Having non-executive directors between 60 and 80 years old can be a big advantage, especially if your company is pushing to change and develop quickly. Remember non-executive of this vintage will have started their business careers before computers and mobile telephones where a dream. so, they have the benefit of seeing the change and impact of technology.
A non-executive director (NED) should focus on providing independent oversight and offering guidance to the management team in their role as a board member. Focus for a NED should be reviewing:
Strategic direction: ensuring that the company has a clear vision, mission, and strategy in place.
Risk management: reviewing and monitoring the company's risk management processes and making recommendations for improvement.
Performance: evaluating the company's financial performance and making recommendations to improve results.
Governance: ensuring that the company has effective governance processes in place, including compliance with legal and regulatory requirements.
Ethical standards: promoting and upholding ethical business practices, including ethical decision-making, anti-corruption measures, and responsible corporate behaviour.
Stakeholder relationships: managing relationships with stakeholders, including shareholders, customers, employees, and suppliers.
Making sure the competitors have been monitored and the company understands the threat caused by the competitors/or the opportunities left by competitors.
Making sure management understands the direction of the industry or industries that the company is engaged in.
In addition to these broad responsibilities, NEDs should also review and discuss specific agenda items that come up during board meetings, such as updates on key projects, approval of major business decisions, and changes to company policies.
The number of non-executive directors (NEDs) a company should have is a matter of business judgment and depends on the size and complexity of the company, as well as its specific needs. But in general, there should be at least 2 NEDs. In general, the larger and more complex a company is, the more NEDs it may need to provide effective oversight and independent guidance to the management team. A smaller, simpler company may need only two NEDs, while a larger, more complex company may have several. It's important to note that having too many NEDs can be a disadvantage, as it can lead to conflicts and ineffective decision-making, while having too few NEDs can result in a lack of independent oversight. Ultimately, the right number of NEDs will vary from company to company, and the board should carefully consider its composition and needs when determining the appropriate number of NEDs.
Diversity in non-executive, directors, or experience? What is more important?
Both diversity and experience are important factors to consider when selecting non-executive directors (NEDs) for your company. Diversity refers to differences in personal characteristics such as gender, ethnicity, education, and background, which can bring a range of perspectives and experiences to the board. Having a diverse board can lead to better decision-making and help the company better reflect and understand its diverse stakeholder base. This is now a very important consideration for most investors, I recently overheard a story of a very frustrated major consultant, who, for three years has been telling a major German company. They must appoint some non-executive directors and they should consider diversity. The chairman had to approach the consultant and said you should be happy; he then went on to explain he had appointed his wife? The consultant suggested to his own company that he should be reassigned to a different project NEDs with relevant experience in areas such as finance, law, technology, and industry can provide valuable guidance and insight to your management team. The importance of diversity and experience may vary depending on the specific needs of the company, but both should be taken into account when selecting NEDs. A balance of both diversity and experience is ideal. In terms of age, it's worth noting that both younger and older NEDs can bring valuable skills, Age is an important factor to consider when selecting NEDs, but it's important to focus on the specific skills, experience, industry knowledge and perspectives that each candidate can bring to the board, regardless of age or gender. To expand this conversation contact me on www.gregorythain.com
