Often described as the best kept secret of a successful company, a non executive director can contribute a wealth of skills, knowledge and experience to a business, but how is the role best defined?
The Companies Act 2006 states that the primary responsibility of a director (there is no legal distinction between an executive and a non executive director) is to promote the success of the company. Non executive directors usually stand back from the day-to-day running of the business and, alongside the executive team, facilitate the strategic decision-making process. They must act in the best interests of the company and its shareholders. Exactly what this entails will vary from company to company, depending on what is required at each stage of a company’s development.
Sir Adrian Cadbury defined the role succinctly when he stated that “the role of the non executive director is to make sure that the company is run properly, but not to run it”. Successful non-executive directors must:
- be numerate
- know about company law and procedures
- have a feel for strategy
- have excellent interpersonal and diplomacy skills
- have the ability to frame a good question to stimulate board debate
- not be afraid to challenge the status quo. Research has found that 1 in 10 CEOs lack someone to challenge them.
- set the right cultural tone at board level. The wrong behaviours adversely affect performance, productivity and profitability.
- bring their external experience into the strategy development process.
In the case of some boards the executive directors do not allow non executive directors to get involved in the business. They only provide limited information because they want to keep them at arm’s length thus creating barriers between the executive and non executive team. Ultimately, a good board needs a thoughtful and balanced team that collaborate effectively.
The future of the role
So it seems there cannot be a one fits all definition for the role. Indeed, some believe that the role of a non executive director is becoming a separate profession in itself. If the right candidates are to be encouraged into the profession companies must ensure that they are supporting their non executive directors effectively and are offering the right training. For the individual, non-executive directorships can offer lucrative recompense along with opportunities for broadening cross-sector exposure and now, more than ever, it vital that the right calibre of person is being encouraged into the role.
Stephen Kimbell is an experienced non executive director and has held a wide range of directorships over a number of years. Stephen is always very interested to hear about new non executive opportunities and would be delighted to hear from companies who think they might benefit from his expertise.