Do you really want to be an Independent Board Director?

If you are considering becoming an independent board director, there are three questions that you should ask yourself. You must 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 decide whether and when to pursue a board career.

Q.1 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 to 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 thing that she already does and gets well compensated for? ”. (For this role, the compensation was well below her current consulting pay scale.)

As I delved further, I realized that she had totally misjudged the role of an independent board director. She had not adequately assessed the appropriateness of her own leadership style, as well as the professional and financial risk that she would take on as a board director. In fact, she was clearly an autonomous decision-maker who, as a consultant, was engaged to make things happen using her autocratic style.

Q.2 What is your leadership style? Does it suit the role of an independent board director?

No one leadership style perfectly suits all boards, and most boards will have a mix of styles represented within their membership. Compatible leadership styles will vary based on the board chair, the organization, the industry, governance requirements, and industry compliance regulations.

Take some time to assess which management styles resonate with you and consider whether you need to adapt your approach to thrive in a collaborative board setting and group decision-making environment. Identifying your leadership style will also help determine what board roles you may be suited to and how to pitch to them.

Here are 8 common leadership styles. I have analyzed these and added two more to show how they play out in the boardroom. It is most likely that you will identify with more than one.

#1 THE COACH – motivational and supportive

This mentoring management style assists in building a strong company culture, but is more useful at the management level than at the board level, due to the 1:1 nature. However, it may be helpful to organizations needing to address poor organizational issues.

#2 THE VISIONARY – progress-focused and inspirational

This style is particularly appealing to startups, small, fast-growing organizations, or those needing to go through significant transformations. Be prepared for the additional time and assistance that may be required of you.

#3 THE SERVANT – humble and protective

Whilst this style may not always be in the best interests of the organization, it is often sought after by board chairs because they can rely on these directors to maintain harmony and be available whenever needed. If you identify with this style, you must do your due diligence as a director and remember you have legal responsibilities to all stakeholders. This may require stepping out of your comfort zone to ask questions and, when needed, disagree.

#4 THE AUTOCRAT – authoritarian and result-focused

When effective governance is practiced, the Board acts as a unified entity, making decisions together and sharing collective accountability for the outcomes. Autocratic leaders may find it difficult to operate in this environment, and some boards may find it challenging to work with them. However, this style may be beneficial for boards that lack confident decision-makers or need to adhere to strict industry standards.

#5 THE LAISSEZ-FAIRE – hands off and delegates

If this is your dominant leadership style, a board role is unlikely to be the path for you to pursue. This style often lacks clear structure and strong leadership practices. Whilst Boards are not involved in the day-to-day running of the business, board members are not hands-off, nor can they delegate their duties and responsibilities to other members of the board or executive team. Consider the risk to your professional reputation if you were to take on and fail in a board role due to this management approach.

#6 THE DEMOCRATIC – supportive and innovative

This leadership style emphasizes inclusive, open discussion and participation, which suits many boards and their members. For boards to be effective, all board members should be heard and respected. However, you need to factor in the role of the chair when decisions need to be made and foster a democratic board culture.

#7 THE PACESETTER – helpful and motivational

This style aligns with the boards of fast-moving organizations that must make sound decisions quickly. The style focuses on goal setting and performance-based results. Stakeholders evaluate the board’s effectiveness, and occasionally, board members receive compensation tied to delivering such outcomes.

#8 THE TRANSFORMER– challenging and communicative

Transformational leaders spend a significant amount of their time focusing on overarching goals; this style of leadership is particularly well-suited for team environments. It is most effective at the executive management level, but also suits many advisory board, voluntary board, and committee roles.

#9 THE TRANSACTIONER – performance-focused

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 the suggestions and decisions to facilitate the achievement of particular goals.

#10 THE BUREAUCRATIC – hierarchical and duty-focused

For most board chairs, this is not the style that is seen as effective in achieving results, particularly when there are deadlines. Many board roles require significant tasks and duties to be completed outside of the boardroom. However, there are boards where this leadership style is essential, particularly in highly regulated industries and organizations, such as government, healthcare, and insurance.

In addition to these leadership styles, I have identified a set of soft skills that you should consider during this process. Whilst these skills should not affect your decision to be an independent board director, they are skills that will make you a more effective one. As such, you can begin refining or strengthening these skills right away.

These soft skills include:

• Inquisitive & reflective thinking
• Good and patient listening
• Effective and confident communication
• Balanced and open viewpoints
• Passion & reliability
• Networking & relationship building

Q.3 What are the risks to consider as an independent director?

Board Appointments operates globally; director duties and director liabilities vary based on where organizations are located, either by country or state. It is therefore tricky to advise on the risks that you may individually face. I can, however, advise you to conduct your own research and understand the legal and financial risks you may be taking on an independent board directorship. Then, investigate ways to mitigate the risk, including obtaining Governance Qualifications and/or Director’s Insurance, seeking legal advice, and speaking to past board members.

There are also other hidden risks or drawbacks that new independent board directors often fail to consider. They include:

• Personal Financial Expenses – Board directors are often not compensated or reimbursed for any or all personal expenses incurred while fulfilling their role. These can be minor, from printing costs to more substantial travel expenses.
• Poor Remuneration – If you are paid for your services, the level of compensation is not great. If one calculates an hourly rate based on their entire time committed, for most board roles, the rates are significantly lower than what one receives 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 – Since most of you have busy executive and personal lives, taking on a board role means dedicating 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. The time commitment is more than just attending the monthly or quarterly board meetings. They include subcommittee attendance, emergency meeting attendance, social engagements and formal representation, board meeting preparation, emails, and travel.
• Your Reputation – Directors can experience reputational damage related 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 steps

Now that you are confident that you do want to be an independent board director, I recommend that your next step should be to read several of my articles where I examine what board roles are right for you, and my tips for getting started. One thing that I can assure you is – that it is never too early to get yourself Board Ready to find and gain the right board role.