The document discusses a case study where the non-executive director (NED) of a small business has concerns about the founder and chairman's use of company funds and a supplier contacting the NED about unpaid debts. It provides an overview of a NED's duties under the Companies Act 2006, including promoting the company's success, exercising independent judgment and avoiding conflicts of interest. It also outlines skills needed for NEDs like integrity, sound judgement, business acumen and political astuteness. The document discusses tasks of the board like establishing vision/values and deciding strategy. It describes the IoD Chartered Director qualification.

1. Have you got what it takes to be a NED?
David Doughty
Wednesday 10 February 2016
Blenheim Palace
IoD Oxfordshire Directors Briefing

2. Case Study
You have been a NED on the board of a small business for less than a
year. You were appointed when the founder, Ashley Michaels, sold 49%
of the business and became Chairman. Tina Peterson joined the board
at the same time as CEO, buying a 20% stake for £240,000.
Recently the FD has confided in you with his concerns that Ashley is
continuing to use the company bank account as if it were his own
personal account, making frequent withdrawals of ‘dividends’
amounting to over £100,000 this year.
Yesterday, one of the suppliers contacted you in desperation saying
that they were owed a significant sum of money and kept getting
fobbed off by the executives with lame excuses as to why they had not
been paid.
What do you do?

3. What is a Non-Executive Director?

4. Companies Act 2006
• The seven general duties
– To act within powers
– To promote the success of the company
– To exercise independent judgment
– To exercise reasonable care, skill and diligence
– To avoid conflicts of interest
– Not to accept benefits from third parties
– To declare interest in proposed transaction or
arrangement with the company

5. Companies Act 2006
To promote the success of the company - having regard (amongst
other matters) to:
• The likely consequences of any decision in the long term;
• The interests of the company's employees;
• The need to foster the company's business relationships with
suppliers, customers and others;
• The impact of the company's operations on the community and the
environment;
• The desirability of the company maintaining a reputation for high
standards of business conduct; and
• The need to act fairly as between the members of the company.

6. What skills do NEDs need?
• Integrity - high ethical standards
• Sound judgement - willingness to challenge
• Interpersonal skills – listening, persuasiveness, ability to communicate ideas,
sensitivity, openness and awareness of non-verbal communication, co-operation
and team-working, facilitation skills
• Leadership and self-awareness, ability to gain respect and attention, confidence
• Critical thinking, creativity and strategic awareness - the ability to take the wider,
strategic view
• Business acumen, ability to identify new business opportunities, embrace change
and innovation
• Ability to assimilate, assess and analyse information, especially financial
information
• Political astuteness, diplomatic, able to deal with conflict
• Determination, with the tenacity and drive to succeed
• Keenness to gain new knowledge and skills to develop competences further

7. From dysfunctional to functional

8. The four key tasks of the board
Establish and maintain
vision, mission and
values
Decide strategy and
structure
Delegate to management
Account to shareholders
and be responsible to
stakeholders
The four key
tasks of the
board

9. IoD Chartered Director
• The professional qualification for
directors
• Awarded under Royal Charter
• Assesses the practical experience gained
by a director
• The interview is based on a portfolio of
evidence
• The interviews are conducted by
experienced peer reviewers
• The designatory letters C Dir are
conferred on individuals who successfully
pass the peer review.

10. Have you got what it takes to be a
NED?
Questions