Non-executive directors

As the voice of experience that can guide your business forward, a non-executive director can provide valuable benefits. But how do you find and manage the person you need? Georgina Harris finds out
Non-executive directors (NEDs) work with other directors to guide a company to long-term growth. Gerald Powell, senior partner at Ernst & Young, London, explains: "A non-executive director is a board member of a company who works with the other directors. He or she provides independent strategy and advice.

"NEDs are not concerned with your day-to-day issues, but they are expected to understand exactly how your company runs, attend board meetings, and stay up to date with the accounts. NEDs may well get more involved in the nitty-gritty of a business in its first few years."

The NED is also expected to assess how the company runs. Powell reveals the benefits: "Non-executive directors bring boardroom skills and experience to businesses, as well as offering a wider perspective on company direction. While NEDs fulfil all the duties of a company director, their corporate governance abilities are not as important as their strategic skills. Special knowledge and guidance is the most important part of their job.

"You're looking for talented people with time on their hands. You need to recruit from your own industry and the right person won't necessarily be on a head-hunter's list. Network and use the grapevine."

Once you have your guru on board, Powell offers the following management tips: "A NED is there to provide strategy. To be sure they do this to best effect, be very open - stay on the level, keep them up to date and use them as a mentor.

"Inevitably there will be strategic differences of opinion in a boardroom. But in a good team, that can be cathartic. Often a healthy row leads to better strategy. Your team should be united. Problems tend to be down to personality, so make sure that you get on before you hire them."

Because they aren't employees of your business, NEDs are usually paid fees, not salaries. Rates vary, but the cost for a small business might be around £5,000 annually; NEDs usually work for 20-30 days a year.

"This isn't a clock-on, clock-off type of job. Consider their value to you, not the cost," Powell concludes.