What do they do?
Non-executive directors (NEDs), whether they’re in the non-profit sector, a charity, or any other area, are there to give their company advice and support. They work with management to refine strategies so the business can enjoy the best results possible. It’s a challenging role, and an effective NED will have a high level of professional competence as well as a large knowledge base and relevant expertise. They also need the confidence and analytical skills to objectively contribute to the board.
There’s no legal difference between executive directors (EDs) and non-executive directors. The UK Unitary Board Structure states that NEDs and EDs have the same legal duties, responsibilities and potential risks. And while NEDs aren’t as closely involved in the business as EDs, they should be equally committed to the company’s success.
What skills do they need?
The obvious must-haves for a non-executive director are commercial experience and financial skills, as they need to understand the key monetary drivers like profit and loss accounts and balance sheets. But what else do board members and the chairperson look for in a non-exec?
Board members need a NED who can take an objective view of the company’s long-term success by rising above any personal preferences and short-term considerations. Independence also helps the NED champion the right decision, rather than the most beneficial one.
A wide perspective
Strategic thinking and critical evaluation skills help NEDs to challenge and contribute to the executive team’s strategies. They need to ask the kinds of questions that let them quickly get under the skin of any issue. And on occasion, they’ll need to request and read key performance measures, so they can see the big picture without distracting details.
NEDs can be very external-facing. Which means they need to be able to responsibly represent the business to any audience – whether it’s shareholders, regulators, stakeholders, government departments, the media or the public.
An understanding of governance
A NED needs a firm grasp of the organisation’s legal and regulatory frameworks, as well as what the directors are liable and responsible for. They also need to be able to support and improve the board, so they need to understand good governance and the board members’ roles and responsibilities.
A good NED will commit time and energy to getting to know their organisation. They’ll need to maintain a current understanding of the market, competitors, challenges and regulatory environments. And when things get hard, they need the determination and resilience to help the board make it through.
How can the board get the right mix of skills?
Obviously the board and trustees want a NED with appropriate skills and experience for the size and needs of the business. For a charity or third-sector organisation, this could be experience in health, the environment, housing, homelessness, human rights or education. If the board notice the NED has any essential skill gaps, they should fill them by appointing new non-execs.
What does the NED expect in return?
Taking on a non-executive director role can broaden someone’s experience and expertise. But they’ll need to clearly understand the skills the company needs and what kind of formal and informal hours they’ll need to commit.
This is why it’s a good idea for a potential NED to discuss the role and the business in depth with the company chairperson, directors and senior managers.
How can you find the right NED?
It can seem more cost-effective to handle the advertising and recruitment yourself. But many of our clients have found this a waste of time as they don’t get enough appropriate responses.
Some recruitment agencies offer a free service, but this can also be unreliable. As executive search and selection experts, we know that doing it properly costs money, as we use specialist researchers and headhunting consultants who work tirelessly to find the right person.
If you do go with an agency, make sure they help you do more than just advertising. They should bring you a selection of candidates who meet your brief. If they don’t, they might not understand governance and board advisory roles.
What does AWS Executive do?
We work with some the UK’s finest charities and non-profit organisations to bring fresh talent to their boards and executive roles. Our happy and successful clients are a constant reminder of how important our work is, and why we love to do it.
If you want to find out what we could do for your board, get in touch today.