Why you should hire a Non-Executive Director now.

Every company depends on strong leadership to guide the organization and its people forward. For small companies, startups, and entrepreneurs, leadership is often a lonely role, consisting of a one-person C-suite. And for larger organizations, an expanded C-suite usually includes members who have deep roots within the company. And for both camps, a non-executive director can provide a valuable resource to your organization’s present and future.

What is a Non-Executive Director (NED)?

By definition, a Non-executive director is an independent member of your organization’s board that is not part of your executive team. This person is typically a specialist in their field and does not engage in your company’s day-to-day management and operations. Rather, their strength is bringing a wealth of expertise, experience, and knowledge in a specific area and putting it to work to achieve your company’s goals.

Non-executive directors also serve to challenge the performance, ideas, and direction of a company. They often play devil’s advocate, where they approach ideas and problems from different sides so that all angles can be explored. They maintain the best interests of the company because they maintain greater objectivity.

In addition, a non-executive director is often chosen to boost a company’s image. They may be selected based on their good community standing, a track record of philanthropy, or demonstrated history of public relations. They embody the same image and values of the company they represent, helping the organization to move even closer to its goals.

Benefits of an Independent Board Member

Regardless of the size of your board, whether you’re the entire C-suite or you have several established executive roles, your business stands to gain considerable advantages with the help of a non-executive director.

Real Industry Experience

Non-executive board members are highly skilled professionals in their field. Many have held C-level positions at one point or another; others have started companies or served in executive roles to understand how businesses operate. They not only serve as sounding boards for CEOs but also contribute their own expertise and experience to your organization’s planning and problem-solving.

This experience is especially valuable for startups and smaller organizations that aim to grow. When navigating new territory, having someone who has “been there” can help you slice through obstacles with greater ease and efficiency. Companies may be able to grow faster and weather tough storms without the guesswork.

Fresh Perspectives

Diversity is the spice of life for organisations of all industries and sizes. Bringing in fresh perspectives of seasoned professionals can help companies approach ideas from new angles, which may lead to your next best path forward.

For established executive teams, it’s not uncommon for managers to get bogged down in the day-to-day details and lose sight of the big picture. Company missions, values, and goals can get obscured along the way, leading to a lack of focus and clarity behind the “why” of everything the company is doing.

Bringing in fresh ideas can help to keep the company’s mission, vision, and goals on track and moving forward. And as an added bonus, their new perspectives and innovation may help you to stay ahead of your competitors.

An Extended Professional Network

When you onboard a non-executive director, you’re not just gaining their expertise. You’re also extending your own professional network through their industry connections. Non-executive directors who have made their role into a career have often served with several companies. They often have large networks of professionals at every level, from the C-suite to middle management, as well as investors, distributors, suppliers, and vendors. With each company they serve with, their network grows alongside it.

This is especially important if you are hiring a non-executive director for their expertise. A large professional network means that if they encounter a question or problem they can’t solve, they likely know someone who can and will lean on that person for clarity.

Greater Trust with Other Organisations, Stronger Governance

Having non-executive directors on your board can foster trust between organisations. One of the main roles of a board is to extend accountability for a company beyond the CEO. This is one reason why lenders and investors require a company to have an established board of directors before they will consider providing capital funding.

For small organisations, creating a board comes easier with the help of a non-executive director. It creates instantly credibility when you have structured governance within your company, something that is often only associated with larger firms.

In addition, an organised board can send positive signals to your customers and the companies you do business with. It demonstrates that these companies are doing business with an authentic, reliable organisation and is therefore more likely to operate in a professional manner. In this sense, your non-executive director’s contributions can be considered a competitive advantage.

Professional Objectivity

If you’re the founder of your company, you likely have a strong emotional attachment to its success. And if you’re not the founder of the company but have nurtured it for many years as though it were your own, you still may have strong emotional bonds to your work and the company you’ve helped to grow.

These feelings, while completely natural and understandable, can also hinder growth if it prevents you from making objective decisions. And oftentimes, you may not realise that objectivity is an issue.

That’s why many companies hire non-executive directors, even if they think they can remain objective without one. Non-executive directors are geared to think objectively, even when the rest of the executive board thinks and says otherwise. They make decisions based on logic and the interests of the company because they have no emotional investment or personal connections to it or its employees.

One area where this is most needed is during succession planning. Often, a company’s owner will want to pass down their role and responsibilities to a family member. But families are riddled with emotional ties and decisions can be made without thinking first about what’s best for the business. Having a board in place can guide this process so that the health and well-being of the company takes priority in succession planning.

Resource Efficiency

Because of the experience and expertise, a non-executive director brings to your company, they’re often viewed as a way to maximise time and other resources. Their experience helps you avoid reinventing the wheel and making mistakes they may have already seen first-hand. This allows the rest of your team to play to their strengths and gives you a clearer, faster path to success.

Leave a Comment

Your email address will not be published. Required fields are marked *