Non Executive Directors and Directorship

A non-executive director (NED) or outside director is a member of the board of directors of a company but who does not form part of the executive management team. They are differentiated from executive directors, who are members of the board also serving as executive managers of the company i.e. they are involved in the day to day running of the business.

Non-executive directors have responsibilities in the following areas, according to the Higgs Report, commissioned by the British Government and published in 2003:

• Strategy: Non-executive directors should constructively challenge and contribute to the development of strategy.
• Performance: Non-executive directors should scrutinise the performance of management in meeting agreed goals and objectives and monitoring, and where necessary removing, senior management and in succession planning.
• Risk: Non-executive directors should satisfy themselves that financial information is accurate and that financial controls and systems of risk management are robust and defensible.
• People: Non-executive directors are responsible for determining appropriate levels of remuneration of executive directors and have a prime role in appointing, and where necessary removing, senior management and in succession planning.

NED's should also provide independent views on:

• Resources
• Appointments
• Standards of conduct

Non-executive directors are the custodians of the governance process. They are not involved in the day-to-day running of business but monitor the executive activity and contribute to the development of strategy.

Being a Managing Director in many businesses can be a lonely place and an NED can act as a guide, advisor and outside pair of eyes to help bring additional support to the MD and to often ask those questions employees, cannot or will not ask.

If you feel your business is lacking something from the board, is getting little or nothing from your board meetings then a Sapio Associates NED may be able to help.

For a confidential conversation regarding Non Executive Directorships please contact us on 01709 539912.