Using non-executive directors to help you build your business


The solutions

What is a non-executive director?

A non-executive director (NED, also NXD) is an individual who will work part-time for your business, bringing knowledge and experience to your board and executive team. NEDs will often have a number of directorships, dividing their time between different businesses, and will typically have enjoyed a successful business career.

Why would you consider appointing a non-executive director?

NEDs can bring significant benefits to companies of all sizes, including one or more of the following:

  • Experience - many NEDs have either seen or dealt with the problem before.
  • An objective perspective on your business, seeing opportunities that you may otherwise overlook.
  • Help in fast-tracking the growth of your business.
  • Expert insight and knowledge of your business sector.
  • Contacts and relationships with potential customers and suppliers.
  • Business intelligence and knowledge of your competitors.
  • Valuable input into strategy.
  • Financial expertise to help you raise development capital, sell or float your business.
  • Risk management skills to help you stay in business and avoid costly, or even fatal, mistakes.
  • Good judgement and people skills, adding value to your senior recruitment strategy.
  • Strong relationships with professional advisers, matching relevant skills to your particular business needs.

What's the potential downside?

  • In smaller companies, management may question the worth of the role of the NED. Be sure to clarify the specific reasons for the NED appointment at the outset.
  • NEDs who are brought in without a specific role may not deliver value for money.
  • NEDs with strong views or relevant experience may be tempted to interfere where they are not needed.

And finally

NEDs will need to be paid for their involvement. As directors, they will give their time and are just as responsible for the conduct of the business as the executive directors.

By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.

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