The power of an NXD

Businesses owners can benefit enormously by enlisting the services of a non-executive director (NXD), it has been claimed.

Writing for the Telegraph, James Hurley noted that employing such an individual - an outsider who does not take an active role in the day-to-day running of the business - can be "a fast-track to commercial wisdom, astute introductions and constructive criticism of your strategy". A staple at board level in larger companies, he believes smaller businesses can also benefit from external expertise from an industry expert. Mr Hurley suggested that NXDs can prove to be an essential sounding board" for entrepreneurs, who often have only themselves to contribute to key business decisions.

"Many entrepreneurs are specialists filling the shoes of a generalist in order to manage a company's growth, so the majority of small businesses will be best served by an adviser with general knowledge to add," he suggested.

Continuing, Mr Hurley said the right adviser can add credibility ahead of a major deal or prospective investment round. He noted that NXD’s pay packet should reflect the fact they are working largely in a consultancy role, devoting perhaps a couple of days per month to the company.

Gareth Osborne of APA, himself a long standing NXD to a number of large and small businesses said, “I would recommend the appointment of at least one NXD to every business board. They are great value for money and have no ‘corporate axe’ to grind. Their advice is impartial and usually not vested in internal politics.”

APA