Business Advice, HR & Employment, Strategy

What is a Non-Executive Director?

Business Advice | 6 February 2023 | 1 year ago

If you know anything about how roles work within a business, you will know that many large companies have an executive director. However, you might not know that many also have a non-executive director. Despite sounding similar, a non-executive director plays a very different part within a business. In this blog, we will take a look at what a non-executive director does, and how their job differs from a standard executive director.

A non-executive director is a member of a company’s board of directors, and they are not an employee of the company. They don’t handle the day to day running of the business, which is what an executive director does. Instead, they act as independent advisors, and focus their attention on planning for the future and policymaking.

What is the Role of a Non-Executive Director?

The role of a non-executive director is a varied one, and it does differ slightly depending on the business type and industry. Generally, the role of a non-executive director is to manage executive directors and stakeholders, and to help with policymaking. They must act with the best interest of the business and stakeholders in mind, and they are usually appointed.

 

There are a lot of important decisions to be made within a business, and a non-executive director is there to provide an independent viewpoint. This could be related to how the business is being run, or how the executive directors are governing. A non-executive director can provide unbiased opinions, as they don’t have a stake in the company. To be a good non-executive director, you need to have strong leadership skills and be confident in your decision making.

How Do Non-Executive Directors Differ From Executive Directors?

Though there are undeniable links between both roles, there are some key differences between being a non-executive director and an executive director. Whereas an executive director is a part of the business itself, a non-executive director is more of an outsider. They are an independent party and they offer a unique perspective from the outside. The main difference is that executive directors are involved in the day to day running of the business, but a non-executive director is not. Another difference is that non-executive directors don’t tend to receive a set salary or employee benefits, and instead they are compensated for their time via fees or equity.

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