Oversight and Reach
We are often asked what are the specifics of an Non Executive Director (NED) role within an organisation and this page aims to answer common questions regarding what it means to be a NED.
Our experience has given us key lessons that provide the understanding to lend expert advice and guidance on the Non-Executive marketplace, as well working with Executives seeking either their first NED role or seeking to extend their portfolio.
Non-Exec Guides
If you are considering being a non-exec or want to know what to look for when hiring for non-execs, then download our guides below:
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Top Tips ¦ Becoming a NED
Top Tips ¦ Hiring a NED
What is a Non Executive Director (NED)?
A non-executive director (abbreviated to non-exec, NED or NXD), independent director or external director is a member of the board of directors of a company or organisation, but not a member of the executive management team.
Part of the role is to provide an impartial and independent view to support the executive team. The non-exec is to be engaged with the businesses landscape but with a certain detachment although they share the same legal responsibilities as the executive directors. This allows a different perspective to provide valuable insight into the business and the surrounding landscape.
Instead of being involved in the day-to-day operations of the business, they are employed for their neutral oversight and reach. They can give a specialist advice regarding corporate governance, risk management and succession planning for an organisation.
Experience and Influence
NEDs are usually chosen because they have a breadth of experience, are of an appropriate calibre and have personal qualities that make them a crucial addition to the board. The role of the NED was well defined in the Cadbury Report almost thirty years ago. It provided a review of the structure and responsibilities of the board of
directors along with recommendations in a Code of Best Practice. Instead of being involved in the day-to-day operations of the business, they are employed for their neutral oversight and reach. They can give a specialist advice regarding corporate governance, risk management and succession planning for an organisation.
The non-execs challenge, question and monitor the CEO and senior management; they bring an independent perspective to decision-making; they hold senior management to account; they also support and mentor the CEO and senior management.
Finding leaders with the desired skill, temperament, contact, insight, and motivation to fulfil the clients brief is an essential part of enhancing leadership teams. The addition of an independent voice allows a different perspective to provide valuable insight into the business and the surrounding landscape.
What are the Key Responsibilities of a NED?
Performance
The NED monitors the executive management and play a key role in succession planning.
Auditing
The NED has a duty to ensure the company accounts properly to its shareholders, presenting a fair reflection of itself.
Remuneration
The NED has input towards deciding the appropriate levels of remuneration of executive directors.
Strategy
The detached position of the NED allows them to survey the opportunities and threats to the organisation.
Communication
Their contacts and opinions can connect the business and board with networks of useful people and organisations.
Risk
Ensuring the integrity of financial information, controls and systems of risk management are dependable,
What are the Key Attributes of a NED?
The nature of the NED role requires certain qualities from the candidate for their appointment to be successful. According to research carried out by Roffey Park, the attributes or qualities most desired in a NED are:
Analytical
Articulate
Confident
Decisive
Honest
Integrity
Good judgement
Persuasive
Self-aware
Emotionally intelligent
Why do some organisations hire NEDs?
Every client’s situation different and our job as recruiters is to establish the needs of the business and their future plans. The reasons for Non-Exec recruitment are varied but usually fall into one of two categories:
Those looking for transformation and embrace a very different future, by disruption, innovation, and growth
Clients are searching for assured leaders that can provide stability in times of fluctuation
Often a business may be seeking to simply strengthen and diversify their Board skills. Other organisations hire a NED in readiness for some specific corporate activity such as an IPO.
One client said that they wanted a NED to share a drink with around the fireplace and openly discuss the issues that the business was facing. A good NED will identify problems and then the Board can begin to create solutions.
Alternatively, the business may wish to refocus their strategic plans or seek challenge and intervention from an external Director to counter the danger of ‘Group Think’. Our Clients also sometimes seek sector experience or relevant knowledge of a supply chain.
Other key areas for the NED would be to further develop commercial and marketing affairs, strategy, operational management, organisational structure, and corporate governance.
Other NED hires are based on adding top line strategic help to the executive team. Identifying and filling skill gaps within a leadership team can make a huge difference to the effectiveness and profit of an organisation.
Some appointments are based on the clients recognising the importance of robust corporate governance practices, with strict fiduciary adherence with audit and risk at the heart of the search.
One client wanted to ensure that their incoming NED would bring a high degree of independence to the Board, offering guidance, support, challenge, expertise, and an objective perspective on the key matters of financial services. Other key areas for the NED would be to further develop commercial and marketing affairs, strategy, operational management, organisational structure, and corporate governance.
How can Moon Executive Search help?
We have excellent knowledge of the executive landscape which allows the team at Moon to quickly identify the right NED for an organisation. The reach of our connections gives our consultants the edge when appointed an NED.
Very few of our roles are advertised, Governance and clear understanding of your legal and fiduciary responsibilities is of huge importance when we look to source credible candidates.
You can visit our Build Your Board page for more information about the connections that we have, and below are some of the NEDs in our orbit:
NED Case Studies
Good Energy
Good Energy assigned us to search for a Non-Executive Director to support their current executive team with their growth transformation strategy:
Client Confidential
Read our confidential case study of how we secured a NED and Director to further financial services knowledge to assist with acquisition and growth:
NED Expert Content
To read more about our experience of working with NEDs, please browse through our content below:
