A framework for good director practice
, Volume 28, Issue 2
|Developed in 2010/11 by the Australian Institute of Company Directors, the Corporate Governance Framework sums up the practices (skills, attributes and expertise) that comprise good director practice as demonstrated by responsible directors. |
Together with the Guide for Directors and Boards: delivering good corporate governance, which articulates a set of values and principles that underpin the behaviours and practices of sound directorship, the framework provides us with a tool to map products and services.
The framework is designed as a wheel that has four quadrants depicting the four key areas of focus and engagement applying to every individual director: individual, board, organisational and stakeholder. Each quadrant is divided into a number of slices representing director practices essential to the quadrant focus.
The framework was developed for a Company Directors’ project requiring research, consultation and advice from leading Australian directors and a review of key international governance and director guidelines and reports. It follows our unique approach, “for directors by directors”.
1. The individual quadrant
This quadrant reflects the practices every director brings as an individual to his or her director role – for example, the responsibilities he or she has in relation to leadership both as a director and as a chairman.
2. The board quadrant
This quadrant reflects the practices of individual directors in relation to the whole board – their commitment to the successful functioning of the board and collegiate responsibilities.
3. The organisational quadrant
This quadrant focuses on the responsibilities of directors in relation to the performance of the organisation, including those of senior executives. There is a focus on relationships and critical areas of organisational functioning that should be led by directors as individuals within the whole board.
This quadrant also identifies the director level operations that underpin peak organisational performance, including governance, risk, strategy, finance and management relations.
4. The stakeholder quadrant
This quadrant focuses on the essential interaction between directors and stakeholders. This is the outward focus directors need to take into account in carrying out directorship responsibilities. It reflects moves beyond shareholders to a broader range of stakeholders.
Applying the Corporate Governance Framework
Immediate uses include the capacity to assist individual directors to reflect on their areas of director strength and to consider development opportunities.
With the myriad practices of directorship laid out, it is easier to review personal knowledge, attributes and skills.
We plan to develop an online self-assessment tool for directors based on the framework. When completed, our members will be able to access the tool through their member portal.
The self-assessment process and report will be totally confidential to the individual member who will end up with a strengths-based review of his or her current director capacity.
With this knowledge, a plan for professional development may be devised to further strengthen areas of expertise and address gap areas.
The framework provides the basis for a common language regarding director practices. With increased use over time, and broad take-up, it has the capability to improve communications about governance and director matters within, and between, a range of stakeholder groups.
At Company Directors, we will be using the framework to guide the development of support services and products for our members and other stakeholders.
We have been using the framework to map our current offerings to identify our own support strengths and gaps so we can better provide for a more aware audience.
For more information, see Director Professional Development.