For the avoidance of doubt, we aren’t talking about the NEDs (urban slang) in Scotland for youths who apparently have a habit of standing around on street corners drinking 98% of the world’s supply of Buckfast …you don’t want one of those unless you are J. Chandler & Company perhaps or a Monk.
Now that we have cleared that up, lets explain further.
In a nutshell Fractional executives (CxOs) take an active leadership role whist non-executive directors (NEDs) tendto havea more advisoryrole.
Whether a start up or a scale up both are an effective way of acquiring senior experience and a network of contacts, without the heavy cost burden of a full time hire.
Fractional executives (CxOs) are professionals who offer their management services to organisations on a for-hire, part-time basis. These executives typically have extensive experience in a business environment in roles such as chairperson, owner, CxO or director.
Their skills can be focused in one discipline or be more broad-based, depending on their experience in the industries they have worked in.
Fractional executives may work as independent consultants or as part of a consulting firm as in our case, but they are not however consultants in the classical sense, as they take an active leadership or management role in the company that hires them, implementing changes and leading the organisation just as their permanent counterpart would do.
They are typically hired on a project basis, a time-limited basis, or in some cases, on a monthly retainer, but they do not work full-time for any particular organisation.
They may also be known as an interim executive, contract executive, part-time executive, temporary executive, on-demand executive or executive-as-a-service; the advantage of hiring such professionals is their experience and that they do not require a full-time position.
The advantage of hiring them through a consulting from like BPC Advisory is that they sit outside of IR35 and you get a concentration of Blue Chip, multi discipline and multi sector experience on tap to assist in all areas of your business.
If one month you need support in a particular area of your business, you pick the CxO with that particular experience, if the next month you need a different set of skills, you can add a different CxO from our experienced team.
A non-executive director (NED) is a member of a company’s board of directors who is not part of the executive team; typically they don’t engage in the day-to-day management of the organisation but are involved in policy-making and planning exercises.
According to the UK Institute of Directors, non-executive directors are expected to focus on board matters and not stray into ‘executive direction,’ thus providing an independent view of the company that is removed from day-to-day running.
Non-executive directors are appointed to bring to the board:
- Wide experience.
- Special knowledge.
- Personal qualities.
NEDs have responsibilities in the following areas, according to the Review of the role and effectiveness of non-executive directors(the Higgs report)
Strategy: Non-executive directors should constructively challenge and contribute to the development of strategy. As an external member of an organisation, the NED may have a clearer or wider view of possible factors affecting the company and its business environment, more-so than executive directors.
Performance: Non-executive directors should scrutinise the performance of management in meeting-agreed goals and objectives and monitoring and, where necessary, removing senior management, and in succession planning.
Risk: Non-executive directors should satisfy themselves that financial information is accurate and that financial controls and systems of risk management are robust and defensible.
People: Non-executive directors can benefit the company’s and board’s effectiveness through outside contacts and opinions. Helping the business and board connect with networks of useful people and organisations become an important function for the NED to fulfil.
There is no fixed rate of pay for NEDs or indeed a Fractional CxO. Remuneration/Cost varies according to company size, the time commitment required from the executive and the value to the business in terms of ability and experience.
Under IR35 rulings NEDs are paid via PAYE as an employee.
Want to know more about BPC’s Fractional CxO service can benefit your business?
Then contact us today