Non-executive directors can provide valuable benefits to small businesses. They are the voice of experience that can guide the business forward. But how do you find the right non-executive director for your business, and manage them for best results?
The role of the non-executive director
Non-executive directors – often abbreviated to NEDs or NXDs – work with other directors to guide a company to long-term growth. A non-executive director is a company board member who provides independent strategy and advice.
Non-executive directors are not concerned with your day-to-day issues, but they are expected to understand exactly how your company runs, attend board meetings, and stay up to date with the accounts. Non-executive directors may well get more involved in the nitty-gritty of a business in its first few years.
Skills of the non-executive director
Non-executive directors are also expected to assess how the company runs. They bring boardroom skills and experience to businesses, as well as offering a wider perspective on company direction.
While non-executive directors fulfil all the duties of a company director, their corporate governance abilities are not as important as their strategic skills. Special knowledge and guidance are the most important part of their job.
Choosing the right non-executive director
When you are looking for a non-executive director, seek out talented people with time on their hands. You need to recruit someone from your own industry or someone who has experience that you need. The right person won't necessarily be on a head-hunter's list, so start using your network.
Managing your non-executive director to best effect
Once you have your guru on board, here are some management tips.
A non-executive director is there to provide strategy. To be sure they do this to best effect, be very open: stay on the level, keep them up to date, and use them as a mentor.
Inevitably there will be strategic differences of opinion in a boardroom. But in a good team this can be cathartic. A healthy row often leads to better strategy.
Your team should be united. Problems tend to be down to personality, so make sure that you get on with your proposed non-executive director before you recruit them.
What a non-executive director costs
Rates of pay vary, but the cost for a small business might be around £1,000+ a month. Non-executive directors usually work for 12 to 15 days a year.
The position of non-executive director isn't a clock-on, clock-off type of job. Consider the value to you – not the cost.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.