This week some shareholder activists made their feelings known about long serving directors as well as over-committed directors. But are their concerns about independence and director workload justified?
While agency theorists would suggest that as long as directors do not have business or social ties to the company or the CEO, they are “independent” directors who will diligently and objectively monitor management. However this is a somewhat over-simplified view. A director can have no business or social ties to the company or CEO and still not demonstrate ‘independent mindedness’ in the boardroom. Equally long serving directors may have the experience (and confidence that that experience brings) required to steadfastly resist the temptation of going with the group view and striking out alone with a clear eye on the issues or demonstrate a professional detachment in their questioning. At the end of the day it is about board dynamic and the attributes of the individual director that will determine how independent their thinking is.
On the workload issue again a more nuanced perspective may be necessary. Research shows that directors who sit on more than one board are generally more flexible in adapting to complex situations and show a tolerance and exposure to different perspectives and view points and generally bring a broader ‘world view’ to the boardroom. Importantly some research also shows that such directors, suffer less status anxiety and therefore exert their monitoring responsibilities more confidently through a better practiced, honed style of questioning. Multiple directorships may in fact be helpful to a point. There is a point at which multiple directorships can stretch a director to the extent where they have to make trade offs about where they spend their time which may have the detrimental impact on the time spent critically reviewing detailed proposals brought to the board.
Perhaps a more nuanced approach to determining what contributes to making an effective director is called for and it may have more to do with the quality of boardroom dynamic and less to do with the number of boards one is on or the nature of ones ties.
Written by Meena Thuraisingham, Founder and Principal of TalentInvest, Currently undertaking a PhD in Board Dynamic
Written by Meena Thuraisingham
Director and Principal, Talent Invest
Meena Thuraisingham is a consultant, author, executive coach and thought leader in the area of People and Culture. An organisational psychologist by training, she founded TalentInvest, a niche consulting practice, advising global clients in the UK, Asia and Australia in Capability and Culture. Meena is also a regular speaker internationally on leadership effectiveness and culture change.
Her published books are The Secret Life of Decisions, Careers Unplugged and Derailed!. Get Your Copy Today