A non-executive director is one who has no interference in the daily management of the company. However, he does participate in business planning and policy formulation in the organization.
That is, a non-executive director does not play a role in the day-to-day management of the firm. Instead, its role is to intervene primarily in planning.
Specifically, this type of director does not hold an executive position, but performs other strategic tasks such as projection or planning of the company.
At this point, we must remember that business planning is the procedure by which companies set their short-term and long-term goals. Thus, proper planning is key to achieving the success of an organization.
Characteristics of the non-executive director
Among the characteristics of a non-executive director we can highlight:
- It is not part of the executive team (of some management), but it is part of the board of directors. This is the highest governing body of a corporation to which the shareholders delegate all their functions. Decisions are made from this body that affect all departments and areas of the company.
- May be included for public relations reasons. Perhaps the person's track record gives them prestige that adds value to the company. In addition, it may be that this director has contacts that are useful for the interests of the firm. For example, if we are talking about an agro-exporter, it may be that this non-executive director has contacts with importers from countries where the company could sell its products.
- It is presumed that these directors may be more objective than those directors who participate in the daily management of the company.
- They are also known as outside or independent directors.
- They are responsible for the success or failure of the firm, just as much as the other directors.
Non-Executive Director Duties
Among the functions of the non-executive director we can summarize the following:
- Intervene in the planning of the company.
- Add value to the company with their experience and professional contacts.
- Follow up on the work of the executive directors.
- Provide objectivity in the management of the company.
In conclusion, and as we can see from their functions and the characteristics of the position, non-executive directors also play an important role in the company.
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