What are Non-Executive Director services?
To bring an independent judgment to bear on
issues of strategy, performance and resources including key appointments and
standards of conduct.
To bring a degree of objectivity to the board's
deliberations, and play a valuable role in monitoring executive management.
It is important to note that they can also
make a valuable contribution to private companies. Indeed, there are a growing
number of private companies, including relatively small ones that are now
actively searching for the ‘right’ non-executive director.
Non-executive directors are expected to
focus on board matters and not stray into ‘executive direction,’ thus providing
an independent view of the company that is removed from day-to-day running.
Non-executive directors, then, are appointed to bring to the board:
• Independence;
• Impartiality;
• Wide experience;
• Special knowledge;
• Personal qualities;
Chairmen and chief executives should use
their nonexecutive directors to provide general counsel – and a different
perspective – on matters of concern. They should also seek their guidance on
particular issues before they are raised at board meetings. Indeed, some of the
main specialist roles of a non-executive director will be carried out in a board
sub-committee, especially in listed companies. The key responsibilities of
nonexecutive directors can be said to include the following:
•
Strategic direction
As an ‘outsider,’ the non-executive
director may have a clearer or wider view of external factors affecting the
company and its business environment than the executive directors. The normal
role of the nonexecutive director in strategy formation is therefore to provide
a creative and informed contribution and to act as a constructive critic in looking
at the objectives and plans devised by the chief executive and his or her
executive team;
•
Monitoring performance
Non-executive directors should take
responsibility for monitoring the performance of executive management,
especially with regard to the progress made towards achieving the determined
company strategy and objectives. They are also responsible for determining
appropriate levels of remuneration of executive directors, and have a prime
role in appointing, and where necessary removing, executive directors and in
succession planning;
•
Communication
The company and board's effectiveness can
benefit from outside contacts and opinions. An important function for
non-executive directors, therefore, can be to help connect the business and board
with networks of potentially useful people and organisations. In some cases,
the non-executive director will be called upon to represent the company
externally;
•
Risk
Non-executive directors should satisfy
themselves on the integrity of financial information and that financial
controls and systems of risk management are robust and defensible.
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