Independent director’s role
NO MATERIAL INTEREST IN FIRM Contribution is to impartially govern and direct the organisation to success.
There is an inherent desire in all of us to grow our careers and contribute more to the economy and society as a whole and while there are a plethora of methods to achieve that, few people consider going the route of an independent director.
In fact, out of the many avenues to grow one’s professional career, serving as a board member has to be the most prestigious, effective and quite lucrative; directors can earn decent to hefty wages for their efforts as board members.
What is an independent or nonexecutive director and how does one become one? In the past, it was associated with the role of a board member who serves as a director in an advisory capacity. But in recent times, that definition has been changed to suit the times and changes in the sphere of business and the boardroom.
The nonexecutive director now has a material interest in the organisation, which in most cases is holding an equity stake. This makes them shareholders or in some cases stakeholders, who sit on a board for the sake of their interest in the organisation but who are still not involved in the day-today running of the business.
In contrast, an independent director or outside director is a board member who has no material interest in the organisation, be it shareholding, company affiliation, prior business dealings, family or friend relationships. Their only financial benefit from the organisation is remuneration.
Independent directors also do not play a role in the day-to-day running of the organisation.
Therefore, if you, as an entrepreneur, desire to serve on a board you have no material interest in, you will be considered an independent director whose role would be to impartially govern and direct the organisation to success.
Becoming an independent director is a strategic career move that, if done correctly, can be hugely beneficial.
Companies, charities, universities and public sector boards all have a need for people with good commercial experience, knowledge, sound judgment and an ethical approach to governance.
Independent directors play a key role in today’s complex economy by bringing perspective and solutions that aid the executive team move the organisation towards its objectives.
If becoming an independent director is one of your career aspirations, I shall unpack the entirety of the profession of directorship and crucially, how you can become an independent director, in coming weeks.
Munya Duvera is CEO at Duvera Elgroup