Director education is an important theme in board effectiveness. Many organizations have a firm grasp on their goals and methodology. In others, though, both management and the board may have a sense that they should be doing something more but are not sure what.
Developing a philosophy about director education is a good first step in establishing an approach that meets the needs of the organization and individual directors. The questions below can support the corporate secretary together with board chair or governance committee as they consider next steps.
What type of education do directors need? Few, if any, directors bring with them all of the knowledge and skills necessary to discharge the board’s oversight function. Most directors need some level of education about the organization’s business and the industry in which it operates, for example. Management necessarily embeds some education in their presentations to the board. What each director needs beyond this depends on their own backgrounds and experiences. A director’s ability to contribute may be enhanced by skills training in financial reporting issues or human resource concepts specifically relevant to the corporation.
Whose responsibility is director education? Is the organization responsible for director education or is it up to individual directors to recognize what they need and seek out ways to supplement their skills and knowledge? Many would say that it is a shared responsibility. Where the organization provides education, how does it determine the subject matter and level of sophistication that will be appropriate across a diverse group of directors? When should board wide education sessions be held? Where the directors take care of their own needs, are they accountable to the organization in any way?
Who absorbs the costs of director education? There are costs to the organization in delivering director education. The costs arise from the time management spends curating a director education program and in developing management led education sessions. There will also be fees associated with presentations by outside experts (although, an organization’s regular outside advisors will often deliver education sessions as a client development courtesy). What is the organization’s budget for director education and who determines how it will be spent?
There are costs associated with education initiatives undertaken by individual directors (although again, many professional advisors offer programs at no costs). There are a number of excellent director education providers, but who pays the fees for these programs and courses? Should individual directors invest their time in professional development to benefit the organization and also absorb the out-of-pocket costs? If the organization pays, how does it determine which programs it will underwrite?
These are some of the questions we discuss with our clients in the course of our board effectiveness mandates. We would be happy to explore your director education and other board effectiveness issues with you.