IoD Director Competency Framework

Transcription

1 IoD Director Competency Framework 110 years inspiring British business

2 Foreword Foreword The Director Competency Framework is the Institute of Directors' (IoD s) latest development to help its members and all business leaders, in the UK and beyond, to succeed. The launch of the framework comes at a crucial time when, regrettably, governance scandals also known as poor leadership are daily news. Whether you work in the public, private, charitable or not-forprofit sector, the need for exceptional leadership has never been greater. Directors are rightly expected to understand and fulfil their responsibilities with confidence and clarity, and yet their own learning and development needs are often overlooked. The framework has been designed to address exactly this issue. It places traditional commercial expectations alongside a broader mix of behaviours and skills. Crucially it addresses the so-called soft skills, which are in fact often the hardest to master, putting knowledge of finance and business strategy on the same level as the ability to encourage diverse views, communicate effectively and make decisions in the face of uncertainty. The Director Competency Framework expresses the standards within our unique Chartered Director programme, which is the only qualification of its kind for directors. The Chartered Director programme leads to both a Masters level qualification and professional status, and addresses all three dimensions of the Director Competency Framework: knowledge, skills and mind-set. The competency framework is free and available to all business leaders. It is our hope that it will be used as a tool by directors to see how they are performing and that ultimately it will become a blueprint for great organisational leadership and success. Contents 2. Foreword 3. Introduction 4. Development Application 5. Structure Knowledge 6. K1 Corporate governance 7. K2 Leadership and stakeholder relations K3 Strategy 8. K4 Finance Skills 9. S1 Strategic thinking 10. S2 Analysis and use of information S3 Decision-making 11. S4 Communication S5 Leadership 12. S6 Influencing Mind-set 13. M1 Ethical 14. M2 Professional M3 Performance oriented 15. M4 Independent M5 Aware of self and others Louise Gulliver Managing Director, Professional Development 2 Director Competency Framework

3 Introduction Introduction Competency frameworks have been used to define the requisite skills, knowledge, attitudes, practices and standards of behaviour of a wide range of professions for years. In a number of professions, meeting these standards is mandatory for professional practice. However, a comprehensive statement of the competencies needed for effective performance by those individuals on the boards of governing bodies has been absent an omission which carries increasing significance given the substantial and manifold responsibilities of today s leaders. Many directors possess specialist expertise which is governed by professional bodies, including in the fields of finance, IT, marketing and HR, while others have risen to positions of responsibility through varied business and managerial experience, or through entrepreneurial spirit and drive. Most have acquired considerable knowledge and skills along the way, but may not have developed the key competencies that are so important for good leadership. The IoD believes that the effective leadership of an organisation demands a set of distinct and wide-ranging competencies encompassing interpersonal skills, legal and business knowledge, financial acumen, ethical questioning, decision-making abilities and high standards of professional conduct. These are the standards of governance which are rightly demanded by an increasingly astute and discriminating public and which are needed for well-functioning public institutions and a strong and stable economy. We recognise the challenges that directors face in meeting these demands. This is why we champion directorship as a profession and why we work hard to support directors to achieve these standards. The IoD Director Competency Framework is the first clear attempt to set out the competencies which define the standards of practice for directors as a professional group regardless of sector, industry, role or location. The creation of this framework reflects the purpose of the Institute as expressed in our Royal Charter: To promote for the public benefit high levels of skill, knowledge, professional competence and integrity on the part of directors and equivalent office holders of companies and other organisations. Directorship is a skilled and demanding profession. The IoD is here to help directors rise to the challenge, and our Director Competency Framework provides a clear and comprehensive guide to the standards they should aim to reach. Dr Claire Wardell Head of Learning Content Director Competency Framework 3

4 Development of the framework Development The IoD has many years of experience educating and developing senior leaders around the world, consulting with boards and providing specialist qualifications for directors. As an awarding body, we set the standards of professional practice for directors, expressed through our Chartered Director programme. We conduct our own research and employ teams of specialist facilitators, coaches and consultants, all of whom are themselves experienced directors and board advisors. The Director Competency Framework was created by amassing and distilling this considerable knowledge and experience, reinforced with: We recognise that the world of business and industry doesn t stand still, and neither do things in the public and third sectors. The needs of directors, and those impacted by their actions, are constantly fluctuating and evolving in response to social, cultural, political and economic change. The Director Competency Framework will be periodically reviewed to ensure it stays current and relevant and provides the effective guidance directors and aspiring directors need. current research and best practice collaboration with learning and development experts consultation with high-performing directors and boards Application The framework provides an accessible and measurable guide to the knowledge, skills and mind-set required to lead an organisation to success. Whether you are an aspiring or currently practising director, occupy an executive or nonexecutive role, lead learning and development in your organisation, or are responsible for the evaluation and development of your board, you will find a range of ways to apply the framework. These include: Self-assessment to identify and address any development needs Undertaking continuing professional development Planning your learning to meet your career goals Performance measurement and 360 assessment Board evaluation to review performance and the balance of competencies Recruitment, selection and succession planning for boards The IoD's experience shows that high-performing directors take their development seriously, undertaking formal training and self-directed learning at various stages of their career. However, professional competence can only be fully achieved when this learning is accompanied and consolidated by experience and skills are put into practice, and there are many ways in which an individual may demonstrate the standards. The framework functions at the level of best practice principles. Directors and boards know the environment in which they operate and we expect that you will apply the competencies and standards in the framework to suit your particular context. The IoD s professional development specialists can provide guidance on how to tailor the framework so that it meets your specific needs as an individual and the needs of your organisation. 4 Director Competency Framework

5 Performance oriented Structure of the framework Structure of the framework The Director Competency Framework contains 15 core competencies across three dimensions: KNOWLEDGE SKILLS MIND-SET The director s understanding and appropriate application of essential practical and theoretical information The expertise that a director brings to their role The attitude and disposition that shape a director s responses and behaviour KNOWLEDGE Strategy Leadership and stakeholder relations Corporate governance Aware of self and others Finance Strategic thinking Director Competency Framework Independent Professional Analysis and use of information Decision-making Communication SKILLS Leadership Influencing Ethical The competencies are numbered K1 K4 (knowledge), S1 S6 (skills) and M1 M5 (mind-set). Each competency is accompanied by a statement of purpose, which explains its role in the director s effective performance Each competency is defined by a set of standards, which are expressed in terms that are observable and assessable and which identify the behaviour that a director or organisational leader should demonstrate MIND-SET As a founder of the IoD s Chartered Director qualification with many years experience as a director internationally, I believe this framework captures the essence of the competencies every director needs to perform effectively. It has never been more important for directors to be able to understand and fulfil their responsibilities with confidence and clarity. This framework provides an ideal blueprint for the director s professional growth. Lady Barbara Judge, chairman, Institute of Directors Director Competency Framework 5

6 The framework: Knowledge The framework Knowledge The director s understanding and appropriate application of essential practical and theoretical information COMPETENCY K1 Corporate governance Directors need to have the knowledge to steer the organisation towards achieving its objectives while operating effectively, responsibly, legally and sustainably. # Knowledge area Standard: The director should demonstrate an understanding of... K1.1 Laws and regulations Laws and regulations applicable to your industry/sector and its jurisdiction, and how your organisation complies with these K1.2 K1.3 Corporate governance practice Best practice in corporate governance, including relevant governance codes and the roles, duties, responsibilities and accountabilities of individual directors and of the board as a whole Your organisation s governance structures, processes and practices K1.4 Board dynamics Board and director relationships, board composition and boardroom behaviours K1.5 Business ethics, ethical codes and ethical decision-making Ethics K1.6 The ethical policies and practices of your organisation K1.7 K1.8 Risk oversight Risk appetite and the role of risk in growth and value creation The structures and systems which enable your organisation to effectively identify, assess and manage risks and crises 6 Director Competency Framework

7 The framework: Knowledge COMPETENCY K2 Leadership and stakeholder relations Directors need to understand how to deliver effective leadership, build good stakeholder relations and develop a strategically aligned and values-based organisational culture in order to achieve good organisational performance. # Knowledge area Standard: The director should demonstrate an understanding of... K2.1 Values The nature and purpose of organisational values and how to create and embed them K2.2 The values of your organisation K2.3 Culture Organisational culture, its role in performance, and the director s role in developing and shaping culture K2.4 The existing and envisioned culture of your organisation K2.5 Leadership Theory and good practice in organisation and team leadership K2.6 K2.7 Stakeholder engagement Methods and tools for effective stakeholder engagement and management Your organisation s key stakeholders, their perspectives and relative influence COMPETENCY K3 Strategy A thorough knowledge of the strategic process can enable directors to create and implement effective strategies which will deliver value and growth for the organisation. # Knowledge area Standard: The director should demonstrate an understanding of... K3.1 K3.2 K3.3 K3.4 K3.5 K3.6 Vision and value creation Strategy development Strategy implementation and change The need for a clear vision and purpose which guide the strategy Your organisation s vision and purpose, and how it adds value in the context of its industry or sector Models and methods of strategic analysis, option evaluation and creating an organisational strategy Your organisation s strategic objectives and current strategic position Your organisation s political, economic, social and technological environment and changes of relevance to the organisation s strategy and future direction The factors involved in successful strategy implementation and leading organisational change Director Competency Framework 7

8 The framework: Knowledge COMPETENCY K4 Finance Directors need to understand how to assess the organisation s financial position and steer its financial performance in order to stay solvent and develop sustainable plans. # Knowledge area Standard: The director should demonstrate an understanding of... K4.1 Financial reporting The collective responsibility of the board for accurate financial reporting K4.2 K4.3 Financial health and performance How to interpret financial statements and accounts in order to assess the financial health of an organisation The financial performance of your organisation in the context of its strategic objectives K4.4 Sources of finance K4.5 Valuation The sources of finance available to an organisation and their relative merits and risks How to assess the financial value of an organisation and potential business opportunities 8 Director Competency Framework

9 The framework: Skills The framework Skills The expertise that a director brings to their role COMPETENCY S1 Strategic thinking The ability to think strategically enables directors to propose ideas, options and plans which take advantage of available opportunities while reflecting a broad and future oriented perspective. # Skill area Standard: The director should be able to... S1.1 Identifying opportunities and threats Identify opportunities and threats to the organisation, taking account of the internal and external business environment S1.2 Taking a broad perspective Offer a broad view beyond the immediate problem and own area of expertise, including short, medium and long-term perspectives S1.3 Proposing options Propose alternative options and present creative solutions and innovations S1.4 Considering the impact of decisions Identify the potential impact of decisions and offer contingency plans and risk mitigation Director Competency Framework 9

10 The framework: Skills COMPETENCY S2 Analysis and use of information Directors need to be able to obtain, analyse, interpret and use information effectively to develop plans and take appropriate decisions. # Skill area Standard: The director should be able to... S2.1 Using a range of sources Actively seek reliable, sufficiently detailed and timely information from a wide range of sources S2.2 Synthesising information Assimilate and synthesise financial, technical and qualitative information S2.3 Evaluating and interpreting information Consider the applicability and limitations of the information and make objective interpretations S2.4 Simplifying complexity Simplify complex information COMPETENCY S3 Decision-making Directors need good decision-making skills in order to arrive at a course of action in a timely manner which provides a clear direction and moves the organisation forward. # Skill area Standard: The director should be able to... S3.1 Evaluating proposals Evaluate proposals using a range of criteria and identify their advantages and disadvantages S3.2 Handling uncertainty Make decisions, even in the face of uncertainty and incomplete information S3.3 Taking appropriate risks Take calculated risks in the context of the organisation s strategy and the appetite of the board 10 Director Competency Framework

11 The framework: Skills COMPETENCY S4 Communication The ability to communicate effectively through a variety of modes and channels and with a range of audiences is necessary for directors to work successfully with others and to fulfil their duties on the board. # Skill area Standard: The director should be able to... S4.1 Listening carefully Listen dispassionately, carefully and attentively S4.2 Communicating frankly and openly Demonstrate transparency, frankness and openness, wherever possible S4.3 Communicating clearly Communicate articulately, clearly and concisely S4.4 Adapting to audience Tailor their communication style to the needs of the audience and the situation, using appropriate modes and channels COMPETENCY S5 Leadership Strong leadership skills enable directors to solve problems, cope with crises and change, and inspire others to follow them in pursuit of the values and goals of the organisation. # Skill area Standard: The director should be able to... S5.1 Conveying self-assurance Display confidence, self-assurance and conviction S5.2 Taking action Take action quickly, under pressure and in difficult circumstances when necessary S5.3 Embracing change Show flexibility, adaptability and willingness to embrace change S5.4 Defusing conflict Defuse conflicts and arguments and facilitate compromise when necessary to achieve an acceptable outcome S5.5 Inspiring others Inspire, support and motivate others, generating willing followers Director Competency Framework 11

12 The framework: Skills COMPETENCY S6 Influencing The ability to build good networks and relationships within and beyond the organisation is important for the director to gain influence, have impact and progress organisational goals. # Skill area Standard: The director should be able to... S6.1 Developing contacts Build and maintain a wide range of contacts in relevant and influential areas S6.2 Persuading and influencing Persuade and influence others, including those of equal, greater or subordinate status and power S6.3 Building effective relationships Identify the needs, interests and influence of internal and external stakeholders and build appropriate and effective relationships S6.4 Commanding respect Command respect within the industry and in the wider business community S6.5 Demonstrating political astuteness Demonstrate shrewdness and political astuteness 12 Director Competency Framework

13 The framework: Mind-set The framework Mind-set The attitudes and disposition that shape a director s responses and behaviour COMPETENCY M1 Ethical Directors with an ethical mind-set demonstrate high standards of conduct and will be better placed to serve, advocate for and represent the organisation. # Mind-set area Standard: Directors should... M1.1 Modelling organisational values Model the values of the organisation M1.2 Displaying high standards of conduct Demonstrate behaviour which conforms to high standards of public conduct M1.3 Prioritising the interests of the organisation Place the interests of the organisation above personal selfinterest in all business matters M1.4 Identifying and managing conflicts of interest Identify and disclose conflicts of interest relating to both self and others when they become apparent, and ensure these are managed appropriately M1.5 Treating others fairly Treat others justly and fairly Director Competency Framework 13

14 The framework: Mind-set COMPETENCY M2 Professional Directors need to bring a professional attitude and outlook to their role in order to have influence and to command respect. # Mind-set area Standard: Directors should... M2.1 Showing care and diligence Maintain high standards of skill, care and diligence in professional activities M2.2 Investing in own development Invest time in learning and personal development applicable to their directorial role, including relevant training and board experience M2.3 Taking responsibility Take responsibility for their own performance and behaviour and that of their organisation M2.4 Acting with integrity Act with integrity and honesty in all dealings M2.5 Championing the organisation Act as an advocate for the organisation, both internally and externally COMPETENCY M3 Performance oriented Directors should have the organisation s current and future performance in mind as they carry out their role in order to bring the most value to the organisation. # Mind-set area Standard: Directors should... M3.1 Focusing on goals and priorities Focus on the goals of the organisation and the priorities agreed by the board M3.2 Showing entrepreneurial spirit Identify and take opportunities to increase the organisation s business advantage M3.3 M3.4 Setting high standards of performance Supporting a learning culture Set challenging but achievable goals and standards of performance for themselves and others Learn from their own successes and mistakes and encourage a culture of learning in the organisation 14 Director Competency Framework

15 The framework: Mind-set COMPETENCY M4 Independent An independent mind-set enables directors to provide the challenge and rigour required to help the board achieve a comprehensive understanding of information and options and high standards of decision-making. # Mind-set area Standard: Directors should... M4.1 Displaying independence Be willing to disagree and take an independent stance in the face of dissenting views and potential personal detriment M4.2 Encouraging diverse views Encourage rigorous discussion and diverse views in order to prevent and dispel groupthink M4.3 Questioning assumptions Adopt an inquisitive approach and actively question assumptions and test propositions M4.4 Asking for clarification Ask for clarification and explanation M4.5 Challenging the status quo Be willing to challenge the status quo and historical ways of doing things COMPETENCY M5 Aware of self and others Directors need an insight into their own emotions and behaviours and sensitivity to the feelings and responses of others in order to be good leaders and high performers. # Mind-set area Standard: Directors should... M5.1 Displaying emotional control Demonstrate an understanding of their own emotional responses and an ability to manage their emotions appropriately M5.2 Demonstrating cultural sensitivity Demonstrate social and cultural awareness and an ability to relate well with a diverse range of people M5.3 Showing empathy and perceptiveness Display empathy and respond appropriately and sensitively to the emotions of others M5.4 Recognising and limiting bias Demonstrate efforts to explore, understand and limit their own biases and preconceptions as well as those of others Director Competency Framework 15

16 IoD Professional Development The IoD is committed to providing continuing professional development in the competencies specific to the knowledge, skills and behaviours required of directors and senior leaders. Our world-class courses, qualifications and board development services, delivered by experienced directors and practitioners are available across the UK and internationally, and are immediately applicable in both an individual and organisational context. To find out how the IoD can support you and your organisation contact: IoD Professional Development T: +44 (0) E: W: iod.com/developing For media enquiries including comment and interview requests, please contact: Press Office T: +44 (0) E: The Institute of Directors The IoD has been supporting businesses and the leaders who run them since As the UK s longest running and leading business organisation, the IoD is dedicated to supporting its members, encouraging entrepreneurial activity, and promoting responsible business practice for the benefit of the business community and society as a whole. Training Events Networks Mentoring Research Influencing Copyright 2016 Institute of Directors