11.3.3 Conclusion

Social ties are considered to have a negative influence on independence. Despite the general belief about the negative influence of the social ties between NEDs and executive directors on the performance of the board and the entire company, this section approaches this discussion with different insights. Although some results do indeed show the negative consequences, there is a positive aspect of social ties as well.

(Consideration 11.2) Due to the existence of a certain kind of relationship, NEDs are able to gain better information about the company, which is needed for their monitoring task. This information is acquired duringadvisory sessions or informal meetings with executive directors. Executive directors are prepared to share this possibly sensitive information with their NEDs only if there is mutual respect which gives the NED credibility within the company. However, the NED must remain independent, but independence must not be interpreted as distant from executive directors, but as a state of mind that enables him to see things differently and to be independent in fact. Therefore, NEDs should pursue board effectiveness with a balance between task effectiveness – the ability to execute their monitoring and advisory tasks – and cohesiveness – the ability to cooperate together –to let a board function well. This means that they must be engaged but non-executive, challenging but supportive, and independent but involved.