The Evolving SID Role: Navigating Complex Business Landscapes

We had a lively discussion on 1st May with SIDs variously describing themselves as canaries, lighthouses and diplomats and catalysts for change.

Our group of 25 FTSE and private company SIDs, Chairs and emerging SIDs concluded that the role is both rewarding and, at times, demanding and a great opportunity for those with strong interpersonal skills, strategic foresight and the confidence to put themselves on the line.

Our conversation is summarised below:

Key Attributes of a Great SID

Emotional intelligence

SIDs must navigate a complex web of relationships with stakeholders including the Chair, fellow board members, management, shareholders and regulators.

Relationship building

Investing in building trust and rapport in the good times pays off in moments of crisis or when harder messages need to be delivered.

Diplomacy

SIDs foster constructive board dynamics, supporting effective decision-making and enabling disagreements to be resolved agreeably.

Horizon scanning

SIDs act as the proverbial “canary in the coal mine”, alert to tensions or unease, and work behind the scenes to identify issues, strengthen communication, and flag concerns to the Chair, and at times other stakeholders.

Steeliness and authority

SIDs must gain the respect of shareholders, be willing to speak truth to power, have confidence in their judgement, and be ready to step into the breach in times of crisis. In crisis they may need to galvanise support to make tough decisions.

Experience matters

Whilst many attributes of a great SID are innate, SIDs are often seasoned board members who draw on accumulated experience. They are often appointed internally, leveraging their knowledge of the organisation and established relationships.

The Role of the SID in Practice

Relationship with the Chair

The SID acts as a trusted confidant and advisor to the Chair, whilst maintaining the independence to challenge the Chair if required. Conducting the annual Chair evaluation and leading Chair succession are key responsibilities.

In good times and bad

SIDs often step forward to help navigate board-level challenges, including shareholder concerns, regulatory pressure, or a breakdown in Chair/CEO relations. They may also act as the catalyst for change, when a Chair is reluctant or unable to do so. Their neutrality and judgement are critical during times of turmoil. A proactive SID uses calm periods to anticipate potential disruption, consider strategic evolution, and build relationships and goodwill.

Key Considerations for the SID Role

Succession to Chair

Being SID is excellent preparation for a Chair role elsewhere, but ambition to become Chair within the same company can hinder effectiveness. Term limits often work against the SID becoming Chair, and only about 10% of SIDs transition to Chair on the same board.

Listed and non-listed companies

The SID role is most relevant for listed organisations but can also be useful in complex regulated subsidiary boards, where they can help navigate the relationships with the parent company and the regulator. Private companies where the Chair is closely aligned to the Founder may also benefit from the independent perspective of a SID.

Final Thoughts

Effective SIDs provide leadership and stability during crises and in good times support the Chair in building an effective board, ensure strong governance, and act as a catalyst for positive change. Never an easy role, if done well, it can be exciting and rewarding.