Why is director training so important?
07 December, 2022
Increased board responsibility and expanding regulatory demands mean higher expectations for board performance. The board is collectively responsible for leading and directing an organisation’s activities and supervising any delegated functions to management and/or board committees. The board also has a responsibility to guide the organisation’s strategic direction, set performance objectives and oversee investment decisions. In that context, board directors are required to act on a fully informed and ethical basis, both collectively and individually. In our work with boards, we have noted that they perform best when they receive effective and quality training.
Induction training
For a newly appointed board member to be effective, he/she must be provided with sufficient information about the organisation in order to contribute to board discussions in a meaningful manner as quickly as possible. The induction training process will:
develop the new board member’s understanding of his/her role and responsibilities, including legal duties;
build an understanding of the nature of the organisation, its objectives and the market in which it operates;
build a link with the organisation’s people—the Chief Executive Officer, key management, staff and its stakeholders; and
build an understanding of the organisation’s main external relationships/stakeholders.
Induction training will help the new board member become familiar with his/her role and responsibilities and the organisation’s structure and operations. It will also enable him/her to contribute to discussions and challenge executives at board meetings more quickly.
Ongoing training
Boards benefit from ongoing development and bespoke training as a means of strengthening their knowledge. Chairpersons regularly review the training and development needs of each director, but an overarching board training schedule is beneficial to cover the specific training needs of the board as a whole. In conjunction with regular board evaluation, ongoing training for board members helps to address any gaps identified in the knowledge of the board or an individual director. Both internal and external experts can be invited to provide training, and board members also have the opportunity to request training throughout the year at board meetings. Finally, it is recommended that directors receive an annual refresher session on the roles and responsibilities of the board and on directors’ fiduciary duties.
The benefits
There are a number of benefits when it comes to training board directors:
- Education in governance ensures that boards know what their legal responsibilities are and have the knowledge base to fulfil them.
- It supports the development of a director’s skills and optimises their contribution to the board.
- It provides directors with practical guidance on how board directors, both individually and collectively, can optimise their effectiveness and performance.
- It assists in keeping up-to-date with the latest developments in legislation, regulations and the operating environment. This in turn enables the board collectively to consider how they affect the organisation and what actions are needed.
How PwC can assist
We provide in-depth training to directors and executives. The training can be tailored for their requirements and will cover topics such as fiduciary duties, the roles and responsibilities of directors, corporate governance best practice, board reporting, and legislative requirements and regulations. Contact us if you need further information or would like us to provide training to your board.
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