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Ability to Handle Conflict of Interest is True Test of an Independent Board Director: Kaushik Dutta, PWC
In recent BW Dialogue titled 'Independent Directors- Adding Value During Crisis!', Kaushik Dutta, Director, Thought Arbitrage Research Institute & Former Member, India Leadership Team, PwC shared the role of an independent director and importance lessons from his years of experience
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In the times of crisis, such as the current pandemic, the leaders of an organization, arguably, are seeking the advice of board directors more than they ever did. Additionally, in this crisis times, the opinion of an independent board director becomes very important. On the other hand, the question of how independent are the independent board members have always been a concern.
Kaushik Dutta, Director, Thought Arbitrage Research Institute & Former Member, India Leadership Team, PwC stated that the debate on how independent are independent directors (In the US, they are called the external directors) has always been there. He shared his view: “The work of an independent director is to take part in the decision-making process.” The speaker was an esteemed panelist at a recent BW Dialogue titled 'Independent Directors- Adding Value During Crisis!' organized by BW Businessworld & Executive Access.
Further, Dutta added, “It is a personal choice to be independent. When the question of becoming independent does come into the pictures – when there is a conflict of interest.” And, at that point of time, how one discharge one’s duties is critical, thinks Dutta. He says: “True test of an independent board director how one handles conflict of interest.” He also added, “At the end of the day, whatever discussion that happens ends up in a decision – whether it is a merger, approving a budget, acquisition. Every director plays a different role depending upon the area of expertise.”
Speaking from his experience, Dutta shared, “I am a financial expert in an audit committee. I need to make sure the financial statements are true and fare from an oversight quantum view.” Further, he stated, “While taking these decisions there are two rules that we follow: 1) Duty of loyalty: whatever you do, you do not compromise on the interest of the company. 2) Duty of care: you take every decision with utmost diligence as a normal person needed to.” “Whatever the decision you take has to be reasonable, logical, based on facts and figures,” Dutta said.
Speaking on the impact of Covid pandemic, Dutta shared, “Pandemic is more than a crisis, it is uncertainty.” He stated that there is no previous model to analyze the pandemic does not have any previous model and so that is why no one has been able to figure it out. “The role of the director has become so much more important (now) to give guidance and collective wisdom put in.