What is an independent director?

by Stephen Conmy on Mar 20, 2023

independent director

An independent nonexecutive company director is a person who is not employed by the company they are a director of, and who is not involved in the daytoday running of the company. They are responsible for providing independent advice and oversight to the board of directors.

Being an independent director – or non-executive director as they are also called – is a great way to gain valuable experience and insights into a company’s operations.

With this role comes responsibility and exciting growth opportunities, both professionally and personally.

Independent board members, or non-executive directors, are expected to make decisions that benefit the organisation while being able to collaborate with other members of the board.

This article will explore what an independent board member is, their responsibilities and the advantages of being on a board.

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What does an independent, non-executive director do? 

An independent board member (director) is not employed by the company and has no financial interest in it.

The shareholders select such people to serve on the board due to their expertise and experience in specific fields such as finance, management, HR or marketing.

An independent director provides a valuable, impartial perspective to corporate decision-making and oversight. Their role is to ensure the organisation operates within the law and its specific charter and ethical expectations.

This includes advisement, strategy development, performance evaluation, risk management, making wealth-creating changes, and overseeing key management roles such as executive officer activity and compensation levels.

Independent board directors are uniquely positioned to help guide organisations in a supportive way towards more success by providing guidance on best practices and strategies for executing their mission goals.

Appointing an independent board director is often seen as a positive choice for any organisation. After all, having access to insights and perspectives from individuals who come with experience in different capacities can be invaluable.

It also shows an organisation’s commitment to providing proper oversight and governance, helping ensure its success.

Independent board directors bring knowledge, skills, and economic understanding to their roles, supporting the board’s functioning by providing advice on important matters and bringing strategic initiatives forward.

Ultimately, they facilitate decision-making processes that consider a variety of perspectives while focusing on the ultimate goal of achieving success — both financial and non-financial.

What skills and traits should an independent director possess?

Potential independent board directors should bring the skill set and experience necessary to make a lasting impact as a leader. These qualities give the individual the modern-day capabilities and insights needed to navigate the competitive business environment.

Through their expertise and leadership, independent board directors can ensure that an organisation takes a calculated approach towards success.

Independent company directors should be equipped with the following:

  • Solid judgment
  • Problem-solving skills
  • Financial literacy
  • Industry knowledge and practices
  • Practical communication abilities
  • Team-building aptitude,
  • And dedication towards their role

With all these traits in place, potential independent directors can help pave the way for more successful company outcomes.

Watch David W Duffy (below), the CEO of the Corporate Governance Institute explain what makes a great non-executive director. 

How can you become an independent non-executive director?

Becoming an independent board director is a challenging yet rewarding process. It requires an individual to demonstrate competence, passion, and commitment to engage meaningfully in their role as an unbiased non-executive director.

To ensure success, individuals must apply for vacancies as soon as they become available and familiarise themselves with the company’s governance documents before attending interviews.

This helps demonstrate that the candidate has put effort into understanding the company’s needs and is ready to commit to becoming part of its leadership team.

Read more: Preparing your CV for a role on a board of directors

The benefits of being an independent non-executive director

As an independent director, you can gain invaluable experience and broader insights into a company’s operations.

Board members are expected to exercise sound judgment and make strategic decisions that benefit the organisation.

This high level of responsibility provides professional challenges and advantages for further career growth for those in the role.

Independent directors benefit from being able to view operations from a more comprehensive perspective and collaborate with other highly experienced board members to discuss matters of importance.

Overall, becoming an independent director can open up many doors of opportunities and offers rewarding challenges throughout the journey.

Become an effective independent non-executive director

Being an independent board director can be a tricky balancing act. Committing the necessary time and energy can be hard when other professional goals are competing for attention.

However, it is worth the effort, as these roles provide an incredible opportunity to lead teams and make decisions.

Directors must communicate thoughtfully when dialogue is complex, listen to all perspectives to reach an informed consensus, and ensure their voice is heard loud enough for our good intentions to shine through.

If you want to enhance your career as a director, the Diploma in Corporate Governance is the perfect place to start. 

By providing the practical knowledge, insightful thinking and global mindset necessary to be successful in the role, this comprehensive course helps directors fulfil their boards’ aspirations while succeeding in their ambitions. 

The diploma offers support and guidance from experienced faculty and expert mentoring from leading industry authorities. It will put participants firmly on the path towards being respected board members with influence, enabling them to bring about real impact within their roles. 

Learn more about the Diploma in Corporate Governance today by downloading the course brochure below. 

University credit-rated Diploma in Corporate Governance

Globally recognised and industry approved.

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