Good judgement as a priority

It is now universally understood that independent and non-executive directors play a significant role in the success of a business, and in strengthening board governance and its effectiveness. The challenge lies in selecting the right persons for the right board.

Of course, skills, competence and experience are important requisites for this position. The person must be sufficiently experienced in business, have the competences and knowledge to carry out the duties and responsibilities of the role, and must be free of conflicts of interest that could impede the proper execution of duties. In the selection, other factors need to be considered such as the balance of competences and experience that are needed to have a multi-disciplinary and cohesive board of directors within the context of the business and the industry, the size of the board, the performance of the incumbent directors, board diversity, and succession planning.

A priority requisite is however practical wisdom and good judgement. The person must have the highest personal and professional ethical standards that strengthen integrity and honesty.

The basic character trait is that of good judgement defined as the ability to judge, decide or form an opinion objectively, wisely, authoritatively, with good sense and discretion. Judgement assumes the careful analysis of a situation, visiting the alternatives, concluding on what needs to be decided, and act. It is based on “common sense” rules that can be followed by thinking things through before deciding, to listen to your inner self, and to learn from others – meaning maturity, objectivity and detachment. Good judgement is at times a result of bad experiences and bad judgement and in asking, “what went wrong?” and “how can we ensure that mistakes are not repeated?” Experience translates into maturity and effective use of maturity leads to good judgement.

Good judgement is also dependent on the other attribute of prudence. The ability to restrain yourself by applying reason and wisdom in decision making and action, taking caution, reflection and discernment in view of risk and uncertainty.

A board director must consider the likely consequences of any decision beyond the short-term, considering the interests of all stakeholders including employees, clients, and community. To consider the impact of the decision on the environment and society.

In our search for the non-executive director, we are looking for strength of character and the ability to discern, to have an objective view while being realistic, pragmatic and consequently effective.

About the author(s)

Joseph F.X. Zahra is a Malta based economist with over thirty five years of corporate leadership and business consultancy experience.