This might sound like a rather odd question to ask, because an affirmative answer seems so obvious. Yet in my experience, many Boards do not exercise the option of seeking advice directly, despite the benefits of doing so being clear. Generally, Boards turn to the CEO to fill information gaps, because they are well-placed to provide the additional information required. However, the CEO is not always the best source of information.

In what situations should the Board engage independent advisors directly? Whenever independence is crucial, or there is a conflict of interest. Three areas emerge as prime candidates to engage independent advice (although there may be others as well):

• Risk management: To do otherwise is to rely on management's view of risk—akin to asking a rustler to report on the number of animals lost. I wrote about this recently.
• Legal advice: Leading governance expert, Dr Richard Leblanc, recently made a strong case for Boards to engage legal advisors who are not conflicted by also providing advice to management.
• Strategy: Several researchers have suggested that the provision of independent contributions (to supplement contributions from management and Board members) is extremely helpful, because it exposes the Board to a more diverse set of trends and options as strategy is developed.If Boards are truly committed to acting in the best interests of the company (or the shareholder, depending on the jurisdiction), the answer must, unequivocally, be "yes".

My hope for 2013 (and beyond) is that more Boards will start to walk the talk.

I've just read a short, approachable article that reminded me of some rather interesting background reading I did 6–12 months ago.

Throughout the early stages of my doctoral research, I was encouraged to read about some of the "big names" in scientific endeavour: Galileo, Newton, Einstein, Crick & Watson. While my research is very much positioned in the social science field, my supervisor suggested that reading widely would help me to  understand how great minds went about their work, how they recognised "opportunities", and how they achieved breakthroughs.

A key learning to emerge from all this background reading is that Galileo, Newton and Einstein all employed an iterative technique of discovery. They cycled around an inductive–deductive loop, inferring a theory and then testing it. They modified existing tools in order to conduct previously unknown tests. And this is what made their work effective.

As we approach Christmas, and look at the night sky, we can thank Galileo for recognising the spyglass might be useful to understand the heavenly bodies. And I thank my supervisor for helping me recognise the inductive–deductive loop, a technique I've adopted for my own research.

Should directors receive performance-based pay for their contributions?

This is an interesting question. Performance-based pay has become commonplace amongst senior executives and sales staff in the last decade or so. The model is straightforward: perform well (by achieving agreed objectives) and get paid a commission, be awarded stock or receive recognition via some sort of bonus. Performance standards are generally set by a more senior manager. The system seems to work reasonably well. However, an increasing trends in recent years is the implementation of similar performance based reward systems in the boardroom. But is this smart? Do performance-based pay systems motivate the "right" behaviours amongst directors?

Whereas management and staff are directly responsible for implementing strategy and achieving performance goals that are determined by a more senior party, the Board is not. In addition to their role being quite different (to determine strategy, monitor performance and manage risk), the link between what Boards do and company performance is tenuous, at best. Simply, we do not understand how Boards contribute to performance. Further, Boards are endogenous—they largely set their own agenda and determine the company's objectives. In establishing performance-based pay systems for themselves, Boards are immediately conflicted. One way of ensuring performance-based payments are made is to set artificially low targets (for example). I'm not sure this is a good way of maximising company performance, or motivating healthy behaviours, but it is a way of being paid(!)

My preference is towards rewarding directors through fixed fee payments for their contribution. If they are contributing, they receive their fee. This would be the default. However, if they are not contributing effectively, this should become known through a formal Board review process. Shareholders should have access to review documentation, and only re-appoint directors that are contributing. 

This sounds remarkably easy on paper, however the topic of today's muse is hotly contested amongst practitioners and academics alike. What's your view?

Note: This Muse is somewhat different from many previous entries. Whereas most prior entries record aspects of my doctoral journey, or make suggestions about a range of topics, this Muse simply poses a question: "What is the purpose of economic growth?"

I'm raising this question now because I realised, while re-reading some PhD notes today, that a statement that appears several times in my papers is heavily loaded. The statement is: "High company performance is an important contributor to economic growth and societal wellbeing". Today, for the first time, I realised this statement somehow assumes that economic growth and societal wellbeing are some how "good", and therefore worthy of pursuit. But why? What is the purpose of economic growth? What is the underlying driver?

Before you get too excited, I'm certainly not devaluing economic growth as such. Rather I'm asking why we humans pursue it. I don't have a clear answer right now, but I will ponder this question over the coming days, do some reading, and try to form some views.

To kick the discussion off, Benjamin Friedman, the political economist, writing in 2006, asserted that "Economic growth—meaning a rising standard of living for the clear majority of citizens—more often than not fosters greater opportunity, tolerance of diversity, social mobility, commitment to fairness, and dedication to democracy. Ever since the Enlightenment, Western thinking has regarded each of these tendencies positively, and in explicitly moral terms."

What do you think? I love to hear your ideas—considered, wacky or otherwise!

One of the promises (or more correctly, one of the aspirational goals) I made when setting out on my doctoral journey was to read widely—particularly in "off-topic" areas. My reason was selfish: to expand my horizons, maintain a sense of sanity and (hopefully) trigger some new ideas, because the sheer volume of on-topic material is enough to intimidate even the most ardent student.

However when I paused for a few days after completing the confirmation process, I realised that progress towards my "read widely" goal had stalled somewhat. In the daily routine of reading about governance, strategy, research methodologies, philosophy, and the theory of knowledge creation, I'd lost sight of the bigger goal.

Having realised what had happened, I decided an active remedy was required. To this end I have explicitly reserved an hour a day to read off-topic material. Further, I have decided to embrace the novel genre (for the first time in my adult life!), and specifically the so-called modern classics. A search engine provided the starting point: To Kill a Mockingbird. Next in line is yet to be determined, so if you have any suggestions, please let me know!