There are persistent moves from politicians and in the media to increase board diversity and certainly there is strong evidence that balanced boards are more effective and efficient and have produced better results.
The Institute of Directors – while being resolutely against quotas – is very supportive of the drive towards balanced boards which reflects a sensible and appropriate range of skills, interests and experiences; and is responsive to the demands on the organisation.
Many boards – and some with a degree of justification – are accused of being “old boys’ networks” yet the only way to break that positively is to build a band of potential board members who have the capability and the expertise and are ready to serve. Such a group of people would be impossible to ignore.
The most important issue we face today is building the capacity of current and prospective board members – in particular the non-executive members. Being a good executive director does not necessarily make you a good non-executive as the skills are not exactly the same.
There are not many walks of life in a modern day Scotland where a qualification and some clear proof of training and expertise is essential but, somewhat bizarrely, it is possible to be the director of a sizeable entity without any direct or specific training.
Surely all our company directors should be trained. Indeed, so should all trustees or directors working in the third and public sectors. If you sit on a board and have an influential role in the future of the organisation, then you should be quite clear on exactly what your role is.
It doesn’t make sense that you can be responsible for a company’s operation or that of a large charity – or indeed a world level football brand – and yet have no requirement to be trained or undertake ongoing development and performance evaluation.
We see a lot – and almost daily – of examples of bad practice at this level of organisations and yet we don’t demand that the individuals involved are educated in this very specific skills and have an understanding of the role to the level needed. Certainly Scotland has many examples of well-run companies and agencies but surely we should be demanding more certainty around that and their continuity of success through developing and supporting the best possible corporate leadership.
Understanding corporate governance and your role and duties within this heading is a vital background to your role in developing the future strategy of the organisation. Being in charge of the fate of the organisation is obviously an important and serious job and not one to be taken on lightly.
The Institute of Directors is not the only organisation offering training and development in this space but it is the only one offering a Chartered Director status and a certificate and diploma in company direction. Of course I would encourage people to follow that route but most importantly would exhort them to get some specialised training regardless of its source.
The IoD is also running a project on developing board experience to get people close to how boards operate in advance of applying for any such posts. In addition there is a board mentoring system focused on those people who are “Tips for the Top” and who will, given the appropriate support and guidance go on to be very constructive board members.
We must mount a campaign to get all our boardroom leaders properly prepared to lead and if we do that we will improve boardroom and company performance and we will all benefit, as will our economy.
Moving in this direction is the key way to ensure that we have no more bank crashes or bankrupt football clubs and the key step to improving under-performing companies and organisations in all three sectors of our civic life.
Scotland has a number of high profile and successful corporate leaders in organisations of all sectors and sizes – like Sir Andrew Cubie or Lady Susan Rice or Sir Moir Lockhead.
They exemplify how strong leadership from the boardroom can really make a difference in bodies as diverse as the Scottish Rugby Union and a medium sized family business or a reinvented bank to a small educational charity.
All have benefited from this quality leadership and guidance and we should do all we can to rise up to these standards – so we must train and develop all our directors and then we will improve boardroom behaviour, company performance, and the wealth and wellbeing of our nation.
Few if any other steps would bring about such significant economic impact for a relatively small input.
David Watt is Director of the Institute of Directors in Scotland.
This article first appeared in BQ Business Quarter on 18 March 2015