The Attributes of a Non-Executive Director

Non-Executive Directors are vital to many organisations, bringing specialist expertise and valuable insights. But of utmost importance is their independence from the management of the company, which makes them well placed for monitoring and evaluating a company’s executive directors and their performance.

In this series of articles we explore the role of an NED, the attributes needed and how you can gain your first NED position. In this second article, we look at the essential attributes of a Non-Executive Director.

Evaluate and empathise

The demanding role of a Non-Executive Directors brings with it essential evaluation and accountability to the boardroom. However, not all companies seeking to appoint an NED have a developed board. Sometimes the appointment of an NED will be the first significant step in creating a proper, fit-for-purpose board.

This is especially true in the SME sector when a founder-managing director comes to accept that they can no longer make strategic decisions in isolation. In this situation the managing director will be looking for an experienced, empathic figure with whom to talk decisions through.

What are the core attributes of an NED?

Fundamentally the NED should be able to demonstrate core attributes that are viewed as essential in fulfilling the duties of a NED. The Chartered Governance Institute outlines five core qualities that companies look for when appointing a NED:

• A strategic thinker, with critical evaluation skills to challenge and contribute;
• An understanding of governance and risk;
• Be objective and of an independent mind-set;
• Have the potential to be an ambassador for the organisation; and
• Energy and commitment, as the role of the NED can be demanding.

Self evaluation

Before accepting an appointment as an NED, irrespective of the context, we would strongly recommend that you undertake your own due diligence. You should not only be comfortable working with the company and the board, sharing their values, but you must also have developed a full appreciation of the business and market(s) they operate in.

Take time to understand the ownership structure and relationship between the board and shareholders, how they apply corporate governance, what potential risks there could be – personally and for the business – and linked to this what reputational or ethical issues could arise. Finally, you must be satisfied that you can make an active contribution to the board and possess the requisite knowledge, skills and experience.

In some instances, access to the above information may be limited prior to commencing an NED position. Whether this is the case or not, it is important that you ensure a formal induction program is in place. Moving forward you should ensure that you are provided with sufficient information on an ongoing basis and that you have access to management to raise concerns or seek clarification. This will allow you to fulfil your duties to the best of your abilities.

Think you’ve got what it takes to become an NED? If you’d like to find out more about furthering your career as a Non-Executive Director then speak to our dedicated Executive division today.