A successful Independent Board Director is supposed to make its company’s Executive Management Team self-realize flaws or oversights in its business models, strategies & assumptions, and coax them to seek better alternatives that would minimize corporate risks and/or maximize shareholder value. Independent Director is supposed to articulate his/her apprehensions in a way that helps Executive Team to understand core issues and to point few clues that leads Executive Team to better alternatives allowing them take full onus of the final decisions. It is easier said than done. Being an Independent Director is a tough business and it does not suit every one even if one is most successful in one’s own profession or assignment otherwise. Hence identification and search of an independent Director represents different challenge. One of the best known Independent Directors in the history happened to be Birbal – a true Independent Minister in Emperor Akbar’s court without any executive responsibilities.
Independence of an Independent Director
Akbar the Great was the Mogul Emperor who ruled India from 1560 to 1605. He himself was illiterate, but he invited several learned people in his court. Among these people, Birbal was his most favorite minister because of his wit and intellect. There are number of folklore on Birbal in India that shows how Birbal artfully pointing out flaws in Akbar’s decision making and letting Emperor Akbar self-realize it. The story goes like this.
Emperor Akbar had a mobile court which one day found itself in a village where a young farmer Mahesh Das lived. Emperor Akbar announced that he would award thousand gold coins to the artist who could make his most realistic portrait of what he looked on that day. There was a beeline of artists and each had a covered picture of the Emperor. Akbar, sitting on a high-throne, received the portraits and rejected them one by one with his cryptic comments.When Mahesh Das’s turn came, Emperor Akbar commented “Are you like the rest of the incapables who don’t know how to portray what I look now?” Whereupon Mahesh, without fear but yet in a tone of humility, said: “Look, my Emperor, into it and satisfy yourself. “Strangely, it was not a drawing or painting, but a mirror that emerged from the folds of Mahesh’s garments to show the Emperor exactly what he was then.Akbar received Mahesh Das with open arms. And after few interactions Akbar appointed Mahesh as his Minister. It is the same Mahesh Das who was later on known to be Birbal- one of the jewel Minister of Akbar’s Courts.Birbal was probably India’s first Independent Director. Each & every folklore only points out how Birbal made Akbar realize flaws or oversight in Akbar’s decisions. They both enjoyed each other’s company despite of Birbal most of time challenging Akbar’s decisions. But the fact is that Akbar willfully chose Birbal to be his minister and intentionally gave Birbal the space and role to challenge his own decisions/ actions.
Something similar happened in recent times with India’s one of the most successful IT company companies – Infosys. During a TIE conference, Mr. Narayan Murthy, founder of Infosys, disclosed how he hired T V. Mohandas Pai- as CFO of Infosys. Mr. Murthy explained that he encountered Mohandas during a conference and Mohandas asked some questions that were critical of and the same time very core to Infosys. And after spending some time with Mohandas, Mr. Murthy realized that Mohandas not only understands the subject deeply but also has a mind of his own to express to show him the mirror. Infosys needed such professionals and Mr. Murthy convinced him to be Infosys CFO then. Few founders like Mr. Murthy can be courageous to appoint someone who can show you the mirror or challenge your decision in an executive role. Other successful promoters appoint such persons on their Board as Independent Directors.
Corporate histories are awash with incidents wherein Promoters or CEOs ,that pick up their ‘ yes sir ‘cronies as Independent Directors, had always gone down the drain irrespective of their size or might . Companies that build a strong board, to challenge their Executive Team internally, have always grown and flourished. There’s saying “Those who care for their companies, like their Independent Directors to be truly Independent”
There’s common tendency to have known & celebrity names on Company’s board. This may make board look more glamorous but it is not the assurance of performance. Appointing an Independent Director of right blend and complementing strengths would require a systematic approach to search.
Searching an Independent Director
Though it is against my own business Interests (I am in the profession of Executive Search helping promoters finding right fit Independent Directors) but I would have no hesitation in admitting that the best search of Independent Director is out of promoter or independent’s own network. One to whom promoter /CEO knew previously and & had shown the mirror deftly in the past. One should do the same what Akbar or Narayan Murthy did. However such coincidences don’t happen for every one and every time. Even if one have known someone, it is better to use an intermediary (An Executive Search firm with expertise) to confirm and verify. Personal connections can sometime be very deceptive. An Executive search firm can check credentials, attribute and fitment and not just confirmation of interest. And also if one’s own connections do not have requisite skilled person, an executive search firm can search beyond obviously created repositories/ Databanks. Independent Directors on the board are like creating a team. Each one should have different complimenting skill, knowledge, sectorial or functional understandings. It would require a systematic Independent Director Search.
Desired Attributes of an Independent Directors
KPMG’s audit committee Institute presented a paper to ASSOCHAM in year 2011 “Role of Independent Directors , Issues and challenges “ that had very appropriately put the attributes desired in an Independent Director as below :
a. Works well with others
b. Possesses the required Business/Industry knowledge
c. Is available when needed
d. Prepares for and attends meetings
e. Devotes quality time to oversee company affairs
f. Is alert and inquisitive
g. Asks hard questions
h. Challenges management assumptions
But as an Executive Search Professional, while conducting Independent Director Search or Board of Directors Search, I would define attributes in a slightly different way .Individual may already be an Independent Director / Executive Director or still at CxO level reporting to a competent Board but must have below given duly verified attributes apart from one’s own professional, functional & sectorial specialization required for that Board seat.
I. Dissents but not Resents – Challenges the Management team’s assumptions & puts forward own but does not resent when not accepted.
II. Challenges but not without viable alternatives – Express one’s Apprehension on the issues but also puts forward alternatives. Apprehensions/Challenges alone without valid alternatives are fruitless
III. Values but not above own Value system – Values one’s Independent Directorship but not at the cost of own ethics and value system. One who would not like to compromise his values for short gains?
Verification of these attributes should be done via rigorous formal & informal and direct or indirect reference checks. This will need extensively connecting with professional, personal and social sphere of that individual. Though some may advise to use psychometric tests but most of individuals in this category do not like to go through such tests. If allowed then one should do it. Again psychometric tests are best indicators. In Practice, psychometric test findings are always reconfirmed / verified through physical reference checks or interaction.
To Be an Independent Director
Are you ready to be an Independent Director? Do you dissent tactfully and without confrontation? Are you able to mend your seniors or board to your thought processes? Have you recently been instrumental in correcting some strategy / decisions / oversight in your company without leaving bad taste in the mouth of anyone concerned? Have you tested your articulation skills that get you appreciation like “Speaks less but says a lot more? “. This should be tried in your actual job consistently before you aspire to be an Independent Director. It is also important that you create opportunities for you to show your skills like an Independent Director before you actually get appointed. Like Birbal or Mohandas Pai, you can also create opportunities for you to be an Independent Director. Professional, industrial or social forums are the best places to display these skills abundantly. Are you working toward that consciously?
Last but not least, Independence of an Independent Director is a relative term. Nobody tell you to how much independence to give someone else to challenge you. It is self-imposed and most fruitful and when one enjoys it.
Author is Managing Director of Executive Search & Recruitment Process outsourcing firm MAGNA Global HR Services Pvt . Ltd , India .
