As board directors who are not part of the executive team, a non-executive director (NED):
- provides creativity and independent oversight to the Board
- constructively challenges executive directors.
The role of the NED is to:
- provide strategic direction
- monitor performance
- help determines remuneration
- ensure the integrity of financial information
- ensure that the financial status of the organisation is correctly reported
- ensure internal controls are in place.
The role of the NED is demanding and responsible but they are highly valued for their objective insights.
Entry and progression
NEDs are experienced professionals often having achieved senior positions in executive roles.
ACCA develops the skills and knowledge required by forward thinking professional accountants, including NEDs. Therefore, ACCA members are frequently asked to become NEDs after they have performed senior roles for many years.
For those who aspire to be a NED, the most relevant exam options are:
Remember for NEDs it’s not just about exams. You need to have the right experience so that you are competent – you have the experience and knowledge – to start and continue your NED career.
High level competencies
High level competencies required by non-executive directors include:
Stakeholder Relationship Management
A. Positively develops relationships with internal and external stakeholders.
B. Communicates and gains commitment from internal and external stakeholders.
C. Uses emerging technologies to collaborate and communicate effectively with stakeholders.
D. Applies professional and ethical judgement when engaging with stakeholders.
E. Aligns organisational strategic objectives with stakeholder needs and manages expectations.
A. Links developments in global trade, markets business practices and the economic environment to required improvements in the financial and risk management of an organisation.
B. Advises on business asset valuations, capital projects and investments using appropriate analytical qualitative and quantitative techniques.
C. Identifies, evaluates and advises on alternative sources of business finance and different ways of raising finance.
D. Communicates and advises on the impact on financial decision making on current developments in regulation, governance and ethics.
E. Assesses and advises on appropriate strategies to manage business and organisational performance regarding business and finance risk and effectively communicates the impact.
Governance, Risk and Control
A. Evaluates organisational structures and governance to protect the long-term interests of stakeholders.
B. Recommends appropriate strategies to ensure adherence to governance structures and application of best practice internal controls.
C. Identifies and manages risk appropriately.
D. Uses risk management for the best interests of an organisation and its stakeholders.
E. Monitors and applies relevant legislation, policies and procedures.
Sustainable Management Accounting
A. Applies development and performance management in the wider business and technological environment in the context of strategic planning and implementation.
B. Directs organisational performance through the selection and measurement of financial and non-financial performance indicators.
C. Collaborates on the key tactical and organisational areas of budgeting and control, capital investments, people and resource management.
D. Consults on the design and use of current and emerging technology and information systems to improve strategic decision-making and organisational performance.
Ethics and Professionalism
A. Develops advanced ethical values and professional skills in the promotion of public interest and the profession.
B. Demonstrates personal effectiveness in fast changing environments.
C. Encourages innovative thinking within the context of professional scepticism.
D. Thinks proactively about the future, applying professional judgement and commercial intelligence and seeks specialist input when needed.
E. Communicates effectively and influences others.