Do you really want to be an Independent Board Director?
If you are considering becoming an independent board director, there are a number of questions that you should ask yourself. It is vital that you consider why you want to serve on a board, whether you are suited to the role, plus the risks and commitments associated with a board directorship. Some key reflective questions will help you make the decision whether to pursue a board career.
Why do you want to be an independent board director?
Any Chair or recruiter is going to be acutely interested in why you want a board role or be an independent board director. By asking yourself this question not only will you be prepared to respond to this question (trust me you will be asked), but you will also clarify in your mind that you are ready to take on the role.
Recently I was consulting a lady who had extensive change management and strategic IT experience in the government and commercial sectors. She was a passionate person, professionally well respected and well connected.
Her goal was clear – to develop a board portfolio. In the 30 minutes we spent together she explained what she does, and in particular her experience with strategic change projects and product development. She also stated her passion to work with boards. However, she did not touch on why she wanted to sit on boards. So, I asked her “why did she want to sit on boards where she would be doing much the same of what she already does and gets well compensated for”? As I delved further I realized that she had totally misread the role of an independent board director. She had not properly assessed the appropriateness of her own leadership style, as well as the professional and financial risk that she would take on. In fact, she was clearly an autonomous decision-maker who, as a consultant, was engaged to make things happen using her autocratic style.
What is your leadership style? Does it suit the role of an independent board director?
There is no one leadership style that perfectly suits all boards. Board leadership styles will vary based on the chair, the organization, the industry, governance requirement and industry compliance regulations. However, you should take some time to acknowledge what type of management style you operate under and whether you need to adjust your style to function at board level? Identifying your leadership style will also help you identify what board roles you may be suited to and how to pitch to them. Board work can be frustrating for those who need to get their fingers into the operational details of an organization. You should ask yourself whether you have the capacity to look at the macro issues and risks facing an organization.
Here are 10 of the most common leadership styles, you will most likely identify with more than one.
#1 COACH – motivational and supportive
This mentoring management style assists in building a strong company culture, but, is more useful at the management level (due to the 1:1 nature) than at the board level. However, it may be useful to organizations experiencing company culture issues.
#2 VISIONARY – progress focussed and inspirational
The style is appealing to startups, small fast-growing organizations or those needing to go through major transformations. Be prepared for the extra commitments of time and assistance that may be requested from you.
#3 SERVANT – humble and protective
This style is often sought after by board chairs as they can rely on these directors to keep the peace and be available whenever needed. You must do your due diligence, as a director you have legal responsibilities to all stakeholders.
#4 AUTOCRATIC – authoritarian and result focussed
Boards need to make decisions as a group and the entire group is responsible for the decisions made. Autocratic leaders may find it difficult to operate in this environment and some boards may find it difficult to work with them. This style is useful to boards lacking confident decision-makers or needing to adhere to strict industry standards.
#5 LAISSEZ-FAIRE – hands off and delegates
If this is your dominant leadership style a board role is unlikely the path for you should pursue. This style often lacks clear structure and leadership. Boards usually seek the opposite attributes in a board member.
#6 DEMOCRATIC – supportive and innovative
This leadership style revolves around inclusive discussion and participation which suits many boards and board members. All board members are heard and respected, however, you need to respect the role of the chair when decisions need to be made.
#7 PACESETTER – helpful and motivational
This style is a good fit for boards of fast-moving organizations that need to make sound decisions fast. The style focuses on goal setting and performance-based results. Many boards are judged by stakeholders, and sometimes remunerated, based on furnishing these types of results.
#8 TRANSFORMATIONAL – challenging and communicative
Transformational leaders spend much of their time focussing on overarching goals, this style of leadership is best for team environments. It is most effective at the executive management level, but might be appealing to many advisory boards.
#9 TRANSACTIONAL – performance focussed
This leadership style is ideal for organizations or boards tasked with hitting specific goals, such as sales and revenue targets. These leaders are very capable of making suggestions and decisions in order to facilitate the achievement of specific goals.
#10 BUREAUCRATIC – hierarchical and duty focussed
For most boards, this is not the style that is seen to achieve results, particularly in a timely manner. Board members have their set duties with little collaboration and may feel restrained or restricted. However, there are boards where this leadership style is essential, particularly in industries and organizations that are highly regulated such as government, health care and insurance.
In addition to leadership styles, I have identified a set of soft skills that you should consider in this process. These skills should not affect your decision to be an independent board director, they are skills that will make you a more effective one. You can start working on developing or enhancing them now. These soft skills include:
- Inquisitive & reflective thinking
- A good listener
- Effective communication
- Balanced viewpoints
- Passion & reliability
- Networking & relationship building
What are the risks to consider as an independent director?
Board Appointments operates globally, director duties and director liabilities vary based on where the organization is located, either by country or state. I can not encourage you enough to do your own research, know what legal and financial risks you may be taking on as an independent board director. Then investigate ways to mitigate the risk where possible, including obtaining Governance Qualifications and/or Director’s Insurance.
There is also another set of risks or drawbacks that new independent board directors fail to consider. They include:
- Extra Financial Expenses – Board directors are often not compensated or reimbursed for any or all personal expenses incurred fulfilling the role. These can be minor from printing costs to more substantial travel expenses.
- Poor Remuneration – If you are paid, the hourly rate is often dreadful when you do the sums. Once calculating the entire time committed, for most board roles the hourly rates are significantly lower than what you receive as an executive or consultant.
- Limited Control – Being part of a board, by definition, means that you are not the sole decision-maker. You are reliant, in part, on the quality of other board members and the Chair.
- Time Commitment – Most of you already have busy executive and personal lives, so taking on a board role means time out of the office or away from your family. This should be factored into any decision to take on an independent board director position. Time commitments are more than just the board meetings; they include subcommittee attendance, emergency meeting attendance, social engagements and representation, meeting preparation, emails and travel.
- Your Reputation – Directors can experience reputational damage relating to the misconduct or failure of an organization. Luckily this does not happen often, but when it does it can be devastating professionally but also personally. In the worst scenarios, leaving people to rebuild their executive and board careers.
The next step
In my next article, I will look at the benefits of being an independent board director. You can then truly weigh up the risks versus the rewards of serving on a board or committee. For most of you I am sure that you will find the rewards, even in a community level role, far outweigh any drawbacks. From there you can then start the process of getting an independent director appointment.
About the Author
David Schwarz is CEO & Founder of Board Appointments. He has over a decade of experience in putting people on boards as an international headhunter and recruiter. He has interviewed hundreds of directors and placed hundreds into some of the most significant public, private and NFP director roles in the world.