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A radical thought about governance

This morning, I was reading the local (London) paper and saw an ad for a training class in governance for non-executive directors (affectionally called “NEDs” here). It set me thinking. Maybe dreaming is a better word.

What if:

  • Directors were required to take training classes in corporate governance?
  • The training had to be certified by a recognized authority as including guidance on all topics relevant to effective board and director performance (which would include topics dear to my heart such as the role of internal audit, oversight of strategy and risk management, executive compensation, responsibilities to the shareholders, etc.)?
  • Each year, the board was required to disclose that each of the directors had received the necessary and appropriate training to perform their duties, including training in corporate governance?
  • Boards had a code of governance that each director was required to sign annually?
  • Each year the board was required to disclose not only that assessments of performance had been performed at board, committee, and director levels, but what the results were?

Would this be beneficial, superficial, or a waste of time?

  1. June 17, 2011 at 6:48 AM

    I’m only sorry that this could be considered radical! Sadly, too many directors (private and public) believe that governance is little more than bright people using common sense. Most directors received more formal training to drive a car than they did to oversee the complex organizations they serve.

  2. Dawuda a
    June 17, 2011 at 12:32 PM

    Director training on the above issues raised would definitely bring about efficiency and effectiveness, thereby resulitng in higher organizational productivity and effective corporate governance practices.

  3. Ck6
    June 17, 2011 at 12:51 PM

    I would think that any company would want to have an annual “Governance” session, and believe that most do (it might not be called that, but when the GC sits down with them and reviews the current state of governance theory – that is it).

    As for as formal training to qualify as a director – forget it in the US anyway. That just does not fit with the personalities who populate boards of directors in the United States. One could say – no training; no directorship – but the result would be a far inferior director population.

  4. Stephanie Koehn
    June 17, 2011 at 4:54 PM

    Best practice guidance produced by IIA-Australia recommends audit committee members participate in corporate governance training during the induction process (including a review of governance related practices, processes and results for their organisation) in addition to an annual update on best practices in corporate governance. In time, we hope this will be mandated.

  5. Mike Lotzof
    June 18, 2011 at 7:47 AM

    Mandatory training for Boards and Senior management in Governance should be a prerequisite.

    My concern is even in the companies that have this in place and attendance/completion is audited, the behaviours do not change in line with the knowledge.

    So a question I will post shortly, is “why doesn’t training stick?” we know, but we don’t act!

  6. June 24, 2011 at 10:44 AM

    Great comments! Its so crazy that HR require candidates for positions with their company to jump through some sometimes quite considerable hoops and have a litany of qualifications and relevant professional training – all good btw, yet those at the top of the heap are often under-qualified public schoolboys who are there purely because of who as opposed to what they know. This is especially true of NEDs in the UK. groan ;-(

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