Guidelines and Attributes for Effective Independent Board Leadership

Published 29-Feb-2016

Attributes of Effective Independent Board Leadership

  • A skilled independent leader of the board
  • Effective board processes
  • Rich mix of board skills and experiences, including deep industry expertise
  • Clear delineation of roles/accountability between board and management

Governance Structures That Enhance Effectiveness:

  • Robust Selection Process: In our experience, very few portfolio companies have institutionalized the process for selecting an independent chair or a lead independent director. We encourage companies and boards to adopt a framework that specifies relevant skills and characteristics.

Effective Board Leaders Must:

  • Be Good Communicators: Since the role requires facilitating discussions among board members, between directors and the CEO/management, and engaging with shareholders/stakeholders, strong communication skills are necessary.
  • Have the Required Time Commitment: Given the key functions of the position, we estimate that the role requires a significant time commitment to execute responsibilities effectively. Based on our engagement sample, the time commitment can range from one day a month (about 100 hours a year) to 2 days a week (over 800 hours a year). On average, the time commitment is between 300–400 hours a year.
  • Have Relevant Industry Expertise: Independent board leaders tend to act as sounding boards to CEOs. Relevant industry expertise enhances the effectiveness of the individual and reduces the risk of a “managementknowledge- captured board.”1
  • Have Personal Effectiveness: This includes personal integrity and professional credibility; ability to earn the support of other directors and management; good problemsolving skills; sound judgment and leadership.
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