The Higgs report of 2003 clarified the role of the NED, and although aimed atlarge
business there are a
significant number
of role that can bebeneficial to smaller businesses, commonly classified as small to mediumsized enterprises, or SMEs. Of all themany qualities to be considered in drawing up a detailed job description,organisational “fit” is likely to be a priority. This really comes todown to what your organisation is aspiring to achieve. Regardless of coreNED functions, if your organisations key objective of the term ofappointment is new research and development, then a NED with a backgroundin finance is unlikely to permit them to make major contributions to yourbusiness. The legal liabilities are equal to that of a executive director, and therefore complete disclosure
of operational issues will be required for them to fulfil their duties.
ANED has a
significant fiduciary duty to fulfil, and will therefore seekto influence governance decisions for the good of the company in animpartial manner. The term of appointment willcommonly be fixed, with terms from 2 to 5 years being commonplace. Remember that a NED is their to help the
business achieve its objectives,whether that’s as basic as ensuring that there is a properly preparedbusiness plan in place, and essential legal duties are being fulfilled, orbringing an expert to the board in a particular area such as environmentalcompliance, change management or IT.