Difference Between Executive and Non-Executive Directors

Directors, non-executive chairman and CEOs play an important role in an organization, whether the entity is a profitable business or a non-profit organization.

Things to Know About Executive and Non-Executive Directors

The general meeting of shareholders makes the most important decisions related to the company’s activities. Determining the company’s policy, main activities, business strategy, as well as monitoring the activities of executive bodies should be carried out by professionals with appropriate qualifications and experience in the business. Decision-making on these issues is entrusted by the legislation of different countries.

All companies are and are managed by the company’s top executives, i.e. the board of directors, which is appointed by the shareholders at the general meeting to conduct the company’s affairs on their behalf. The Board of Directors of the company consists of both executive and non-executive directors, and executive directors have managerial responsibilities.

Therefore, executive directors take care of routine operations. They represent the top management of the organization. In contrast, the Non-Executive Director, abbreviated NED, is not responsible for management. They are advocates of neutrality who seek to protect the interests of the company. Criteria for assessing deviations and changes in the project are developed during the project integration activities. Deviations of deadlines are assessed in order to ensure the implementation of the current plan, as well as to accelerate the implementation of actions aimed at eliminating delays and deviations from the current plan

As Chairman of the Board of Directors, the Executive Director shares the responsibility of the entire Board as its head. It is also part of their responsibilities to guide the opinion of the board, and they are the person who seeks to convene a board for its internal communication (such as consulting and communicating with fellow directors).

Board Executive Director and Non-Executive Director

These two important positions belong to the upper level of the organizational structure, in particular at the top management level. The non-executive director is the holder of this position and has less experience and knowledge than the executive director. He is almost an outsider and has fewer hands than the CEO. It brings objectivity and knowledge to the board.

This type of director is not involved in day-to-day operations and management. Rather, he is a whistleblower and an unexpected spectator, ensuring good business practices and stakeholder interests. Such a director is not an employee of the company and is usually self-employed. In the event of significant changes and deviations that jeopardize the implementation of the project, it is advisable to change the project manager so that these changes and deviations are eliminated by another manager. A change of leader would make it possible to review the debt and write it off, which would allow you to start the program from scratch.

The board executive director must play a special role in any organization:

  1. He not only manages people, takes care of assets, controls the hiring and firing of employees, but also has a leading role in concluding contracts.
  2. He is the leader of the ship and must have extensive knowledge and skills in various fields.

As Chairman of the Board, the CEO is fully responsible for the entire company as its leader. He is also responsible for bringing the views of the board of directors into action, as well as convening the board (for example, to advise). Assess project progress and take corrective action decisions. The project mission and its initial plan are the basis for assessing the progress of the project.