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The role of directors and strategic leaders in all sectors and sizes of business has never been under as much scrutiny as it is today.
Shareholders and investors demand professionalism and integrity from Ireland's business leaders and it is also now common and desirable for directors to undertake an appropriate level of training for the role, a development which most would argue, has been necessary for some time.
For many years, the accepted norm was that directors did not need specific training or a qualification for their role, as it was assumed that business experience and being ‘good on the job' were qualifications enough. However, modern business has changed. And while the demands on directors to meet and fulfil their obligations under company law always existed, an increase in regulation and minimum requirements in some sectors, brought about by acute failings in corporate governance is some companies, has placed additional demands on directors to keep up-to-date with best practice and their responsibilities.
For directors of regulated financial services companies, the demands in terms of increased governance regulation in the sector mean that they must meet minimum requirements. For regulated companies, the Central Bank requires that each director has the qualification, experience, competence and capacity appropriate to the role of director.
Under the Central Bank's Corporate Governance Code, the boards of regulated institutions are required to have the necessary knowledge, skills, experience, expertise, competencies, professionalism, fitness, probity and integrity to carry out their duties. In addition, the board must have a full understanding of their individual direct and indirect responsibilities and collective responsibilities.
Which such an emphasis on the need for sufficient skills and expertise at board level, it is no wonder that so many directors are now recognising the need to undertake formal training.
Research conducted by the Institute of Directors in Ireland (IoD) with its members in May 2012*, found that when asked whether they had an adequate level of knowledge and training at the time of being appointed as a director, 45% of directors surveyed felt they did not have an appropriate level of knowledge and training at the time of their appointment.
Moreover, over half (52%) of directors surveyed acknowledge the need to undergo additional training now to carry out their role. While it is cause for concern that such a high percentage admit to needing further training, no doubt governance shortcomings in recent years have awakened directors to the complexities of the role and the need to be sufficiently trained to carry out their duties and meet their legal responsibilities and obligations.
For directors who want to undertake a formal director qualification, the IoD's Chartered Director Programme is in constant high demand. Since it launched in Ireland in 2008, over 300 participants, from a multitude of business disciplines, have embarked upon the programme, which is open to just 19 participants per cohort.
The programme combines learning with actual professional experience and is designed for busy people who want to learn practical skills which will translate into improving their own performance and that of the boards on which they participate.
As the number of people completing the Chartered Director Programme grows, so too will the demand for their skills and expertise. As a minimum level of competence and capacity is already expected from directors in the financial services sector, no doubt it won't be long until other sectors follow and begin to place similar demands on their directors and boards.
The emphasis placed on training at board level is ever increasing and if directors want to compete, then they must be able to demonstrate that they have the skills, expertise and knowledge to carry out their duties and responsibilities effectively.
Maura Quinn, Chief Executive, Institute of Directors in Ireland
* Fieldwork was undertaken by telephone by Behaviour & Attitudes with a sample of 150 members of the Institute of Directors in Ireland. Fieldwork was completed between 2nd May - 10th May 2012.