This archive report was first published on 24 November 2019.
On November 24, 2019, CAROL MUSYOKA wrote about the pros and cons of having a lead independent director on a board.
Managing a board is a challenging task that requires strong interpersonal skills from the chairperson. However, the role of a lead independent director (LID) has been recommended as a way to improve board governance.
The LID is a highly versatile intermediary between the chair, the board, and stakeholders. In normal times, they contribute to good relationships and functions, but in times of stress, they assist in facilitating the resolution of situations.
Marion Plouhinec, in a Harvard Law Forum article, described the LID as an alternative communication channel for board members. This can be especially useful when members have concerns that have not been properly considered by the chair or board.
One of the key responsibilities of the LID is to monitor the relationship between the chair and CEO, ensuring it is a well-functioning working relationship without becoming too close or powerful.
However, the creation of a LID role can also lead to the perception of an alternative power center on the board, which can be a challenge for the chairperson.
Some boards have circumvented this tension by decentralizing the role of conflict management to a committee, such as the audit or risk committee.
This approach allows the committee to take on a stronger role in ensuring governance is effectively applied, even if the chairperson is not vested in the same.
