Non Executive Director

The benefits for companies of employing non executive directors

Non executive directors can be extremely useful to any company. In many companies, it can be relatively simple for the management structure to slip into an introverted and staid approach to business. It is fairly common for traditional, family owned businesses to fall into the trap of “we’ve always done it this way – why should we change?.

A non executive director however can often see risks and opportunities in the market place that are sometimes overlooked by the executive management. This is because they are not wrapped up in the day-to-day running of the business. A non executive director can, therefore, step back from the stress of every day business life and see things from a different perspective. They can provide a vital strategic overview.

The role of a non executive director can be particularly important when the Chairman or Chief Executive Officer of a company is especially entrepreneurial or overbearing. Non executive directors can have an influence to moderate a Chief Executive Officer who is doing the business for his own ego or financial benefit and not those of the shareholders.

In other companies, there could be the opposite problem – in that the non executive director is brought in because the organisation lacks the entrepreneurial flair, international connections or drive and dynamism to compete in the modern day market place.

Some companies require non executive directors to see them through a corporate transition such as a change in ownership and the non executive director may bring highly specialised knowledge invaluable to a company going through a flotation, relocation, rebuilding programmes and/or strategic alliance.

At its simplest level, a non executive director might just be brought in to fill a temporary shortage of in-house qualified directors.