When structure meets behaviour and what boards should do about the gap
Global Directors Council Roundtable | Co-hosted by Jennifer Cook and BoardOutlook
"Director independence has been a cornerstone of governance frameworks for decades. The ASX Corporate Governance Principles define it carefully. Institutional investors scrutinise it. Boards report on it. And yet, in my experience sitting on and observing boards across listed, private and not-for-profit contexts, the gap between independence on paper and independence in practice remains one of the most consequential and least openly examined dynamics in the boardroom.
The question I kept returning to in preparation for this conversation was not whether a director satisfies the structural tests, but whether they actually behave independently when it matters. When the Chair disagrees. When the CEO pushes back. When the room is moving toward a decision and an independent director can see something the others cannot, or will not, see. That is when independence either shows up or it does not, and no tenure clock or disclosure register tells you which way it will go.
What I have observed, across different governance contexts, is that the conditions for genuine independence are largely cultural and relational. They depend on whether the Chair has created a room in which challenge is welcomed rather than managed. They depend on whether directors have been appointed because of who they are, their character and their willingness to hold a position under pressure, or purely because they satisfy a skills matrix. They also depend on whether the board has consciously considered the difference between a director who is formally independent and one who is substantively so.
The distinction between listed entities and not-for-profit boards is also worth dwelling on. In listed environments, the framework provides clarity that can become its own trap: if you satisfy the criteria, the conversation tends to stop there. In not-for-profit and federated structures, the frameworks are looser, but the governance questions are in some ways sharper because the sources of legitimacy are more contested and the interests that directors represent are more explicitly under tension. A stakeholder-nominated director who would fail a listed-entity independence test may bring precisely the proximity and accountability that makes their challenge credible. The question is whether the board has thought deliberately about what independence is for in its specific context, rather than borrowing a definition designed for a different one.
My hope for this conversation is that it moves us past the compliance frame and into the governance one. Not: Does this director pass the test? But: Can genuine independence actually deliver for the organisation in this board context?
Independence is not an end in itself. It exists for a reason: to protect shareholders, stakeholders, donors and the public from bad or biased decision making. That is the origin of the concept, and it is worth keeping in view. A board that pursues independence as a compliance exercise, detached from that purpose, may tick every box while missing the point entirely. The more useful question is not "are we sufficiently independent?" but "are we independent enough to make the decisions that need to be made, without bias, in the interests of those we serve?""
— Jennifer Cook
Director independence is one of the most discussed and least well understood concepts in modern governance. Regulatory frameworks define it structurally through tenure, disclosed relationships and material interests but the evidence from boardrooms suggests that structural independence is a necessary condition, not a sufficient one. What actually drives effective independent oversight is behavioural: the willingness to think and act independently when doing so carries a cost.
BoardOutlook recently convened a Global Directors Council roundtable in Sydney, co-hosted by Jennifer Cook, bringing together non-executive directors from listed, private, government and not-for-profit boards. Participants brought direct experience from boards spanning financial services, energy, real estate, infrastructure, technology and the community sector, alongside executive careers in CFO, transformation and strategy leadership roles. The session drew on BoardOutlook's benchmarking data from more than 250 board performance processes annually across ASX-listed, FTSE, private and not-for-profit entities, and was conducted under the Council's confidentiality principles.
The discussion surfaced a consistent pattern: independence defined by structure tends to be performative; independence defined by behaviour tends to be effective. The gap between these two types - present in almost every governance context participants described - is the central problem this paper addresses.
Every director in the room had observed the same phenomenon: a board composed largely or entirely of formally independent directors that nonetheless failed to exercise genuine independent oversight when it mattered. The reasons were consistent: a dominant Chair, a long-serving CEO with deep institutional knowledge, the social dynamics of a room where challenge feels more costly than agreement, or the accumulated weight of relationships that have grown closer over time than formal disclosure obligations capture.
The inverse was also noted: directors with relationships that might technically raise independence questions who brought genuine intellectual independence to the board because their character was right and the culture permitted it. The structural framework, participants agreed, provides a useful floor, a baseline below which independence is demonstrably compromised, but treating it as a ceiling creates a false assurance.
The practical implication is that independence needs to be assessed on two dimensions simultaneously: structural, through the standard framework; and behavioural, through a more honest examination of how the board actually functions. The first is well understood. The second is where most boards have significant work to do.
The conditions that enable genuinely independent behaviour are primarily cultural, and the Chair is their primary determinant. Participants described, in consistent terms, the difference between Chairs who create permission for dissent, who explicitly invite challenge, who appoint a director to take the contrarian position, who treat the unexpected question as a contribution rather than a disruption, and those who use their position to shape the agenda and manage the room toward predetermined outcomes.
A Chair who makes dissent safe does not need to eliminate conflict; they need to reframe it. Several participants described the practice of explicitly assigning a director the 'black hat' role, the designated challenger for a given agenda item, as a simple and effective mechanism for normalising independent challenge without making it personal. Others described in-camera sessions as a critical pressure valve: the conversation that cannot happen in the main meeting because of the presence of management, the CEO, or the Chair themselves.
Beyond the Chair, participants identified a number of individual factors that strengthen behavioural independence. Portfolio diversity, sitting across listed, NFP, government and private boards was described as one of the most practical sources of genuinely independent thinking: the question that only someone from outside the industry would ask. The willingness to walk away, described by several participants as the ultimate expression of independence, creates a form of credibility that no governance framework can manufacture. And the practice of regularly asking oneself what would be challenged if joining the board today was identified as a self-diagnostic that the most self-aware directors build into their own practice.
The relationship between tenure and independence was one of the most contested topics in the room. The regulatory instinct formalised in the UK through mandatory refreshment within nine years and present in Australia as a softer norm reflects a genuine concern: that familiarity erodes the willingness to challenge. But participants pushed back on the assumption that this erosion is inevitable, or that shorter tenure is straightforwardly better.
What long-tenured directors bring, including institutional memory, pattern recognition or the credibility that comes from having seen a company through multiple cycles is not easily replaced. The question is whether that value is bundled with a diminishing willingness to ask the hard question. One participant described the specific pattern that concerned them most: not disagreement captured by the comfort of long association, but a subtler drift toward contextualising rather than questioning. 'We tried that before' becomes a frame that forecloses exploration, even when the circumstances have changed.
The most effective response, participants suggested, is not mechanical rotation but deliberate self-assessment. Boards that explicitly ask directors to reflect on what they would challenge if they were new to the organisation, and build this into the annual evaluation cycle, create the conditions for tenure's benefits to be retained without its costs.
One of the most productive tensions in the discussion was between directors whose primary experience was in listed entities where the ASX Corporate Governance Principles provide a structured and relatively legible framework and those whose work was primarily in not-for-profit, federated or government-linked contexts, where the frameworks are looser and the governance questions correspondingly harder.
Several participants described sitting on boards of federated organisations facing external pressure to move toward majority independent structures. The resistance they encountered was not simply an attachment to the status quo; it was a substantive governance argument. In organisations where legitimacy derives from membership, elected or stakeholder-linked directors bring a form of accountability that a formally independent director cannot. The question of whether independence and representativeness can be held in balance or whether they are in fundamental tension remained genuinely open.
The practical implication for boards operating across different contexts is the need for deliberate frame-switching. The definition of independence that makes sense for a listed entity optimising for shareholder value is not the definition that makes sense for an NFP stewarding a community mission or a federated body whose authority derives from its members. Applying listed-entity definitions unchanged to these contexts produces compliance without governance substance and sometimes produces governance substance that the formal framework would count as non-compliant.
The dynamics of independence in founder-led and family-influenced boards were described, with remarkable consistency, as the most demanding test of everything the discussion had covered. In these environments, formal independence is particularly important. The independent directors are the primary check on the exercise of concentrated power and yet particularly difficult to exercise, because the channels of influence that a founder or major shareholder can operate are rarely captured by formal governance frameworks.
What emerged from the discussion was a distinction between procedural independence such as the formal composition of the board and the declared absence of material relationships and effective independence, which depends on whether the independent directors have the relational credibility to actually be heard. In founder-led environments, that credibility is built through trust, not through the absence of a relationship. The most effective independent directors in these contexts were described as those who invested in understanding the founder's perspective and motivations, not to agree with them, but to challenge them in terms that resonated.
The willingness to resign and to be known as someone who has resigned rather than compromised, was described as the strongest signal of genuine independence in these environments. It is not a first resort; it is a last one. But boards that include directors for whom resignation is genuinely on the table are, in practice, more independent than those where the social and professional costs of departure are treated as prohibitive.
The discussion surfaced a practical set of governance practices that distinguish boards which navigate independence well from those that do not.
Building genuine director independence requires measurement, not just intention. BoardOutlook's platform supports boards across the full set of processes that make this possible: board, committee and director evaluations; skills matrices that capture behavioural as well as technical capability; CEO and chair evaluations; and Director 360s that surface how directors are actually showing up alongside the credentials they bring.
The combination of these processes with BoardOutlook's global benchmarking dataset - drawn from more than 250 board performance processes annually across ASX-listed, FTSE, S&P 500, private and not-for-profit entities - enables boards to understand where their independence culture sits relative to peers, and to identify specific areas where structural compliance and behavioural practice are diverging.
BoardOutlook's AI-powered tool, OutlookIQ, enables boards to interact with their performance, composition and evaluation data dynamically rather than through static, point-in-time reports. Drawing on a board's own underlying data, BoardOutlook's global benchmarking dataset, and an institutionalised governance framework developed in partnership with experienced chairs and directors, the platform supports analysis across capability gap identification, performance oversight, and succession planning - all within hosted, audited infrastructure with deletion and retention controls engineered for the sensitivity of board data.
For boards ready to take the gap between structural and substantive independence seriously, BoardOutlook provides the tools, data and structured process to make that commitment concrete and sustained. For more information, please contact the BoardOutlook team at team@boardoutlook.com.
This paper was developed by BoardOutlook based on a Global Directors Council roundtable co-hosted with Jennifer Cook on 2 June 2026 in Sydney. Participant contributions are reflected thematically and are not individually attributed, in accordance with the Council's confidentiality principles. BoardOutlook's Global Directors Council brings together chairs and directors from across sectors and geographies to explore governance questions in a confidential peer setting.