not feel ready to hire a NED, ensure you and your senior team members meet monthly to discuss the overall strategy of the business and where you are on your plan to achieve your longer-term goals.
When should I hire an NED?
A NED can help at any stage in a business’s cycle. Owners, entrepreneurs and executives will know their business inside out, but a NED can help you step back and consider the bigger picture, whilst ensuring threats are missed and opportunities capitalised on.
There is no requirement to hire a NED. However, if you feel your business needs extra support or advice that it can’t find internally. Or are unsure about how to grow your business or having difficulty overcoming certain challenges, you may benefit from external management support even if just for a limited period.
What should I expect a NED to do?
NEDs will act as a mentor, guiding you and your business. After understanding the goals of your business and any current challenges, often, they will draw up the agenda for the board meetings, chair the meeting and both prepare and circulate the minutes. This ensures all your meeting are focused. By producing the minutes, it also means that everyone at the meeting will be held accountable for any actions they have been given.
NEDs can also help set up and monitor KPIs so that the performance of the business is continually monitored, and appropriate actions taken.
How do I find a NED?
There are many headhunters and websites that can provide a shortlist of candidates for NED positions. Several of the partners at Gerald Edelman also act for many clients as a NED or in a management support capacity, sharing their experiences from working with clients from a variety of sectors.
Salaries/fees for NEDs do vary and it is important to find a NED that is the right fit for your board.
Considering hiring a NED and want further information or business advice? Contact us at email@example.com.