There are a wealth of positions that can be found at an executive level, each with varying degrees of responsibility. One such role is that of a Non-Executive Director (NED), which entails supervising board-related matters and providing an independent perspective on them. Although this differs from an Executive Director, the two are often confused with each other. The primary difference between them is that Executive Directors are fully employed by the business and are therefore much more involved in its daily operations. However, it is the impartiality of NEDs that make them so vital to successful Board performance.
It is important to note that the role of NED also differs between sectors, particularly in terms of titles and remuneration. Despite this, the job itself largely carries the same responsibilities. Positions found in the charity sector are usually voluntary and any expenses will typically be paid for by the organisation. They also tend to go by the name of Trustee instead. According to the Charity Commission, there are six primary duties expected to be undertaken by Trustees which are as follows:
- Ensure your charity is carrying out its purpose for the benefit of the public
- Comply with your charity’s governing document and the law
- Act in your charity’s best interests
- Manage your charity’s resources responsibly
- Act with reasonable care and skill
- Ensure your charity is accountable
Within the education sector, NED’s are known as Governors, and as with Trustees, are usually there in a voluntary capacity. Their duties include plotting their school’s strategic direction in collaboration with their fellow Board members, supervising the financial affairs of the school and ensuring that any funds are spent effectively. Governors are also responsible for holding the institution’s headteacher and leadership to account in a bid to manage the school’s development. Governors are expected to attend around three meetings per academic year with the term of office being four years. It’s not a prerequisite for individuals to be parents or have prior experience in the education sector; in fact an outside perspective can be useful to the Board’s decision making.
It is within the public sector that NED’s most often retain their original namesake. These roles are also often paid, however the annual income of remunerated positions may vary depending on factors such as sector, time commitment and size of the organisation. It’s also important to note that as they are not formal employees, pay is referred to as ‘directors fees’. Key responsibilities of NED’s include providing a sense of strategic direction and monitoring the performance of the Board alongside the progress being made to meet any set objectives. In smaller organisations, it is also down to NED’s to determine the rate of pay for Executive Directors, ensuring that the remuneration process is undertaken from an independent perspective. NED’s are also relied on to connect the organisation with any potentially reliable contacts and may be asked to be an external representative.
As with any role, there are specific qualities that are essential when taking on the position of NED, including:
- Being able to consider the ‘big picture’
- Retaining sound knowledge of governance
- Having an independent mindset
- Energy and commitment
By honing these skills, the role should produce numerous benefits ranging from furthering your executive career path to broadening your network as well as providing an opportunity to enjoy both independence and flexibility.
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