Independent Directors: What Do They Perceive of Their Own Role?

Most publications on independent directors typically discuss the advantages they bring to boards of directors and their organizations, something that is undoubtedly undeniable not only because of the diversity they represent but also because of the value they contribute to most cases. However, few discuss the challenges these directors may perceive in their own role.

In conversations with directors who have served on multiple boards as “independents”, generally understood as those not affiliated with the organization (neither at the executive level nor as a shareholder), these are the main observations:

Advantages:

1. The opportunity to gain insight into an organization (strategy, structure, processes, among others) in which they have not worked before.

• The opportunity to understand different organizational cultures, their shared vision and values, interact with the management team, employees, shareholders (in the Annual General Meeting) and in some cases their main stakeholders when the organization has that level of maturity and gives value to ​​their proactive engagement (stakeholder engagement).

• The opportunity to contribute and complement their expertise in areas specific to their expertise, improving the collective performance of the board of directors as a “group” either through their knowledge of that industry (Depth) or in others (Breadth) acquired over the years through their participation in other industries or in other contexts or roles (CEO, director, consultant, etc.)

• The personal learning that comes from interacting with other directors and/or executives with different styles and backgrounds, and how to adjust his/her own style and communication to be heard and achieve an assertive impact on the board and therefore on the organization.

• If serving as a director in a different country than usual, the opportunity to learn about the external and internal rules and/or regulations applicable to that organization.

Challenges:

1. The commitment and responsibility to organize the agenda (among other commitments) and set aside the necessary time to study, understand, and analyze all the information required by the organization allowing him/her to fully fulfill his/her duties of loyalty and care.

• The ability to understand the “politics” and “powers” within the board of directors and achieve the most appropriate contribution of value, ideally without affecting the “tone” with other directors.

• The honesty to communicate in a timely manner any potential conflicts of interest that may arise, if applicable.

• The external pressures from majority shareholders or other stakeholders as indicated in Corporate Governance Matters: A Closer Look at Organizational Choices and Their Consequences – 2015, David Larcker and Brian Tayan.

• The requirement to stay up to date on organizational issues without being part of it, which can be overwhelming if management does not streamline the flow of information to the board as stated in Top Boards Do These 4 Things Differently – 2020, Harvard Business Review)

• Avoid falling into group dynamics that do not contribute to the dynamics and strategic role of the board of directors (The Group Dynamics That Define Well-Functioning Boards – 2021, INSEAD)

• And finally, perhaps the most complex, the courage and candor required to express that something is not right even if it is for everyone else (executive or equity members) or to change the status quo so the organization moves forward being aware of the “price” this may have when electing new members for the next term.

As you can see, it is a role with many contributions but also requires skills, competencies, experience, and a unique character from those who are part of the governing bodies of organizations.

How can we support you?

Our training programs for board members, tailored to their level of expertise, will allow attendees to learn not only about best practices in corporate governance and boards of directors, but also about the challenges, duties, characteristics, and expected behaviors of those actively involved in these spaces. Our portfolio includes:

1. Onboarding training for new board members
2. Updating training for active board members
3. C-Level training aimed at improving interaction with their board of directors
4. Short talks on topics of primary interest to boards of directors, such as AI, cybersecurity, and more.