Difference between non-executive director and executive director
Executive Director
The chief executive officer has the overall,
primary management and leadership role in the
organization. Therefore, the CEO must have
extensive knowledge and skills in a wide
variety of areas.
There is no standard list of the major
responsibilities carried out by a chief executive
officer, however the list below outlines the most
common.
Board Administration and Support
Supports board members by advising and
informing, going between board members and
staff, and supporting the board's evaluation of
chief executive.
Program, Product and Service Delivery
Oversees design, marketing, promotion,
delivery and quality of programs, products and
services.
Financial, Tax, Risk and Facilities Management
Recommends an annual budget for Board
approval and then manages resources within the
budget.
Human Resource Management
Oversees the management of the human
resources team ensuring that they comply with
current laws and regulations.
Community and Public Relations Ensures that
the venture is seen in a positive light from
outsiders.
Fundraising (nonprofits-specific)
Oversees fundraising planning and
implementation.
Non-executive Director
A non-executive’s role is less hands-on. A non-
executive director may have less experience and
less knowledge than an executive. However, the
benefit here is that a non-executive can bring
objectivity and an external awareness to the
board.
Non-executive directors are not usually
involved with day-to-day management,
however, the smaller the company, the more
likely it is that there will be some hands-on
work.
The non-executive’s role is an over-viewer and
whistle blower, ensuring adherence to good
practice, respect for the interests of other
stakeholders and adherence to the process of
boardroom discipline. Non-executives are often
thought of as “advisers” although this is not the
case. The role is larger than this – the non-exec
is a director and shares the legal duties and
responsibilities of the executive directors.
As far as corporate governance is concerned,
non-executives are usually associated with
Independence and may be self employed.
What is meant by an Independent Non-
Executive Director?
The following characteristics are indicative of a
state of independence
* The individual is not an employee of the
company but perhaps self employed;
* The individual is not a professional advisor;
* Individual is not a supplier or customer of the
company;
* The individual does not have a family
connection with someone in the business;
* The individual’s directorship is for a fixed
term and accordingly he is less likely to be
motivated by self-preservation when taking
decisions;
* The individual does not depend so heavily on
his remuneration from the company as to make
resignation difficult