Making Ireland an exemplar of corporate governance

Boards of directors must formulate and oversee the execution of strategy within clearly defined risk parameters, operating with an effective system of internal control. They must do so with imperfect information and in an uncertain global macro-economic environment. Every organisation has unique characteristics, and the board of directors must evolve the governance infrastructure to suit it with regard to maturity, size, competition, geographical spread, and ownership, among other things.

Corporate Governance codes, such as the UK Corporate Governance Code (2018), provide a critical benchmark against which organisations can develop their governance infrastructure. These components include: board composition, matters reserved for board decision, composition and terms of reference of board committees, board policies, system of internal governance, processes of accountability, and reporting to and from the board.

However, the business landscape is constantly changing with developments in technology (eg artificial intelligence), the digital economy and cyber security creating both opportunities and threats for organisations and their boards. The ESG agenda, emanating from the objectives of the Paris Agreement and the related UN Sustainable Development Goals (SDGs), is changing the governance landscape, and significantly influencing the issues requiring board discussion and judgement.

The most successful leaders and directors are those who are always open to learning

The IoD Ireland Continuing Professional Development (CPD) Framework for Directors, launched last year, supports board directors and senior executives in the exercise of their governance responsibilities. It provides a blueprint that describes the competencies boards, directors, and senior executives need to ensure strong governance and high-performing leadership in the fast-paced and demanding environment organisations must respond to.

“It is our aim to propel Ireland forward as an exemplar of corporate governance,” commented IoD Ireland’s chief executive, Caroline Spillane CDir. “IoD Ireland is committed to providing cutting-edge resources and expert insights to help Ireland’s directors succeed. Our CPD Framework is designed for directors by directors.

“The most successful leaders and directors are those who are always open to learning, new ideas, and are inquisitive. They work with their executive teams effectively to ensure a clear understanding of the business’s needs so they can help support and foster the business and create a good culture.”

“These leaders and directors do not see learning and development as a simple box-ticking exercise but see it as a genuine opportunity to upskill and learn, so they can give a greater contribution to their board and, in turn, their organisation.”

The idea behind the IoD CPD Framework is the belief that a board is always learning and always growing; indeed, a board’s effectiveness is optimised by a collective commitment by directors to keep abreast of the changing business environment.

The learning opportunities afforded through the IoD CPD Framework for Directors are designed with the needs of board members in mind. Spillane noted, “Directors are exceptionally busy people, but need to keep learning as the environment changes. We recognise this and aim to give them that knowledge in portions that work for them, whether it’s through bite-sized learning via events, resources and/or workshops, or via more in-depth learning opportunities like our Chartered Director Programme.”

“The framework can be applied by both individual directors to identify their own educational needs so you can contribute to the collective strength of the board; but equally, boards can utilise the framework for their skills assessment, or for successioplanning, both at board and at senior management level.”

The evolving nature of the CPD Framework is shaped by IoD Ireland’s unique strength as a membership-based organisation. Spillane noted, “Our members are the beating heart of IoD Ireland. Realtime member feedback and insight allow us to explore and evolve our director and board supports and offerings, including our learning and development opportunities such as events,workshop and programmes such as the Chartered Director Programme; our member and board services including board evaluations, boardroom centre, and in-house learning and development; as well as our research, policy, and advocacy work. The strength of our membership base feeds into everything we do, and proudly makes us different”.

The CPD Framework is developed around four main dimensions.

The first dimension is the Governance Framework, which encompasses the specific competencies needed to design, evolve, and oversee a corporate governance framework suitable to context. With the regulatory and legal landscapes within which companies operate always evolving, this is a particularly important part of the framework.

“The second dimension encompasses the Technical Skills and Knowledge needed to optimise the collective strength of the board in leading the strategic planning process, in making decisions, and creating accountability in relation to legal and regulatory compliance, risk, controls and corporate performance,” explained Spillane. “We focus on very specific areas here, such as financial literacy – you don’t need to be a chartered accountant, but you need to have enough knowledge to support your oversight of all things financial, including the company’s annual financial statement. It also covers cyber security, AI, and ESG.”

The third dimension is Creative Strategy Formulation, which looks at the methodologies and creative thinking needed to shape strategies that meet short- and long-term business goals.

The final dimension is the Psychology of the Boardroom. This dimension recognises that corporate governance is about human behaviour as much as structures and processes. It encompasses the practical realities of boardroom behaviour and dynamics with a view to enhancing individual director and overall board effectiveness.

This innovative framework proves once again IoD Ireland’s aim to deliver all that directors need to lead in times of ceaseless change. It is a critical element of their mission to always champion innovation, life-long learning, and good governance to shape a dynamic future from the inside of Irish business out.

Learn more about the Institute of Directors Ireland: www.iodireland.ie