Guides
What makes a good NED?
What makes a good NED (non-executive director)? It’s an extraordinarily unique career path with significant responsibility.
What’s more, the role of the non-executive director has changed significantly over the past ten years. Successful non-executive directors need to be strong independent voices in the boardroom and fearlessly challenge any governance breaches.
We’ve seen through history that boards dominated by executive (as opposed to non-executive) directors can lead a company into trouble. The lack of independent oversight can be a breeding ground for poor decision-making. These days, companies are wary of going down that path again. They want the independent oversight in place from the get-go.
Ultimately, companies with good corporate governance and with strong non-executive voices in the boardroom make more money – they create more value for their shareholders.
What makes a good NED? The voice
Non-executive directors should never be “the decorations on the Christmas tree” as the late Tiny Rowland of Lonhro famously described them.
The non-executive director’s role is to police the board in a strategic, polite and factual manner.
Being a non-executive director involves a legal obligation of the highest degree. If a non-executive director doesn’t challenge bad corporate governance or ethical breaches, they can fall foul of the law.
A company’s board of directors carries the heavy-duty of governance to ensure a duty of care is observed. Very high expectations of good governance are placed on directors, but more so on the shoulders of independent, non-executive directors.