How can NEDs supervise without managing?

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How do you provide oversight while not being in a business full time?

This is a constant challenge many Non-Executive Directors (NEDs) face in role. NEDs are equally as accountable as Executives under the Companies Act 2006 so it can be difficult to know how to draw the line. Even more so for those where it is their first NED role, removing their day to day Executive hat and helicoptering to see the big picture while being aware of the nitty gritty can be quite a challenge.

It is, therefore, important for all NEDs to ensure that they provide objectivity rather than run the day to day business. The role of the NED is an extremely effective tool for ensuring good Board advisory decisions.

How do you supervise as a NED without managing?

Oversight by the Board means preventing (as far as possible) financial, legal, ethical or operational mistakes that can threaten the effectiveness or existence of a business. To do this effectively directors need to see ‘the wood from the trees’ and the only way to do that is to not get buried in the minutiae of detail of the business. The Board, particularly NEDs, are supposed to ask lots of questions and act as the critical friend. If something is not understood, it is their job to ask probing questions and draw out answers. This is the only way that they are able to spot potential pit falls which could lead to poor business health.


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