The Institute of Directors hopes framework will improve director quality

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With a backdrop of damning reports from MPs published  last week on the demise of the retailer BHS and on poor working practices at Sports Direct, which both identified weak corporate governance as partly to blame for company failures, the Institute of Directors (IoD) has launched its Director Competency Framework which it said sets out the knowledge, skills and mind-set that a director needs to perform effectively as a board member.

The IoD said the framework was based on consultation with high-performing directors and boards, alongside research and best practice distilled from the IoD’s extensive experience of working with senior leaders around the world for more than 110 years. The framework places traditional commercial expectations alongside a broader mix of behaviours and skills. Knowledge of finance and business strategy are put on the same level as the ability to encourage diverse views, political astuteness and decision-making in the face of uncertainty. The IoD added that the competency framework is the first of its kind in the world to apply to directors of companies of all sizes and sectors, including listed and unlisted companies, and not-for-profit organisations.

Lady Barbara Judge, chair of the IoD, said,“We need to rethink what we mean by good leadership in business in light of recent corporate scandals and the EU referendum campaign, in which the voices of companies were often dismissed. The definition of a good director must be expanded to encourage more diversity of thought in boardrooms, as well as better sensitivity to the cultural and political environment in which the company operates.

“It has never been more important for directors to be able to understand and fulfil their responsibilities with confidence and clarity, and yet their own learning and development needs are often overlooked. This framework provides an ideal blueprint for the director’s professional growth.”

The IoD’s Royal Charter, granted in 1906, instructs the institute to “promote for the public benefit high levels of skill, knowledge, professional competence and integrity on the part of directors”. The competency framework is available online for free and the IoD hopes that this will give all directors and boards the chance to review whether they are performing at the right level.

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