How the role of the non-executive director in a single tier board has developed in recent yearsIntroductionThe role of the non-executive director in a single tier board has transformed significantly and contemporary companies are expecting more from non-executive directors than they used to before. A considerable number of changes are witnessed in the composition, role, job performance and diversity in the non-executive director composition. Non-executive directors are generally expected to be more involved or more engaged in the running of the business so as to determine whether the stakeholders’ expectations are being met.
Non-executive directors are no longer regarded as the shadow figures whose role was to provide an external insight or provide wisdom and acumen to the board. Non-executive directors are not necessarily people with status or whose experience in business was considered superior but individuals who are willing to dedicate their time towards the accomplishment of the company’s objectives. This discussion seeks to explore the various changes in the role of the non-executive director in order to establish how the role has changed in a single-tier board over the years.
DiscussionTraditional role of non-executive directorIn order to effectively differentiate between the role of non-executive directors in the past and what is expected of them in the contemporary world, it would first be imperative to understand the role of the traditional executive director. Available literature indicates that the role of a non-executive director was rather simple in the past and that the main idea was to incorporate an experienced ‘outsider’ into the board discussions so as to offer more insight for the company and enhance decision making ability (Greenfield 2008; Treadwell 2006, p.
64). This is because boards were initially thought to be too introspective; which was considered dangerous and in the need to seek more experienced persons in order to enhance the decision making process. In most cases, boards sought experienced businessmen who were respected in their fields and therefore capable of bringing in valuable knowledge, wisdom, common sense and strategic acumen towards the board debates (Treadwell 2006, p. 64). Such directors provided a ‘helicopter’ view and were often considered a sign of potential excellence for the company. An individual who promised a link to the government was also highly preferred during the selection of non-executive directors.
Treadwell (2006, p. 64) notes that the non-executive director would be required to spend minimal time in dealing with company issues (basically 15 days per annum) and would learn about the business over time and consequently contribute in board meetings where appropriate. The non-executive director was not expected to overtax himself with paper work but only to attend and contribute in the board meetings (Greenfield 2008). It is also notable that non-executive directors who were already sitting in another board were treated with ‘status’ and therefore preferred due to their experience and exposure (Tredwell 2006, p.
65). This played a significant role in defining the individual professionally, socially and personally and individuals with such statuses were therefore likely to be selected as the non-executive directors for companies. Changing role of non-executive director