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What is a competent director?

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EXCELLENTWhen multi-billion pound bank bailouts start hitting the headlines, the spotlight naturally falls on the people in charge. Colin Coulson-Thomas examines the qualities that make a competent director.







Despite the greater attention given to corporate governance in recent years, the competence of directors is still an issue. When bank write-offs and bailouts occur, discussion inevitably turns to the competence of the people at the helm. Should they have been more alert as people were paid bonuses for bringing timebombs into their organisations? Could they have read the road ahead?

Photo of COLIN COULSON-THOMAS"Integrity is perhaps the key personal attribute of the competent director."

On such occasions an obvious related question for the training community is: what is a competent director? Before answering that question, it is necessary to define and agree a development requirement. The assessment of directors needs to address a number of areas, starting with their role on the board.

Complementary qualities

The competencies of individual directors should complement the qualities and attributes of colleagues, and improve the operating dynamics of the boardroom team. Board effectiveness can be enhanced or constrained by individual strengths or limitations.

Directorial competence and board performance are interrelated. Collective contribution will depend on the extent to which individuals are compatible, and bring out the best in each other, when they are brought together in the boardroom. Personalities sometimes jar rather than gel.

Board composition rather than development may be the problem. Deficiencies of knowledge and skills could be just one cause of a gap between expectations and performance. Attitudes, motivation and commitment can all have an impact. A lack of time, poor support and inadequate information may also reduce the value added by a board.

Knowledge and understanding

As a minimum, directors should understand the role and function of the board, their legal duties and responsibilities, and the distinctive nature of direction. The Companies Act 2006 requires a director to 'act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole.'

The activities of a board are varied. They include understanding risks, threats and opportunities; visioning; establishing values and policies; appointing a CEO; ensuring appropriate capabilities and controls are in place; delegating responsibly to management; monitoring and reporting; being accountable and behaving responsibly to stakeholders.

New appointees should understand the purpose of the company; the function of the board; the duties, responsibilities and accountabilities of directors and the key requirements of stakeholders. They also need to be made aware of any particular contribution that is expected of them. Other factors to consider could include a regulatory environment or listing requirements in the case of a quoted company.

The director's perspective

While the personal competences required can vary according to role, size of company or the directorial challenge, when directors are asked to describe 'a good director' terms such as awareness, judgement, common sense, vision, wisdom, honesty, tact and communication skills often recur. Integrity is perhaps the key personal attribute of the competent director.

Energetic managers may not make the best directors. Effective direction can be more about thinking than doing. Some directors become so engrossed in immediate, internal or functional concerns that they lose touch with external developments and fail to read the road ahead.

A competent director should have vision, strategic awareness, perspective and breadth, and should exercise 'independent judgement'. Business acumen, customer focus and the ability to provide strategic direction and good governance are also required.

A team player

A competent director should be a team player whose attributes complement the qualities of other members of the boardroom team. A person who is appropriate in one context might not be suitable in a different situation. The qualities of existing members of the board need to be taken into account when new directorial appointments are made.

Boards come in many different forms. Much also depends upon the situation, circumstances, context and aspirations. Particular demands are placed upon non-executive directors and general principles of good practice need to be applied in a thinking way to each directorial context. Directors – and particularly non-executive directors – need the curiosity to question and the courage to challenge.

"Effective direction can be more about thinking than doing. Some directors become so engrossed in immediate, internal or functional concerns that they lose touch with external developments and fail to read the road ahead."

Directors need to be robust and resilient, as well as sensitive and aware. A certain level of energy and commitment may be needed if a board has to bring about a fundamental change. However, the drive to implement board policies and decisions can be counter productive if these turn out to be mistaken or misguided.

Addressing training needs

If board members are to be committed to appropriate training and development responses they must have confidence in the process used to define competences. In the interests of objectivity, some boards use the services of an independent facilitator. The aim should be to identify the qualities, attributes or winning ways that are especially relevant in the context of a particular board and its vision, values, goals and objectives.

Finally, it's important to view the training needs of directors with a sense of perspective and balance. Board members do not need not excel in a wide range of areas if they understand their limitations. Some directors have deficiencies that could prove fatal to the career prospects of an ambitious manager. However, an awareness of their deficiencies allows them to be balanced by the compensating strengths of directorial colleagues around the boardroom table.

Colin Coulson-Thomas, author of 'Developing Directors' and 'Winning Companies; Winning People' is an experienced director and professor of direction and leadership at the University of Lincoln. He can be contacted via www.colincoulson-thomas.com. 'Developing Directors' is published by Policy Publications: www.policypublications.com

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