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|Total Solutions Middle East is the leading compliance consultancy and training service company in the Dubai established in 2004, We provides HR Solutions, contracting, outsourcing and Payrolling services as well.|
Independent Directors – A Crucial Part Of The Companies
If you think your business doesn’t need any independent director, then you are walking the wrong lane. The role of an independent director is becoming increasingly important. Thanks to some scandals that opportunities for these directors have increased. Some business legislations also mandate the appointment of independent directors on board of listed companies. Aside from legislations, the benefits of having an outside director also necessitate to include them in the board.
They are ‘independent’ so more objective, and precisely evaluate the performance and wellbeing of a company. It comes from:
Independence from the management
These directors do not rely on the company president or CEO for any update or information, but keep focus on outside information and perspective.
No additional compensation
Outside directors do not accept compensation for anything other than the board services. They are not involved into any consulting professional services or other business dealings like a supplier or financier or customer. Thus there remains no conflict of interest financially or by any other means.
Conflict of interest
Board members are always away from organisations or activities which may create conflict of interest with the company on whose board the director serves. On some issues, like where a partnership or alliance with an organization is in consideration, a director can excuse himself if there are some chances of conflict.
Just the way an independent director is important, fully utilizing and retaining them is also extremely crucial. There are many talented and mature business professionals who like serving on boards in order to garner positive response for your organisation. However, if their perspectives, opinions are not given thoughtful consideration then their time is wasted. Also, if the business processes are not maintained in a fashion that reflects the value of outside board, then it is less likely that they would serve.
To establish the credibility of businesses, it is important to attract and retain outside directors and run the board meetings in a professional manner. This includes sending the agenda and board books to busy people several weeks in advance to let them have enough time to prepare for the meetings. It also makes focusing on critical business processes easy.
Having an outside board member or independent director who is neither the member of the family nor employee, advisor, customer or supplier of the company brings many advantages. It adds great value to a business as well as the family who owns it. But this value remains at place only when the director’s opinions are given respect and concern.
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