There is no legal distinction between non-executive directors and executive directors. However, in practice, NEDs are fundamentally ‘outsiders’ to a company, detached from day-to-day operations and valued for their objective insight. This creates a very different dynamic within their role to that of an executive director and means they can offer a unique perspective towards corporate governance, risk management and succession planning, amongst other areas. A company must ensure that its non-executive directors complement the balance of skills and experience of the board.
This introductory factsheet explains the role of a non-executive director and how NEDs operate within a company. It provides an overview of the qualities sought from prospective NEDs and highlights the core skills possessed by HR professionals, which could make them suitable non-executive directors.