Are you thinking of becoming or hiring a non-executive director (NED) but having trouble understanding their role in business and their responsibilities? It is crucial that you are aware of what is expected and what should be given as a necessity, such as challenging the board and asking those important questions that nobody dares ask.
Characteristics of a Non-Executive Director: Financial Literacy
You must consider what specific skills you bring to the table that will make you a valuable NED. It does not matter if you are not a qualified accountant, but NEDs are expected to be financially literate. This includes being able to read Profit and Loss accounts and a balance sheet, and understand cash flow. You must also be able to translate this into a language that other people around the table understand. fds delivers the training course Finance Demystified, which aims to equip directors and executives with a foundation in financial understanding and the accounts used in business.
Characteristics of a NED: Asking the Difficult Questions
The non-executive director’s role is to ask difficult questions. It is important always to ask ‘why’ in every situation- why are or aren’t we doing certain things? Your job isn’t to pull apart the executive team but rather to help constructively challenge their proposals with a new dimension.
While you must have a voice in the boardroom, ensure that you do not dominate the conversation. Other people around the table have earned their seats for a reason and deserve to have their say in the topics discussed.
Characteristics of a NED: Valuable Connections
One reason non-executive directors are invaluable to a company is the people they know within their network and the industry contacts they have. Do not be afraid to share this value with your fellow board members.
A well-connected non-executive director can open doors to strategic partnerships, funding opportunities, and trusted advisors. These relationships can accelerate growth, support business development, and provide access to expertise that might otherwise be out of reach. It’s about being part of the strategic direction of the business, giving your input, and making a difference to how that company progresses.
Characteristics of a NED: Understanding What is Important
When joining a company as an NED, you must be willing to play whatever part is needed. Above all else, the role of a NED should be about bringing value to a company. If you undertake this responsibility solely for the money, you will never get the most out of your professional journey. Of course, you should be paid appropriately, but there is a lot more to it than that.
How fds Can Help You
fds benefits from a wealth of experience with board support and helping non-executive directors be the best they can be in the boardroom. To discuss how we can help you, please get in touch to learn more.