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IoD redefines what makes a good business leader

28 Jul 2016

Institute of Directors building at 116 Pall MallBusiness group launches competency framework for all directors

Following a damning report by MPs earlier this week into the collapse of BHS, which claimed that “weaknesses in corporate governance contributed substantially” to the company’s demise, the Institute of Directors has today put forward a new definition of good business leadership.

Publishing a new blueprint for success, the Director Competency Framework, the IoD 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 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. Following widespread media coverage of the BHS saga, combined with allegations of unacceptable working conditions at SportsDirect, public faith in business to do the right thing has been severely shaken. This makes the framework’s emphasis on communication and building external relationships very timely.

View the Director Competency Framework here

Lady Barbara Judge, Chairman 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”. By making the competency framework available online free-of-cost, the IoD hopes to give all directors and boards the chance to review whether they are performing at the right level.  

Dr Suzy Walton, an IoD board member and Chartered Director who helped to craft the new guidelines, added:

“The IoD’s new Director Competency Framework provides every member of any board, in any sector or industry or indeed any country, with a clear and comprehensive set of standards to guide their performance and development. It draws together the IoD’s many years of expertise and experience supporting and educating directors. This is the first framework of its kind to provide a holistic picture of the knowledge, the skills and the mindset that every director needs to bring to their role to be fully effective.”

The Competency Framework sits alongside other efforts by the IoD to raise governance standards, including the unique Chartered Director programme, which is the only qualification of its kind for Directors.  The Chartered Director programme leads to a Masters level qualification and focuses on the knowledge, skills and mind-set dimensions of the Director Competency Framework.

Louise Gulliver, Managing Director, Professional Development, said:

“We are seeing a double digit increase in business leaders investing in their professional development. This in part is due to the high profile governance failures, meaning business leaders are increasingly aware of their responsibilities and in part down to a recognition that good leadership makes good business sense.  The concept of life-long learning is no longer for the enlightened few. 

“As well as the dimensions of the Competency Framework featuring in all IoD courses, the fact that it is a freely available resource that spans any organisational context, means directors and their organisations can apply it themselves. The IoD is walking the talk by taking the framework and using it internally for the development of our own directors and leaders.“

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