Page 1
User Guide
BU
ILD
ING
DIR
EC
TO
R T
RA
ININ
G O
RG
AN
IZA
TIO
NS
US
ER
GU
IDE
Global CorporateGovernance Forum
T O O L K I T 1
Building
Director Training
Organizations
1818 H Street NWWashington, DC 20433 USA
Telephone: +1 (202) 458-1857Facsimile: +1 (202) 522-7588
Internet: www.gcgf.orgEmail: [email protected]
Global CorporateGovernance Forum
P R I N T E D O N R E C Y C L E D PA P E R
Co-founded by the World Bank
and the Organisation for Economic
Co-operation and Development
(OECD), the Global Corporate
Governance Forum is an advocate,
a supporter, and a disseminator of
high standards and practices of
corporate governance worldwide,
especially in developing countries
and transition economies. Through
its co-founders and other donors,
including the governments of India,
Luxembourg, the Netherlands,
Norway, Sweden, Switzerland, the
United Kingdom, and the United
States, the Forum brings together
developed and developing countries.
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Page 2
TOOLKIT 1
Building Director Training Organizations
Project OfficerMarie-Laurence Guy, Global Corporate Governance Forum
ConsultantsChris Pierce, Institute of Directors, UK Kerrie Waring, Institute of Directors, UK
EditorsMarty Gottron, Stockbridge, MassachusettsNancy Morrison, Falls Church, Virginia
Graphic designStudio Grafik, Herndon, Virginia
PrintingUpstate Litho, Rochester, New York
Page 3
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Building
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Page 4
Copyright 2003.
The International Bank for
Reconstruction and D
evelopment/
The World B
ank1818 H
Street N
W
Washington, D
C 20433
All rights reserved.
The findings, interpretations, and conclusions expressed in this publicationshould not be attributed in any m
annerto the W
orld Bank, to its affiliated
organizations, or to mem
bers of itsboard of Executive D
irectors or thecountries they represent. The W
orldB
ank does not guarantee the accuracyof the data included in this publicationand accepts no responsibility for anyconsequence of their use.
The material in this w
ork is protected bycopyright. C
opying and/or transmitting
portions or all of this work m
ay be aviolation of applicable law
. The World
Bank encourages dissem
ination of itsw
ork and hereby grants permission to
the user of this work to copy portions
of this work for user’s personal,
noncomm
ercial use, without any right to
resell, redistribute, or create derivativew
orks herefrom. A
ny other copying oruse of this w
ork requires the expressw
ritten permission of the W
orld Bank.
For permission to photocopy or reprint,
please send a request with com
pleteinform
ation to:The W
orld Bank P
ermissions D
eskO
ffice of the Publisher
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treet NW
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or to:The C
opyright Clearance C
enter, Inc.222 R
osewood D
riveD
anvers, MA
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1 978-750-4470.A
ll queries on rights and licenses including subsidiary rights should beaddressed to:The O
ffice of the Publisher
The World B
ank1818 H
Street N
WW
ashington, DC
20433Fax: +
1 202-522-2422.
Page 5
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Dem
ands on the corporation have never been
higher – and rightly so. In a world w
here
scandal has hit the headlines and the
international comm
unity has comm
itted itself to
eradicating poverty, the power of the corporation is
foremost on society’s agenda. B
ut who w
ill be
responsible for ensuring that corporations fulfill their
promise? The answ
er is directors. Recent corporate
scandals have shown that directors have the pow
er to
make or break corporations. D
irectors are the link
between the corporation and the outside w
orld.
Yet something has been m
issing from the heart of
corporate governance reform – the concept of the
professional director. In most countries, being a
director is still the only professional job one can do
without training, qualification, or experience. There is
a shortage of trained, competent, and independent
directors. Reform
often highlights the need to appoint
independent directors; the constraint is lack of
capacity.
The challenge was captured in a book published by
the Centre for International P
rivate Enterprise (C
IPE
) in
2003, In Search of G
ood Directors.This is a com
mon
theme across developing countries and em
erging
markets. This toolkit is designed to help m
eet the need
by presenting practical advice on how to set up and
strengthen organizations that promote director
professionalism.
This toolkit forms part of a coordinated series of
initiatives to promote director professionalism
. In
partnership with the Yale Institute of International
Corporate G
overnance, the International Finance
Corporation, the W
orld Bank Institute, and other
groups active in the field such as the Com
monw
ealth
Secretariat and C
IPE
, the Forum is:
•D
eveloping a Global D
irector Training Netw
ork,which
links organizations that train directors and related
organizations across developed and developing
countries so they can exchange experiences.
•H
elping regional training networks tailor curriculum
and teaching materials
to meet their needs and local
circumstances.
•O
rganizing residential programs to train the trainers
who w
ill lead the organizations active in corporate
governance – to date for East Asia and Latin A
merica.
This toolkit complem
ents these efforts. It offers step by
step guidance on building organizations that will train
directors to fulfill their professional role, advocate policy
reform to ensure that corporations fulfill society’s
expectations, and represent the profession of directors.
The toolkit provides business planning and governance
tools. It explains how to apply for funding and build
sustainability, how to develop activities, and how
to
develop and deliver a training program. D
rawing on
examples and experiences from
around the world, the
toolkit aims to foster the sharing of know
ledge among
developed and developing countries.
The toolkit does not offer a single "best practice"
solution. There is no one-size-fits-all way to craft
corporate governance reform. A
range of tools,
techniques, approaches, and activities have proven
successful in various contexts. The toolkits’ objective is
to provide a practical resource for developing countries
and emerging m
arkets in implem
enting good corporate
governance practices at the board level.
The Forum is grateful to num
ber of experts and
practitioners from developed and developing countries
who have contributed to the crafting of this toolkit and
would w
elcome com
ments and suggestions to further
support effective reform in the boardroom
.
Anne S
imp
son, H
ead of the Secretariat,
Global C
orporate Governance Forum
F o r e w o r d
Page 6
2
Wh
at is th
e purpose of th
is toolkit?
This corporate governance reform toolkit focuses on building, developing, and
supporting organizations that seek to improve the professionalism
of corporate
directors through training. The toolkit emphasizes the role, responsibilities, and
benefits of establishing organizations that train corporate directors.
The toolkit aims to provide such institutions w
ith a step by step approach and a
variety of mechanism
s that can help them achieve self-sufficiency through quality
services. The toolkit walks the user through the steps required to set up an
organization that emphasizes professional developm
ent through education,
certification, and evaluation. Because m
any organizations that train directors are
mem
bership-based, the toolkit also offers information on targeting, attracting,
and retaining mem
bers.
The Forum recognizes that there are m
any different and valid approaches to
organizing and providing director training. Whether the organization is a directors
institute or a corporate governance association or some other type of
organization altogether will depend on the individual circum
stances of each
organization. Whatever the form
, it is essential that the organization be
comm
itted to good corporate governance practices, have a thorough
understanding of corporate governance issues, and be able to provide quality
training to directors.
In five modules, this toolkit guides the user through the process of starting up
and sustaining an organization comm
itted to providing quality training for
directors. The toolkit discusses how to determ
ine the learning needs of directors
in their specific country or region, how to develop and deliver a quality training
program that m
eets those needs, and how to set up a sustainable organization
that supports the professional development of directors.
Wh
at isin th
istoolkit?
Page 7
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Wh
o w
ill find th
is toolkituseful?
Director training organizations
This toolkit is aimed prim
arily at:
•Individuals in the process of setting up an organization dedicated to
improving corporate governance practices and training directors;
•O
rganizations that want to set up a subunit or affiliated organization
dealing specifically with training directors;
•O
rganizations that train directors that want to develop their activities and
organizational structure.
Organizations th
at foster corporate governance reform
efforts
Although the toolkit focuses on setting up and running a director training
organizations, the general content and methodology can benefit any
organization concerned with strengthening corporate governance and
the effectiveness of directors.
Corporate governance reform
leaders
This toolkit can benefit a wide com
munity interested or engaged in
corporate governance reform such as policym
akers, professional
associations, and business schools.
Developm
ent agencies
This toolkit can provide useful support to multilateral and bilateral
development agencies engaged in funding local corporate governance
reform program
s and strengthening the performance of corporate
directors.
Page 8
4
MO
DU
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1Starting
Why train directors? . . . . . . . . . . . . . . . . . . . . . . . .p. 2
Who trains directors? . . . . . . . . . . . . . . . . . . . . . .p. 5
The roles of an organization •
that trains directors . . . . . . . . . . . . . . . . . . . . .p. 7First steps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .p. 11P
reparing the business plan . . . . . . . . . . . . .p. 13D
ealing with start-up challenges . . . . . . . .p. 23
Sources of start-up funding . . . . . . . . . . . . . .p. 26
Further reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .p. 32A
nnex 1. Organizations that prom
ote ••
•director training . . . . . . . . . . . . . . . . . . . . . . . . . . . .p. 34A
nnex2. S
ample business plan . . . . . . . . .p. 40
Annex
3. PES
T and SW
OT analyses
. . . .p. 47A
nnex4.S
ources of start-up funding . . .p. 48
Annex
5.A donor grant program
. . . . . . .p. 49
MO
DU
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2Structuring
Establishing the governing body
. . . . . . . . .p. 3S
electing senior staff . . . . . . . . . . . . . . . . . . . . . . . .p. 13D
eveloping the organization’s •charter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .p. 15D
eveloping a code of ethics and •a code of conduct . . . . . . . . . . . . . . . . . . . . . . . . .p. 16 Further reading
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .p. 18A
nnex 1.Sam
ple notice of an annual •general m
eeting . . . . . . . . . . . . . . . . . . . . . . . . . . . .p. 20
Annex 2.G
uidance on evaluating •perform
ance of a board of directors . . .p. 21A
nnex3. S
ample job description
. . . . . . .p. 23A
nnex 4. Principal duties of the
•nomination and audit com
mittees . . . . . .p. 25
Annex
5. Sam
ple charter . . . . . . . . . . . . . . . . . .p. 28A
nnex6. S
ample code of ethics
. . . . . . . . .p. 31A
nnex7. S
ample code of conduct . . . . . .p. 34
MO
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Starting
Glo
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Building
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M o d u l e C o n t e n t s
MO
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2
Structuring
Glo
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Page 9
5
MO
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3Training
Developing a training program
. . . . . . . .p. 2W
orking with a partner . . . . . . . . . . . . . . . . .p. 10
Delivering a training course
. . . . . . . . . . . .p. 14O
verseeing and managing training
•activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .p. 20
Evaluating the training program
. . . . . .p. 24D
irector certification . . . . . . . . . . . . . . . . . . . . .p. 26
Further reading . . . . . . . . . . . . . . . . . . . . . . . . . . .p. 29
Annex
1.Exam
ples of training •courses
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .p. 32A
nnex2.S
ample curriculum
for an•orientation program
, India . . . . . . . . . . . .p. 39
Annex
3.Sam
ple curriculum,
•Indonesia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .p. 40
Annex
4.Case study preparation
•for a director training course . . . . . . . . .p. 41A
nnex5.S
ample reading list for a
•training course . . . . . . . . . . . . . . . . . . . . . . . . .p. 43
Annex
6.Sam
ple core •curriculum
, Com
monw
ealth . . . . . . . . .p. 45A
nnex7.S
ample train-the-trainers
•course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .p. 48
Annex
8.Sam
ple residential •training course, Zam
bia . . . . . . . . . . . . . . .p. 50A
nnex9.S
ample course
•evaluation form, B
razil . . . . . . . . . . . . . . . . .p. 53A
nnex10.S
ample course
•evaluation form, U
K . . . . . . . . . . . . . . . . . . . .p. 54
MO
DU
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4
Expanding
Revenue-generating services and •
•activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .p. 2
Sponsorships and affinity
•programs
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .p. 13D
eveloping and managing a
cmem
bership base . . . . . . . . . . . . . . . . . . . . . .p. 16 Further reading . . . . . . . . . . . . . . . . . . . . . . . . . . .p. 32A
nnex1.K
ey activities of corganizations that train directors
. . . . .p. 34A
nnex2.S
ample conference
•evaluation form . . . . . . . . . . . . . . . . . . . . . . . . .p. 36
Annex 3.E
xamples of m
embership
•categories, Australia . . . . . . . . . . . . . . . . . .p. 38
Annex
4.Exam
ples of mem
bership•categories, U
K . . . . . . . . . . . . . . . . . . . . . . . . .p. 39
Annex
5.Sam
ple application form,
•UK
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .p. 40A
nnex6.S
ample application form
, •Zam
bia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .p. 42
MO
DU
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5M
onitoringB
udgeting and financial planning . . . .p. 2
Risk and internal controls . . . . . . . . . . . . . .p. 7
Perform
ance measurem
ent and •sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . . .p. 9M
anagement accounts and financial •
•statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .p. 11
Further reading . . . . . . . . . . . . . . . . . . . . . . . . . . .p. 18A
nnex 1.Sam
ple zero-base budget . .p. 20
Annex
2.Sam
ple annual budget . . . . . .p. 21A
nnex3.S
ample operating surplus
•statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .p. 22
Annex
4.Sam
ple balance sheet . . . . .p. 23
Annex 5.S
ample incom
e statement . .p. 24
Annex
6.Sam
ple cash-flow
•statement, U
K
. . . . . . . . . . . . . . . . . . . . . . . . . .p. 25A
nnex7.S
ample cash-flow
statement,
•Turkey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .p. 26
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Training
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MO
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Monitoring
Glo
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MO
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4
Expanding
Glo
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Page 10
6
Th
e opening page
The first page of each module
presents the rationale andcontents of the m
odule.
Th
inking points
Each m
odule features a number
of thinking points to help usersaddress key steps in setting up ordeveloping a director trainingorganization.
Exam
ples
This toolkit does not advocate aone-size-fits-all m
odel. Rather, it
provides a menu of options
through examples from
aroundthe w
orld, from w
ell-establishedorganizations as w
ell as recentlyestablished organizations.
Cross–
references
Each m
odule includes cross-references to the other m
odulesto direct readers to related topicsand in-depth discussions.
1234 Wh
at to
ols w
ill you
find
in th
e mo
du
les?
TH
INK
ING
P
OIN
TW
ould your organizationbenefit by partnering w
ithanother group? W
hat type oforganization w
ould be yourm
ost effective partner?
WO
RK
ING
WIT
H A
N E
ST
AB
LIS
HE
DO
RG
AN
IZA
TIO
N
The Institute o
f Directo
rs, UK
is currently pro
viding
advice to
the
Co
rpo
rate Go
vernance Fo
rum o
f Turkey in the follo
wing
areas:
•D
evelop
ment o
f a syllabus and
curriculum
•R
ecruitment o
f faculty with the ap
pro
priate
credentials
•D
evelop
ment o
f training sup
po
rt materials using
samp
le
training m
aterials
•D
evelop
ment o
f infrastructure to sup
po
rt the pro
gram
,
including
practical issues such as venue
•Q
uality assurance
E X A M P L E S
Page 11
7
Fu
rther rea
din
g
Each m
odule provides an illustrative list
of readings that further discuss various
aspects addressed in the module.
Glo
ssary
Individual modules include a basic
glossary of the terms used in building
a director training organization. Theglossaries do not provide strict defi-nitions of the term
s but explain thecontext in w
hich key terms are used.
Annexes
Annexes in each m
odule present samples
and forms from
around the world that can
help users in their practical,step by stepapproach to developing a director trainingorganization.
CD
RO
M
The entire toolkit is contained in the C
D R
OM
included in this user’s guide.
5678
CERT
IFICAT
ION
The p
rocess o
f confirm
ing that co
urse
particip
ants perfo
rm o
r meet the training
pro
gram
’s go
als, usually by p
assing an
exam.
CO
UR
SET
he event(s) throug
h which the kno
wled
ge
and skills in the syllab
us are pro
vided
to
particip
ants.
CU
RR
ICU
LUM
The fram
ewo
rk of a training
pro
gram
. A
curriculum is typ
ically divid
ed into
a numb
er
of m
od
ules reflecting a rang
e of areas o
r
top
ics to b
e add
ressed.
SYLLA
BU
ST
he subjects stud
ied fo
r a particular co
urse
or seq
uence of co
urses. The syllab
us can
include vario
us types o
f training m
aterials
such as case studies, read
ing m
aterials,
and exercises.
G L O S S A R Y
TO
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Building Director
Training Organizations
Glo
ba
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orp
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overn
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ww
w.gcgf.org
US
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Page 12
Cou
ntry con
tributors
Australia
Ian Dunlop, P
olicy Advisor and Form
er•C
EO
, Australian Institute of C
ompany
•Directors
John Hall, C
hief Executive O
fficer,•A
ustralian Institute of Com
pany Directors
Pam
ela Murray-Jones, G
eneral Manager
•National E
ducation, Australian Institute
of Com
pany Directors
Brazil
Heloisa B
edicks, General S
ecretary,•B
razilian Institute of Corporate
•Governance
Bengt H
allqvist, Co-founder, B
razilian•Institute of C
orporate Governance
Leonardo Viegas, Head of Training,
•Brazilian Institute of C
orporate•G
overnance P
aulo Villares, Chairm
an of the Board,
•Brazilian Institute of C
orporate•G
overnance
Ca
na
da
Bernard W
ilson, Chairm
an of the Board,
•Institute of Corporate D
irectors
Colom
biaP
aola Gutierrez Valandia,C
orporate•G
overnance Project C
oordinator,•C
onfecámaras
Hong K
ongC
arlye Tsui,Chief E
xecutive Officer,
•Hong K
ong Institute of Directors
IndiaS
heela Bhide,Joint S
ecretary to the•G
overnment of India, M
inistry of Finance•and C
ompany A
ffairs N
. Balasubram
anian,Chairm
an, Centre for
•Developm
ent of Cases and Teaching
•Aids, Indian Institute of M
anagement
•Bangalore
IndonesiaA
nugerah Pekerti,Faculty A
ssociate,•Institute for C
orporate Directorship
IrelandS
usan Thornber, Chief E
xecutive, Institute•of D
irectors in Ireland
Kenya
Karugor G
atamah,E
xecutive Director,
•Centre for C
orporate Governance
New
Zealand
David N
ewm
an,Chief E
xecutive Officer,
•Institute of Directors N
ew Zealand
Th
e Ph
ilippinesJesus Estanislao,P
resident & C
EO
,•Institute of C
orporate Directors
Jonathan Juan Moreno,P
rogram D
irector,•Institute of C
orporate Directors
8
c o n t r i b u t o r s
Peer R
eview G
roup
To develop this toolkit andgather lessons learned fromdeveloping and developedcountries alike, the G
lobalC
orporate Governance Forum
invited representatives fromdirector training organizationsfrom
various regions of thew
orld to share their experiencesand discuss m
ilestones andchallenges in building directortraining organizations. TheForum
would especially like
to thank the following people
for their contribution to thistoolkit by providing m
aterials,exam
ples, and extensivecom
ments on building director
training organizations.
Page 13
9U
SE
R
GU
ID
E
Russia
Igor Belikov,D
irector, Russian Institute of
•Directors
Alexander Ikonnikov,C
hairman of the
•Board, Independent D
irectors Association
South A
fricaR
ichard Wilkinson,E
xecutive Director,
•Institute of Directors in S
outhern Africa
TurkeyM
elsa Ararat, E
xecutive Director, C
orporate•G
overnance Forum, Turkey
United K
ingdomP
hilippa Foster Back,D
irector, Institute of•B
usiness Ethics
Alan M
orkel,Institute Secretary, Institute of
•Directors, U
K
United States
Roger R
aber, President, N
ational•A
ssociation of Corporate D
irectorsA
lexandra Lajoux,Director of R
esearch•and P
ublications, National A
ssociation of•C
orporate Directors
Zam
biaP
atrick Chisanga,E
xecutive Chairm
an,•Institute of D
irectors Zambia
Zim
babwe
Peter B
roadway, E
xecutive Director,
•Institute of Directors Zim
babwe
Intern
ation
al con
tributors
Alexander B
erg, Senior P
rivate Sector
•Developm
ent Specialist, Investm
ent•C
limate, W
orld Bank G
roupG
eoffrey Bow
es, Director, C
omm
onwealth
•Association of C
orporate Governance
Michael G
illibrand, Special A
dvisor & H
ead•of A
dvisory Services, C
omm
onwealth
•Secretariat
Darrin H
artzler, Senior C
orporate•G
overnance Officer,
•International Finance Corporation
Florencio Lopez de Silanes, D
irector, The•International Institute for C
orporate•G
overnance at Yale University
Mike Lubrano, H
ead, Corporate
•Governance U
nit, International Finance•C
orporation A
lyssa Machold, P
roject Officer, G
lobal•C
orporate Governance Forum
Anne M
olyneux, Director, C
S International
Behdad N
owroozi,S
enior Financial•M
anagement S
pecialist, East A
sia •and the
Pacific, W
orld Bank G
roupD
jordjija Petkoski,Lead E
nterprise•R
estructuring Specialist,
•World B
ank InstituteS
ue Rutledge, S
enior Private S
ector•D
evelopment S
pecialist, Europe and
•Central A
sia, World B
ank Group
John Sullivan, E
xecutive Director, C
enter•for International P
rivate Enterprise
contributors
Page 14
10
MA
NA
GE
ME
NT:
(see staff)
MA
RK
ET R
ES
EA
RC
H:
M1 (19, 47);
M3 (2 – 6, 7, 9, 23, 24); M
4 (11, 16, 17, 18, 21, 22, 29)
ME
MB
ER
SH
IP:
generalM1 (5);
M3 (3); M
4 (1, 5, 8, 14, 16, 17): dataM
4 (28 – 31, 38, 39): eligibilityM
4 (19,20, 24): fees
M4 (18, 19): recruitm
entM
4 (21 – 28, 40, 42)
MIS
SIO
N S
TATEM
EN
T:M
1 (17, 18);M
4 (1, 2, 10, 13, 14, 16, 26); M5 (4, 6)
NE
TWO
RK
ING
:M
3 (12); M4
(5, 9 – 12, 23)
OR
GA
NIZATIO
N:
types ofM1 (2, 5, 6);
M4 (8, 14, 16, 18, 19, 21): legal form
M1 (13, 16): governing body/board M
2(2 – 13, 25 – 27, 34); M
3 (20): annualm
eetingM
2 (5, 20)
PE
RFO
RM
AN
CE
:M
2 (21, 22); M3 (2,
25, 26, 27, 53); M4 (4, 7, 25, 31); M
5 (2– 5, 7, 9 – 12, 16, 17)
PU
BLIC
ATION
S:
M4 (5, 6, 9, 11, 13,
22, 26, 31, 34)
RIS
K M
AN
AG
EM
EN
T:M
3 (6, 8, 34 –36, 38, 46, 48, 51); M
5 (4, 5, 7, 8, 30)
SE
RV
ICE
S:
(see activities)
STA
FF:M
1 (21, 23, 24); M3 (11, 16, 20
– 24, 34, 45, 48); M4 (6, 11, 21, 26 –
28, 46); M5 (2, 5, 7, 10, 17)
STA
ND
AR
DS
:(see best practice)
SP
ON
SO
RS
HIP
:(see funding)
SY
LLAB
US
:M
3 (5, 7, 9, 12, 16, 20, 21)
TRA
INE
RS
:(see staff)
TRA
ININ
G:
rationaleM
1 (2, 7, 21); M4
(2): materials
M1 (22 – 24); M
3 (12, 14 – 16, 20, 22, 24, 25, 32, 34, 41)
UN
IVE
RS
ITIES
: M
1 (6); M3
(11, 32, 35, 36)
AD
VO
CA
CY:
M1 (8 – 10);
M4 (3, 25, 35)
AC
TIVITIE
S:
M1 (7 – 10, 19 – 21);
M3 (3, 10, 15, 17 – 20, 23, 28, 37);
M4 (3 – 13, 14 – 19, 21, 26 – 29, 34);
M5 (3, 5, 6, 9 – 12, 15 – 17, 22, 24)
AN
NU
AL R
EP
OR
T: M5 (12, 13, 16)
BE
ST P
RA
CTIC
E:
M1 (7 – 10);
M3 (2, 5, 7, 14); M
4 (3, 5, 9, 12, 13, 16)
BU
DG
ETING
:M
1 (9, 10, 12, 22); M3
(20, 23); M5 (2 – 5, 9, 10, 12, 20, 21)
BU
SIN
ES
S P
LAN
:M
1 (13 – 22, 40 – 46); M
5 (2)
CE
RTIFIC
ATION
:M
3 (2, 26, 35); M
4 (35)
CH
AR
TER
:M
2 (2, 15, 28 – 30)
CO
AC
HIN
G:
M3 (15); M
4 (2, 4)
CO
DE
OF E
THIC
S:
M2 (16, 17,
31 – 33)
CO
NS
TITUTIO
N:
(see charter)
CU
RR
ICU
LUM
:M
3 (2 – 7, 10 – 14, 16, 20, 24, 33, 34, 39, 40, 45, 48)
DE
VE
LOP
ME
NT A
GE
NC
IES
: M
1 (26 – 31, 48, 49); M
3 (13 – 14)
DIS
TAN
CE
LEA
RN
ING
:M
3 (15, 16, 36, 38)
EVA
LUATIO
N:
M3 (8, 20, 22 – 25, 36,
48, 50, 53, 54); M4 (2, 7, 12, 36)
EV
EN
TS:
M3 (3); M
4 (5 – 7, 9 – 13, 21,23, 25 – 27, 29, 31, 34)
FINA
NC
IAL S
TATEM
EN
TS:
M5
(2, 11 – 17, 22, 23, 25 – 27, 30)
FOU
ND
ING
CO
MM
ITTEE
:M
1 (11 – 13)
FUN
DIN
G:
M1 (26 – 31, 48, 49);
M4 (1, 2, 9, 13 – 15, 18, 21); M
5 (9)
INTE
RN
ATION
AL O
RG
AN
IZATION
S:
(see development agencies)
LEA
RN
ING
STY
LES
:M
3 (16, 17)
AU
STR
ALIA
:M
1 (5, 10, 34, 48); M2 (34);
M3 (4,12,14, 32, 39, 46); M
4 (12, 16, 20,23 – 26, 34, 38)
BR
AZIL:
M1 (5, 15, 18, 23, 34);
M2 (7, 14); M
3 (4, 15, 33, 41, 42, 53); M
4 (5, 11, 18, 34)
CA
NA
DA
: M
1 (34, 48); M3 (4)
CO
LOM
BIA
:M
1 (6, 8, 23, 34, 49); M
3 (10, 14, 42); M4 (34); M
5 (11)
EG
YP
T: M
1 (27)
HO
NG
KO
NG
:M
1 (6, 16, 18, 34); M
3 (13, 26, 33) ; M4 (3, 5, 10, 12, 34)
IND
IA:
M1 (34); M
3 (8, 39, 45, 46)
IND
ON
ES
IA:
M1 (8, 23, 34);
M3 (8, 13, 40)
IRE
LAN
D:
M1 (36); M
3 (11, 34); M
4 (6, 9, 10)
KE
NYA
:M
1 (3, 5, 8, 10, 15, 28, 36, 49);M
2 (7); M3 (10, 22, 34, 45, 46); M
4 (34)
MA
LAYS
IA:
M1 (36); M
3 (13, 26, 34, 46)
NE
W ZE
ALA
ND
:M
1 (18, 36); M2 (8);
M3 (46); M
4 (8, 34)
THE
PH
ILIPP
INE
S:
M1 (8, 28, 36);
M3 (4, 8, 11, 13, 24, 35); M
4 (7)
PO
LAN
D:
M1 (6, 36)
RU
SS
IA:
M1 (3, 8, 18, 20, 28, 36, 38, 49);
M3 (35); M
4 (34); M5 (11)
SIN
GA
PO
RE
:M
1 (6, 38); M3 (13)
SO
UTH
AFR
ICA
:M
1 (38, 48); M2 (12);
M3 (36)
THA
ILAN
D:
M1 (3, 12, 28, 38); M
3 (13)
TUR
KE
Y:M
1 (5, 6, 18, 28, 38); M2 (8,
28); M3 (12, 37); M
4 (34); M5 (20, 26)
UN
ITED
KIN
GD
OM
:M
1 (3, 5, 6, 27, 38,48); M
2 (20, 23, 31); M3 (12, 28); M
4 (3, 7,8, 10, 15, 16, 18, 20, 23, 26, 29, 30, 34,39, 40); M
5 (22, 23, 25)
UN
ITED
STATE
S:
M1 (3, 5, 10, 24, 38);
M3 (12, 49); M
4 (6, 9, 17, 23, 34)
ZAM
BIA
: M
1 (8, 23, 31, 38); M
3 (10, 45, 50); M4 (19, 42)
ZIMB
AB
WE
: M
1 (3, 38); M3 (34, 36)
C o u n t r y i n d e x
T h e m a t i c i n d e x
Page 15
M O D U L E 1
Starting
BU
ILD
ING
DIR
EC
TO
R T
RA
ININ
G O
RG
AN
IZA
TIO
NS
MO
DU
LE
1
ST
AR
TIN
G
1
Global CorporateGovernance Forum
1818 H Street NWWashington, DC 20433 USA
Telephone: +1 (202) 458-1857Facsimile: +1 (202) 522-7588
Internet: www.gcgf.orgEmail: [email protected]
Global CorporateGovernance Forum
T O O L K I T 1
Building
Director Training
Organizations
P R I N T E D O N R E C Y C L E D PA P E R
Page 16
TOOLKIT 1
Building Director Training Organizations
Project OfficerMarie-Laurence Guy, Global Corporate Governance Forum
ConsultantsChris Pierce, Institute of Directors, UK Kerrie Waring, Institute of Directors, UK
EditorsMarty Gottron, Stockbridge, MassachusettsNancy Morrison, Falls Church, Virginia
Graphic designStudio Grafik, Herndon, Virginia
PrintingUpstate Litho, Rochester, New York
Page 17
MO
DU
LE
1
Starting
Glo
ba
l C
orp
ora
teG
overn
an
ce Fo
rum
TO
OL
KI
T
1
Building
Director Training
Organizations
Page 18
Copyright 2003.
The International Bank for
Reconstruction and D
evelopment/
The World B
ank 1818 H
Street N
W
Washington, D
C 20433
All rights reserved.
The findings, interpretations, and conclusions expressed in this publicationshould not be attributed in any m
annerto the W
orld Bank, to its affiliated
organizations, or to mem
bers of itsboard of Executive D
irectors or thecountries they represent. The W
orldB
ank does not guarantee the accuracyof the data included in this publicationand accepts no responsibility for anyconsequence of their use.
The material in this w
ork is protected bycopyright. C
opying and/or transmitting
portions or all of this work m
ay be a violation of applicable law
. The World
Bank encourages dissem
ination of itsw
ork and hereby grants permission to
the user of this work to copy portions of
this work for user’s personal,
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ercial use, without any right to
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orks herefrom. A
ny other copying oruse of this w
ork requires the expressw
ritten permission of the W
orld Bank.
For permission to photocopy or reprint,
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pleteinform
ation to:The W
orld Bank P
ermissions D
eskO
ffice of the Publisher
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treet NW
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or to:The C
opyright Clearance C
enter, Inc.222 R
osewood D
riveD
anvers, MA
01923Fax: +
1 978-750-4470.A
ll queries on rights and licenses including subsidiary rights should beaddressed to:The O
ffice of the Publisher
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ank1818 H
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ashington, DC
20433Fax: +
1 202-522-2422.
Page 19
MO
DU
LE
1
Startin
g1
Starting
A w
ell functioning
bo
ard o
f directo
rs is key to the p
erform
ance of co
mp
a-
nies and their cap
acity to attract cap
ital—and
go
od
corp
orate g
overnance
is key to the effective functio
ning o
f the bo
ard. A
sound
corp
orate g
over-
nance framew
ork help
s ensure that corp
orate b
oard
s effectively mo
nitor
manag
erial perfo
rmance, use reso
urces wisely, and
achieve an adeq
uate
rate of return fo
r sharehold
ers, while p
reventing co
nflicts of interest.
Directo
rs need a firm
understand
ing o
f corp
orate g
overnance to
fulfill
their duties effectively and
respo
nsibly. T
hey also need
to keep
abreast o
f
practical and
theoretical d
evelop
ments in the d
irection o
f their com
pany.
This calls fo
r adeq
uate and sp
ecialized training
and p
rofessio
nal
develo
pm
ent. This m
od
ule discusses the im
po
rtance of training
directo
rs
and d
escribes the typ
es of o
rganizatio
ns that engag
e in training d
irectors.
It pro
vides the b
asic inform
ation need
ed to
launch a directo
r
training o
rganizatio
n.
WH
AT
YO
U W
ILL
FIN
D IN
TH
IS M
OD
UL
E
This m
od
ule reviews:
•T
he incentives for training
directo
rs
•T
he types o
f org
anizations that train d
irectors
•T
he key roles o
f org
anizations that train d
irectors
•T
he first steps in starting
an org
anization that trains d
irectors
•T
he com
po
nents of a b
usiness plan
•S
om
e of the co
mm
on challeng
es in the start-up p
hase
•S
ources o
f start-up fund
ing
Page 20
2
WH
Y T
RA
IN D
IRE
CT
OR
S?
Most directors can enhance their effectiveness—
and thus the profitability
and success of their enterprise—though training and continuing profes-
sional development. A
mong the m
ain incentives for directors to improve
their skills and knowledge are the follow
ing:
•Im
pact on corporate performance
•Investor confidence
•S
hareholder and stakeholder activism
•R
egulatory and/or legal requirements
•R
eputation of the corporation
•C
hanging business environment
•Fighting corruption
•M
edia coverage
•P
ublic pressure
The need for training is greater than ever, given the continuous and rapid
change that has become the norm
in business. The impact of increased
globalization, financial market crises, and corporate scandals have
persuaded policymakers and investors w
orldwide of the need to im
prove
and enforce corporate governance standards. For developing countries
and emerging m
arkets, the ability to understand and follow sound princi-
ples of corporate governance is essential to attract foreign and domestic
investment and to build com
panies that use resources effectively as they
weather increasingly com
petitive markets. This need for sound corporate
governance is all the more im
portant because well-perform
ing compa-
nies are key to overall national and international economic
growth—
which in turn is necessary for the alleviation of poverty.
DIR
EC
TO
R T
RA
ININ
G O
RG
AN
IZA
TIO
NS
Whether an o
rganizatio
n that trains directo
rs is a corp
orate g
overnance
associatio
n or an asso
ciation d
evoted
solely to
directo
rs dep
ends in larg
e
part o
n the local co
ntext. This to
olkit uses the p
hrases “org
anization that
trains directo
rs” and “d
irector training
org
anization” to
describ
e an
org
anization w
hose p
rimary p
urpo
se is to train d
irectors—
regard
less of
the type o
f org
anization. T
he too
lkit is not reco
mm
ending
the establishm
ent
of a sp
ecific type o
f org
anization, o
r sugg
esting that o
ne pro
gram
wo
rks
better than ano
ther.
Page 21
MO
DU
LE
1
Startin
g3
KE
NY
A
“It has beco
me increasing
ly evident that o
ur continued
pro
sperity as natio
ns, as com
munities, and
even as
dig
nified ind
ividuals, is clo
sely linked w
ith our ab
ility to
create, strengthen, and
maintain p
rofitab
le, com
petitive,
and sustainab
le business enterp
rises.
“The ro
le of a d
irector is increasing
ly beco
ming
mo
re pro
-
fessional and
much m
ore d
emand
ing w
ith even toug
her
legal, statuto
ry, contractual, and
com
mo
n law d
uties and
liabilities, yet there is no
legal g
uidance o
n how
to fulfill
those d
uties or avo
id the liab
ilities.
“This sug
gests that d
irectors no
w need
to m
ore clearly
understand
their roles, d
uties, and resp
onsib
ilities and the
liabilities attached
thereto.”
Centre fo
r Co
rpo
rate Go
vernance
LA
TIN
AM
ER
ICA
“The professionalization of d
irectors and the p
romotion of
corporate governance strengthens corp
orate practices, and
in turn increases confidence and
comp
etitiveness in our
financial markets, and
, as a result, investment in Latin
Am
erica.” The Latin A
merican Institute fo
r Co
rpo
rate
Go
vernance
RU
SS
IA
“The p
rog
ram o
f educatio
n of m
emb
ers of the b
oard
s of
directo
rs of R
ussian com
panies (o
pen jo
int stock co
mp
a-
nies) is desig
ned to
assist in the transform
ation o
f the
bo
ard o
f directo
rs into the effective o
rgan o
f contro
l and
go
vernance and, thus, to
enhance the effectiveness of the
op
eration o
f the com
pany as a w
hole.”
Russian Institute o
f Directo
rs
TH
AIL
AN
D
“Private b
usiness organizations, corporate firm
s, and
enterprises are the core found
ation of the Thai economy.
Therefore, the strength and development of the Thai econom
y
will b
e dep
endent on the stab
ilization and the p
erformance
of the core foundation. For any resp
ected b
usiness organiza-
tions, corporate firm
s, or enterprises to ob
tain stability for
their respected
businesses, they m
ust obtain efficiency in
prod
uction as well as an efficient m
anagement system
with
the app
ropriate d
irectors to manage and
direct.”
Thai Institute o
f Directo
rs
UN
ITE
D K
ING
DO
M
“The objective of d
irector develop
ment is to create a
situation for directors w
here professional and
personal
growth can occur. This learning situation is likely to involve
the acquisition and
the increase of knowled
ge, experience
and skills. It m
ay also enable p
ersonal qualities to m
ature.”
Institute of D
irectors, U
K
UN
ITE
D S
TA
TE
S
“As fid
uciaries who rep
resent a corporation's sharehold
ers,
corporate d
irectors have duties of care and
loyalty. [We]
affirm the value of ongoing d
irector education in fulfillm
ent
of these duties. Furtherm
ore, [we] strive to ensure that their
actions and d
ecisions meet the highest stand
ards of law
and ethics. Through this com
mitm
ent, [we] serve the
general pub
lic's need for corp
orate integrity.”
Natio
nal Asso
ciation o
f Co
rpo
rate Directo
rs
ZIM
BA
BW
E
“[We] aim
to help
directo
rs fulfill their leadership
respo
nsi-
bilities in creating
wealth fo
r the benefit o
f business and
society as a w
hole.”
Zim
bab
we Institute o
f Directo
rs
OR
GA
NIZ
AT
ION
S’ R
EA
SO
NS
FO
R T
RA
ININ
G D
IRE
CT
OR
S
Page 22
TH
E R
OL
E O
F D
IRE
CT
OR
S
4
It is the responsibility of individual directors to build regularly and systematically
upon their existing knowledge, skill, and expertise. Yet directors in developing
and developed countries alike may not have the essential know
ledge and skills
to perform as professional board m
embers.
AR
EA
DE
CIS
ION
MA
KIN
G
RE
SP
ON
SIB
ILITIE
S
AC
CO
UN
TA
BIL
ITY
LEA
DE
RS
HIP
ET
HIC
S A
ND
VA
LUE
S
CO
MPA
NY
A
DM
INIST
RAT
ION
PE
RFO
RM
AN
CE
BEST
PR
AC
TIC
ES
Directo
rs help g
uide the future o
f the com
pany and
pro
tect its assetsand
reputatio
n. They co
nsider ho
w their d
ecisions relate to
stakehold
-ers and
the regulato
ry framew
ork.
Directo
rs are respo
nsible fo
r the long
-term p
rosp
erity of the co
mp
any.In so
me co
untries they are required
by law
to ap
ply skill and
care inexercising
their duty to
the com
pany and
are subject to
fiduciary
duties. If they are in b
reach of their d
uties or act im
pro
perly, d
irectors
may b
e mad
e perso
nally liable and
pro
secuted and
/or d
isqualified
.
Directors are accountab
le to shareholders for the p
erformance of the
comp
any but should
act in the interest of the corporation as a w
hole.D
irectors are generally app
ointed and
removed
from office b
y sharehold
ers and in som
e cases by staff.
Directo
rs oversee m
anagem
ent and d
irection o
f an org
anization. T
heysho
uld have the ab
ility to hire and
fire executive manag
ement.
Directo
rs should
play a key ro
le in determ
ining the values and
ensuringthe integ
rity of the co
mp
any and o
btaining
com
mitm
ent to tho
se valuesfro
m m
anagem
ent.
Directo
rs are respo
nsible fo
r ensuring the co
mp
any's effective ad
ministratio
n.
Directo
rs set strategic o
bjectives and
guid
e and ad
vise the m
anagem
ent team in the attainm
ent of these strateg
ic ob
jectives.
Page 23
MO
DU
LE
1
Startin
g5
WH
O T
RA
INS D
IREC
TOR
S?
A variety of organizations contribute to the professional developm
ent and training
of directors. These include stock exchanges, financial institutions, government
and industry regulators, business associations, chambers of com
merce, institutions
of higher education, institutes of directors, and associations set up to promote
good corporate governance practices. (Examples of the types of organizations
that contribute to training directors can be found on page 6. A list of organiza-
tions that promote director training, together w
ith contact information, can be
found in annex 1.)
Director training is delivered prim
arily by two broad types of organizations.
One is corporate governance associations, w
hich are devoted to improving
corporate governance in general and provide training as one aspect of that
effort. The other is organizations that are focused on directors and that support,
represent, and set standards for directors. Both types of organizations can be
mem
bership associations, such as the National A
ssociation of Corporate
Directors in the U
nited States, the Institute of D
irectors in the United K
ingdom,
and the Brazilian Institute of C
orporate Governance. O
r they may serve directors
without having a m
embership base, such as the C
orporate Governance C
entre
in Kenya and the C
orporate Governance Forum
of Turkey.
Many successful organizations training directors have also developed and
expanded as a result of the merger of organizations w
ith similar values and
objectives. In most cases the m
erging bodies offer their networks and/or
mem
bers similar benefits in the w
ay of education, publications, and events.
The merger can be of great value to all com
pany directors in a country as they
become represented by a single pow
erful voice in their dealings with
government, the m
edia, and the comm
unity at large.
EX
AM
PL
E O
F A
ME
RG
ER
: AU
ST
RA
LIA
The A
ustralian Institute of C
om
pany D
irectors (A
ICD
) was o
fficially
form
ed o
n January 1, 1990, as a result of a m
erger o
f the Institute of
Directo
rs in Australia and
the Co
mp
any Directo
rs’ Asso
ciation o
f
Australia. T
he merg
er enabled
the new institute to
build
on the
strengths o
f the pred
ecessor o
rganizatio
ns, which had
been o
perating
since the mid
-1960s, and to
ob
tain the synergy b
enefits of the m
erger.
At the tim
e of the m
erger, A
ICD
had ab
out 7,000 m
emb
ers; it now
rep-
resents mo
re than 17,000 mem
bers thro
ugho
ut Australia.
E X A M P L E S
TH
INK
ING
P
OIN
TW
hat type of director trainingorganization w
ould best suit yourbusiness environm
ent?
Page 24
6
TY
PE
S O
F O
RG
AN
IZA
TIO
NS
TH
AT
SU
PP
OR
T D
IRE
CT
OR
TR
AIN
ING
CH
AM
BE
RS
OF
C
OM
ME
RC
E
Cham
bers o
f com
merce and
indus-
try traditio
nally pro
vide a variety o
f
services to the business com
munity.
With the g
row
ing im
po
rtance of
corp
orate g
overnance issues,
chamb
ers of co
mm
erce, especially
in countries w
ith a civil law trad
i-
tion, have increasing
ly taken to
training d
irectors.
Fo
r examp
le, Co
nfecámaras in
Co
lom
bia w
as established
in 2001
as a business asso
ciation m
ade up
of 57 reg
ional C
hamb
ers of
Co
mm
erce and Ind
ustry. It is a pri-
vate sector initiative sup
po
rted b
y
an international d
evelop
ment
agency, the C
enter for Internatio
nal
Private E
nterprise (C
IPE
). Tog
ether
with C
IPE
, Co
nfecámaras b
egan
develo
ping
a pro
gram
to b
uild
sound
corp
orate g
overnance in
Co
lom
bia. A
Natio
nal Center o
f
Co
rpo
rate Go
vernance was estab
-
lished to
cond
uct directo
r training
throug
h regio
nal chapters o
f the
affiliated cham
bers w
orking
in part-
nership w
ith universities.
UN
IVE
RS
ITIE
S
Universities and
business schools
are also active in establishing
program
s that prom
ote enhanced
corporate governance through
training for corporate d
irectors.
In add
ition to their expertise,
universities and b
usiness schools
can provid
e tutors, materials, and
training facilities to help start a
director training
org
anization.
For examp
le, the Corp
orate
Governance Forum
of Turkey was
founded
by S
abanci U
niversity and
the Turkish Industrialists’ and
Businessm
en’s Association. It is
develop
ing director training
program
s in Istanbul. The forum
’s
mission is to p
romote and
imp
rove
the corporate governance
framew
ork in Turkey.
PR
OF
ES
SIO
NA
L
AS
SO
CIA
TIO
NS
Ded
icated b
usiness leaders and
associations comm
itted to im
proving
director p
rofessionalism have p
layed
a significant role in establishing
successful organizations serving the
needs of d
irectors around the w
orld.
Fo
r examp
le, the Po
lish Institute of
Directo
rs was fo
rmed
in early 2003
to fo
ster corp
orate g
overnance
reform
in Po
land and
to p
rovid
e a
platfo
rm fo
r com
pany d
irectors to
discuss g
overnance-related
issues.
The P
olish C
onfed
eration o
f Private
Em
plo
yers, the Asso
ciation o
f
Investment F
und C
om
panies, the
Institute of B
usiness Develo
pm
ent,
the Po
lish Asso
ciation o
f Bro
kers
and Investm
ent Ad
visors, the
Po
lish Cham
ber o
f Insurance, and
the Warsaw
Sto
ck Exchang
e col-
lectively established
the institute.
ST
OC
K E
XC
HA
NG
ES
In their effort to
foster co
rpo
rate
go
vernance reform
, som
e stock
exchanges have also
been q
uite
active in pro
mo
ting p
rofessio
nal
develop
ment p
rograms for d
irectors.
The S
ingap
ore S
tock E
xchange
supp
orted
the creation o
f the
Sing
apo
re Institute of D
irectors in
1998, pro
viding
office facilities and
secretarial services to the institute
in its start-up p
hase.
DIR
EC
TO
R IN
ST
ITU
TE
S
Directo
r institutes are mem
bership
org
anizations that sup
po
rt direc-
tors in a num
ber o
f ways, includ
ing
offering
training and
other fo
rms o
f
pro
fessional d
evelop
ment and
services.
The first Institute o
f Directo
rs was
established
in the United
King
do
m
in 1903 and w
as granted
a Ro
yal
Charter in 1906. It is a p
olitically
indep
endent organization sup
porting,
representing
, and setting
standard
s
for 55,000 ind
ividual m
emb
ers. In
add
ition to its wid
e range of director
training p
rog
rams and
business
services, the institute represents
the interests of its m
emb
ers to
go
vernment and
private secto
r
op
inion lead
ers.
The Institute o
f Directo
rs, UK
has
also b
een active in setting up
similar o
rganizatio
ns in other
countries. F
or exam
ple, it set up
a
branch in H
ong
Ko
ng in 1991 to
pro
vide d
irector training
to its
mem
bers there. W
hen the sover-
eignty o
f Ho
ng K
ong
returned to
China in 1997, the b
ranch becam
e
an affiliate of the U
K Institute as
the Ho
ng K
ong
Institute of
Directo
rs.
Page 25
MO
DU
LE
1
Startin
g7
TH
E R
OL
ES
OF
AN
OR
GA
NIZ
AT
ION
TH
AT
T
RA
INS
DIR
EC
TO
RS
Whether they cater only to directors or to a broader netw
ork, whether they are
mem
bership organizations or not, most organizations that train directors offer
at least three key benefits—training, standard setting, and representation.
Training
First and foremost, organizations offer training and developm
ent aimed at raising
the standards of individual directors and the boards on which they serve. In som
e
cases, this training and development can lead to certification for board m
embers.
Training can provide directors with:
•N
ew skills
•Increased professionalism
•Increased confidence
•G
reater awareness of relevant issues
•A
ccess to current thinking on governance and other issues
•O
pportunities to discuss issues with peers and m
entors
•A
n increased appreciation of the ethics and values underpinning effective
governance
For a detailed discussion of developing training and certification programs, see
MO
DU
LE 3: TRA
ININ
G.
Setting standards
Researching and form
ulating corporate governance standards and board best
practices are important tasks of an organization that trains directors. These
tasks are often performed by a departm
ent or a working group dedicated to
that purpose in the organization. This department or team
typically monitors
regulatory and statutory developments in corporate governance and conducts
surveys on trends and compliance w
ith regulations. It responds to government
and other regulatory and consultative bodies; meets regularly w
ith government
ministers, regulators, and other civil servants dealing w
ith relevant issues; and
offers testimony and other form
al representations wherever appropriate.
Page 26
8
CO
LOM
BIA
A d
irector training
org
anization sho
uld:
•P
rovid
e go
od
directo
rs, who
can be
trusted b
y national co
rpo
rations and
do
mestic and
foreig
n investors.
•B
uild training
pro
gram
s guid
ed b
y
pro
fessionalism
, imp
artiality, ethics,
and exp
ertise.
•G
uide d
irectors in b
eing acco
untable,
respo
nsible, and
fair by ap
plying
go
od
corp
orate g
overnance p
rinci-
ples.
•O
ffer courses that m
eet the specific
training need
s of d
irectors.
•B
uild reg
istries of trained
directo
rs.
•R
ecom
mend
skilled d
irectors fo
r
app
ointm
ent to b
oard
s of natio
nal
com
panies.
Co
nfecámaras
IND
ON
ESIA
A d
irector training
org
anization sho
uld:
•S
upp
ort d
irector p
rofessio
nalism.
•D
evelop
and p
rom
ote ethical
standard
s.
•C
ond
uct relevant research.
•R
epresent and
advocate its m
emb
ers’
interests in pub
lic po
licymaking
.
•P
rovid
e educatio
n for d
irectors.
•M
onito
r ethical standard
s throug
h
carefully screened m
emb
ership.
Institute for C
orp
orate
Directo
rship
KEN
YA
“A d
irector institute sho
uld d
evelop
,
mo
nitor, and
otherw
ise regulate ‘d
irector
pro
fessionalism
’ like any other p
rofes-
sional o
rganizatio
n and no
t like an ‘old
bo
ys club.’ A
directo
rs’ institute can
imp
rove d
irector p
rofessio
nalism
throug
h training, ensuring
that only
qualified
, com
petent, and
fit perso
ns
are elected to
bo
ards and
by taking
discip
linary action ag
ainst ‘delinq
uent’
directo
rs. Und
oub
tedly, it m
ust of
course b
e realized that m
any other
institutions—
schoo
ls and co
lleges,
sharehold
er associatio
ns, existing p
ro-
fessional and
business asso
ciations,
institutes of co
rpo
rate go
vernance,
existing p
rofessio
nal and b
usiness
associatio
ns can play a critical ro
le in
develo
ping
directo
r pro
fessionalism
.”
Co
rpo
rate Go
vernance Centre
TH
E PH
ILIPP
INES
The Institute o
f Co
rpo
rate Directo
rs is
prom
oting professionalism
in the practice
of corporate d
irectorship through training
corp
orate d
irectors and
installing a
perfo
rmance evaluatio
n system via a
corp
orate g
overnance sco
recard. It is
also d
eeply eng
aged
in po
licy advo
cacy
as well as reg
ional (internatio
nal)
netwo
rking w
ith similar institutes in
the regio
n (East A
sia).
Institute of C
orp
orate D
irectors
RU
SSIA
The ro
le of d
irector o
rganizatio
ns is
to b
e a self-regulato
ry org
anization fo
r
corp
orate d
irectors, co
ntributing
to
develo
pm
ent of the p
rofessio
nal
com
munity, b
y pro
viding
inform
ation,
offering opp
ortunities for peer interaction,
setting p
rofessio
nal standard
s, and
offering
directo
r training.
Indep
endent D
irectors
Asso
ciation
RU
SSIA
The ro
le of a d
irector training
org
anization sho
uld b
e:
•To
develo
p p
rofessio
nal standard
s
and ethical rules fo
r bo
ard m
emb
ers
and to
train directo
rs.
•To
encourag
e the develo
pm
ent of the
pro
fessional co
mm
unity of co
rpo
rate
directo
rs.
•To
carry out reg
ular mo
nitoring
and
assessment o
f the perfo
rmance o
f
corp
orate d
irectors.
•To
identify the m
ost acute p
rob
lems
in com
pany co
rpo
rate go
vernance
practices at larg
e and b
oard
activities
in particular and
present w
ays to d
eal
with them
.
•To
contrib
ute to the d
evelop
ment o
f
corp
orate law
and jud
icial practices
related to
corp
orate g
overnance.
Russian Institute o
f Directo
rs
ZA
MB
IA
The ro
le of an institute o
f directo
rs
should
be to
pro
mo
te the princip
les
and the p
ractice of the co
ncepts o
f
corp
orate g
overnance as w
ell as to
pro
vide co
ntinuing d
irector training
service. The institute o
f directo
rs
should
also serve as an instrum
ent
throug
h which co
mp
anies and
org
anizations can b
e kept co
nstantly
inform
ed ab
out d
evelop
ments in the
glo
bal co
rpo
rate wo
rld. T
he institute
of d
irectors can help
imp
rove d
irector
pro
fessionalism
by id
entifying areas
of need
and d
isseminating
inform
ation
in that regard
.
Institute of D
irectors, Z
amb
ia
WH
AT
DIR
EC
TO
R T
RA
ININ
G O
RG
AN
IZA
TIO
NS
SA
Y A
BO
UT
TH
EIR
KE
Y R
OL
ES
Page 27
MO
DU
LE
1
Startin
g9
The department or the relevant research team
may publish regular policy papers
setting out the organization’s position on major topics of interest. These papers
are circulated both within and outside the organization’s netw
ork and/or
mem
bership base.
To maintain respect and influence, the organization m
ay find it useful to concen-
trateits energies on only a few
key topics. Its position on these topics must be
comm
unicated consistently and clearly to government officials, regulators, other
businesses, the media, and m
embers (if any). In addition, policy positions can
be continuously reinforced through frequent restatement in a variety of forum
s.
Any statem
ent that deviates—or appears to deviate—
from the established policy
position may not only confuse the organization’s m
essage, but may m
isrepresent
the organization and thus damage its integrity and reputation.
Represen
tation
As an independent association, an organization that trains directors is in a good
position to advocate the views of its m
embers and/or the stakeholders it repre-
sents to government and other policym
akers or opinion leaders. The goal is to
encourage an economic and regulatory environm
ent that is supportive of the
principles of good governance and that allows business to flourish and com
pete
internationally. By consulting directors and other stakeholders regularly, form
ulat-
ing policies carefully, and expressing views clearly and forcefully, the organization
can build up a voice that is influential and respected.
The ability to exert influence depends on several factors:
•The quality of the argum
ents expressed
•The recognized independence of the organization and its nonpolitical stance
•The reputation of the organization, its directors, its m
anagers, and its partners
•The size and nature of the m
embership (if it is a m
embership organization)
and/or network
•The effectiveness of consultation w
ith mem
bers and/or network
•The know
ledge and insight exhibited by the organization’s spokespeople
•A
ccess to decisionmakers and suitable m
edia platforms
•The nature of the issue concerned
Page 28
10
SE
TT
ING
ST
AN
DA
RD
S A
ND
BE
ST
PR
AC
TIC
E
AU
ST
RA
LIA
The P
olicy and
Ad
vocacy D
epartm
ent is the Australian Institute o
f
Co
mp
any Directo
rs’ vehicle for d
evelop
ing and
advo
cating p
olicy
on sp
ecific directo
r- and b
oard
-related issues. T
he dep
artment
researches and co
mm
unicates best p
ractice in directo
rship, b
oth
nationally and
internationally. It m
onito
rs trends and
pro
vides
relevant educatio
n and info
rmatio
n to assist d
irectors and
senior
manag
ers in making
bo
ards m
ore effective. T
he institute’s com
mit-
tees on natio
nal law, tax and
econo
mics, and
sustainability help
to
develo
p p
olicy, alo
ng w
ith the Acco
unting and
Financial A
dviso
ry
Co
mm
ittee and vario
us ad ho
c wo
rking g
roup
s and task fo
rces.
The institute co
mm
unicates its wo
rk to the w
ider co
mm
unity
throug
h po
licy subm
issions, testim
ony, p
ositio
n pap
ers, and the
“Mem
bers” Vo
ice colum
n in the Co
mp
any Directo
r Journal, w
hich
is sent to m
emb
ers mo
nthly.
KE
NY
A
The C
entre for C
orp
orate G
overnance (fo
rmerly the P
rivate Secto
r
Co
rpo
rate Go
vernance Trust) in Kenya d
evelop
ed and
circulated
The P
rinciples and
Sam
ple C
od
e of B
est Practice fo
r Co
rpo
rate
Go
vernance and p
ut corp
orate g
overnance o
n the Kenyan p
olicy
agend
a by ho
lding
:
•A
wareness-raising
wo
rkshop
s and sem
inars.
•Technical w
orksho
ps fo
r mem
bers o
f parliam
ent, heads o
f state-
ow
ned enterp
rises, and lead
ers of institutio
ns of hig
her learning.
•Training
courses fo
r directo
rs of co
rpo
rate business enterp
rises.
UN
ITE
D S
TA
TE
S
The N
ational A
ssociatio
n of C
orp
orate D
irectors has b
uilt a solid
reputatio
n in best p
ractice dissem
ination thro
ugh its “B
lue Rib
bo
n
Co
mm
ittee” repo
rts on d
irector-related
issues. These rep
orts are
based
upo
n wo
rkshop
s featuring p
rom
inent business lead
ers on
subjects such as executive co
mp
ensation and
audit co
mm
ittees.
Legislato
rs and reg
ulators co
nsulted w
ith the Natio
nal Asso
ciation
of C
orp
orate D
irectors in the U
nited S
tates concerning
recent
changes to
stock exchang
e listing rules and
the Sarb
anes-Oxley
Act o
f 2002, which tig
htened co
rpo
rate accounting
, auditing
, and
financial disclo
sure regulatio
ns.
E X A M P L E S
Page 29
MO
DU
LE
1
Startin
g11
FIR
ST
ST
EP
S
Any group that w
ants to start up an organization that trains directors will need
to follow a num
ber of steps. These include defining the purpose of the organi-
zation, setting up a workable structure, and adopting organizing and operating
principles to achieve that purpose. The founders of the organization also need
to develop a business plan setting forth a strategy for reaching the stated goals
and determining how
the organization will raise both start-up and operating
funds. If the organization is going to solicit mem
bers, the business plan would
also set out criteria for mem
bership and mem
ber services. Because a chief
mission of a director training organization is to im
prove director professionalism,
a key element in the planning process is designing a set of training and profes-
sional development activities.
Settin
g u
p a fou
nd
ing
comm
ittee
The driving force behind a start-up organization dedicated to training directors
has often been a single individual with the vision and m
otivation necessary
to create a body that fosters better corporate governance practices and
meets the professional needs of directors. This leader typically identifies and
recruits a number of individuals w
ho share the same goals but com
e from
various backgrounds to ensure the organization’s independence and credibility.
This core group, or founding comm
ittee, is then responsible for developing
the business plan: that is, formulating the strategy and structure of the new
organization.
The core mem
bers of the founding comm
ittee need to be comm
itted to
raising corporate governance standards through professional development.
They can be people the leader already knows or w
ill identify through an
established network of colleagues. The leader w
ill seek to recruit people with
the various skills needed for the organization’s development (financial and
strategic planning experts, lawyers, experts in corporate governance issues),
as well as business leaders, bankers, institutional investors, or other reputable
representatives from constituencies w
ith a stake in good corporate gover-
nance. In seeking advice and funding, the founding comm
ittee may also
seek the support of other well-established organizations or developm
ent
agencies promoting sustainable private sector developm
ent. The main
challenge in recruiting a founding comm
ittee is to avoid being captured by
political or financial interests while bringing in people w
ith a wide range of
skills who share the sam
e goal.
TH
INK
ING
P
OIN
TW
ha
t are th
e key ch
ara
cteristics requ
ired for
an
effective foun
din
g
comm
ittee?
Page 30
12
Ideally, individuals who serve on the founding com
mittee w
ould have some or all
of the following attributes:
•Im
peccable reputations in their field of influence as well as their personal lives
•Leadership skills
•D
irector and board-level experience
•G
ood connections in the corporate world, governm
ent, and civil society
•E
ntrepreneurial flair
•O
rganizational acumen
•Financial and accounting experience
•M
arketing expertise
•G
ood knowledge of corporate governance issues
•C
omm
itment to corporate governance reform
efforts
Mem
bers of the founding group might be retired or have other full-tim
e
obligations. In any case they are likely to be providing their time to starting up
the organization on a voluntary basis.
Du
ties of a fou
nd
ing
comm
ittee
The founding mem
bers of an organization will think about and m
ake decisions
on several aspects of the future business at the same tim
e. For example, they
might be analyzing the m
arket to determine w
hat sorts of services directors
need while they are consulting w
ith peers and others about the best ways to
structure and operate the organization.
RE
CR
UIT
ING
A F
OU
ND
ING
CO
MM
ITT
EE
: T
HA
ILA
ND
The fo
unders o
f the Institute of D
irectors in T
hailand, estab
lished in
1999, included
influential leaders fro
m the:
•S
tock E
xchange o
f Thailand
•B
ank of T
hailand
•O
ffice of the S
ecurities and E
xchange C
om
missio
n, Thailand
•C
apital M
arket Develo
pm
ent Fund
, a private internatio
nal gro
up
E X A M P L E S
Page 31
MO
DU
LE
1
Startin
g13
The founding comm
ittee undertakes the following tasks:
•D
efines the organization’s overarching goals (vision) and its role (mission)
•D
ecides on the legal status of the organization
•P
repares a business plan
•O
btains financial support
•S
ets up the structure of the organization
•H
ires the core staff
PR
EP
AR
ING
TH
E B
US
INE
SS
PL
AN
A key step in starting any organization is the preparation of a business plan. The
business plan sets out the mission and goals of the organization and m
aps out
the strategy for achieving those goals. It covers all aspects of the organization’s
structure and operations, including how the organization intends to raise rev-
enues, what services it plans to provide, how
it will go about attracting directors
or soliciting mem
bership, and how it w
ill market itself to various stakeholders
and/or mem
bers, policymakers, the new
s media, and the public at large.
A business plan helps identify and plan for potential difficulties. It sets out
benchmarks by w
hich to measure the organization’s perform
ance. And it is the
organization’s primary tool for gaining support from
key figures whose influence
(or lack of it) can be crucial to the organization’s success. This is especially true
in the early stages, when the organization’s founders m
ust attract support on
the basis of its vision rather than track record. Public and regular endorsem
ent
from the local, national, and international business com
munity, regulators, and
investors can lend legitimacy to the organization and should form
a part of the
organization’s marketing cam
paign. (An exam
ple of a business plan from a
start-up organization that trains directors can be found in annex 2.)
In developing the business plan, it may be useful to talk to colleagues, professional
associates, and other business acquaintances. Established director training
organizations in other countries can provide valuable insights into the challenges,
milestones, and successes they have experienced.(S
ee annex 1.)
It is important to m
ake the business plan as concise and easy to read as possi-
ble. At the sam
e time, it needs to be thorough and to anticipate and answ
er any
questions that potential financial partners, mem
bers, and others might raise.
Too much detail in the m
ain body of the plan may overw
helm the reader.
TH
INK
ING
P
OIN
TW
ho can offer you sound advice on your business plan?
Page 32
14
TE
RM
S C
OM
MO
NLY
US
ED
IN B
US
INE
SS
PL
AN
S
VIS
ION
Desired
future state; what the o
rganizatio
n ultim
ately wants to
achieve
MIS
SIO
NS
tatement o
f what need
s to b
e do
ne in o
rder to
achieve the vision
GO
ALS
Measurab
le targets lead
ing to
the achievem
ent of the m
ission
VA
LUE
SP
rinciples and
standard
s of co
nduct that
inform
the org
anization’s o
peratio
n
ST
RA
TE
GY
Statem
ent of the b
usiness the o
rganizatio
n will und
ertake, how
it will
carry out its o
bjectives, and
the resources
it will d
eplo
y to fulfill its m
ission
OB
JEC
TIV
ES
Measurab
le targets lead
ing to
the achievem
ent of the strateg
y
PO
LICIE
SS
tatements relating
to the activities o
f the o
rganizatio
n and the w
ay in which they
should
be carried
out
LEG
AL FO
RM
Fund
amental rules o
n how
the entity is to b
eo
rganized
. A d
irector training
org
anization
may b
e a subd
ivision o
f another leg
al entity, a lim
ited liab
ility com
pany, a trust, a p
artner-ship
, or any o
ther local fo
rm o
f corp
oratio
n. M
ost d
irector training
org
anizations are set
up as no
t-for-p
rofit o
rganizatio
ns.
TA
RG
ET
MA
RK
ET
The sco
pe, size, and
trend o
f the market (the
peo
ple and
org
anizations) to
which the
directo
r training o
rganizatio
n plans to
offer
its services and activities.
OR
GA
NIZ
AT
ION
AL
The g
overning
bo
dy, key m
anagem
entS
TR
UC
TU
RE
po
sitions, and
expected
staffing need
s of
the org
anization.
G L O S S A R Y
Page 33
MO
DU
LE
1
Startin
g15
Statistical and other supporting inform
ation can be provided in annexes. A w
ell-
organized and well-presented plan sends the m
essage that the organization is
competent and has high professional standards.
It is important to avoid overly optim
istic or under-ambitious planning. The m
ost
accurate projections possible of expected revenues and costs will be the m
ost
useful. Inaccurate marketing cam
paigns or mem
bership forecasts can generate
cash-flow crises, staff losses, cost-cutting, and other problem
s that can under-
mine the viability of the organization.
It is also important to realize that the business plan is not set in stone. The
development strategy w
ill be continually refined as the organization matures. For
example, the target m
arkets might change and expand and the services offered
evolve. The role or the name of the organization m
ay even change.
The key elements of a business plan for an organization training
directors include:
•C
over and contents page
•E
xecutive summ
ary
•N
ame, legal form
, location
•V
ision statement
•M
ission statement
•M
arket analysis
•A
ctivities and services
•M
arketing
•O
rganizational structure
•O
perations
•Finance C
HA
NG
ES
IN T
HE
OR
GA
NIZ
AT
ION
’S N
AM
E
BR
AZ
ILT
he Brazilian Institute o
f Directo
rs becam
e the Brazilian Institute o
f
Co
rpo
rate Go
vernance to em
phasize its ro
le in fostering
corp
orate
go
vernance reform
efforts .
KE
NY
AT
he Private S
ector C
orp
orate G
overnance Trust recently b
ecame the
Co
rpo
rate Go
vernance Centre, as it chang
ed its leg
al status from
a
trust to a co
mp
any limited
by g
uarantee witho
ut share capital.
E X A M P L E S
Page 34
16
Cover a
nd
conten
ts pag
e
The front cover of a business plan typically displays the name, address, and
telephone number of the organization, together w
ith the names of the founders.
The contents page displays page numbers for each section and any num
bering
within sections. It also lists page num
bers for any statistical material and supporting
information included at the end of the plan.
Execu
tive sum
ma
ry
The executive summ
ary is intended to set the scene and convince the audience
that what follow
s is worth reading. It sum
marizes the purpose and goals of the
organization and outlines the operational, financial, and marketing strategy for
achieving those goals. The information provided in the executive sum
mary should
be to the point, concise, and eye-catching. It may be helpful to w
rite the executive
summ
ary after the main body of the business plan has been com
pleted.
Na
me, leg
al form
, an
d loca
tion
This section of the plan sets out the formal nam
e of the organization and spells
out its legal form. The specific legal status of an organization that trains directors
will depend on the country’s legal fram
ework. The organization can be an
association, a private limited partnership, a lim
ited company, or som
e other legal
form of local corporate entity. Typically organizations dedicated to training directors
and improving corporate governance practices are either set up as “not for profit”
or “nonprofit” entities.
TH
INK
ING
P
OIN
TW
hat legal form w
ould be most
appropriate for your organization?
LE
GA
L F
OR
M O
F A
DIR
EC
TO
R
TR
AIN
ING
OR
GA
NIZ
AT
ION
: HO
NG
KO
NG
The H
ong
Ko
ng Institute o
f Directo
rs is set up as a no
n-
pro
fit-distrib
uting and
nonp
olitical o
rganizatio
n and is
registered
as a com
pany lim
ited b
y guarantee. It o
perates
autono
mo
usly and is no
t contro
lled b
y go
vernment o
r
influenced b
y any single b
usiness interest.
E X A M P L E S
Page 35
MO
DU
LE
1
Startin
g17
It is probably wise to consult w
ith a lawyer about the options available and the
registration of the organization. It may also be w
ise to check with the local tax
authority on the tax implications of the legal form
the organization is considering.
In many countries, m
embership bodies are tax exem
pt, but revenue from sources
other than mem
bership is usually subject to tax.
This section of the business plan also provides comm
ents on the location of the
organization’s offices. If the organization plans to use these premises for training
sessions or to provide meeting areas for m
embers and/or nonm
embers, this
section can describe the accessibility of the location, including the available
transportation links.
Whenever possible, locating the organization in the country’s m
ain business center
(or one of the main centers) w
ill enable it to draw on the largest possible potential
mem
bership or director network base and to m
ore easily build its influence with
the comm
unities it serves. Such office space m
ay be quite expensive. If the
government or other supporting groups can be persuaded to endorse the
organization’s mission, they m
ay assist with providing subsidized prem
ises, at
least initially. Alternatively, the organization m
ay want to consider entering into a
space-sharing agreement w
ith an organization that is not using all of its space.
Such an arrangem
ent can be an effective way of sharing costs and increasing the
networks of both organizations.
Vision
statem
ent
A vision statem
ent sets out the desired future state of the organization—in other
words, the organization’s long-range aim
s. Ideally, it should be no more than three
or four lines. Writing a vision statem
ent is no easy task. It may take m
any weeks
of consultation among those setting up the organization and other interested
parties. A typical vision statem
ent includes the formal nam
e of the organization,
the overarching goals it hopes to advance, and its target markets.
Mission
statem
ent
The mission statem
ent articulates the organization’s role and tasks to achieve the
vision. The mission defines the purpose and objectives of the organization—
in
other words, w
hat the organization is comm
itted to doing. Mission statem
ents for
organizations that train directors often highlight the value of good corporate gover-
nance and high standards of director professionalism.
TH
INK
ING
P
OIN
TH
ow does your organization see
itself? What does it w
ant to be?
Page 36
18
SA
MP
LE
VIS
ION
AN
D M
ISS
ION
ST
AT
EM
EN
TS
BR
AZ
ILIAN
INS
TIT
UT
E O
F C
OR
PO
RA
TE
GO
VE
RN
AN
CE
“To b
e the main co
rpo
rate go
vernance reference in Brazil and
to
develo
p and
dissem
inate best co
ncepts and
practices o
f corp
orate
go
vernance thus contrib
uting to
the better p
erform
ance of co
rpo
rations
and to
a mo
re fair, respo
nsible, and
transparent so
ciety.”
HO
NG
KO
NG
INS
TIT
UT
E O
F D
IRE
CT
OR
S
“To b
e Ho
ng K
ong
’s prem
ier bo
dy rep
resenting p
rofessio
nal directo
rs
wo
rking to
gether to
pro
mo
te go
od
corp
orate g
overnance and
to
contrib
ute tow
ards ad
vancing the status o
f Ho
ng K
ong
, bo
th in China
and internatio
nally.”
INS
TIT
UT
E O
F D
IRE
CT
OR
S, N
EW
ZE
ALA
ND
“To prom
ote excellence in corporate governance, to rep
resent directors’
interests, and to
facilitate their pro
fessional d
evelop
ment in sup
po
rt of
the econo
mic w
ell-being
of N
ew Z
ealand.”
IND
EP
EN
DE
NT
DIR
EC
TO
RS
AS
SO
CIA
TIO
N, R
US
SIA
“To enhance the co
rpo
rate perfo
rmance o
f Russian jo
int stock co
mp
a-
nies by p
rom
oting
better B
oard
activities throug
h the imp
lementatio
n
of p
rofessio
nal indep
endent d
irector b
est practices.”
CO
RP
OR
AT
E G
OV
ER
NA
NC
E FO
RU
M, T
UR
KE
Y
“To sup
po
rt imp
rovem
ent of co
rpo
rate go
vernance practices and
legal
and institutio
nal framew
ork in Turkey thro
ugh research and
educatio
nal
pro
gram
s as well as to
be actively invo
lved in ad
vocacy o
f go
od
cor-
po
rate go
vernance.”
E X A M P L E S
Page 37
MO
DU
LE
1
Startin
g19
Ma
rket an
alysis
Describing the scale and potential grow
th of the market in w
hich the organization
will operate is a fundam
ental element of a business plan. The num
ber of people
that might potentially buy and/or benefit from
the service the organization wants
to offer is likely to be a persuasive factor for potential partners or donors. Having
a good understanding of the potential market helps determ
ine exactly what services
to offer, how to price them
, and how to m
arket them.
There are two m
ain ways to conduct a m
arket analysis. One is a S
WO
T analysis,
which exam
ines the strengths, weaknesses, opportunities, and threats in the
potential market. The other is the P
ES
T overview, w
hich examines the political,
economic, social, and technological aspects of the potential m
arket. It is impor-
tantto consider the m
arket trends and the force(s) that would increase or
decrease the demand to join the organization or to seek its services. For exam
ple,
pressure from the private sector for corporate governance reform
or the introduc-
tion of new codes of best practice m
ight encourage directors to seek professional
development. (For m
ore details about PES
T and SW
OT analyses, see annex 3.)
The market analysis should include:
•A
profile of the directors to be trained to better determine their needs and the
services and training materials that w
ould be useful to them
•M
arket size and trends (numbers of directors/dem
and for training)
•O
ther organizations providing training in the field of corporate governance,
including their market share, fees, and other activities offered, operating
methods,and com
position of mem
bership/clients.
The organization’s unique selling points or competitive advantage can be
highlighted in the business plan. These selling points could relate to:
•S
pecific training activities
•O
ther benefits and services the organization plans to offer
•The reputation the organization has or hopes to build
•The target m
arket (individual directors, aspiring directors, independent directors,
bank directors, and so on)
•P
rice
•Location
Information on how
to target the market can be found in M
OD
ULE 3: TR
AIN
ING
and MO
DU
LE 4: EXPAN
DIN
G.
TH
INK
ING
P
OIN
TW
hat mem
bers or nonmem
bersm
ight use your services?
Page 38
20
MA
RK
ET
FO
CU
S: R
US
SIA
The Ind
epend
ent Directo
rs Asso
ciation in the R
ussian Fed
eration
was estab
lished in 2002 after the jo
int stock co
mp
any law req
uired
nonexecutive d
irectors to
sit on the b
oard
of listed
com
panies.
Previously, the Investor P
rotection Association had
been coord
inating
mino
rity sharehold
ers efforts to
put ind
epend
ent nonexecutive
directo
rs on co
rpo
rate bo
ards o
f directo
rs.E X A M P L E S
Ma
rketing
strateg
y
The marketing strategy is outlined in this section of the business plan. B
ased on
the market analysis, it sets forth how
the organization plans to market its
activities, especially its training and professional development courses. If the
organization is to be based on mem
bership, this section also describes the
organization’s plan for recruiting and retaining mem
bers. The strategy can help
assure potential partners, donors, and others that the organization is viable over
the long run.
Areas to be developed in this section of the plan are:
•P
ositioning of the organization
•A
dvertising and promotion cam
paigns
•P
otential for regulatory or market requirem
ents for training
•P
ricing of training courses, and other activities
•E
xpected revenues from activities and training courses, including num
ber of
directors expected to be trained in the first year
•M
embership policy and fees (if applicable)
•E
xpected revenues from m
embership fees, including expected num
ber of
mem
bers to be recruited in the first year (if applicable)
More inform
ation on developing a mem
bership base is provided in
MO
DU
LE 4: EXPAN
DIN
G.
TH
INK
ING
P
OIN
TH
ow w
ill you create growing
demand for training?
Page 39
MO
DU
LE
1
Startin
g21
Activities a
nd
services
This section of the business plan outlines the activities, services, and benefits
the organization proposes to offer. These activities and services are developed
in conjunction with the m
arket analysis to ensure that they meet the stated
needs of a sizable portion of any given director group.
Activities and services that m
ight be offered include:
•P
romoting individual professional developm
ent through education
•Induction training for new
directors
•B
oard evaluation
•S
pecialized training (for mem
bers of audit and risk comm
ittees, for example)
•D
eveloping professional standards of conduct for directors
•R
epresenting and advocating the interests of directors to policymakers,
regulators, and the public at large
•R
esearching, publishing, and formulating policy on governance and other
policy issues of relevance to directors
•O
rganizing forums for discussion and netw
orking
•D
isseminating business inform
ation and advice
•P
roviding premises and m
eeting rooms for m
embers or clients
•A
ccess to a director data base and support in appointing nonexecutive
directors to corporate boards.
•C
ertification of directors if needed or required
Activities and services are discussed in m
ore detail in MO
DU
LE 4: EXPAN
DIN
G.
Org
an
ization
al stru
cture
This section of the plan describes the organizational structure, key managem
ent
positions, and expected staffing needs the organization will have, together w
ith
recruitment objectives and m
ethods, remuneration levels, and perform
ance
requirements. The skills, know
ledge, experience, and responsibilities of the
mem
bers of the governing body and managem
ent team especially need to be
defined. This section also sets out the way decisions w
ill be made and
delineates who reports to w
hom.
Organizational structure and governance are discussed in M
OD
ULE 2:
STR
UC
TUR
ING
.
TH
INK
ING
P
OIN
TW
hat are the first services your
organization will offer its
mem
bers and/or network?
Page 40
22
Opera
tions
This part of the plan describes how the training, professional developm
ent, and
other services will be produced and delivered (including any areas of the busi-
ness that will be contracted to other providers). The operating plan typically con-
tains procedures for closely monitoring prices and operating costs to ensure that
the organization is not losing money. For all services and activities, the plan
describes:
•S
pecific staffing requirements
•Training m
aterials needed
•M
arketing and promotional m
aterials
•Equipm
ent and technological infrastructure
•P
remises required
•R
esearch and development needs
Information on delivering a training program
is provided in MO
DU
LE 3: TRA
ININ
G.
Fina
nce a
nd
bud
get
This important section of the business plan details w
hy the business proposition
is comm
ercially viable and how the organization w
ill become self-sustaining. It
forecasts as realistically as possible the revenues to be generated from such
sources as training course fees, event fees, publications, and mem
bership dues.
It also forecasts the expenditures required to provide the planned services and
activities and operate the organization.
Whether the organization is looking for initial and ongoing funding or beginning
to build its mem
bership base, the business plan is an invaluable tool for com-
municating w
hy the funding is necessary and how it w
ill be used.
The financing of an organization is discussed in more detail in M
OD
ULE 5:
MO
NITO
RIN
G.
A w
ell-thought out vision statement, m
ission statement, and business plan, a
core team of founders, and initial contacts w
ith potential partners will help ensure
the smooth start-up of the organization. U
ntil the organization has established a
reputation for providing excellent services, the business plan is likely to remain
the most im
portant tool to advocate the organization’s potential achievements.
Page 41
MO
DU
LE
1
Startin
g23
DE
AL
ING
WIT
H S
TA
RT
-UP
CH
AL
LE
NG
ES
Most founders of organizations that train directors face a com
mon set of
challenges as they consider how to set up the organization. These challenges
are also addressed in the course of developing the business plan, when
possible. Three comm
on obstacles are lack of qualified trainers and materials,
director complacency, and lack of financial resources.
TH
INK
ING
P
OIN
TW
hat are some of the m
ajor
challenges your organization
might face starting up?
ST
AR
T-U
P C
HA
LL
EN
GE
S
CO
LOM
BIA
The m
ajor o
bstacles facing
the Co
lom
bian C
onfed
eration o
f Cham
bers
of C
om
merce (C
onfecám
aras) were the ab
sence of d
emand
for training
from
indep
endent d
irectors, the lack o
f experts in the co
untry to train
directo
rs, the lack of literature in S
panish ab
out the b
enefits of w
ell-
trained co
rpo
rate directo
rs, and the lack o
f funding
to hire internatio
nal
experts. C
onfecám
aras now
wo
rks with the C
enter for Internatio
nal
Private E
nterprise, the G
lob
al Co
rpo
rate Go
vernance Fo
rum, and
the
Brazilian Institute o
f Co
rpo
rate Go
vernance to tackle these challeng
es.
IND
ON
ES
IA
In the start-up p
hase, the Indo
nesian Institute of C
orp
orate D
irectorship
had d
ifficulties hiring lo
cal qualified
instructors and
finding
adeq
uate
training m
aterials, especially g
oo
d co
untry-specific case stud
ies
supp
orted
by research. N
ow
, the institute is wo
rking w
ith other
countries in the reg
ion to
build
a datab
ase of reg
ional case stud
ies.
ZA
MB
IA
The m
ajor challeng
es confro
nting the Institute o
f Directo
rs in Zam
bia
were larg
ely financial, but the o
rganizatio
n saw tho
se pro
blem
s as
transitory. A
nother m
ajor d
ifficulty was asso
ciated w
ith develo
ping
a
team o
f skilled trainers. T
hese issues were reso
lved w
ith help fro
m
other estab
lished d
irector training
org
anizations and
org
anizations
such as the Co
mm
onw
ealth Asso
ciation o
f Co
rpo
rate Go
vernance.
E X A M P L E S
Page 42
24
ST
AR
T-U
P C
HA
LL
EN
GE
S (C
ON
T.)
UN
ITE
D S
TA
TE
S
A b
ig challeng
e in the develo
pm
ent of the N
ational A
ssociatio
n of
Co
rpo
rate Directo
rs has been the co
mp
lacency of m
any experienced
directo
rs, who
do
not see the value o
f directo
r educatio
n. This chal-
lenge m
ay be o
vercom
e because o
f the many new
regulatio
ns associ-
ated w
ith the Sarb
anes-Oxley A
ct of 2002, w
hich tightened
corp
orate
accounting
, audit, and
financial repo
rting and
disclo
sure standard
s.
The new
law p
rovid
ed the o
pp
ortunity fo
r the associatio
n to o
ffer
wo
rkshop
s and sem
inars to b
ring co
rpo
rate directo
rs up to
speed
on
changes in the reg
ulations. T
he associatio
n, for exam
ple, has b
een
asked b
y NA
SD
AQ
to d
evelop
a financial literacy training p
rog
ram.
E X A M P L E S
Lack of m
ateria
ls an
d q
ua
lified tra
iners
Corporate governance is an increasingly im
portant discipline, yet little practical
guidance has been written from
the perspective of some developing and transi-
tion economies. W
ithout regional or international support, start–up organizations
may find it difficult to find qualified trainers and adequate m
aterials for training
directors in their country. Organizations m
ay need to invest a great deal of time
to train a core group of trainers and to craft a customized curriculum
.A grow
ing
body of materials is nevertheless being m
ade available through international and
regional networks and by existing organizations. D
irector institutes, institutes of
higher education, and corporate governance associations are offering assistance
and advice, particularly in the areas of curriculum and case study developm
ent,
training methodologies, and assessm
ent activities.
More inform
ation on developing training materials and netw
orking opportunities
can be found in MO
DU
LE 3: TRA
ININ
G.
Page 43
MO
DU
LE
1
Startin
g25
Director com
placency
As they start up, m
ost director training organizations need to face the reluctance
of directors to be trained. In order to build demand, organizations need to
continually raise awareness of the significance of good corporate governance
practices for improved com
pany performance, investor confidence, and better
access to capital. The table on pages 25-26 lists arguments provided by directors
for not pursuing professional development. It also suggests several counterar-
guments that m
ight be worked into the business plan, as w
ell as some different
approaches, such as mentoring and coaching, that m
ight prove successful.
CO
UN
TE
RIN
G R
ES
IST
AN
CE
TO
DIR
EC
TO
R T
RA
ININ
G
AR
GU
MEN
TS FO
R N
OT
SEEKIN
G T
RA
ININ
G
LAC
K O
F TIM
E AN
D M
ON
EY
DIR
ECTO
RS A
RE
EXP
ERIEN
CED
ENO
UG
H
IRR
ELEVAN
CE
NO
PER
CEIV
ED P
ERSO
NA
LO
R C
OR
PO
RAT
E REW
AR
DS
FOR
PU
RSU
ING
P
RO
FESSION
AL
DEV
ELOP
MEN
T
DIR
ECTO
RS FR
OM
OT
HER
CO
MPA
NIES A
RE N
OT
D
OIN
G IT
NO
PER
CEIV
ED SU
PP
ORT
FOR
PR
OFESSIO
NA
L D
EVELO
PM
ENT
FRO
M
SENIO
R-LEV
EL BO
AR
D
MEM
BER
S SUC
H A
S TH
EC
HA
IRM
AN
OR
CH
IEF EX
ECU
TIV
E
TH
E BU
SINESS C
ASE
Directo
rs should
regard
pro
fessional d
evelop
ment and
training as an
investment—
not as a net co
st.
Directo
rs need to
keep ab
reast of vast and
com
plex chang
es in co
rpo
rate go
vernance standard
s, practices, and
issues.
Courses and
other activities will b
e well d
esigned and
add
ress the sp
ecific needs of d
irectors.
Training is an o
pp
ortunity fo
r directo
rs to enhance their status.
Directo
rs who
behave p
rofessio
nally can be m
ore effective than d
irec-to
rs who
do
not. B
oard
s could
encourag
e pro
fessional d
evelop
ment b
ym
aking it p
art of a p
erform
ance and rew
ard system
. Org
anizations can
offer d
irector certificatio
n pro
gram
s and o
rganize p
ublic aw
ards.
A hig
her deg
ree of p
rofessio
nalism am
ong
a com
pany’s b
oard
of
directo
rs can give it a co
mp
etitive advantag
e in the marketp
lace.
The d
irector o
rganizatio
n mig
ht need to
convince the chairm
an of the
imp
ortance o
f dem
onstrating
such supp
ort. T
he chairman co
uld set an
examp
le by p
articipating
in training sessio
ns or intro
ducing
his or her
mento
r to o
ther directo
rs.
Continued next page
Page 44
26
CO
UN
TE
RIN
G R
ES
IST
AN
CE
TO
DIR
EC
TO
R T
RA
ININ
G (C
ON
T.)
AR
GU
MEN
TS FO
R N
OT
SEEKIN
G T
RA
ININ
G
LAC
K O
F AWA
REN
ESS OF
TH
E VALU
E OF D
IREC
TOR
DEV
ELOP
MEN
T
AU
TOC
RAT
IC B
OA
RD
C
ULT
UR
E
FEAR
OF T
RA
ININ
G
TH
E BU
SINESS C
ASE
Making
the need fo
r pro
fessional d
evelop
ment a reg
ular item o
n theb
oard
agend
a or m
aking p
rofessio
nal develo
pm
ent part o
f the p
erform
ance and co
mp
ensation system
wo
uld help
.
Increasing the interp
ersonal skills am
ong
the directo
rs wo
uld help
create a m
ore effective style o
f bo
ard lead
ership.
This must b
e handled
with sensitivity so that ind
ividuals d
o not lose face and
are not shown in a negative light in front of their p
eers and
subord
inates. Personal coaching and
mentoring are tw
o solutions.M
aking training mand
atory for all the mem
bers of a b
oard m
ay be
another way to hand
le director’s p
ersonal reluctance to train.
The need for financial resources
The founders must consider how
the organization will obtain financing to start
up and run the organization until the anticipated routine sources of revenue are
in place. The business plan should clearly and comprehensively state the am
ount
of start-up funding that is required and how it is going to be spent. In m
ost cases
organizations aim to becom
e self-sustaining in two to five years.
SOU
RC
ES OF STA
RT-UP
FUN
DIN
G
Potential funding m
ay be provided by partnering organizations such as business
associations or universities, private benefactors, governmental agencies, and
bilateral and multilateral developm
ent agencies supporting corporate governance
reform efforts. S
ome director training organizations have been successfully
established by private benefactors or business associations. Others have
received financial support from international developm
ent agencies for specific
projects. And som
e others have drawn on volunteers and m
embers to becom
e
self-sufficient from the start. In som
e cases a consortium of m
ajor businesses
and professional associations in a country, together with financial institutions
and development agencies, jointly contribute funding to set up or develop an
organization that trains directors.
Page 45
MO
DU
LE
1
Startin
g27
EX
AM
PL
ES
OF
ST
AR
T-U
P F
UN
DIN
G
EG
YP
T
The W
orld
Bank is p
rovid
ing a g
rant to the g
overnm
ent of E
gyp
t to
assist in the creation o
f a directo
r training o
rganizatio
n. The g
rant
will help
establish a no
ngo
vernmental o
rganizatio
n that will w
ork to
strengthen co
rpo
rate go
vernance practices, p
rovid
e research and
technical adviso
ry services to enhance co
mp
liance with law
s and
regulatio
ns, and p
rom
ote aw
areness of the b
enefits of g
oo
d co
rpo
rate
go
vernance. The sp
ecific activities financed b
y the grant are
expected
to:
•P
rovid
e technical assistance to d
evelop
a training curriculum
adap
ted to
the specific co
rpo
rate needs in E
gyp
t, including
the
prep
aration o
f courses and
materials, accred
itation, and
training
for the trainers.
•P
rovid
e technical assistance to p
repare a b
usiness plan fo
r the
org
anization, includ
ing the d
evelop
ment o
f the org
anizational
structure, missio
n statement, financial sustainab
ility, and b
udg
et.
KE
NY
A
The P
rivate Secto
r Co
rpo
rate Go
vernance Trust (now
the Co
rpo
rate
Go
vernance Centre o
f Kenya) w
as created w
hen several peo
ple
interested in sup
po
rting co
rpo
rate go
vernance reform
and training
directo
rs do
nated their tim
e to co
me up
with a viab
le strategy fo
r
establishing
such an org
anization. T
he found
ing m
emb
ers then
app
roached
various fund
ers with their p
lan. The F
ord
Fo
undatio
n and
the United
King
do
m’s D
epartm
ent for Internatio
nal Develo
pm
ent were
the first do
nors to
assist in setting up
the org
anization. T
he Fo
rd
Fo
undatio
n subseq
uently pro
vided
the org
anization w
ith a two
-year
grant fo
r institution b
uilding
. No
w o
ver half of the o
rganizatio
n’s
revenues are generated
from
training services.
E X A M P L E S
Continued next page
Page 46
28
EX
AM
PL
ES
OF
ST
AR
T-U
P F
UN
DIN
G (C
ON
T.)
RU
SS
IA
The Ind
epend
ent Directo
rs Asso
ciation o
f Russia received
substantial
supp
ort fro
m E
rnst and Yo
ung and
has recently been aw
arded
a grant
from
the U.S
. Ag
ency for Internatio
nal Develo
pm
ent to p
rovid
e supp
ort
for a p
rog
ram in co
rpo
rate go
vernance in the follo
wing
areas:
•F
orm
ulating p
rofessio
nal standard
s of g
oo
d p
ractice for no
nexecu-
tive directo
rs of R
ussian Joint S
tock C
om
panies (JS
Cs).
•Im
pro
ving the efficiency o
f the bo
ards o
f directo
rs of R
ussian JSC
s
by p
rom
oting
best p
ractices for ind
epend
ent directo
rs throug
h
practical w
orksho
ps, ro
undtab
le discussio
ns, and surveys o
n
balancing
the bo
ardro
om
(recog
nizing b
oard
diversity and
signifi-
cance of w
om
en on the b
oard
).
•Increasing
pub
lic awareness o
f go
od
corp
orate p
ractices by
dissem
inating p
roject results to
sharehold
ers, go
vernment
regulato
rs, Russian JS
Cs, and
the pub
lic at large.
TH
AILA
ND
AN
D T
HE
PH
ILIPP
INE
S
The A
sia-Euro
pe M
eeting (A
SE
M) and
the Wo
rld B
ank pro
vided
grants
to the Institute o
f Directo
rs of T
hailand and
the Institute of C
orp
orate
Directo
rs of the P
hilipp
ines to co
ver the initial cost o
f develo
ping
a
training p
rog
ram, includ
ing researching
and d
rafting o
f a curriculum,
pub
lishing training
materials, and
the training o
f trainers.
TU
RK
EY
The C
orp
orate G
overnance F
orum
of Turkey w
as set up thro
ugh jo
int
funding
from
the Turkish business asso
ciation T
US
IAD
and the p
rivate
university Sab
anci in Istanbul.
E X A M P L E S
Page 47
29M
OD
UL
E
1S
tarting
Developm
ent a
gen
cies
Organizations that train directors in developing countries have in som
e cases
successfully sought funding from appropriate m
ultilateral or bilateral develop-
ment agencies. They have argued that prom
oting sound corporate governance
practices and training directors is essential to improved corporate perform
ance,
access to capital, and in turn economic grow
th. Supporting director training
organizations in developing countries therefore may w
ell be part of the mission
of a number of international or governm
ental agencies engaged in private sector
development.
Most developm
ent agencies providing grants for private sector development
projects can be researched online. They usually provide templates for funding
requests as well as eligibility criteria on their w
ebsites. Most funding agencies
also have regional offices in major developing countries. (A
list of selected
funding organizations can be found in annex 4. A description of a grant
program can be found in annex 5.)
To receive funding, the organization or its founding comm
ittee is likely to have to
demonstrate that the project w
ould not take place or achieve the same level of
success without the requested funds. K
ey elements required w
hen applying for
funding include:
•A
description of the project, its objectives, goals, and rationale, including
benefits and risks
•A
description of the organization’s structure and project leaders as well as
their relevant experience to the project
•M
arketing and promotional m
aterials
•A
work plan indicating w
ho will do w
hat and by when and how
goals will be
achieved
•P
remises required
•A
detailed budget, listing cofunding and requested funding as well as a
strategy for making the project self-sustainable
•R
eferences
Key to w
inning donor funding is to present a project with specific objectives,
goals, activities to achieve these goals, and indicators to measure the perform
-
ance of the project. Furthermore the project proposal w
ill need to outline how
the project ties in with the strategic direction of the organization as w
ell as the
mission of the donor agency.
Page 48
30
The donor is likely to monitor how
its funds are being used as well as how
the
project is progressing. It may require the organization to keep specific records and
make periodic reports on the use of the funding. It is also likely that the donor w
ill
require an audit before the project is complete and the last paym
ent has been made.
Developm
ent agencies often do not supply full funding for projects. The organiza-
tion will m
ost likely need to secure cofunding in cash or in-kind. Furthermore,
development agencies are generally not a source of continuing financial support.
It is therefore necessary to plan for other sources of income before donor funding
has ended. Donor funding is typically m
ade on a one-to-three year basis.
EX
AM
PL
E O
F A
PR
OJE
CT
RA
TIO
NA
LE
OB
JECT
IVE
Imp
rove co
rpo
rate go
vernance practices at the b
oard
level to im
pro
ve risk
manag
ement and
perfo
rmance
GO
ALS
Develo
p a d
irector training
pro
gram
AC
TIV
ITIES
Develo
p a training
curriculum, train trainers, research and
pub
lish training
materials
IND
ICATO
RS
•O
rganize a first training
course b
y a specific d
ate
•Train a sp
ecified num
ber o
f directo
rs by ano
ther specific d
ate
•A
sk particip
ants to evaluate the co
urse
Page 49
31M
OD
UL
E
1S
tarting
Grant m
oney is generally disbursed according to an agreed schedule and may
be disbursed in one of three ways:
•Installm
ents at fixed periods.
•P
ayment only after proof of actual expenditure.
•A
partial payment at the outset, and then phased disbursem
ent upon delivery
of the expected outputs or when specific requirem
ents have been met. (For
example, a paym
ent might be conditional on the project em
ploying a certain
number of people or providing the final draft of a report).
Short-term loans
Because grants from
development agencies m
ay not be disbursed in full at the
beginning of a project or incoming revenues from
activities may be delayed, the
organization may need to apply for a short-term
loan from its bank. B
anks will
often require proof or guaranty of the expected income to deliver a bridge loan in
anticipation of the intermediate-term
or long-term financing.
In-kind support
In addition to seeking necessary funding, start-up organizations should also seek
in-kind support. Interested parties may be w
illing to lend office space and staff
mem
bers or provide free legal or financial expertise. For example, the
Com
monw
ealth Association of C
orporate Governance lent personnel to the
Institute of Directors, Zam
bia in the planning stages.
Page 50
32
FU
RT
HE
R R
EA
DIN
G
Blackw
ell, Edw
ard. 1998. How
to Prepare a B
usiness Plan. London:
Kogan P
age.
Bryson, John M
., and Farnum K
. Alston. 1999. C
reating and
Implem
enting a Strategic P
lan: A W
orkbook for Public and N
onprofit
Organizations. S
an Francisco: Jossey-Bass.
Center for International P
rivate Enterprise. 2003. In S
earch of Good
Directors: A
Guide to B
uilding Corporate G
overnance in the 21st
Century. 3rd ed. W
ashington, D.C
.
Dussauge, P
ierre, and Bernard G
arrette. 1999. Cooperative S
trategy:
Com
peting Successfully through S
trategic Alliances. H
oboken, N.J.:
John Wiley &
Sons.
Hallqvist, B
engt. Private Institute for C
orporate Governance – The
Brazilian Experience. S
an Paolo: B
less Grafica e E
ditora LTDA
.
Hussey, D
avid, and Robert P
errin. 2003. How
to Manage a Voluntary
Organization. London: K
ogan Page.
Morris, M
. J. 2001. Starting a S
uccessful Business. London: K
ogan
Page.
Stutely, R
ichard. The Definitive B
usiness Plan: The Fast-Track to
Intelligent Business P
lanning for Executives and Entrepreneurs.
London: Financial Times.
Page 51
MO
DU
LE
1
Startin
g33A N N E X E S
AN
NE
XE
S
1. Org
anizations that p
rom
ote d
irector training
2. Sam
ple b
usiness plan
3. PE
ST
and S
WO
T analyses
4. So
urces of start-up
funding
5. A d
ono
r grant p
rog
ram
Page 52
A N N E X 1 34A
NN
EX
1.
OR
GA
NIZ
AT
ION
S T
HA
T P
RO
MO
TE
DIR
EC
TO
RT
RA
ININ
G
CO
UN
TRY
Argentina
Australia
Brazil
Canada
Caribbean
Colom
bia
Czech Republic
Fiji
Ghana
Hong K
ong
India
Indonesia
NA
ME
Institute of Corporate
Governance
Australian Institute of
Corporate D
irectors
Brazilian Institute of
Corporate G
overnance
Institute of Corporate
Directors
The Caribbean Institute of
Directors
Confecám
aras
Czech Institute of D
irectors
Institute of Directors
Institute of Directors
The Hong K
ong Institute ofD
irectors
Indian Institute ofM
anagement B
angalore
Indonesian Institute forC
orporate Directorship
CO
NTA
CT
Marcos B
ertin
John Hall
Paulo V
illares
Bernard R
. Wilson,
LLD
Bob K
nowlessar
Paola G
utierrez
Monika Zahalkova
Joe Singh
Frank Ocran
Carlye Tsui
N. B
alasubramanian
Anugerah P
ekerti
AD
DR
ESS
Gaspar C
ampos 1372, B
1638A
RZ
Vte Lopej, B
uenos Aires
Level 25, Tower B
dg Australian
Square 264-278
George S
t,S
ydney, NS
W 2000
Av. N
aceos Unidas, 12.551-190
anda-Cjto.1912, 04578-000
Sao P
aulo
277 Wellington S
treet West,
Toronto ON
T, M5V
3H2
---
Carrera 13 N
o.27-47 Floor 5th - 47 P
iso 5B
ogota
PO
Box 171, P
raha 6, Kafkova 19,
PS
C 16041
GP
O B
ox 13730, Suva
Box 20372, G
PO
Accra
505 Bank of A
merica Tow
er12 H
arcourt Rd,
Hong K
ong
Bannerghatta R
oad, Bangalore –
560 076
Puloasem
Raya JL, Jakarta,
EX
AM
PL
ES
OF
OR
GA
NIZ
AT
ION
S T
HA
T P
RO
MO
TE
D
IRE
CT
OR
TR
AIN
ING
Page 53
A N N E X 1
35M
OD
UL
E
1S
tarting
TELEP
HO
NE/FA
X
T: +54 (11) 4718 1020
F: +54 (11) 4718 1020
T: +61 (2) 8248 6600
F: +61 (2) 8248 6696 or 8248 6633
T: +55 (11) 3043 8191 or 3043 7008
F: +55 (11) 3043 8186 or 3043 7005
T: +1 (416) 815-5092
F: +1 (416) 204-3414
---
T: +57 (1) 346 7055
F: +57 (1) 346 7026
T: +420 (02) 2098 2508
F: +420 (02) 2098 2527
---
---
T: +852 2867 1185
F: +852 2537 9093
T: +91 (080) 658 24 50
F: +91 (080) 658 40 50
T: +62 (21) 489 7489
F: +62 (21) 546 1040
EMA
IL
[email protected]
Jhall@com
panydirectors.com.au
Paulodv@
terra.com.br
bernie.wilson@
ca.pwcglobal.com
---
Pgutierrez@
confecamaras.org.co
Monika.zahalkova@
ciod.cz
[email protected]
.fj
[email protected]
[email protected]
laba@iim
b.ernet.in
Angur@
attglobal.net
WEB
SITE
Shared site (for now
)w
ww
.latincorporategovernance.net
ww
w.com
panydirectors.com.au
ww
w.ibgc.org.br
ww
w.icd.ca
ww
w.carribeandirectors.com
ww
w. C
onfecamaras.org
http://ww
w.ciod.cz/project/
---
---
ww
w.hkiod.com
---
---
Page 54
A N N E X 1 36
CO
UN
TRY
Ireland
Jamaica
Kenya
Malaysia
Mexico
New
Zealand
Nigeria
Papua New
G
uinea
Peru
The Philippines
Poland
Russia
NA
ME
Institute of Directors
Private S
ector Organisation
Centre for C
orporate G
overnance (form
erly Private S
ectorC
orporate Governance Trust)
Institute for Corporate
Governance
Instituto Mexicano de
Gobernabilidad C
orporativa
Institute of Directors
Institute of Directors
Institute of Com
panyD
irectors
Associacion de D
irectoresC
orporativo
Institute of Corporate
Directors
Polish Institute of D
irectors
Russian Institute of D
irectors
CO
NTA
CT
Susan Thornber
Greta B
ogues
Karugor G
atamah
Lee Leok Soon
Sam
Podolsky
David N
ewm
an
Akin Iroko
Ray C
lark
Andres N
obl
Jesus Estanislao
Krzystof Lis
Igor Belikov
AD
DR
ESS
89 James's S
treetD
ublin 8
39 Hope R
oad, Kingston 10, W
1
PO
Box 13936, 00800
Westlands, N
airobi, Kenya
27A Jalan M
ohd Fuad 3, Tarman
Tun Dr. Ism
ail, 60000, Kuala
Lumpur
Avenida de las P
almas Lom
a deC
hapultapec, DF11000
PO
Box 8017, W
ellington
PO
Box 51037, Falom
o, Ikoyi –Lagos
Box 660, P
ort Moresby
Anteguera 866 S
an Isudro, Lim
a 27
24th Flr., Yuchengco Tower,
RC
BC
Plaza, 6819 A
yala Ave.,
Makati C
ity
36, Krucza S
tr., 00-921, Warsaw
Kitaigorodski proezd, 7 103074,
Moscow
, Russia
EX
AM
PL
ES
OF
OR
GA
NIZ
AT
ION
S T
HA
T T
RA
IN D
IRE
CT
OR
S (C
ON
T.)
EX
AM
PL
ES
OF
OR
GA
NIZ
AT
ION
S T
HA
T P
RO
MO
TE
D
IRE
CT
OR
TR
AIN
ING
(CO
NT
.)
Page 55
A N N E X 1
37M
OD
UL
E
1S
tarting
TELEP
HO
NE/FA
X
T: +353 (01) 408 4548
F: +353 (01) 408 4550
T: +1 (876) 927 6957
F: +1 (876) 927 5137
T: +254 (20) 444 0003
F: +254 (20) 444 0427
T: +60 (3) 2282 9276
F: +60 (3) 2282 9281
T: +52 (55) 5202 1104
F: +52 (55) 5202 4104
T: +64 (4) 4990076
F: +64 (4) 4999488
T: +234 (1) 774 0920
T: +675 322 1000
T: +51 (1) 421 2112
F: +51 (1) 440 4290
T: 63 2812 2331F: 63 2812 2221
T: +48 (22) 782 7878
F: +48 (22) 782 7391
T: +7 (095) 220 4535
F: +7 (095) 220 4545
EMA
IL
[email protected]
Ceopsoj@
cwjam
aica.com
Pscgt@
insightkenya.com
Chan@
maicsa.org.m
ym
[email protected]
y
Sam
[email protected]
david.newm
[email protected]
[email protected]
info@ibbm
.com.ng
Asdic@
terra.com.pe
Andyno@
terra.com.pe
[email protected]
[email protected]
Belikov@
rid.ru
WEB
SITE
ww
w.iodireland.ie
http://ww
w.psoj.org/
ww
w.corporategovernance.co.ke
ww
w.m
icg.net
Shared site (for now
)w
ww
.latincorporategovernance.net
ww
w.iod.org.nz
ww
w.iodnig.com
---
Shared site (for now
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ww
.latincorporategovernance.net
ww
w.icd.org
---
ww
w.rid.ru/
Page 56
A N N E X 1 38
CO
UN
TRY
Russia
Singapore
South Africa
Thailand
Turkey
United K
ingdom
United States
Venezuela
Zam
bia
Zim
babwe
NA
ME
Independent Directors
Association
Singapore Institute of
Directors
Institute of Directors in
Southern A
frica
Thai Institute of Directors
Corporate G
overnance Forum
Institute of Directors
National A
ssociation ofC
orporate Directors
Executives A
ssociation ofVenezuela
Institute of Directors
Institute of Directors
CO
NTA
CT
Alexander Filatov
John Lim
Richard W
ilkinson
Charnchai
Charuvastra
Melsa A
rarat
Kerrie W
aring
Roger R
aber
Sonia de P
aola
Patrick C
hisanga
Peter B
roadway
AD
DR
ESS
20/12 Podsosenski per
Moscow
, Russia
2 Finlayson Green #07-01/02
Asia Insurance B
ldg Singapore
049247
2nd Floor, 15 W
ellington Rd.
Parktow
n 2193 – Johannesburg
5th Floor, The Stock Exchange of
Thailand, Bldg 62, R
achadapisekR
oad, Klongtoey,B
angkok 10110
Graduate S
chool ofM
anagement, O
rhanli 81474Tuzla, Istanbul, Turkey
116 Pall M
all,London, S
W1Y
5ED
1828 L Street, N
W, S
uite 801W
ashington, D.C
. 20036
Edufico Venezuela, P
iso 3,O
fficina 33, El R
osal, Caraces
P.O. B
ox 50576, Lusaka
Box 2629, H
arare
EX
AM
PL
ES
OF
OR
GA
NIZ
AT
ION
S T
HA
T T
RA
IN D
IRE
CT
OR
S (C
ON
T.)
EX
AM
PL
ES
OF
OR
GA
NIZ
AT
ION
S T
HA
T P
RO
MO
TE
D
IRE
CT
OR
TR
AIN
ING
(CO
NT
.)
Page 57
A N N E X 1
39
TELEP
HO
NE/FA
X
T: +7 (095) 938 6651
F: +7 (095) 705 9293
T: +65 6227 2838
F: +65 6227 9186
T: +27 (11) 643 8086
F: +27 (11) 484 1416
T: +66 (2) 229 2170
F: +66 (2) 654 5484
T: +90 (0216) 483 9000
F: +90 (0216) 483 9699
T: +44 (207) 766 8928
F: +44 (207) 766 8987
T: +1 (202) 775 0509
F: +1 (202) 775 4857
T: +58 (212) 952 8717
T: +260 (1) 293 611
F: +260 (1) 290 864
T: +263 (4) 701 250
or 701 764
EMA
IL
[email protected]
Secretariat@
sid.org.sg
[email protected]
[email protected]
Melsaararat@
sabanciuniv.edu
Kerrie.w
[email protected]
Rw
[email protected]
Sdpaola_ave@
cantv.net
chisanga@zam
net.zm
admin@
iodz.co.zw
WEB
SITE
ww
w.nand.ru
ww
w.corp-gov.ru
ww
w.sid.org.sg
ww
w.iodsa.co.za
ww
w.thai-iod.com
/en/index.asp
---
ww
w.iod.com
ww
w.nacdonline.org
Shared site (for now
)w
ww
.latincorporategovernance.net
---
http://site.mw
eb.co.zw/iod/
also: ww
w.iod.com
/zim
MO
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Executive S
umm
ary
The Institute is a professional organizationm
ade up mainly of individual corporate directors
and reputational agents comm
itted to the professional practice of corporate directorship . . .in line w
ith global principles of modern corporate
governance.
The Institute is for corporate directors with
professional needs and requirements directly
related to their serving in the board of directors ofcorporations and other institutions vested w
ithpublic interest.
It is directed and governed by corporate directorsacting in their individual capacity and serving tokeep the institute open, autonom
ous and independent of specific political, business andother interests.
The Institute is primarily an institute of, for and by
corporate directors. Its focus is on serving the professional needs of its A
ssociates. It alsohelps prom
ote corporate governance reforms.
The Institute caters mainly to the professional
requirements of its A
ssociates as they start their practice as corporate directors and as they grow
,m
ature and become m
ore fully experienced in theirservice to corporate boards. It sets standards forthe professional practice of corporate directorship.It certifies those w
ho have qualified as Fellows of
the Institute. It arranges for and requires continuingeducation. It stages regular, institutional eventsthat address the changing and dynam
ic needs ofcorporate directors.
It provides orientation and training in all aspects ofthe practice of corporate directorship. Its trainingprogram
includes the knowledge, skills and values
demanded by m
odern corporate governance. Itextends to corporate ethics, an appropriate corporate culture and strategic issues highlightedby responsible citizenship.
The Institute may also assist, if called upon, in the
formulation and im
plementation of corporate
governance improvem
ent programs in specific
boards where its A
ssociates serve.
It subscribes to quality in all aspects of its serviceto its A
ssociates. As an independent and
autonomous institute, it is open to w
orking with
others in the pursuit of systemic corporate
governance reforms . . . .
I. Visio
n
To professionalize the practice of directorship . . . .The uderlying prem
ise is that professional directors m
aximize the leadership contribution of
boards to corporations, thereby positioning thecom
pany for better performance. A
s companies
do well, w
ealth is created, the national economic
and social well being is ensured, and eventually
poverty is alleviated.
All of these shall be undertaken w
ith the higheststandards of ethics and corporate governance asw
ell as with utm
ost integrity and social responsibility.
AN
NE
X 2
. SA
MP
LE
BU
SIN
ES
S P
LA
N
The following is extracted from
a business plan drawn up by a young director organization.
Page 59
A N N E X 2
41
II. Ob
jective
The key objective is to establish and efficientlyoperate a professional organization for directors . . . .
III. Key R
oles
To be able to achieve the objective, the following
are the key roles that the Institute must fulfill:
a.To represent . . . director interests both dom
esticallyand internationally;
b.To conduct research and advocate policies ondirector related issues;
c.To prom
ote excellence in director performance
through quality education and professional developm
ent programs for . . . directors;
d.To provide relevant and up-to-date inform
ation ondirector-related issues;
e.To attract quality associates and m
aintaining theirloyalty and sustaining their enthusiasm
;
f.To encourage codes of conduct and ethics;
g.To forge strategic alliances w
ith key organizations;
h.To collaborate w
ith key reputational agents thathave a role to play in m
odernizing corporate governance practices in the country.
IV. Co
re Activities
The following are [the Institute’s] m
ain activities:
Associates P
rogram
The Institute invites to enroll as Associates all
the Directors and B
oard[s] of Directors [that
have] taken the Orientation S
eminar on C
orporate
Governance. The invitation is open also to high
ranking corporate officers with a com
mitm
ent toim
proved corporate governance practices. In addition, others w
ho belong to important
professional groups with a key role to play in
improving corporate governance—
such as businessreporters, auditors, financial analysts, etc.—
may
also become A
ssociates . . . .
Training Program
[The Institute] offers an Orientation S
eminar on
Corporate G
overnance to corporate directors. Itoffers the sam
e seminar to other professionals w
hoserve as key reputational agents for corporate governance.
Specialized courses on A
udit Com
mittees, R
iskM
anagement C
omm
ittees, Governance
Com
mittees, and Financial Issues (Financial
Num
eracy) for Directors are also on offer. In
addition to these the Core C
ourse on Corporate
Directorship is being developed and w
ill be offeredin the second quarter of 2004. . . .
Certification P
rogram
The Institute has initiated a certification program in
corporate governance. . . .
The Institute’s certification program is open m
ainlyto corporate directors. It is open as w
ell to otherprofessionals belonging to groups that play a keyrole as reputational agents for m
odern corporategovernance.
The groups include, among others, journalists, audi-
tors, financial analysts, corporate lawyers, corporate
secretaries, and judges in specialized courts.
The main aim
of the program is to professionalize
the practice of corporate directorship.
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The program includes the follow
ing main
components:
a.A
n Orientation S
eminar, w
hich provides a generalintroduction and initial exposure to the field of professional directorship and m
odern corporategovernance.
b.A
Core C
ourse, a 3-module course that focuses on
the role of the board and the key issues they face.E
ach module lasts a day and a half.
c.P
re-qualification for Fellowship, w
hich includes subm
ission of a successful initiative in corporategovernance im
provement.
d.A
positive result of an interview to determ
ine com
mitm
ent to professional ethics and continuingeducation.
Those who attend any of the orientation or special
courses will be invited to be an Institute A
ssociate.For those w
ho succeed in completing the
requirments of all four com
ponents of the programare given Institute certification as P
rofessionalD
irectors and invited to become Institute Fellow
s. . . .
Advocacy for P
olicy Reform
In close cooperation with other reform
-orientedgroups, and w
ith government agencies as w
ellas w
ith business and other civil society organizations,the Institute contributes to the form
ulation and pursuit of a C
orporate Governance
Reform
Agenda. . . .
Research, C
onsultancy and InternationalN
etworking
Together with its partner institutes, the Institute is
active in promoting research and developing training
materials for corporate directors and other
professionals comm
itted to the practice of modern
corporate governance. The Institute organizes
Directors’ Forum
s, Roundtables, and R
egionalV
ideoconferences and Annual C
onferences to keepits A
ssociates and Fellows up-to-date w
ith regionaland global trends and best practices of corporate governance.
Together with its partners, the Institute extends
assistance to banks and other corporations with a
corporate governance improvem
ent program.
V. Business S
trategy
Positioning S
tatement
The Institute positions itself as the pre-eminent
professional organization of Corporate D
irectors inthe country.
Its core business is to attract associates, keepthem
, and serve them and specifically their
professional needs as corporate directors as bestas possible. It likew
ise helps promote corporate
governance reform. . . .
It is an organization with an independent
governance structure and is working tow
ards beingthe opinion leader on director issues and governance trends.
Key S
ervice Attributes
The Institute’s Associates services shall be
delivered in the most professional m
anner observinghighest standards of quality.
Its training programs as w
ell as its reform and
advocacy efforts shall demonstrate intellectual
credibility and independence. The content of suchefforts m
ust be very relevant and as much as
possible, leading edge. How
ever, there should alsobe a conscious effort to “contextualize” the issuesto m
ake it more applicable locally, thereby
making it realistic for those concerned.
Page 61
A N N E X 2
43
Intellectual Leadership in Directorship and C
orporateG
overnance Issues
Central [to the] strategy is for the Institute to
establish itself as the intellectual leader in directorshipand m
odern corporate governance issues. A
s such, it shall have a strong and globally benchm
arked research and development capability.
Com
plementing this w
ould be a solid, well
trained and highly competent set of facilitators
who are fully com
mitted to the Institute and its
training programs. These facilitators should not
only be technically competent and experienced.
They also have to be highly motivated and trained.
They are expected to be familiar w
ith basic concepts of adult education and shall be able toeffectively handle and facilitate training sessions.
a. Research and C
ase Developm
ent
The Institute is working tow
ards building its own
research capability that will prim
arily develop various curricula, training program
s, case studies,codes of conduct for directors, technical papers,publications, and other teaching m
aterials andrelated policy briefs. . . .
b. Faculty Developm
ent
[The] faculty pool shall be a mix of those from
the academe and actual practicing directors w
hoare experts in their respective fields. A
lthoughdom
inated by the latter, the pool will be of a
caliber that will m
aintain high-quality training. To further com
plement in house faculty
development and to keep abreast of the latest
international developments in directorship skills
and corporate governance, the Institute will
continue to coordinate and forge agreements w
ithm
ultilateral agencies such as the World B
ank,A
usAID
, and US
AID
.
The objective is to get grants/funding for bothlocal and international Faculty Training andD
evelopment P
rograms.
The Institute is working tow
ards having 40 individualsattend a “training the trainers” program
in early 2004. . .
Information S
ystem
For efficiency and effectiveness, the Institute will
require a state of the art information technology
infrastructure that would allow
it to manage not
only its internal and external systems according to
best standards.
The IT system should be able to address . . .
administrative and financial requirem
ents (i.e., payroll,associates database, etc) but also its training andadvocacy needs (i.e., virtual resource center, w
ebsite, etc).
VI. M
arketing S
trategy
The primary strategy w
ill be to market the . . .
Associates program
. . . and the trainingcourses to different sectors (banking, publiclylisted, fam
ily corporations) focusing on the Top 30to 40 com
mercial and industrial groups.
These marketing efforts w
ould be enhanced by theconduct of roundtable discussions and thepublication of com
mittee reports on 4-6 issues that
are of major interest to directors.
CG
Orientation C
ourses
The Corporate G
overnance Orientation P
rograms
would aggressively be m
arketed to publicly listedcorporations, insurance com
panies, pre-needcom
panies and other non-bank companies w
hosenature of business is im
bued with public trust. . . .
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A N N E X 2 44
Every orientation session w
ould end with a C
Gself-assessm
ent exercise. [This will] serve as a
basis for determining the client’s baseline C
Gpractices and m
onitor its progress. . . .
Specialized C
ourses
The specialized courses are initially targeted as a w
ay of making follow
-ups to those that had their C
G O
rientation last year. These special courses w
ould then be opened to the bigcom
mercial-industrial groups soon after their
directors take the Orientation S
eminar. . . .
To enhance and support these specialized courses, [the Institute], in cooperation w
ith [itspartner], w
ill organize videoconferences around 4topics of A
udit Com
mittees, R
isk Managem
entC
omm
ittees, Governance C
omm
ittees, andFinancial Issues. S
peakers from the N
ationalA
ssociation of Com
pany Directors (N
AC
D) as w
ellas other experts in the above fields w
ould beinvited to participate in the videoconferences.
Boosting the N
umber of A
ssociates
For 2003, focus would be on the local [com
panies].The Institute P
resident and Executive D
irectorw
ill make personal calls on the principals of each
of the [companies] to invite them
to enroll theirentire boards as A
ssociates of the Institute.
In addition to the personal calls, invitations arebeing sent to individuals and corporations w
hohave participated in Institute sem
inars, roundtables, w
orking sessions and open conferences. This is being com
plemented by the
invitations made by friends and pioneering
associates of the Institute.
The target number of A
ssociates for the nextthree years is as show
n.
All m
embers are to be encouraged and pressed to
take some of the specialized 1-day courses,
the more com
prehensive and higher–levelC
orporate Directors P
rogram, as w
ell as other organized activities.
Roundtables
Experience thus far suggests that roundtables
have been a very effective way to generate interest
for the Associates program
and training courses.
The personal, friendly exposure provided to relatively sm
all groups of corporate directors com
ing together to listen and respond to presentations of recognized experts on variousdirectorship and governance issues, have provedto be a very effective w
ay to market Institute services.
In this regard, the Institute will seek the assistance
of the Global C
orporate Governance Forum
andW
orld Bank Institute for the production of a set of
short videos from top experts in various aspects of
corporate governance, and when possible, to bring
in experts . . . .
YE
AR
123
NE
W
200
200
400
CU
MU
LA
TIV
E
200
400
800
Page 63
A N N E X 2
45
Marketing P
rogram
The marketing program
will be integrated as it w
illinclude direct m
ail campaign, a speakers bureau
where the P
resident, Executive D
irector and selectA
ssociates will talk before various groups about
the Institute and its programs. B
rochures, flyers,m
ailers, marketing presentations w
ill be utilized. The quality of these m
arketing materials w
ill beexcellent. P
rofessional design, artwork and
copywriting w
ill be used.
a. Institutional and Marketing P
ublicity
The Institute has already launched institutional publicrelations and a m
arketing publicity campaign. . . .
b. Website
The Institute will need to develop and m
aintain astate of the art, easily accessible and user-friendlyinter-active w
ebsite. Its content will alw
ays be relevant and w
ill be constantly updated.
The website w
ill be designed to serve as a major
marketing tool for the Institute’s P
roducts andS
ervices. It shall be capable of supporting theInstitute’s training program
s and a distance learning or a correspondence training program
.
The website w
ill always contain the latest inform
ationabout the Institutes and its services. It w
ill serve asthe m
edium by w
hich associates can be informed
about on-going activities, offerings and otherinfom
ation.
The website shall likew
ise serve as the gateway to
the virtual resource center where relevant
information on directorship, corporate governance,
and other relevant information w
ould be posted.
VII. P
ublicatio
ns
Com
mittee R
eports
A W
orking Com
mittee is tasked to develop the
materials for a specific subject and w
ould beinvolved in the actual delivery of it during a specialcourse. It w
ill be composed of four to five individuals
wherein 2 or 3 w
ill come from
the Institute, onefrom
a partner institution, and one from a regulator. . . .
After w
hich, a Com
mittee, m
ade up of select, highprofile individuals w
ith special interest in selectedtopics, w
ill be asked to pass upon the content andm
aterials developed by the Working C
omm
ittee.They are expected to suggest any im
provements,
based on their experience and perspective.
The materials w
ould be continuously improved
through additional course offerings and/or regularroundtables w
here the materials are to be tested
and validated. . . .
For 2003, the special topics are:
1. Audit C
omm
ittee2. R
isk Managem
ent Com
mittee
3. Governance C
omm
ittee4. Financial Issues and N
umeracy for D
irectors5. G
overnance Issues for Family O
wned C
orporations6. C
ompensation for D
irectors
Other P
ublications
The Institute will likew
ise issue other publicationssuch as Institute P
apers, newsletters, brochures,
and leaflets. Som
e of these may be m
ade availableto the general public how
ever; most of them
shallbe developed prim
arily for Institute Associates &
Fellows and key business and regulatory groups. . . .
MO
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A N N E X 2 46
VII. H
uman R
esources
a.Managem
ent
President and C
EO
Adviser for A
cademic and P
olicy Affairs
Adviser for A
dministrative/Finance
Advisers for M
arketing and Institutional Relationships
1. Three prominent business individuals w
ill behelping the Institute build and nurture relationshipsw
ith its different client groups. . . .
Together with the P
resident and Executive D
irector,they are expected to help m
anage the Institute’srelationship w
ith key business leaders and organizations. A
full-time m
arketing officer will
assist them.
Executive Director . . .
Special Events and C
omm
unications Consultant . . .
b. Support S
taff
To minim
ize overhead expenses without having to
sacrifice on efficiency, the Institute will m
aintain alean, but w
ell trained, skilled staff. The staff will be
a multi-functioning one.
This group is headed by the Adm
in and TreasuryO
fficer and shall be composed of the follow
ing:
2. IT/MIS
Assistant
3. Accountant
4. Adm
inistrative Assistant
5. Office M
essenger6. D
river
Whenever additional staff services are needed,
part time staff shall be hired for the duration of the
need (less than 6 months).
c.C
ompensation and B
enefits
All em
ployees shall enjoy the basic benefitsand privileges as provided for by law
.
Advisers are com
pensated through token amounts
given to them as honoraria.
The Board of D
irectors shall determine com
pensationand benefits for the P
resident/CE
O, the E
xecutiveD
irector and other senior managem
ent positions.
IX. P
rojected
Revenue S
tructure
In the past, funding was m
ainly from the founder's
contribution (time, expertise, nam
e, and money),
volunteer contributions and comm
itments from
associates, as well as from
grants, and in 2002from
training services.
As an A
ssociates-based institute, the Institute shallgradually m
ove towards getting annual fees from
its associates. After 3 years, m
embership fees are
envisioned to cover some 40%
of the operating budget. . . .
Training would continue to be an im
portant sourceof support. O
ver time, training revenue shall
cover some 40%
of the Institute’s operating budget.
The special events being staged were either “break-
even” or have become sources of grants and special
contributions from donors and supporting institutions
and foundations. They are expected to continue toyield som
e income stream
s. But over tim
e, the netcontribution from
events to cover the operating budgetw
ould eventually come dow
n to 10%.
The special services such as tutorials and consultan-cies, are expected to, over tim
e, contribute to cover atleast 10%
of operating expenses. . . .
[The plan then spells out specific targets, including
increasing the number of associates and expanding
the reach of its training programs.]
Page 65
A N N E X 3
47
A P
ES
T analysis is a tool for analyzing the market that
focuses on four broad factors:
•P
olitical factors (P), including form
al laws and
regulations such as company law
, securities regula-
tions, and listing rules, and informal factors such as
political demand for corporate accountability.
•E
conomic factors (E
) that affect the purchasing
power of the potential beneficiaries and/or m
embers
and cost of providing training programs and other
activities. These factors include such issues as eco-
nomic grow
th and inflation and interest rates.
•S
ocial factors (S) affecting the num
ber and needs of
the potential beneficiaries and/or mem
bers, such as
changing attitudes about the importance of good
corporate governance and the need for professional
development of directors.
•Technological factors (T), such as the inform
ation
technologies enabling training through distance
learning programs.
The broadly based PE
ST analysis can then be
combined w
ith more specific inform
ation about theinternal strengths and w
eaknesses and the opportunitiesand threats in the m
arketplace. This analysis is called aS
WO
T analysis.
•S
trengths (S) are the resources and capabilities that
can give a competitive advantage, including
reputation, expertise, knowledge, and influence in
the world of corporate governance.
•W
eaknesses (W) are defined as the absence of
specific strengths, such as lack of funding or lack of
qualified trainers.
•O
pportunities (O)are potentially new
areas for
growth, such as a new
regulation affecting corporate
financial reporting or a growing dem
and for skilled
nonexecutive directors.
•Threats (T) are outside changes that could negatively
affect growth, such as director com
placency about
professional development.
AN
NE
X 3
.P
ES
T A
ND
SW
OT
AN
ALY
SE
S
MO
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WE
BS
ITE
ww
w.afd
.fr
ww
w.acb
f-pact.org
ww
w.ad
b.org
ww
w.ausaid
.gov.au
ww
w.acd
i-cida.gc.ca
ww
w.cip
e.org
ww
w.thecom
monw
ealth.org
ww
w.sd
c.adm
in.ch
ww
w.d
fid.gov.uk
ww
w.eb
rd.org
ww
w.europ
a.eu.int/comm
/index_en.htm
ww
w.Firstinitiative.org
ww
w.ford
found.org
ww
w.gcgf.org
ww
w.gtz.d
e/english
ww
w.iad
b.org
ww
w.ifc.org
ww
w.isd
b.org
ww
w.lux-d
evelopm
ent.lu
ww
w.nd
a.org.za
ww
w.sid
a.se
ww
w.snvw
orld.org
ww
w.usaid
.gov
ww
w.w
orldb
ank.org
ww
w.id
ealist.org
OR
GA
NIZ
AT
ION
AFD
(France)
Africa C
apacity B
uilding Found
ation
Asian D
evelopm
ent Bank
AusA
ID (A
ustralia)
CID
A (C
anada)
CIP
E
Com
monw
ealth Secretariat
DE
ZA
/SD
C (S
witzerland
)
DFID
(UK
)
EB
RD
(Europ
ean Bank for
Reconstruction and
Develop
ment)
Europ
ean Com
mission
FIRS
T Initiative
Ford Found
ation
Glob
al Corp
orate Governance Forum
GTZ
(Germ
any)
Inter-Am
erican Develop
ment B
ank
International Finance Corp
oration
Islamic D
evelopm
ent Bank
LUX
-DE
VE
LOP
ME
NT (Luxem
bourg)
ND
A (S
outh Africa)
SID
A (S
wed
en)
SN
V (N
etherlands)
US
AID
(US
A)
World
Bank
To search for other organizations, see
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ATIO
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OV
IDE G
RA
NT
S AN
D T
ECH
NIC
AL
ASSISTA
NC
E TO FO
STER
PR
IVATE SEC
TOR
DEV
ELOP
MEN
T
AN
NE
X 4
.S
OU
RC
ES
OF
ST
AR
T-U
P F
UN
DIN
G
Page 67
A N N E X 5
49
CIP
E’s m
ission is to build democracy around the
world through the prom
otion of private enterprise and m
arket-oriented reform
Corporate governance is one of the core areas of
interest for CIP
E as part of both its support grants and
technical assistance to business associations and thinktanks in developing countries. E
stablished in 1983 asan affiliate of the U
.S.C
hamber of C
omm
erce, CIP
E is
supported by the National E
ndowm
ent for Dem
ocracy(N
ED
), with additional support from
the U.S
. Agency for
International Developm
ent (US
AID
) and private founda-tions. W
ith roots in the global business comm
unity,C
IPE
takes a distinctly “business-approach” to itsactivities, w
hich distinguishes it from other develop-
ment organizations.
CIP
E’s expertise in corporate governance reform
hasaided in the success of such program
s such as: theR
ussian Institute for Directors (R
ID), the S
trategicA
lliance of Business A
ssociations (SA
BA
) in Rom
ania,the B
ulgarian Corporate G
overnance Initiative, theC
enter for Corporate G
overnance in Kenya, the
Colom
bian Confederation of C
hambers of C
omm
erce(C
ON
FEC
AM
ER
AS
), and most recently, the A
ssociationof D
evelopment Finance Institutions in A
sia and theP
acific (AD
FIAP
).... CIP
E’s grants assistance, these and
other programs have been able to further corporate
governance initiatives in their respective regions.Further inform
ation on these an other programs can be
found at ww
w.cipe.org.
How
can my organization apply for a grant?
CIP
E aw
ards grants to organizations that will advance
the development of corporate governance in developing
countries through policy advocacy, business services,and educational program
s. CIP
E grants norm
ally rangefrom
$30,000 to $70,000, based on program goals.
Proposals m
ust demonstrate specific project goals and
objectives rather than for operating support or research.
CIP
E’s grants program
provides both managem
entassistance and practical experience. P
otential applicants are urged to subm
it a brief concept paperexplaining the proposed project before a com
plete proposal is prepared. W
hen preparing formal proposals,
applicants should review the criteria described in the
grant guidelines available on CIP
E’s w
ebsite,w
ww
.cipe.org, and carefully follow the form
at. W
hile a grant award is based on a num
ber of criteria,applicants m
ust include matching funds from
their own
budget or other sources of revenue or provide a com
pelling reason why this criterion should be w
aived....
AN
NE
X 5
. A D
ON
OR
GR
AN
T P
RO
GR
AM
The following release from
the Center for International P
rivate Enterprise explains how an
organization that trains directors can apply for a grant.
MO
DU
LE
1
Startin
g
Page 68
Peer R
eview G
roup
To develop this toolkit and gather lessonslearned from
developing and developedcountries alike, the G
lobal Corporate
Governance Forum
invited representatives from
director trainingorganizations from
various regions of thew
orld to share their experiences and discuss m
ilestones and challenges in building director training organizations. The Forum
would especially like to thank
the following people for their contribution
to this toolkit by providing materials, exam
-ples, and extensive com
ments on building
director training organizations:
Cou
ntry con
tributors
Australia
Ian Dunlop,
Governance and S
ustainability Advisor
John Hall,
Australian Institute of C
ompany D
irectorsP
amela M
urray-Jones, A
ustralian Institute of Com
pany Directors
Brazil
Heloisa B
edicks, B
razilian Institute of Corporate G
overnanceB
engt Hallqvist,
Brazilian Institute of C
orporate Governance
Leonardo Viegas, B
razilian Institute of Corporate G
overnanceP
aulo Villares, B
razilian Institute of Corporate G
overnance
Canada
Bernard W
ilson, Institute of C
orporate Directors
Colom
biaP
aola Gutierrez Valandia, C
onfecámaras
Hong K
ongC
arlye Tsui, H
ong Kong Institute of D
irectors
IndiaS
heela Bhide,
Ministry of Finance and C
ompany A
ffairs N
. Balasubram
anian, Indian Institute of M
anagement B
angalore
IndonesiaA
nugerah Pekerti,
Institute for Corporate D
irectorship
IrelandS
usan Thornber, Institute of D
irectors in Ireland
Kenya
Karugor G
atamah,
Centre for C
orporate Governance
New
Zealand
David N
ewm
an, Institute of D
irectors New
Zealand
Th
e Ph
ilippinesJesus Estanislao, Institute of C
orporate Directors
Jon
athan
Juan
Mo
reno
, Institute of C
orporate Directors
Russia
Igor Belikov,
Russian Institute of D
irectorsA
lexander Ikonnikov, Independent D
irectors Association
South A
fricaR
ichard Wilkinson,
Institute of Directors in S
outhern Africa
TurkeyM
elsa Ararat,
Corporate G
overnance Forum, Turkey
United K
ingdomP
hilippa Foster Back,
Institute of Business E
thicsA
lan Morkel,
Institute of Directors, U
K
United States
Roger R
aber, N
ational Association of C
orporate Directors
Alexandra Lajoux,
National A
ssociation of Corporate D
irectors
Zam
biaP
atrick Chisanga,
Institute of Directors Zam
bia
Zim
babwe
Peter B
roadway,
Institute of Directors Zim
babwe
Intern
ation
al con
tributors
Alexander B
erg, W
orld Bank G
roupG
eoffrey Bow
es, C
omm
onwealth A
ssociation of C
orporate Governance
Michael G
illibrand, C
omm
onwealth S
ecretariatD
arrin Hartzler,
International Finance Corporation
Florencio Lopez de Silanes,
Yale’s International Institute for C
orporate Governance
Mike Lubrano,
International Finance Corporation
Alyssa M
achold, G
lobal Corporate G
overnance ForumA
nne Molyneux,
CS
InternationalB
ehdad Now
roozi, W
orld Bank G
roupD
jordjija Petkoski,
World B
ank InstituteS
ue Rutledge,
World B
ank Group
John Sullivan,
Center for International P
rivate Enterprise
CO
NT
RIB
UT
OR
S
50
Page 69
M O D U L E 2
Structuring
BU
ILD
ING
DIR
EC
TO
R T
RA
ININ
G O
RG
AN
IZA
TIO
NS
MO
DU
LE
2
ST
RU
CT
UR
ING
2
Global CorporateGovernance Forum
T O O L K I T 1
Building
Director Training
Organizations
1818 H Street NWWashington, DC 20433 USA
Telephone: +1 (202) 458-1857Facsimile: +1 (202) 522-7588
Internet: www.gcgf.orgEmail: [email protected]
Global CorporateGovernance Forum
P R I N T E D O N R E C Y C L E D PA P E R
Page 70
TOOLKIT 1
Building Director Training Organizations
Project OfficerMarie-Laurence Guy, Global Corporate Governance Forum
ConsultantsChris Pierce, Institute of Directors, UK Kerrie Waring, Institute of Directors, UK
EditorsMarty Gottron, Stockbridge, MassachusettsNancy Morrison, Falls Church, Virginia
Graphic designStudio Grafik, Herndon, Virginia
PrintingUpstate Litho, Rochester, New York
Page 71
MO
DU
LE
2
Structuring
Glo
ba
l C
orp
ora
teG
overn
an
ce Fo
rum
TO
OL
KI
T
1
Building
Director Training
Organizations
Page 72
Copyright 2003.
The International Bank for
Reconstruction and D
evelopment/
The World B
ank 1818 H
Street N
W
Washington, D
C 20433
All rights reserved.
The findings, interpretations, and conclusions expressed in this publicationshould not be attributed in any m
annerto the W
orld Bank, to its affiliated
organizations, or to mem
bers of itsboard of Executive D
irectors or thecountries they represent. The W
orldB
ank does not guarantee the accuracyof the data included in this publicationand accepts no responsibility for anyconsequence of their use.
The material in this w
ork is protected bycopyright. C
opying and/or transmitting
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ay be a violation of applicable law
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Bank encourages dissem
ination of itsw
ork and hereby grants permission to
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orks herefrom. A
ny other copying oruse of this w
ork requires the expressw
ritten permission of the W
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eskO
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or to:The C
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enter, Inc.222 R
osewood D
riveD
anvers, MA
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ll queries on rights and licenses including subsidiary rights should beaddressed to:The O
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ank1818 H
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ashington, DC
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Page 73
MO
DU
LE
2
Stru
cturin
g1
Structuring
The structure and
bylaw
s that a directo
r training o
rganizatio
n establishes
for itself w
ill dep
end larg
ely on its g
oals, its leg
al status, the country’s
legal req
uirements, and
whether it w
ill be a m
emb
ership o
rganizatio
n.
The examples presented in this m
odule will provide guidance for organizations
that are starting up
or fo
r established
org
anizations seeking
to refine their
go
verning structures.
WH
AT
YO
U W
ILL
FIN
D IN
TH
IS M
OD
UL
E
This m
od
ule discusses the m
ain steps in setting
up and
develo
ping
the
structure of the o
rganizatio
n. The structure includ
es the go
verning b
od
y
(the bo
ard o
f directo
rs) and the m
anagem
ent team that w
ill direct
op
erations aim
ed at fulfilling
the org
anization’s m
ission.
This m
od
ule also p
rovid
es guid
ance on d
rafting the o
rganizatio
n’s majo
r
bylaw
s, including
the charter (constitutio
n) and o
ther do
cuments stating
the rules and p
rinciples und
er which the o
rganizatio
n will o
perate.
This m
od
ule reviews:
•The d
uties and resp
onsibilities of the governing b
ody of the organization
•The key p
ositions on the governing bod
y or board
•The key staff p
ositions
•The elem
ents of the organization’s charter (constitution)
•H
ow to d
raft a code of ethics and
a code of cond
uct
Page 74
2
TE
RM
S C
OM
MO
NLY
US
ED
IN
OR
GA
NIZ
AT
ION
AL
ST
RU
CT
UR
ES
GO
VE
RN
ING
BO
DY
S
tructure chosen to
go
vern the affairs of the
org
anization. U
nless the org
anization is set
up as a trust fund
or is an affiliate o
f an estab
lished o
rganizatio
n, the go
verning
bo
dy is usually called
a bo
ard. T
he bo
ard is
com
po
sed o
f directo
rs, som
etimes called
b
oard
mem
bers. D
epend
ing o
n the legal
framew
ork in w
hich the org
anization o
per-
ates, the bo
ard m
ay be set up
as a unitary b
oard
or as a tw
o-tier b
oard
.
CH
AR
TE
RT
he charter, constitutio
n, or p
rosp
ectus is the o
rganizatio
n’s main fo
unding
do
cument
and sets fo
rth the org
anization’s leg
al status,m
ission statem
ent, go
als, and o
rganizatio
nalstructure.
CH
IEF
EX
EC
UT
IVE
In every o
rganizatio
n there is at least one
OF
FIC
ER
perso
n who
leads staff and
is respo
nsible fo
ro
verseeing o
peratio
ns; som
eone w
ho is
generally kno
wn as the p
resident, executive
directo
r, chief adm
inistrator, g
eneral m
anager, o
r chief executive officer. W
orking
clo
sely with the g
overning
bo
dy (g
enerally the b
oard
of d
irectors) and
adviso
ry gro
ups,
the chief executive officer is resp
onsib
le for
carrying o
ut the strategic p
lans and p
olicies
of the o
rganizatio
n.
EX
EC
UT
IVE
B
oard
mem
bers w
ho are p
art of the
DIR
EC
TO
RS
org
anization’s staff and
actively particip
ate in the m
anagem
ent of the o
rganizatio
n, suchas the chief executive officer, the chief financialo
fficer (finance directo
r), or the g
eneral co
unsel (secretary).
NO
NE
XE
CU
TIV
EB
oard
mem
bers w
ho are no
t part o
f the D
IRE
CT
OR
So
rganizatio
n’s staff and are no
t involved
in its d
ay-to-d
ay adm
inistration.
No
nexecutive directo
rs are also referred
to
as “indep
endent” d
irectors o
r “outsid
e” d
irectors.
G L O S S A R Y
Page 75
MO
DU
LE
2
Stru
cturin
g3
ES
TA
BL
ISH
ING
TH
E G
OV
ER
NIN
G B
OD
Y
Once the organization has been registered according to established local pro-
cedure and basic funding has been secured, the founders of the organization
are likely to establish the governing body—in m
ost cases, a board of directors.
In both the start-up and operational phases, the governing body contributes
to setting the direction in which the organization should be heading and to
planning how to get there. The governing body also plays an essential part in
monitoring the organization’s perform
ance, safeguarding its reputation, and
making sure it m
eets its goals. For many not-for-profit organizations, board
mem
bers are often called upon to raise funds, increase public visibility, and
recruit mem
bers.
For information on the first steps in starting up a director training organization,
see MO
DU
LE 1, STA
RTIN
G.
Best pra
ctice
The legal requirements on how
to set up the organization’s governing structure
vary from country to country and depend on the type of organization set up.
In most cases, a director training organization w
ill have a board of directors.
In some cases—
if the organization is set up as a unit of a bigger organization
such as a stock exchange, or is established as a partnership or a trust, for
example—
it will have a different governance structure. W
hatever form the
governing body takes, following established best practice m
ay help ensure the
successful strategic guidance of the organization. The best practiceprinciples
of a well-functioning governing body rem
ain effectiveness, accountability, and
transparency:
•Effectiveness. The board exercises leadership, enterprise, and judgm
ent,
combined w
ith prudent control in directing the organization so as to ensure
its long-term sustainability. The board m
ust always attem
pt to act in the
best interests of the organization as a whole.
•A
ccountability.The board is accountable to its funding partners (and mem
bers,
when relevant) w
hile taking into account the interests of all interested parties.
It should act in compliance w
ith all applicable laws. B
oard mem
bers must be
aware of their legal duties and liabilities. M
oreover, because the mission of a
director training organization is to improve corporate governance practices as
a whole, directors should take care that their conduct reaches the highest
standards of integrity. They should act in good faith, on a fully informed basis,
and in the best interests of the organization as a whole.
TH
INK
ING
P
OIN
TW
hat guiding principles w
ill make the governing body of
your organization effective? Transparent? A
ccountable?
Page 76
4
•Transparency.There should be sufficient transparency regarding the activities of
the board to secure confidence and trust in the organization.The board is
responsible for comm
unicating fully with funding partners, m
embers (if applicable)
and relevant stakeholders such as staff mem
bers.
The governing body or board of a director training organization should also be
aware of its legal duties and liabilities. These w
ill vary from country to country.
The governing body should meet on a regular basis, usually three to six tim
es a
year. How
ever the governing body of a start-up organization may w
ant to meet
more frequently to help get the organization on track. The governing body’s
primary responsibilities and duties include:
•E
stablishing the organization’s vision, mission, and values
•P
roviding strategic guidance by setting performance goals, assessing risk, and
reviewing annual budgets and business plans
•M
onitoring the organization’s performance
•M
onitoring the quality of the organization’s activities and services
•Identifying and replacing key staff w
hen necessary
•Ensuring the integrity of the organization’s accounting and reporting system
s
•A
ppointing an independent auditor
•Ensuring a form
al and transparent board nomination process
•R
eviewing the renum
eration of key staff, as well as board m
embers, if applicable
•M
anaging and disclosing potential conflicts of interest of managem
ent, board
mem
bers, funding partners, and other stakeholders
•C
onvening the annual general meeting
It is also essential that the mem
bers or representativesof the governing body help:
•R
aise funds
•R
aise awareness
•S
trengthen the organization’s reputation
•S
upport mem
bership growth
•R
epresent the interests of the organization’s mem
bers and stakeholders
•S
upport the organization’s standards and policy perspectives
Page 77
MO
DU
LE
2
Stru
cturin
g5
Assem
bling
the g
overnin
g bod
y
The size of the governing body or board should not be so large as to be
unwieldy nor so sm
all as to lack independence or perspective. Som
e director
training organizations find that a board of seven to fifteen mem
bers works w
ell.
Board m
embers often serve tw
o three-year terms. In som
e cases, an organization
might w
ant to invite a board mem
ber to serve beyond the stated term lim
it. In
such cases, these board mem
bers are generally reelected annually.
To fulfill its duties effectively, the governing body not only needs access to
accurate and relevant information about the organization’s perform
ance; it must
also be able to exercise independent judgement about w
hether managem
ent
and staff mem
bers are developing the organization to its full potential.
It is therefore important that the founders of the organization provide for the
appointment of board m
embers that are not part of the organization’s staff or
involved in its day-to-day administration. A
s opposed to executive directors or
managers w
ho are part of the organization’s staff and actively participate in the
managem
ent of the organization, these nonexecutive directors or board mem
bers
TH
E A
NN
UA
L G
EN
ER
AL
ME
ET
ING
At the annual general m
eeting, funding p
artners and or m
emb
ers of
the organization typically:
•R
eview the annual report including the organization’s financial and
nonfinancial statements (see M
OD
ULE
5: MO
NITO
RIN
G)
•A
pp
oint or reapp
oint the indep
endent aud
itor for the ensuing year
•E
lect or reelect mem
bers of the governing b
ody
•R
eview the p
erformance of the organization
•D
iscuss any other matter on the agend
a
Funding p
artners and or m
emb
ers should b
e given amp
le notice of
the date of the annual m
eeting and the top
ics that it will cover.
Typically, the organization send
s funding p
artners and or m
emb
ers
notice at least 21 days b
efore the meeting. They should
be allow
ed to
prop
ose items to b
e discussed
on the agenda and
have the governing
bod
y or board
respond
to their questions. (A
samp
le notice for an
annual general meeting of a m
emb
ership organization is p
rovided
in
annex 1.)
Page 78
6
may be better able to evaluate w
hether the organization is taking the proper
actions to meet its goals and m
aintain high standards of conduct.
Nonexecutive directors should have no conflicts of interest w
ith the organization
or its business, and they should be comm
itted to the organization’s objectives.
It is comm
onbest practice that no m
ore than one person from the sam
e outside
organization be named to the board. They m
ay be selected among funding part-
ners or come from
outside the organization. Mem
bership organizations typically
select their nonexecutive directors among their m
embership base. Individuals
are often invited to sit on the governing body of the organization because of
their special expertise or reputation in some area of im
portance to the organiza-
tion, such as financial affairs, strategic planning, corporate governance issues, or
curriculum developm
ent.
Mem
bers of the governing body with the follow
ing professional qualities are likely
to be most helpful in leading the organization tow
ard its long-range goals:
•S
ound judgment w
ith a tested competence and track record
•A
n enquiring mind to question intelligently, debate constructively, challenge
rigorously, and decide dispassionately
•A
bility to provide advice and counseling to the board in their individual areas
of expertise
•S
olution-oriented, addressing issues in a pro-active manner
•A
bility to devote sufficient time to duties
•C
omm
itment to the m
ission and goals of the organization
•A
good understanding of corporate governance issues
•A
role model for m
embers or directors generally
TH
INK
ING
P
OIN
TW
ha
t sort of expertise do
you n
eed from
your
non
executive boa
rd
mem
bers?
CO
MP
OS
ING
TH
E G
OV
ER
NIN
G B
OD
Y
The id
eal bo
ard sho
uld:
•B
ring to
gether the stakeho
lders sup
po
rting the o
rganizatio
n
•B
e com
po
sed o
f high-p
rofile d
irectors w
ith integrity and
com
mitm
ent
to the o
rganizatio
n’s ob
jectives
•H
ave mem
bers w
ith no co
nflicts of interests
•Includ
e executive and no
nexecutive mem
bers
•E
nsure that the interests of all b
eneficiaries and o
r mem
bers o
f the
org
anization are fairly rep
resented
•E
nsure the overall ind
epend
ence of the o
rganizatio
n to allo
w it to
fulfill its ob
jectives
Page 79
MO
DU
LE
2
Stru
cturin
g7
Most start-up organizations w
ill be unable to compensate m
embers of its
governing body for their contribution to the development of the organization as
most of the organization’s funds w
ill be needed for operational costs and
developing its activities. In most cases board m
embers see their contributions
to the mission and goals of a director training organization as im
portant and
prestigious and readily offer their time on a voluntary basis. M
embers of the
governing body representing funding partners may in som
e cases be
compensated by those funding partners.
EX
AM
PL
ES
OF
GO
VE
RN
ING
ST
RU
CT
UR
ES
BR
AZ
IL
The b
oard
of the B
razilian Institute of C
orp
orate G
overnance
consists o
f nine mem
bers w
ho all w
ork o
n a voluntary b
asis.
The b
oard
norm
ally meets six tim
es a year and can m
eet mo
re
often if circum
stances require. T
he bo
ard m
eets initially in
executive session, w
ithout any m
emb
ers of m
anagem
ent being
present, so
that manag
ement p
erform
ance can be review
ed. T
he
CE
O and
often the co
rpo
rate secretary and treasurer usually
attend the rest o
f the meeting
, which usually lasts fo
r three hours.
The b
oard
chairman later rep
orts to
the manag
ers individ
ually on
the discussio
ns held in executive sessio
n.
KE
NY
A
The b
oard
of the C
entre for C
orp
orate G
overnance in K
enya is
com
po
sed o
f 11 nonexecutive d
irectors and
1 executive directo
r,
who
is the chief executive officer o
f the center. The chairm
an of
the bo
ard is a no
nexecutive directo
r. Other no
nexecutive directo
rs
include an acco
untant, attorneys, b
usiness executives,
a go
vernment rep
resentative, and a trad
e union rep
resentative.
E X A M P L E S
Continued next page
Page 80
8
EX
AM
PL
ES
OF
GO
VE
RN
ING
ST
RU
CT
UR
ES
(CO
NT
.)
NE
W Z
EA
LA
ND
The N
ational C
ouncil (B
oard
) of the Institute o
f Directo
rs, New
Zealand
consists o
f a nonexecutive p
resident, a no
nexecutive vice
presid
ent, and seven no
nexecutive mem
bers. A
ll nine mem
bers o
f
the council are m
emb
ers of the institute and
do
not receive any
remuneratio
n for their services to
the institute. The p
resident
carries out a lead
ership ro
le in the cond
uct of the co
uncil and its
relations w
ith mem
bers and
other stakeho
lders. T
he presid
ent
maintains a clo
se pro
fessional relatio
nship w
ith the chief executive
officer and
the manag
ement team
. The institute’s co
nstitution
go
verns pro
cedures fo
r the op
eration o
f the national co
uncil,
including
the election o
f council m
emb
ers.
TU
RK
EY
The C
orp
orate G
overnance F
orum
of Turkey has a tw
o-tier b
oard
structure. The first tier is an executive b
oard
consisting
of three
mem
bers. O
ne mem
ber is the executive d
irector o
f the forum
, who
is emp
loyed
on a full-tim
e basis. T
he two
other m
emb
ers are
nom
inated b
y the two
found
ers of the fo
rum (S
abanci U
niversity
and the Turkish Ind
ustrialists’ and B
usinessmen’s A
ssociatio
n, or
TU
SIA
D). T
hese two
mem
bers d
o no
t have manag
ement ro
les in
the forum
. Their ro
le is to ad
vise and sup
po
rt the executive directo
r
in executing the annual p
lan and to
facilitate org
anizational sup
po
rt
from
the two
found
ing o
rganizatio
ns.
The seco
nd tier is called
the superviso
ry bo
ard. A
self-regulating
bo
ard, it is co
mp
osed
of the p
residents o
f the two
found
ing
org
anizations and
the two
representatives they no
minate fo
r the
executive bo
ard. T
he two
presid
ents tog
ether name an ind
epend
ent
chairman (w
ho is no
t affiliated w
ith the found
ing o
rganizatio
ns).
The executive d
irector o
f the forum
serves as the secretary of the
superviso
ry bo
ard. T
he superviso
ry bo
ard can have up
to 11
mem
bers. H
ow
ever, there must alw
ays be an eq
ual numb
er of
academ
ic and b
usiness representatives. T
here is no vice chairm
an.
E X A M P L E S
Page 81
MO
DU
LE
2
Stru
cturin
g9
Filling
key positions
In setting up the governing body of the organization, the founders of the
organization should provide as soon as possible for the following five key
positions:
•C
hairman
•C
hief executive officer of the organization
•V
ice chairman
•Treasurer
•S
ecretary
Ch
airman of th
e board
In most organizations, the chairm
an of the governing body or board is
typically elected from am
ong the nonexecutive mem
bers of the board for a
specific term (often three years). A
lthough the chief executive officer may
serve on the board, it is considered best practice that he or she not serve as
chairman. This w
ill help preserve the independence of the board and avoid
vesting too much pow
er and authority in one person. In the case of start
ups, the chief executive officer nevertheless often serves as chairman of the
board, and that is also typically the patternin nonprofit organizations.
The role of the chairman of the board is to:
•E
nsure that the role and powers of the board are clear and w
ell understood.
•Lead the board in setting the organization’s values and strategy.
•Lead the board in m
aking major decisions affecting the organization.
•C
hair all meetings of the board, allow
ing sufficient time for full discussion of
complex or contentious issues.
•E
nsure that the board operates effectively in all aspects of its role and does
not microm
anage the senior managem
ent team.
•P
ublicly represent the organization (together with the chief executive) and
ensure that the views, advice, and opinions expressed in public by any
person on behalf of the organization do not conflict with those of the
organization.
•Ensure (w
ith the assistance of the chief executive and secretary) that all
directors receive accurate, timely, appropriate, and clear inform
ation, including
agendas for board meetings.
•P
romote effective com
munication betw
een executive and nonexecutive
directors,both at board meetings and at other tim
es.
TH
INK
ING
P
OIN
TW
ho sh
ould
be eligible to
be cha
irma
n? H
ow sh
ould
the ch
airm
an
be selected?
Page 82
10TH
INK
ING
P
OIN
TW
ha
t skills an
d expertise
are you
seeking
in a
chief
executive?
•M
onitor the composition and structure of the board by regularly review
ing
items such as the overall size of the board, the balance betw
een executive
and nonexecutive directors, and the balance between age, experience, skills,
and personality of the directors. If the composition and structure are inappro-
priate, the chairman is responsible for initiating necessary change.
•Initiate regular review
s of the board’s performance. (G
uidance on evaluating
the performance of a board is given in annex 2.)
•E
stablish a program of induction for new
board mem
bers.
•E
ncourage board mem
bers to seek continuing professional development.
•Ensure that all board com
mittees that have been established operate effectively.
Ch
ief executive officer
The chief executive officer manages the organization and is responsible for seeing
that the decisions made by the board are properly and effectively im
plemented.
The key role of the chief executive is to take the lead in putting the long-term
strategy of the organization into operation. This involves:
•D
eveloping strategic operating plans that reflect the longer-term objectives
and priorities established by the board and ensuring that these are
appropriately delegated to the executive directors or other mem
bers of the
senior managem
ent team.
•M
aintaining an on-going dialogue with the chairm
an of the board about the
goals and performance of the organization.
•E
nsuring that the operating objectives and standards of performance are
understood and accepted by the managem
ent and other employees.
•C
losely monitoring the operating and financial results against plans
and budgets.
•Taking rem
edial action where necessary and inform
ing the board of significant
changes.
•R
ecruiting, developing, and maintaining a strong executive team
.
Page 83
MO
DU
LE
2
Stru
cturin
g11
Vice ch
airman
The duty of the vice chairman is to act in the absence of the chairm
an (that is,
when the chairm
an is not able to attend a meeting for som
e reason such as
sickness or travel). In a well-operated board, the vice chairm
an does not
automatically progress to the chairm
anship. Instead, some m
onths before the
chairman’s term
s is due to expire, the board (or the nomination com
mittee if
one has been set up) should propose a successor to the chairman (and obtain
such prospective successor’s consent). This procedure upholds the democratic
process and avoids the embarrassm
ent of feeling obliged to appoint a
predetermined candidate w
hen a more qualified candidate m
ight be available.
(How
ever, a director training organization might consider that the vice chairm
an
position, while not providing autom
atic progression, provides a good training
ground for the next chairman.) Ideally, an outgoing chairm
an mentors the
successor in the last few m
onths before leaving office.
Treasurer
The treasurer is responsible for ensuring that the accounts and financial records
of the organization are properly maintained and that its assets are prudently
managed. The treasurer is typically a nonexecutive director and should have
appropriate accounting qualifications as well as experience in financial affairs.
As the organization grow
s, it is likely to hire an executive finance director to
take over these functions. If the board retains the position of a nonexecutive
treasurer, that director would act as an advisor to the finance director and
typically head the audit comm
ittee.
Secretary
The secretary is responsible for ensuring that the board follows appropriate
procedures and that the organization complies w
ith all applicable statutes and
regulations. The secretary’s primary task is to serve the board and the organi-
zation by advising on and managing internal legal issues. H
e or she convenes
board meetings in accordance w
ith applicable regulations and ensures that
minutes and a record of attendance are kept.
Refin
ing
the boa
rd’s stru
cture
As the organization m
atures and increases in size, its governing structure is
likely to be refined. For example, the board m
ay decide to establish comm
ittees
to monitor specific activities. O
r it might decide to create an advisory council.
Page 84
Board com
mittees
Like most larger organizations, an organization that trains directors m
ight want to
set up nomination and audit com
mittees. G
iven the specific mission of a director
training organization, the board should also consider setting up comm
ittees on:
•Training activities or professional developm
ent, to oversee the existing programs
and curriculum and guide necessary changes. This com
mittee w
ould be
responsible for monitoring all aspects of developing and updating the curriculum
,
ensuring that each course meets the established criteria and that the course
leaders are well qualified. If the organization certifies course participants, the
comm
ittee should monitor this program
and any complaints and appeals
procedures associated with certifications and the training program
in general.
•M
embership, to m
onitor and develop the mem
bership strategy.
•C
orporate governance, to stay abreast of developments in this field.
The board may w
ant to set up comm
ittees on any number of other subjects,
including remunerations and com
munications. E
ven if the organization is not yet
in a situation to establish such comm
ittees, it may consider having all of these
specific issues as regular items of the board’s agenda.
As a m
atter of good governance, the duties and responsibilities of each comm
ittee
should be clearly defined. Other m
atters, such as the number of com
mittee
mem
bers, the designation of specific board mem
bers as comm
ittee mem
bers,
and the number of com
mittee m
embers required for a quorum
, should also be
spelled out. Ideally, the mem
bership of every comm
ittee should be reviewed
annually.(S
umm
aries of the principal duties of nominations and audit com
mittees
are provided in annex 4.)
12TH
INK
ING
P
OIN
TW
hat comm
ittees might be of
greatest help to your board?
BO
AR
D C
OM
MIT
TE
ES
: SO
UT
H A
FR
ICA
The b
oard
of the Institute o
f Directo
rs in So
uthern Africa has
the follo
wing
com
mittees:
•E
xecutive Co
mm
ittee—B
oard
of D
irectors
•F
inance, Aud
it, Risk, and
Rem
uneration
•N
om
ination
•M
emb
ership, P
ublic R
elations, P
ublicatio
ns, and N
etwo
rking
•Integ
rated S
ustainability—
Safety, H
ealth and E
nvironm
ent
•C
orp
orate G
overnance
•D
irector D
evelop
ment
E X A M P L E S
Page 85
MO
DU
LE
2
Stru
cturin
g13
Advisory council
A director training organization m
ay also want to set up an advisory council
(or panel) in order to raise its profile among relevant stakeholders and benefit
from the advice of various experts. U
nlike the board, the council does not
monitor the organization and has no pow
er of decision. Its role is to support
the general goals of the organization, advise the board on strategic issues, and
help the organization establish its reputation.
The council is responsible for:
•A
dvising the board on any changes to the organization’s constitution (or other
governing document).
•Introducing key contacts and “opening doors” in support of the
organization’s development.
•P
romoting the interests of the organization and acting as am
bassadors for it.
•A
dvising on any matter w
hich, in the opinion of the board, will have a m
aterial
effect on the nature or development of the organization.
•A
cting as a consulting body to the board as required.
SE
LE
CT
ING
SE
NIO
R S
TA
FF
As m
entioned earlier in this module, the organization’s first hiring priority is the
chief executive officer, who w
ill manage the overall day-to-day operations of the
organization. Following are brief descriptions of som
e of the other senior positions
that a director training organization might w
ant to fill quickly. An organization
that is just starting up may not be able to fund all of these positions im
mediately
and may therefore need to ask som
e managers to w
ork on a part-time basis or
to take on more than one function (see annex 3 for a sam
ple job description
and personal specification form).
Head of training activities
The head of training activities is a key position for an organization whose
primary function is training directors. The head of professional developm
ent or
training program director organizes a range of training courses, professional
development program
s, and services for directors, including standards, certification,
and accreditation. This person is also in charge of developing the curriculum,
collecting relevant training materials, and m
anaging the team of trainers.
TH
INK
ING
P
OIN
TW
hat are the specific job and personal qualities you are lookingfor in your senior m
anagement
team?
Page 86
14
Accounting
One of the first positions the organization w
ill need to fill is that of accountant, even
if the person hired does not work full tim
e or performs others task. O
nce the organi-
zation is well established, it w
ill most likely set up a financial departm
ent.
Public relations officer
The public relations officer is responsible for raising the profile of the organization not
only within the business com
munity, but also w
ith the news m
edia and among opinion
leaders both inside and outside government. A
start-up organization typically cannot
afford to hire a public relations officer. The chief executive officer and the chairman of
the board are well situated to take on the public relations functions.
Head of events
The head of events manages the conferences, m
eetings, and other events that the
organization hosts for its mem
bers and/or stakeholders. This person also manages
the organization’s facilities and arranges for any meeting room
rental and catering the
organization might require in connection w
ith its events or as a service to mem
bers
and/or stakeholders.
Once the organization is up and running, it m
ay also want to appoint a m
arketing
manager, a policy and research director, a hum
an resources director, and a manager in
charge of mem
bership to help the organization in the recruitment and retention of
mem
bers and the development of m
ember benefits and services. U
ntil the organization
is able to hire people for these positions, the functions should be covered by the chief
executive officer, who m
ay want to delegate som
e duties to existing staff.
STAFFIN
G T
HE
OR
GA
NIZ
ATIO
N: T
HE
BR
AZ
ILIAN
EX
PE
RIE
NC
E
“During the first tw
o years there was no staff. The chairm
an/chief execu-tive officer, the treasurer and
the corporate secretary, all on a voluntary
basis, hand
led all the ad
ministrative w
ork using any available volunteer or
even family m
emb
ers. In 1997 a student w
as emp
loyed for office w
orkconsisting p
rimarily of hand
ling the courses, telephone calls, corresp
on-d
ence, the registration of mem
bers and
the prep
aration of accountingd
ocuments. In 1999 an ad
ditional p
erson was em
ployed
to handle the
logistics related to the m
onthly events, courses, seminars and
the annualcongress. The financial success of the B
razilian Institute of Corp
orateG
overnance is the result of close cost control and a lot of voluntary w
ork.”
Bengt H
allqvist,P
rivate Institute for Corp
orate G
overnance: The Brazilian E
xperience
E X A M P L E S
Page 87
MO
DU
LE
2
Stru
cturin
g15
DE
VE
LO
PIN
G T
HE
OR
GA
NIZ
AT
ION
’S C
HA
RT
ER
The charter or constitution is the principal document guiding the organization’s
operation. The charter typically provides a structure for the effective and
efficient managem
ent of the organization. It sets out clear lines of responsibility
and timely decisionm
aking, ensures that the interests of funding partners,
mem
bers, and other stakeholders will be properly represented, and provides clear
accountability for serving those interests. The table on this page lists the items
that can be included in a charter. (An exam
ple of a charter of a start-up organiza-
tion is given in annex 5.)
TOP
IC
OB
JECT
IVES
MEET
ING
S
GO
VER
NIN
G B
OD
Y
MEM
BER
S (IF AP
PLIC
AB
LE)
AC
CO
UN
TS
AU
DIT
PR
OFIT
S/SUR
PLU
S
WIN
DIN
G-U
P P
RO
CED
UR
ES
ELEMEN
T
•A
n ob
jectives clause
•N
otice p
eriod
s of g
eneral meeting
s •
Definitio
n of a q
uorum
•R
ole and
po
wers o
f the chairman
•W
ho m
ay attend m
eetings
•W
ho m
ay vote at m
eetings
•A
pp
ointm
ent of an ind
ividual to
maintain the m
inutes•
Rig
hts to insp
ect minutes o
f meeting
s
•S
tructure of the g
overning
bo
dy
•P
ow
ers and resp
onsib
ilities (including
duties and
liabilities)
of d
irectors o
r bo
ard m
emb
ers•
Co
mp
ositio
n of the b
oard
•
Num
ber o
f directo
rs or b
oard
mem
bers (m
inimum
/ maxim
um)
•A
pp
ointm
ent pro
cedures
•R
etirement p
roced
ures (if app
licable)
•D
isqualificatio
n and rem
oval p
roced
ures•
Rem
uneration p
roced
ures (if app
licable)
•E
xpense acco
unt pro
cedures
•D
eclaration o
f the interests of d
irectors o
r bo
ard m
emb
ers
•D
efinition and
catego
ries of m
emb
ers•
Mem
bership
fees
•W
ho m
aintains the accounts
•R
ights to
inspect the acco
unts•
Annual rep
ort d
isseminatio
n pro
cesses•
Who
receives the annual repo
rt
•A
udit p
roced
ures•
Ap
po
intment o
f external audito
r
•P
rofit/surp
lus distrib
ution p
rocess (if ap
plicab
le)
•P
roced
ures for clo
sing d
ow
n the org
anization
EL
EM
EN
TS
OF
A C
HA
RT
ER
Page 88
16
DE
VE
LO
PIN
G A
CO
DE
OF
ET
HIC
S A
ND
A C
OD
E O
FC
ON
DU
CT
To foster best practices, it is especially important for director training organizations,
and nonprofit organizations generally, to develop a code of ethics. The board
(with the support of the advisory council, if applicable) should develop a code of
ethics for the organization’s managem
ent and staff. The code of ethics shapes and
reflects the organization’s culture, describing the core values that should guide per-
sonal decisionmaking consistent w
ith the organization’s stated principles and values.
The code of ethics goes beyond legal compliance to capture the spirit of the law
and focus attention on the values and principles implicit in all the organization’s policies.
A code of ethics m
ay address issues such as gifts and entertainment, bribery and
corruption, conflicts of interest, confidential information, and use of the organization’s
assets, for example.
There are many w
ays to develop a code of ethics. Whatever m
ethod is chosen, it
is essential that input be solicited from the entire staff of the organization, from
the
chief executive on down. S
taff mem
bers who are given a stake in developing the
code are more likely to com
mit to follow
ing it in their work lives.
Following are the key steps in developing an effective code of ethics:
•Identify a “cham
pion.”The cham
pion oversees the process of developing the
code. Ideally the champion w
ill be a senior manager, preferably the chief executive,
to ensure maxim
um support from
the managem
ent team.
•Form
a working party.A
working party drafts the code. It begins by
identifying key words associated w
ith the organization and its values, such as
“integrity,” “reliability,” or “transparency.” These words should be defined in a
statement of principles that the organization adheres to in its day-to-day
relationships with internal and external stakeholders. The code should also
define what constitutes
a conflict of interest or an unacceptable gift,
for example.
•Test the draft code.The draft code should be “tested” internally. Typically, it is
discussed with the board to determ
ine if it is appropriate and then discussed
with m
anagers and staff.
•Form
ally adopt the code.The code should be formally adopted by the board
and ratified by the chief executive officer and/or board chairman. O
ne or both of
these two officers also usually w
rites a preamble explaining the im
portance of
following the code.
TH
INK
ING
P
OIN
TW
hat key values should the codeof ethics uphold?
Page 89
MO
DU
LE
2
Stru
cturin
g17
CO
DE
S O
F C
ON
DU
CT
A co
de o
f ethics can be co
mp
lemented
with a co
de o
f cond
uct. Aco
de o
f cond
uct is concerned
prim
arily with the rules b
y which the
org
anization is m
anaged
, as op
po
sed to
the org
anization’s values,
and seeks to
pro
mo
te com
pliance w
ith the legal o
blig
ations o
f theo
rganizatio
n. It outlines the stand
ards and
measurem
ents by w
hichem
plo
yees or m
emb
ers will b
e held acco
untable in o
bserving
thestated
corp
orate values and
princip
les. To fo
ster best p
ractices theco
de sho
uld g
o b
eyond
the basic necessities reg
ulated b
y law.(A
samp
le cod
e of co
nduct fo
r bo
ard m
emb
ers is pro
vided
in annex 7.)
•P
ublish the code.The code should be published and disseminated to all board
mem
bers and all staff. In addition each mem
ber of the staff should receive
training in the use of the code. It should be published both internally and
externally in paper format and on the organization’s w
ebsite, if one is available.
•R
eview the code. From
time to tim
e the code should be revisited to ensure its
relevance. The board should monitor this feedback process.
Each organization will w
ant to develop its own unique code of ethics
reflecting its particular circumstances. (A
sample code of ethics is provided in
annex 6. It is offered for guidance.)
Page 90
18
FU
RT
HE
R R
EA
DIN
G
Bryson, John M
., and Farnum K
. Alston. 1999. C
reating and Implem
enting a
Strategic P
lan: A W
orkbook for Public and N
onprofit Organizations. S
anFrancisco: Jossey-B
ass.
Burns, R
obert. 2001. Making M
eetings Happen. A
Sim
ple and Effective Guide
to Implem
enting Successful M
eetings. London: Business and P
rofessionalP
ublishing.
Cadbury, A
drian 2002.C
orporate Governance and C
hairmanship—
A P
ersonal
View. O
xford: Oxford U
niversity Press.
Carver, John. 1997.
Boards that M
ake a Difference: A
New
Design for
Leadership in Nonprofit and P
ublic Organizations. S
an Francisco: Jossey-Bass.
Dunne, P
atrick. 2000.D
irectors Dilem
mas. London: K
ogan Page.
Dussauge, P
ierre, and Bernard G
arrette. 1999. Cooperative S
trategy:
Com
peting Successfully through S
trategic Alliances. H
oboken, N.J.: John W
iley&
Sons.
Hallqvist, B
engt.P
rivate Institute for Corporate G
overnance: The Brazilian
Experience.Sao P
aolo: Bless G
rafica e Editora LTD
A.
Harper, John. 2000. C
hairing the Board. London: K
ogan Page.
Hussey, D
avid, and Robert P
errin. 2003.How
to Manage a Voluntary
Organization. London: K
ogan Page.
IoD (Institute of D
irectors). 1999. The Independent Director. London.
——
—. 2001.
Standards for the B
oard. London.
Kakabadse, A
ndrew. 2000. The Essence of Leadership.London: Thom
son.
PAR
N (P
rofessional Associations R
esearch Netw
ork). 2002. Ethical Codes of U
K
Professional A
ssociations. Bristol, U
.K.
——
—. 2002. G
overnance of Professional A
ssociations: The Structure and R
ole
of the Governing B
ody. Bristol, U
.K.
Sm
ith, Robert. 2003. A
udit Com
mittees C
ombined C
ode Guidance. London:
Financial Reporting C
ouncil.
Page 91
MO
DU
LE
1
Stru
cturin
gM
OD
UL
E
2S
tructu
ring
A N N E X E S
AN
NE
XE
S
1. Sam
ple no
tice of an annual g
eneral meeting
2. Guid
ance on evaluating
perfo
rmance o
f a bo
ard o
f directo
rs
3. Sam
ple jo
b d
escriptio
n
4. Princip
al duties o
f the nom
ination and
audit co
mm
ittees
5. Sam
ple charter
6. Sam
ple co
de o
f ethics
7. Sam
ple co
de o
f cond
uct
19
Page 92
A N N E X 1 20
No
ticeis hereby given that the A
nnual General M
eeting of the Institute of Directors w
ill be held at 116
Pall M
all, London SW
1 on Wednesday 30 July 2003 at 2.30pm
for the following purposes:
1To receive and consider the R
eport and Accounts for the year ended …
……
……
.
2To re-elect M
embers of the C
ouncil.
The following m
embers of the C
ouncil retire under By Law
24(2) and, being eligible, offer themselves
for re-election:
****
3 To re-appoint ……
……
……
……
as auditors for the ensuing year.
By O
rder o
f the Co
uncil
Date
Address
No
teA
mem
ber entitled to attend and vote at the Annual G
eneral Meeting m
ay appoint another mem
ber,
or alternately may nom
inate the Chairm
an of the Meeting, to vote in his or her stead on a poll. A
form of
proxy is available from the Institute S
ecretary on request. To be valid the completed proxy form
must be
received by the Institute Secretary at (address of Institute) not later than 48 hours prior to the tim
e of the
Meeting.
AN
NE
X 1
. SA
MP
LE
NO
TIC
E O
F A
N A
NN
UA
L G
EN
ER
AL
M
EE
TIN
G
The following exam
ple comes from
the Institute of Directors, U
K, a m
embership organization.
Page 93
A N N E X 2
21M
OD
UL
E
2S
tructu
ring
The board evaluation process should be used
constructively as a mechanism
to improve board
effectiveness, maxim
ise strengths and tackle
weaknesses. The results of board evaluation should
be shared with the board as a w
hole, while the results
of individual assessments should rem
ain confidential
between the chairm
an and the non-executive
director concerned.
The following are som
e of the questions that should be
considered in a performance evaluation. They are,
however, by no m
eans definitive or exhaustive and
companies w
ill wish to tailor the questions to suit their
own needs and circum
stances.
The responses to these questions and others should
enable boards to assess how they are perform
ing and
to identify how certain elem
ents of their performance
areas might be im
proved.
Perfo
rmance E
valuation o
f the Bo
ard
•H
ow w
ell has the board performed against any
performance objectives that have been set?
•W
hat has been the board's contribution to the
testing and development of strategy?
•W
hat has been the board's contribution to ensuring
robust and effective risk managem
ent?
•Is the com
position of the board and its comm
ittees
appropriate, with the right m
ix of knowledge and
skills to maxim
ise performance in the light of future
strategy? Are inside and outside the board relationships
working effectively?
•H
ow has the board responded to any problem
s or
crises that have emerged and could or should these
have been foreseen?
•A
re the matters specifically reserved for the board
the right ones?
•H
ow w
ell does the board comm
unicate with the
managem
ent team, com
pany employees and others?
How
effectively does it use mechanism
s such as the
AG
M [annual general m
eeting] and the annual report?
•Is the board as a w
hole up to date with latest
developments in the regulatory environm
ent and the
market?
•H
ow effective are the board's com
mittees?
(Specific questions on the perform
ance of each
comm
ittee should be included such as, for example,
their role, their composition and their interaction
with the board.)
The processes that help underpin the board's
effectiveness should also be evaluated e.g.:
•Is appropriate, tim
ely information of the right length
and quality provided to the board and is managem
ent
responsive to requests for clarification or amplification?
Does the board provide helpful feedback to m
anage-
ment on its requirem
ents?
•A
re sufficient board and comm
ittee meetings of
appropriate length held to enable proper consideration
of issues? Is time used effectively?
•A
re board procedures conducive to effective
performance and flexible enough to deal w
ith all
eventualities?
AN
NE
X 2
. GU
IDA
NC
E O
N E
VA
LU
AT
ING
PE
RF
OR
MA
NC
E
OF
A B
OA
RD
OF
DIR
EC
TO
RS
This guidance is taken from D
erek Higgs, 2003, R
eview of the R
ole and Effectiveness of N
on-executive Directors. London: U
nited Kingdom
Departm
ent of Trade and Industry(w
ww
.dti.gov.uk/cld/non_exec_review).
Page 94
A N N E X 2 22
In addition, there are some specific issues relating to
the chairman w
hich should be included as part of an
evaluation of the board's performance e.g.:
•Is the chairm
an demonstrating effective leadership of
the board?
•A
re relationships and comm
unications with
shareholders well m
anaged?
•A
re relationships and comm
unications within the
board constructive?
•A
re the processes for setting the agenda working?
Do they enable board m
embers to raise issues and
concerns?
•Is the com
pany secretary being used appropriately
and to maxim
um value?
Perfo
rmance E
valuation o
f the No
n-executive
Directo
r
The chairman and other board m
embers should
consider the following issues and the individual
concerned should also be asked to assess themselves.
For each non-executive director:
•H
ow w
ell prepared and informed are they for board
meetings and is their m
eeting attendance satisfactory?
•D
o they demonstrate a w
illingness to devote time
and effort to understand the company and its
business and a readiness to participate in events
outside the boardroom, such as site visits?
•W
hat has been the quality and value of their
contributions at board meetings?
•W
hat has been their contribution to development of
strategy and to risk managem
ent?
•H
ow successfully have they brought their know
ledge
and experience to bear in the consideration of strategy?
•H
ow effectively have they probed to test inform
ation
and assumptions? W
here necessary, how resolute
are they in maintaining their ow
n views and resisting
pressure from others?
•H
ow effectively and proactively have they follow
ed up
their areas of concern?
•H
ow effective and successful are their relationships
with fellow
board mem
bers, the company secretary
and senior managem
ent? Does their perform
ance
and behaviour engender mutual trust and respect
within the board?
•H
ow actively and successfully do they refresh their
knowledge and skills and are they up to date w
ith:
•the latest developm
ents in areas such as corporate
governance framew
ork and financial reporting?
•the industry and m
arket conditions?
•H
ow w
ell do they comm
unicate with fellow
board
mem
bers, senior managem
ent and others, for example
shareholders? Are they able to present their view
s
convincingly yet diplomatically and do they listen and
take on board the views of others?
Page 95
A N N E X 3
23M
OD
UL
E
2S
tructu
ring
AN
NE
X 3
. SA
MP
LE
JOB
DE
SC
RIP
TIO
N
This sample w
as provided by the Institute of Directors, U
K.
JOB
TIT
LE
:-
RE
SP
ON
SIB
LE
TO
:-
JOB
PU
RP
OS
E:-
MA
IN R
ES
PO
NS
IBIL
ITIE
S:-
LO
CA
TIO
N:
RE
LA
TIO
NS
HIP
SC
ON
TA
CT
S IN
CL
UD
E:-
PE
RS
ON
AL
SP
EC
IFIC
AT
ION
:-S
EE
AT
TA
CH
ED
PA
GE
ED
UC
AT
ION
/SK
ILL
SA
) .
B) .
C) .
D) .
E) .
F) .
G) .
H) .
TE
RM
S A
ND
CO
ND
ITIO
NS
HO
UR
S
HO
LID
AY
SA
LA
RY
BE
NE
FIT
S
Page 96
A N N E X 3 24
Perso
nal Sp
ecification
The post holder will be required to hold or develop the
following com
petencies:
1. A client focus -
~ To interact w
ith high level clients, both mem
bers
and non-mem
bers.
~ To find out their priorities and needs and to offer
solutions and support.
2. Product know
ledge -
~ To be able to get to grips quickly w
ith the range of
products and services on offer by the IoD.
3. Professionalism
-
~ To be punctual and m
eet deadlines.
~ To act w
ith honesty and integrity at all times w
ith
all internal and external relationships.
~ To be thorough and up to date w
ith paperwork
and admin.
4. Working relationships -
~ To develop strong and professional relationships
with clients, colleagues and suppliers.
~ To develop and m
aintain helpful and supportive
relationships within the departm
ent, with other
departments and other Institutes and bodies.
~ To establish a netw
ork of contacts.
5. Values, beliefs and attitudes -
~ To conduct yourself in a friendly and helpful manner.
~ To dem
onstrate a sense of humour and build long
term relationships w
hich benefit the client.
~ To be able to interact on equal term
s with B
oard
level clients.
~ To be tenacious and keep a positive attitude even
when the client is consistently unavailable - D
irectors
are busy people!
~ To be concerned only w
ith what can be done, not
what can’t.
6. To be a team player and to help out w
hen required.
7. To be willing and open to learning new
things.
Page 97
A N N E X 4
25
The nomination com
mittee should consist of a m
ajority
of independent non-executive directors. It may include
the chairman of the board, but should be chaired by
an independent non-executive director.
Duties
The comm
ittee should:
•be responsible for identifying and nom
inating for the
approval of the board, candidates to fill board
vacancies as and when they arise;
•before m
aking an appointment, the nom
ination
comm
ittee should evaluate the balance of skills,
knowledge and experience on the board and, in the
light of this evaluation, prepare a description of the
role and capabilities required for a particular appointment;
•review
annually the time required from
a non-executive
director. Perform
ance evaluation should be used to
assess whether the non-executive director is spending
enough time to fulfill their duties;
•consider candidates from
a wide range of back-
grounds and look beyond the “usual suspects”;
•give full consideration to succession planning in the
course of its work, taking into account the
challenges and opportunities facing the company
and what skills and expertise are needed on the
board in the future;
•regularly review
the structure, size and composition
(including the skills, knowledge and experience) of
the board and make recom
mendations to the board
with regard to any changes;
•keep under review
the leadership needs of the
organisation, both executive and non-executive, with
a view to ensuring the continued ability of the
organisation to compete effectively in the m
arketplace;
•m
ake a statement in the annual report about its
activities; the process used for appointments and
explain if external advice or open advertising has
not been used; the mem
bership of the comm
ittee,
number of com
mittee m
eetings and attendance of
mem
bers over the course of the year;
•m
ake publicly available its terms of reference explaining
clearly its role and the authority delegated to it by the
board; and
•ensure that on appointm
ent to the board,
non-executive directors receive a formal letter of
appointment setting out clearly w
hat is expected of
them in term
s of time com
mitm
ent, comm
ittee service
and involvement outside board m
eetings.
The comm
ittee should make recom
mendations to the
board:
•as regards plans for succession for both executive
and non-executive directors;
•as regards the re-appointm
ent of any non-executive
director at the conclusion of their specified term of
office;
•concerning the re-election by shareholders of any
director under the retirement by rotation provisions in
the company's articles of association;
•concerning any m
atters relating to the continuation in
office of any director at any time; and
•concerning the appointm
ent of any director to executive
or other office other than to the positions of chairman
and chief executive, the recomm
endation for which
would be considered at a m
eeting of the board.
MO
DU
LE
2
Stru
cturin
g
AN
NE
X 4
. PR
INC
IPA
L D
UT
IES
OF
TH
E N
OM
INA
TIO
N
AN
D A
UD
IT C
OM
MIT
TE
ES
The N
om
ination C
om
mittee
Following is a sum
mary of the principal duties of the N
omination C
omm
ittee, taken from D
erek Higgs, 2003,
Review
of the Role and Effectiveness of N
on-executive Directors. London: U
nited Kingdom
Departm
ent of Trade
and Industry (ww
w.dti.gov.uk/cld/non_exec_review
).
Page 98
A N N E X 4 26
Constitution
1. The board hereby resolves to establish a comm
ittee
of the board to be known as the A
udit [and Risk]
Com
mittee.
Mem
bership
2. The comm
ittee shall be appointed by the board. All
mem
bers of the comm
ittee shall be independent
non-executive directors of the company. The com
mittee
shall consist of not less than three mem
bers. A quo-
rum shall be tw
o mem
bers.
3. The chairman of the com
mittee shall be appointed
by the board from am
ongst the independent
non-executive directors.
Attendance at M
eetings
4. The finance director, head of internal audit and a
representative of the external auditors shall attend
meetings at the invitation of the com
mittee.
5. The chairman of the board, the C
EO
and other
board mem
bers shall attend if invited by
the comm
ittee.
6. There should be at least one meeting a year, or part
thereof, where the external auditors attend w
ithout
managem
ent present.
7. The company secretary shall be secretary of the
comm
ittee.
Frequency of Meetings
8. Meetings shall be held not less than [three] tim
es a
year, and where appropriate should coincide w
ith
key dates in the company's financial reporting cycle.
9. External auditors or internal auditors m
ay request a
meeting if they consider that one is necessary.
Authority
10. The comm
ittee is authorised by the board to:
a. investigate any activity within its term
s of reference;
b. seek any information that it requires from
any
employee of the com
pany and all employees are
directed to co-operate with any request m
ade by the
comm
ittee; and
c. obtain outside legal or independent professional
advice and such advisors may attend m
eetings
as necessary.
Responsibilities
11. The responsibilities of the comm
ittee shall be:
a. to consider the appointment of the external auditor
and assess independence of the external auditor,
ensuring that key partners are rotated at appropriate
intervals.
b. to recomm
end the audit fee to the board and
preapprove any fees in respect of non audit services
provided by the external auditor and to ensure that
the provision of non audit services does not impair
the external auditors' independence or objectivity;
The A
udit C
om
mittee
The following is a sum
mary of the principal duties of an audit com
mittee, taken from
Robert S
mith, 2003, A
udit
Com
mittees C
ombined C
ode Guidance London: Financial R
eporting Council (w
ww
.frc.org.uk).
Page 99
A N N E X 4
27M
OD
UL
E
2S
tructu
ringc. to discuss w
ith the external auditor, before the
audit comm
ences, the nature and scope of the audit
and to review the auditors' quality control procedures
and steps taken by the auditor to respond to
changes in regulatory and other requirements;
d. to oversee the process for selecting the external
auditor and make appropriate recom
mendations
through the board to the shareholders to consider at
the AG
M [annual general m
eeting];
e. to review the external auditor's m
anagement letter
and managem
ent's response;
f. to review the internal audit program
me and ensure
that the internal audit function is adequately
resourced and has appropriate standing within the
company.
g. to consider managem
ent's response to any major
external or internal audit recomm
endations;
h. to approve the appointment or dism
issal of the
head of internal audit;
i. to review the com
pany's procedures for handling
allegations from w
histleblowers;
j. to review m
anagement's and the internal
auditor's reports on the effectiveness of systems
for internal financial control, financial reporting and
risk managem
ent.
k. to review, and challenge w
here necessary, the
actions and judgements of m
anagement, in relation
to the interim and annual financial statem
ents before
submission to the board, paying particular attention to:
i. critical accounting policies and practices, and
any changes in them
ii. decisions requiring a major elem
ent
of judgement
iii. the extent to which the financial statem
ents
are affected by any unusual transactions in the
year and how they are disclosed
iv. the clarity of disclosures
v. significant adjustments resulting from
the audit
vi. the going concern assumption
vii. compliance w
ith accounting standards
viii. compliance w
ith stock exchange and other
legal requirements
ix. reviewing the com
pany's statement on
internal control systems prior to endorsem
ent
by the board and to review the policies and
process for identifying and assessing business
risks and the managem
ent of those risks by
the company; and
l. to consider other topics, as defined by the board.
Reporting P
rocedures
12. The secretary shall circulate the minutes of m
eet-
ings of the comm
ittee to all mem
bers of the board,
and the chairman of the com
mittee or, as a m
ini-
mum
, another mem
ber of the comm
ittee, shall
attend the board meeting at w
hich the accounts are
approved.
13.The comm
ittee mem
bers shall conduct an annual
review of their w
ork and these terms of reference
and make recom
mendations to the board.
14. The comm
ittee's duties and activities during the
year shall be disclosed in the annual financial
statements.
15. The chairman shall attend the A
GM
and shall
answer questions, through the chairm
an of the
board, on the audit comm
ittee's activities and their
responsibilities.
Page 100
A N N E X 5 28
AN
NE
X 5
. SA
MP
LE
CH
AR
TE
R
This example com
es from the C
orporate Governance Forum
of Turkey, which w
as formed by a
university and a business association.
1. General
1.1. Corporate G
overnance Forum of Turkey is
founded by Sabanci U
niversity (SU
) and Turkish
Industrialists’ and Businessm
en’s Association (TU
SIA
D).
1.2. The Forum w
ill be initially funded by the
founders and will seek synergies w
ith the founders’
strategies and programs to the extent it is possible.
2. Mission
2.1. The mission of the Forum
is “to support
improvem
ent of corporate governance practices and
legal and institutional framew
ork in Turkey through
research and educational programs as w
ell as to
play be actively involved in advocacy of good
corporate governance.”
The Forum recognizes the role of im
proved corporate
governance in reducing the vulnerability of emerging
markets to financial crises and in prom
oting better
performance and responsible behavior of the
corporations for the benefit of society in general.
The Forum contributes to the international efforts and
to the on-going debate on the role of Corporate
Governance for sustainable econom
ic growth by
fostering co-operation with other relevant organizations
and individuals.
3. Objectives
The Forum’s objectives driven from
its mission are
3.1. In the area of research
3.1.1. To undertake, comm
ission and disseminate
research on Corporate G
overnance in co-operation
with existing E
uropean and global research networks
3.1.2. To promote interaction betw
een academics in
Turkey from different disciplines bringing together a
critical mass of expertise and interest in C
orporate
Governance
3.1.3. To contribute to and advise on policy formulation
and best practice development based on objective
research and collective wisdom
of the Forum
3.2. In the area of training and education
3.2.1. To develop and offer training and education
programs for directors (B
oard mem
bers) of open
corporations . . . to help them appreciate the benefits
of better corporate governance and understand the
role and responsibilities of boards
3.2.2.To help develop and document professional
standards, best practices and accreditation criteria
for Boards and B
oard mem
bers
Page 101
A N N E X 5
29M
OD
UL
E
2S
tructu
ring
3.3. In the area of advocacy
3.3.1.To organize/support roundtables, forums and
conferences bringing together private sector
representatives, investors, NG
Os and experts from
both academia and the governm
ent
3.3.2. To disseminate and present to the public the
knowledge and the collective w
isdom of the Forum
in journals, publications, newspapers and other
media
3.3.3.To undertake or engage in any other activity
that will im
prove understanding and practice of
corporate governance
4. Lines of Action
4.1. The following lines of activities are considered
for the Forum.
a) Courses, training and education for
corporate Boards
b) Research and publications
c) Public lectures, sem
inars, workshops,
roundtables, conferences
d) International co-operation and presence
e) Advisory services and developm
ent of case studies
f) Resource and com
munication hub (P
ortal)
g) Prom
oting public debate on current issues of
Corporate G
overnance
4.2. Annual program
will m
ake use of available funds
and resources to define the specific activities for the
year in consideration.
5. Governance
5.1. The formal bodies of the Forum
are the
Supervisory B
oard and Executive B
oard
6. Supervisory B
oard
6.1. The highest governing body of the Forum is the
Supervisory B
oard.
6.2. The procedure to establish the first Council is
defined in the “Mem
orandum of U
nderstanding”
signed between the founders. O
nce established by
the “Mem
orandum of U
nderstanding” signed by the
Founders, the Council is a self-governing body.
6.3. The Council w
ill consist of minim
um 3 m
aximum
9 mem
bers. It may decide to alter its size and
composition for every year of operation to include
representatives of other future donors and
internationally renowned academ
icians; however the
council will alw
ays be composed of equal num
ber of
academic and nonacadem
ic mem
bers excluding the
Chairm
an who is alw
ays a nonacademic. M
aximum
term for C
ouncil mem
bership is 2 years. The Council
a) Elects its independent chairm
an (who is not a
representative of the Founders)
b) Invites and appoints new C
ouncil mem
bers as
appropriate
c) Defines and directs the m
ission and the strategy
of the Forum
d) Oversees the P
rogram O
ffice and reviews its
activities periodically
e) Approves the annual program
, budget and
accounts of the Forum
f) Agrees term
s of reference for advisory panels
g) Approves the am
endments to the S
tatute of the
Forum
h) Provides leadership for the Forum
i) Decides on potential donors and strategic partners
6.4. The Council physically m
eets twice a year.
Extraordinary m
eetings can be convened at the
request of any board mem
ber or the Forum’s
Director. D
ecisions are taken in consensus.
Decisions m
ay be taken between m
eetings by
correspondence on a no-objection basis.
Page 102
A N N E X 5 30
7. Program
Office
7.5. Program
Office consists of Forum
Director and
program staff as foreseen in annual program
s.
The statutory employer of the staff is S
U.
The Director
a) Prepares annual program
and budget for approval
by the Council
b) Is responsible for the implem
entation of the annual
program
c) Reports to the C
ouncil periodically
d) Utilizes available funds in accordance w
ith the priorities
and procedures agreed by the Council
e) Sets up advisory panels to support the activities of
the Forum based on the term
s of reference agreed
by the Council
f) Acts as the secretary of the C
ouncil
g) Represents the Forum
at academic circles, m
edia,
general public etc.
8. Financing and Auditing
8.1. The core funding of the Forum initially w
ill come
from the Founders. The principles of funding are
explained in the Mem
orandum of U
nderstanding.
The Forum is intended to becom
e self funded gradually.
The Forum w
ill also seek sponsorship from
corporations for specific activities or projects.
8.2. Financial control, audit and treasury function will
be performed by S
abanci University in accordance
with the M
emorandum
of Understanding.
8.3. Each advisory panel set up in accordance w
ith
the annual program w
ill submit a review
of Forum’s
activities to the Council to assess the effectiveness
of the Forum’s program
in fulfilling it’s function and
achieving it’s objectives.
Page 103
A N N E X 6
31M
OD
UL
E
2S
tructu
ring
A. P
reamble
The Institute should adhere to three core values:1. Integrity;2. R
espect for others; and3. O
penness.
It should also:
•R
ecognise obligations to all those with w
hom it has a
relationship—m
embers, em
ployees, customers,
suppliers and the wider com
munity;
•P
rotect its reputation by ensuring the trust andconfidence of those w
ith whom
it deals; •
Maintain the highest ethical standards in carrying out
its business activities. Corrupt practices of any sort
should not be tolerated; and•
Monitor ethical perform
ance regularly.
B. R
elations with M
embers
1. Provide products and services giving good value
and consistent quality, reliability and safety.- M
arketing products and services produced to accredited national and international standards or, in their absence, stringent safety tests;- G
iving adequate and accurate descriptions of products or services;- N
ot knowingly selling products w
hich harm
its mem
bers or customers.
2. Avoid untruths, concealm
ent and overstatement in
all advertising and other public comm
unications.
3. Provide a high standard of after-sales service in its
efforts to maintain m
ember or custom
er satisfactionand co-operation.
4. Ensure no gift of inducem
ent is made or received
to or from a m
ember or custom
er, which could be
construed as being intended as a bribe.
5. Avoid practices w
hich seek to increase sales byany other m
eans than legitimate m
erchandisingefforts.
6. Maintain the confidentiality of m
ember and
customer inform
ation.
C. R
elations with S
hareholders and other Investors
1. Protect the interests of shareholders and other
investors and will not do anything that w
ill advantageone class of investor at the expense of another.2. E
nsure accounting statements give a true and fair
view and are issued in a tim
ely manner.
3. Aim
to provide benefits and services to, and representation on behalf of, its m
embers.
4. Com
municate its business policies, achievem
entsand prospects honestly and in a tim
ely manner.
D. R
elations with E
mployees
1. Recruit and prom
ote employees on the basis of
their suitability for the job without discrim
ination interm
s of race, religion, national origin, colour, gender,sexual orientation, age, m
arital status or disabilityunrelated to the task in hand.
2. Seek to provide a clean, healthy, safe and secure
work environm
ent in line with best practice.
- Em
ployees for their part have a duty to take every reasonable precaution to avoid injury to them
selves, their colleagues and mem
bers of the public.- The Institute’s health care specialists are em
ployed as impartial advisors and their
actions are governed by their professional codes of ethics. A
ccess to clinical data is
AN
NE
X 6
. SA
MP
LE
CO
DE
OF
ET
HIC
S
This example w
as provided by the Institute of Business Ethics in the U
nited Kingdom
as a guideline for developing a code of ethics for a directors’ organization.
Page 104
A N N E X 6 32
confined to the occupational physicians and nurses and no confidential inform
ationm
ay be disclosed to any others w
ithout the consent ofthe individual em
ployee.3. E
xplain the purpose of its activities and individualjobs, foster effective com
munication and involve
employees in im
proving their work and that of the
enterprise as a whole.
4. Encourage and help em
ployees at all levels todevelop relevant skills and progress their careers.5. M
aintain a framew
ork of fair and just remuneration
policies and structures In recognition of the efforts ofthe individual.
- Pay system
s should seek to recognise both the contribution of the individuals and the perform
ance of the departments in w
hich they w
ork.6. E
nsure that information received by em
ployees inthe course of business dealings m
ay not be used forgain for them
selves, their families and friends or any
purpose except that for which it is given.
7. Ensure that any personal interests or that of a
mem
ber of one’s imm
ediate family in relation to the
Institute’s business must be disclosed. A
conflict ofinterest could include directorships, significant share-holdings and em
ployment of fam
ily mem
bers.8. N
ot tolerate sexual, physical or mental harassm
entof its em
ployees.9. E
nsure that appropriate steps are taken so thatem
ployee pension funds are responsibly governed,preserved and used for their proper purpose.10. Im
plement a disputes procedure and resolve
issues. 11. M
aintain effective comm
unication with each
employee as an individual, and w
ithin the naturalgroupings in w
hich they work. W
here appropriate, forindividuals to be suitably represented in negotiations.W
here Trade Union recognition agreem
ents exist,ensuring appropriate structures are in place to facilitateconstructive dialogue.
E. R
elations with S
uppliers
1. Aim
to develop relationships with suppliers based
on honesty, fairness and mutual trust.
2. Undertake to pay suppliers in accordance w
ithagreed term
s.3. N
ot use purchasing power unscrupulously.
4. Not receive im
proper inducement from
suppliersin return for concessions.
- Gifts and favours m
ust not be solicited;- G
ifts of money m
ust never be accepted;- R
easonable small token and hospitality m
ay be accepted provided they do not place the recipient under any obligation, are not capableof being m
isconstrued and can be reciprocatedat the sam
e level.- A
ny offer of gifts or favours of unusual size or questionable purpose should be reported im
mediately
to the employee’s m
anager and theInstitute S
ecretary.5. E
nsure that all information concerning the
relationship between the Institute and the supplier is
respected as confidential.
F. Relations w
ith Governm
ent and the LocalC
omm
unities
1. Com
mitm
ent to obey the law and to contribute to
the economic w
ell-being and social development of
countries and comm
unities where it conducts busi-
ness.2. R
espect the traditions and cultures of each country in w
hich it operates.3. Take into account the concerns of the w
ider com
munity including both national and local interests.
4. Encourage participation of em
ployees in the com
munity and civic affairs.
5. Support, as appropriate, com
munities in w
hich it operates. G
enerally donations should be minim
al as it should be the business of the individual m
embers
of the Institute to make donations. The Institute
should not make donations out of m
embership
subscriptions.
Page 105
A N N E X 1
MO
DU
LE
2
Stru
cturin
g
G. R
egulatory Authorities
1. Co-operate fully w
ith any regulations or regulatory authority having jurisdiction.
H. E
nvironment
1. Take responsibility, as pragmatically reasonable,
over the conservation and enhancement of the
environment in its broadest sense. It should
therefore:a. R
eview regularly and report on the
environmental perform
ance of existing operationsb. K
eep the comm
unities in which the Institute
operatesinform
ed of its environmental
programm
e.
I. Taxation
1. Ensure proper com
pliance with tax obligations.
2. Record and report all transactions, including those
where paym
ent is made in cash.
J. International
1. Where business practices differ in different countries
in which the Institute operates, w
orking for consistentprocedures am
ong subsidiaries and associates.2. C
onsider carefully before trading with, or investing
in, countries which are governed by regim
es which
are deemed repressive, that is, those w
hich do notadhere to the U
N C
harter of Hum
an Rights.
K. R
elations with C
ompetitors
1. Com
pete vigorously, but honestly.2. N
ot damage the reputation of com
petitors eitherdirectly or by im
plication or innuendo.3. E
nsure employees avoid discussing proprietary or
confidential information w
ith any contacts with
competitors.
4. Not attem
pt to acquire information regarding a
competitor’s business by disreputable m
eans. This includes industrial espionage, hiring com
petitors’em
ployees to obtain confidential information, urging
competitors’ personnel or custom
ers to discloseconfidential inform
ation, or any approach which is
not transparent.5. N
ot engage in anti-competitive practices or abuse
any position of market dom
inance.
L. Com
pliance and Verifications
1. Implem
ent applicable principles and elements of
the Code w
ithin the broad conditions of employm
ent.2. A
im to create the clim
ate and opportunities forem
ployees to voice genuinely held concerns aboutbehaviour or decisions that they perceive to beunethical.3. E
nsure that the Institute Secretary has the
responsibilityfor initiating and supervising the
investigation of all reports of material breaches of
conditions of employm
ent and ensure that appropriatedisciplinary action is taken w
hen required.4. E
nsure that auditors are asked to report on anypractice they discover in the course of their w
orkw
hich appears to breach the Code of E
thics.
A N N E X 6
33
Page 106
A N N E X 7 34
1. A director m
ust act honestly, in good faith and in
the best interests of the company as a w
hole.
2. A director has a duty to use due care and diligence
in fulfilling the functions of office and exercising the
powers attached to that office.
3. A director m
ust use the powers of office for a
proper purpose, in the best interests of the company
as a whole.
4. A director m
ust recognise that the primary
responsibility is to the company’s shareholders as a
whole but should, w
here appropriate, have regard
for the interests of all stakeholders of the company.
5. A director m
ust not make im
proper use of
information acquired as a director.
6. A director m
ust not take improper advantage of
the position of director.
7. A director m
ust not allow personal interests, or
the interests of any associated person, to conflict
with the interests of the com
pany.
8. A director has an obligation to be independent in
judgement and actions and to take all reasonable
steps to be satisfied as to the soundness of all
decisions taken by the board of directors.
9. Confidential inform
ation received by a director in
the course of the exercise of directorial duties
remains the property of the com
pany from w
hich it
was obtained and it is im
proper to disclose it, or
allow it to be disclosed, unless that disclosure has
been authorised by that company, or the person
from w
hom the inform
ation is provided, or is required
by law.
10. A director should not engage in conduct likely to
bring discredit upon the company.
11. A director has an obligation, at all tim
es, to comply
with the spirit, as w
ell as the letter, of the law and
with the principles of this C
ode.
AN
NE
X 7
. SA
MP
LE
CO
DE
OF
CO
ND
UC
T
This code of conduct is from A
ppendix 1 to the Articles of A
ssociation of the Australian Institute of
Com
pany Directors.
Page 108
36
Peer R
eview G
roup
To develop this toolkit and gather lessonslearned from
developing and developedcountries alike, the G
lobal Corporate
Governance Forum
invited representatives from
director trainingorganizations from
various regions of thew
orld to share their experiences and discuss m
ilestones and challenges in building director training organizations. The Forum
would especially like to thank
the following people for their contribution
to this toolkit by providing materials, exam
-ples, and extensive com
ments on building
director training organizations:
Cou
ntry con
tributors
Australia
Ian Dunlop,
Governance and S
ustainability Advisor
John Hall,
Australian Institute of C
ompany D
irectorsP
amela M
urray-Jones, A
ustralian Institute of Com
pany Directors
Brazil
Heloisa B
edicks, B
razilian Institute of Corporate G
overnanceB
engt Hallqvist,
Brazilian Institute of C
orporate Governance
Leonardo Viegas, B
razilian Institute of Corporate G
overnanceP
aulo Villares, B
razilian Institute of Corporate G
overnance
Canada
Bernard W
ilson, Institute of C
orporate Directors
Colom
biaP
aola Gutierrez Valandia, C
onfecámaras
Hong K
ongC
arlye Tsui, H
ong Kong Institute of D
irectors
IndiaS
heela Bhide,
Ministry of Finance and C
ompany A
ffairs N
. Balasubram
anian, Indian Institute of M
anagement B
angalore
IndonesiaA
nugerah Pekerti,
Institute for Corporate D
irectorship
IrelandS
usan Thornber, Institute of D
irectors in Ireland
Kenya
Karugor G
atamah,
Centre for C
orporate Governance
New
Zealand
David N
ewm
an, Institute of D
irectors New
Zealand
Th
e Ph
ilippinesJesus Estanislao, Institute of C
orporate Directors
Jon
athan
Juan
Mo
reno
, Institute of C
orporate Directors
Russia
Igor Belikov,
Russian Institute of D
irectorsA
lexander Ikonnikov, Independent D
irectors Association
South A
fricaR
ichard Wilkinson,
Institute of Directors in S
outhern Africa
TurkeyM
elsa Ararat,
Corporate G
overnance Forum, Turkey
United K
ingdomP
hilippa Foster Back,
Institute of Business E
thicsA
lan Morkel,
Institute of Directors, U
K
United States
Roger R
aber, N
ational Association of C
orporate Directors
Alexandra Lajoux,
National A
ssociation of Corporate D
irectors
Zam
biaP
atrick Chisanga,
Institute of Directors Zam
bia
Zim
babwe
Peter B
roadway,
Institute of Directors Zim
babwe
Intern
ation
al con
tributors
Alexander B
erg, W
orld Bank G
roupG
eoffrey Bow
es, C
omm
onwealth A
ssociation of C
orporate Governance
Michael G
illibrand, C
omm
onwealth S
ecretariatD
arrin Hartzler,
International Finance Corporation
Florencio Lopez de Silanes,
Yale’s International Institute for C
orporate Governance
Mike Lubrano,
International Finance Corporation
Alyssa M
achold, G
lobal Corporate G
overnance ForumA
nne Molyneux,
CS
InternationalB
ehdad Now
roozi, W
orld Bank G
roupD
jordjija Petkoski,
World B
ank InstituteS
ue Rutledge,
World B
ank Group
John Sullivan,
Center for International P
rivate Enterprise
CO
NT
RIB
UT
OR
S
Page 109
M O D U L E 3
Training
BU
ILD
ING
DIR
EC
TO
R T
RA
ININ
G O
RG
AN
IZA
TIO
NS
MO
DU
LE
3
TR
AIN
ING
3
Global CorporateGovernance Forum
T O O L K I T 1
Building
Director Training
Organizations
1818 H Street NWWashington, DC 20433 USA
Telephone: +1 (202) 458-1857Facsimile: +1 (202) 522-7588
Internet: www.gcgf.orgEmail: [email protected]
Global CorporateGovernance Forum
P R I N T E D O N R E C Y C L E D PA P E R
Page 110
TOOLKIT 1
Building Director Training Organizations
Project OfficerMarie-Laurence Guy, Global Corporate Governance Forum
ConsultantsChris Pierce, Institute of Directors, UK Kerrie Waring, Institute of Directors, UK
EditorsMarty Gottron, Stockbridge, MassachusettsNancy Morrison, Falls Church, Virginia
Graphic designStudio Grafik, Herndon, Virginia
PrintingUpstate Litho, Rochester, New York
Page 111
MO
DU
LE
3
Training
Glo
ba
l C
orp
ora
teG
overn
an
ce Fo
rum
TO
OL
KI
T
1
Building
Director Training
Organizations
Page 112
Copyright 2003.
The International Bank for
Reconstruction and D
evelopment/
The World B
ank1818 H
Street N
W
Washington, D
C 20433
All rights reserved.
The findings, interpretations, and conclusions expressed in this publicationshould not be attributed in any m
annerto the W
orld Bank, to its affiliated
organizations, or to mem
bers of itsboard of Executive D
irectors or thecountries they represent. The W
orldB
ank does not guarantee the accuracyof the data included in this publicationand accepts no responsibility for anyconsequence of their use.
The material in this w
ork is protected bycopyright. C
opying and/or transmitting
portions or all of this work m
ay be aviolation of applicable law
. The World
Bank encourages dissem
ination of itsw
ork and hereby grants permission to
the user of this work to copy portions of
this work for user’s personal,
noncomm
ercial use, without any right to
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orks herefrom. A
ny other copying oruse of this w
ork requires the expressw
ritten permission of the W
orld Bank.
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pleteinform
ation to:The W
orld Bank P
ermissions D
eskO
ffice of the Publisher
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treet NW
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or to:The C
opyright Clearance C
enter, Inc.222 R
osewood D
riveD
anvers, MA
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ll queries on rights and licenses including subsidiary rights should beaddressed to:The O
ffice of the Publisher
The World B
ank1818 H
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ashington, DC
20433Fax: +
1 202-522-2422.
Page 113
MO
DU
LE
3
Trainin
g1
Training
Training o
rganizatio
ns can introd
uce directo
rs to b
est practices in
corp
orate g
overnance and
give them
new skills and
know
ledg
e to m
anage
their com
panies b
etter. Directo
r training o
rganizatio
ns can also p
rovid
e the
certification that so
me co
mp
anies and reg
ulators are b
eginning
to exp
ect.
But training
pro
gram
s must b
e planned
and im
plem
ented w
ith care to
ensure that the training is relevant and
meets sp
ecific learning need
s of
directo
rs.
WH
AT
YO
U W
ILL
FIN
D IN
TH
IS M
OD
UL
E
This m
od
ule offers info
rmatio
n on d
evelop
ing, d
elivering, and
manag
ing a
training p
rog
ram that m
eets the needs o
f directo
rs, including
how
to set
up a certificatio
n pro
gram
. The m
od
ule discusses:
•Targ
eting the ap
pro
priate d
irector m
arkets
•Id
entifying the p
rofessio
nal requirem
ents and learning
needs o
f directo
rs
•D
evelop
ing a training
curriculum
•D
evelop
ing a syllab
us and testing
individ
ual courses
•Tailo
ring training
metho
ds to
the learning styles o
f directo
rs
•M
anaging
and staffing
a training p
rog
ram
•E
valuating a training
course
•C
ertifying d
irectors
Page 114
2
DE
VE
LO
PIN
G A
TR
AIN
ING
CU
RR
ICU
LU
M
The principles of good governance and the skills and knowledge to prom
ote
director professionalism should form
the core of any training program for
directors. Generally, a good curriculum
should be well-structured,
comprehensible, relevant, up to date, and tailored to m
eet director concerns
and specific learning needs.
Developing a training program
is a multistep process involving:
•Targeting the specific set of directors w
hich will be the focus of training
programs
•Identifying the international and local standards of best practice that directors
in the target market should strive to m
eet
•Identifying the skills and know
ledge that directors should have, including the
specific laws and regulations in the country w
ith which directors m
ust comply
•Identifying the specific learning needs of directors in the target m
arket
•D
eveloping the curriculum—
the framew
ork of the program—
that will provide
directors with the training they need
•D
eveloping a syllabus that outlines the content of individual courses, including
supporting case studies, reading materials, and exercises
•Testing the individual courses to ensure that the learning m
aterial and its
delivery is comprehensive, com
prehensible, and suitable to the needs and
learning styles of the course participants and contributes to enhancing their
performance
CERT
IFICAT
EA
ward
given to
a particip
ant for m
eeting the training
pro
gram
’s go
als or d
emo
nstrating
pro
ficiency to p
erform
accord
ing to
a set of b
enchmarks. C
ertificates, som
etimes
called d
iplo
mas, are typ
ically award
ed after the p
articipant has p
assed an exam
ination
or test. S
om
e org
anizations p
resent a certificate of attend
ance confirm
ing that an
individ
ual has attended
and co
mp
leted a training
course.
CERT
IFICAT
ION
The p
rocess o
f confirm
ing that co
urse particip
ants perfo
rm o
r meet the training
pro
gram
’s go
als, usually by p
assing an exam
.
CO
UR
SET
he event(s) throug
h which the kno
wled
ge and
skills in the syllabus are p
rovid
ed to
particip
ants.
CU
RR
ICU
LUM
The fram
ewo
rk of a training
pro
gram
. A curriculum
is typically d
ivided
into a num
ber o
f
mo
dules reflecting
a range o
f areas or to
pics to
be ad
dressed
.
SYLLA
BU
ST
he subjects stud
ied fo
r a particular co
urse or seq
uence of co
urses. The syllab
us can
include vario
us types o
f training m
aterials such as case studies, read
ing m
aterials, and
exercises.
G L O S S A R Y
Page 115
MO
DU
LE
3
Trainin
g3
Targ
eting
the m
arket
Before the organization sets up a curriculum
and collects training materials, it
needs to identify its target market to understand its specific learning needs.
Training courses can be extremely diverse, and organizations that train directors
are ill advised to assume that “one size fits all.” O
ffering a curriculum that covers
the full gamut of director training is not financially feasible for m
ost organizations,
especially young ones. The first step in developing a training program is
therefore to segment the director m
arket and then focus on specific segments.
The targeting defines the market to be pursued and hence the curriculum
priorities and the content of the syllabus. It is important that a start-up
organization begin with clearly set, lim
ited objectives that are deliverable in terms
of content, schedule, quality, and financial viability. Once these objectives are
met, the organization can gradually broaden its offerings and activities.
A w
ell-targeted market can also prove extrem
ely useful in developing a
mem
bership base and organizing events or other professional development
services.
For further information on m
embership developm
ent and marketing services,
refer to MO
DU
LE 4: EXPAN
DIN
G.
There are several ways to segm
ent the market. The m
ost comm
on are by:
•O
rganization, such as directors of companies listed on stock exchanges,
directors of small and m
edium-size enterprises, directors of fam
ily
businesses, directors of multinational com
panies, or directors of state-
owned enterprises.
•Function, such as chairm
en, chief executive officers, chief operating officers,
chief financial officers, company secretaries, nonexecutive or independent
directors, or mem
bers of specific board comm
ittees such as audit
comm
ittees.
•Level of experience, such as aspiring directors, new
ly appointed directors,
or experienced directors.
•S
ector, such as industry, infrastructure, services, or banking and finance.
•G
eographic location, such as country, major cities, neighboring countries,
region, or international.
Once a training organization has divided the director m
arket into relevant
segments, it then needs to consider several questions in deciding w
hich of
these segments to target. W
hat is the size of the potential market? W
hat is
TH
INK
ING
P
OIN
TW
hich target market is a
priority for your organization?
Page 116
4
the ability of the organization to provide quality training in the specific field?
Can revenue from
the program cover the costs of developing and delivering
the program? C
an the program be started from
scratch, or can it be developed
with existing m
aterial?
An organization is w
ise to revisit its segmentation and targets on a regular basis,
as the needs of companies and directors change over tim
e.
SE
GM
EN
TIN
G T
HE
DIR
EC
TO
R M
AR
KE
T
AU
STR
ALIA
The Australian Institute of C
ompany D
irectors has many program
s
to suit different target markets. These include the “G
oing Public”
program, aim
ed at private companies that are ready to go public.
It is tailored to the individual company and delivered in-house.
BR
AZ
IL
The Brazilian Institute of C
orporate Governance has segm
ented its
market and runs separate courses for different business
segments, such as fam
ily businesses, small and m
edium-size
companies, and large public com
panies.
CA
NA
DA
The Canadian Institute of D
irectors focuses on nonexecutive,
external directors of companies listed on the S
tock Exchange in
Toronto. It has focused on this segment on the grounds of
potential sponsorship for its courses from interested parties, such
as financial institutions.
TH
E PH
ILIPP
INES
The Institute of Corporate D
irectors in the Philippines initially
focused its training on serving directors of banks. It is now
expanding its training to directors of state-owned com
panies and
listed companies.
E X A M P L E S
Page 117
MO
DU
LE
3
Trainin
g5
Collectin
g th
e train
ing
conten
t
Once the target m
arket has been identified, the next step is to collect the
relevant information that w
ill help structure a detailed curriculum and develop
the content of the syllabus. To begin with, a review
of existing best practices
and regulations will provide the organization w
ith a clear view of the overall
professional requirements expected from
a broad range of directors. Review
ing
specific professional requirements for the target m
arket will then help craft the
content of the syllabus.
Review
ing best practice
It is useful to gather information about international as w
ell as local best
practices in the field of corporate governance and the role of the board,
if such information is not already available. N
ational codes of best practice
(if available) and international principles and guidelines may provide
a suitable foundation for reviewing existing best practice. E
xamples of
international best practice include the OE
CD
Principles of C
orporate
Governance (w
ww
.oecd.org), the Corporate G
overnance Guidelines
produced by the Com
monw
ealth Association of C
orporate Governance
(ww
w.cacg-inc.com
), and the Standards for the B
oard, produced by the
Institute of Directors, U
K (w
ww
.iod.com).
Review
ing norms and regulations
Typically the organization reviews the law
s, regulations, and trends that define
or may affect directors’ duties and liabilities in the country. C
ultural norms that
affect the way directors conduct their jobs are also taken into account.
Many corporate governance principles are generic, but the legal fram
ework
and context of their applications vary from country to country. For exam
ple,
accountability and honesty are generic principles expected of all directors
everywhere. B
ut the appropriateness of a two-tier versus a unitary board
structure is determined by local circum
stances. Localized examples and
illustrations are invaluable in making the training courses m
ore relevant
and comprehensible to participants.
Review
ing specific professional requirements
To adapt the syllabus to the target market, it is essential to review
both the
specific professional requirements of directors w
ithin the target market and the
Page 118
6
specific issues these directors may face in the board room
. This review includes
gathering the specific laws and regulations that affect the target m
arket. For
example, disclosure requirem
ents and procedure can vary considerably
depending on whether a director is serving on the board of a listed com
pany,
a bank or other financial institution, or a privately held firm. This im
portant
research phase helps determine w
hat learning objectives are important and
relevant to the target market. E
specially in cases where director training is
mandatory for listed com
panies, the organization may w
ant to discuss the
specific professional requirements expected from
directors with the relevant
regulatory body or stock exchange to ensure that the training course meets
its goals and is duly recognized by these authorities.
Identifying specific learning needs
Surveys, sem
i-structured interviews, and focus groups m
ay be useful tools in
helping to identify specific learning needs and therefore in satisfying the training
needs of directors. To be most effective, this should be a step-by-step process,
with the inform
ation gained at the first step used to develop the questioning in
the next step, and so on. For example, the first step m
ight be a survey that
determines how
much the target m
arket understands about the purpose, role,
and key tasks of a board. The next step might be interview
s with som
e of those
surveyed to gain a better sense of how w
ell the group understands the board’s
strategic planning role, for example. The last step m
ight be conducting focus
groups with a carefully selected group to determ
ine if a course on risk
managem
ent would be useful and relevant to directors. In conducting the
research, specific attention can be given to relevant country- and market-
specific details.
The surveys, interviews, and focus groups m
ust be carefully planned to elicit
the most useful answ
ers on a range of subject areas. The target population
for the surveys and interviews is a cross-section of interested parties including
practitioners, academics, and potential course leaders. The practitioners
should include both experienced and inexperienced directors, either
interviewed separately or participating in different focus groups. In addition,
a group of experts should be consulted for each subject area to ensure
that the right issues are being discussed and that the research is neither too
broadly nor too narrowly focused. W
hile each subject area should be addressed
separately, it is important to m
aintain oversight of all subjects to ensure
consistency of approach.
Page 119
Developin
g a
curricu
lum
Once the key areas of know
ledge and skills needs for the target market have
been identified, they can be arranged in an appropriate curriculum fram
ework
and drawn up as a series of detailed syllabuses outlining the content of
individual courses. Care m
ust be taken to ensure that individual courses meet
specific objectives that form the intended learning outcom
es for the training
and development program
s. In settling on the curriculum and syllabuses, it
may be helpful to consult w
ith several experts, including course leaders,
subject experts, and specialists in adult learning.
The format for delivering the training program
is also an important
consideration. The organization may choose to conduct one type of offering or
a variety. For example, it m
ay offer a week-long training course on the
essential skills and knowledge required by directors, together w
ith a longer
course that goes into each of these essential subjects in more depth and a
seminar series on specific topics of interest such as a new
law that affects
corporate accounting practices. Depending on its purpose, a training course
may last a few
hours or continue over years. Because directors are busy
people, most training organizations offer several short training courses (lasting
two to seven days) w
ithin a year that cover a range of topics. (A sum
mary, by
country, of selected director training programs is presented in annex 1.)
Developin
g a
syllabu
s
In designing individual courses, course leaders work closely w
ith the program
manager, lead tutors, and any advisory group the organization m
ight have set
up for the purpose.
Key to the design of individual courses is the selection and com
pilation of
appropriate training materials such as supplem
entary reading lists, reference
materials, graphics, exercises, and case studies. The m
aterials and
documentation used in the syllabus need to be:
•P
ertinent to the subject
•C
onsistent with international best practices
•C
onsistent with national codes of best practice
•C
onsistent with national law
s and regulations
•O
f interest to course participants
MO
DU
LE
3
Trainin
g7
TH
INK
ING
P
OIN
TW
hat kinds of training formats
would best suit your target m
arket?
Page 120
8
SA
MP
LE
PR
OG
RA
M F
OR
A T
RA
ININ
G S
EM
INA
R
Fo
llow
ing is the p
rog
ram fo
r a short o
rientation sem
inar for b
ank
directo
rs presented
by the Institute o
f Co
rpo
rate Directo
rs in the
Philip
pines.
DA
Y 1
8:30–
9:00 amA
rrival and R
egistratio
n
9:00–
9:10C
ourse Intro
ductio
n
9:10–
10:00A
n Introd
uction to
Co
rpo
rate Go
vernance in the
Philip
pines
10:00–
10:45C
orp
orate G
overnance fo
r Bank B
oard
s – Key
Princip
les
10:45–
11:00B
reak
11:00–
12:30C
orp
orate G
overnance: T
he Practice
12:30–
1:30Lunch
1:30–
3:30R
isk Manag
ement Issues fo
r Bank B
oard
s
3:30–
3:45B
reak
3:45–
4:45Leg
al and R
egulato
ry Issues for P
hilipp
ine Bank
Directo
rs
4:45–
5:15S
elf-Assessm
ent of the B
oard
of D
irectors
DA
Y 2
9:00 –
10:30Intro
ductio
n to C
orp
orate G
overnance
Sco
recards and
Presentatio
n of P
hilipp
ine
Co
rpo
rate Go
vernance Refo
rm E
fforts
10:30 – 10:45
Break
10:45 – 11:30
Co
urse Wrap
-Up
and W
ay Fo
rward
11:30 – 12:00
Acco
mp
lishments o
f ICD
and B
SP
Evaluatio
n
Sheets
(Ad
ditio
nal examp
les of training
curricula from
India and
Indo
nesia
can be fo
und in annexes 2 and
3.)
Page 121
MO
DU
LE
3
Trainin
g9
Case studies should as m
uch as possible cover situations that are familiar
to the participants. (For an example on how
to develop effectively
integrated case studies, see annex 4; for an example of a supplem
entary
reading list, see annex 5.)
Once a course syllabus is prepared, for exam
ple, on directors’
fiduciary duties, it may be adapted into program
s of different length
or focus or aimed at different target audiences w
ith only slight changes.
The organization might also find training m
odules or syllabuses
prepared by other director training organizations that can be
adapted to suit its training needs.
The syllabus is a continually evolving body of knowledge and skills
whose m
aintenance and updating are as important as its initial creation.
The content of knowledge of certain corporate governance topics m
ay
change rapidly. For example, the publication of a corporate governance
report in a country can have a significant impact upon
the content of courses. Any changes should be checked against
the original syllabus to ensure that course content and materials
continue to meet the learning objectives.
Testing
a cou
rse
Before a course is launched, it should be tested under carefully
managed and m
onitored conditions. Such a pilot test usually involves
running the course with an audience that is aw
are of the trial nature
of the program and can offer know
ledgeable and objective reviews
on the content, materials, and presentation of the course. If possible,
it is advisable to run a test of the same course tw
ice using two different
leaders. Afterw
ard, the two leaders can com
pare notes and ensure
consistency of approach.
The test audience should be representative of the target market for
the course. The organization may w
ant to invite the test audience to
attend the full program of courses and then solicit feedback on their
relevance. One positive side effect of involving participants in this w
ay
at this stage is that the participants then market the program
to their
colleagues by “word of m
outh”—often the m
ost effective marketing tool.
Page 122
10
WO
RK
ING
WIT
H A
PA
RT
NE
R
An organization that trains directors, especially one that is just starting up,
may not have the expertise, m
aterials, and the financial resources to develop
and deliver a training program on its ow
n. While the training program
will
eventually become one of the m
ain activities of the organization, the time and
money spent on it could divert attention and resources from
other programs
that might generate revenues in the short term
. The organization might
therefore benefit from partnering w
ith other groups within the country, such as
a university or business school, or seek support from w
ell-established director
training organizations in other countries. Each solution has its
benefits and drawbacks. If the course is given in partnership w
ith another
organization, the relationship and responsibilities of the partnership should
be spelled out.
CO
LLEC
TIN
G T
RA
ININ
G M
AT
ER
IALS
: CO
LOM
BIA
,K
EN
YA
, AN
D Z
AM
BIA
Directo
r training o
rganizatio
ns are likely to have to
overco
me
various challeng
es as they develo
p their training
pro
gram
s. Fo
r
examp
le, the Centre fo
r Co
rpo
rate Go
vernance in Kenya had
to
cop
e with a lack o
f academ
ic research and d
ocum
entation o
n
go
vernance practices in A
frica. Co
nfecámaras in C
olo
mb
ia had to
deal w
ith the lack of literature in S
panish exp
laining the b
enefits of
directo
r develo
pm
ent. Partnering
with ano
ther org
anization o
r
seeking sup
po
rt from
existing netw
orks m
ay help in co
llecting
adeq
uate training m
aterials.
The Institute o
f Directo
rs in Zam
bia uses training
pro
gram
s
develo
ped
by the C
om
mo
nwealth A
ssociatio
n of C
orp
orate
Go
vernance (ww
w.cacg
-inc.com
). It is currently mo
difying
som
e
of these training
pro
gram
s so that they ad
dress the sp
ecific and
specialized
needs o
f the Zam
bian b
usiness environm
ent while
retaining internatio
nal go
vernance princip
les. (An o
utline of the
core curriculum
of the Institute o
f Directo
rs in Zam
bia can b
e
found
in annex 8.)
E X A M P L E S
TH
INK
ING
P
OIN
TW
ould your organizationbenefit by partnering w
ithanother group? W
hat type oforganization w
ould be yourm
ost effective partner?
Page 123
Pa
rtnerin
g w
ith a
un
iversity
Som
e organizations that train directors have established close ties with
universities or business schools, especially in the start-up phase. In addition to
supplying much-needed expertise w
ith curriculum developm
ent, universities and
business schools may also be able to supply in-kind services, such as
classroom space and trainers.
Som
e organizations that worked closely w
ith universities at the beginning
eventually decided to operate their training program independently. The training
organization may w
ant to offer a teaching style that is less theoretical than the
typical academic approach and m
ore geared to real business problems. O
r the
organization may find a business school’s traditional em
phasis on managem
ent
training too limiting and not sufficiently focused on the needs of directors. O
r it
may decide that it has accum
ulated the financial resources and expertise
necessary to become autonom
ous.
MO
DU
LE
3
Trainin
g11
PA
RT
NE
RIN
G W
ITH
A U
NIV
ER
SIT
Y
IRELA
ND
The Institute o
f Directo
rs in Ireland has und
ertaken a joint
venture with U
niversity Co
llege D
ublin. T
he IoD
Centre fo
r
Co
rpo
rate Go
vernance at UC
D, as the jo
int venture is called,
pro
vides sched
uled co
urses on all asp
ects of co
rpo
rate
go
vernance and custo
mized
courses d
elivered in-ho
use.
TH
E PH
ILIPP
INES
The Institute o
f Co
rpo
rate Directo
rs in the Philip
pines w
as
orig
inally set up as an auto
nom
ous extensio
n of the U
niversity of
Asia and
the Pacific. It has no
w reco
gnized
the need to
be o
pen
to d
ifferent educatio
nal establishm
ents and has b
ecom
e
indep
endent o
f the university, althoug
h the institute and the
university maintain lo
ose ties.
E X A M P L E S
Page 124
12
Pa
rtnerin
g w
ith a
n esta
blished
train
ing
orga
niza
tion
Som
e well-established director training organizations, such as the Institute
of Directors, U
K, the U
.S. N
ational Association of C
orporate Directors, and the
Australian Institute of C
orporate Directors, have been sharing their expertise
or are in the process of developing international departments to prom
ote their
expertise and provide support to young organizations worldw
ide to develop
their director development activities.
Find
ing
support th
roug
h n
etworks
Another option available to help organizations in developing their training
program is netw
orking with other director training organizations that face or
have faced similar challenges. N
etworking can be both productive and cost-
effective. Several such netw
orks have been established:
•The C
omm
onwealth netw
ork.The Com
monw
ealth Association for C
orporate
Governance (C
AC
G) w
as established in 1998 to promote excellence in
corporate governance in the Com
monw
ealth. The CA
CG
has two prim
ary
objectives: to promote good standards in corporate governance and business
practice throughout the Com
monw
ealth; and to facilitate the development of
appropriate institutions to advance, teach, and disseminate such standards.
WO
RK
ING
WIT
H A
N E
ST
AB
LIS
HE
DO
RG
AN
IZA
TIO
N: U
NIT
ED
KIN
GD
OM
The Institute o
f Directo
rs, UK
is currently pro
viding
advice to
the
Co
rpo
rate Go
vernance Fo
rum o
f Turkey in the follo
wing
areas:
•D
evelop
ment o
f a syllabus and
curriculum
•R
ecruitment o
f faculty with the ap
pro
priate
credentials
•D
evelop
ment o
f training sup
po
rt materials using
samp
le
training m
aterials
•D
evelop
ment o
f infrastructure to sup
po
rt the pro
gram
,
including
practical issues such as venue
•Q
uality assurance
E X A M P L E S
Page 125
MO
DU
LE
3
Trainin
g13
•The East A
sian Netw
ork.With leadership from
the Philippine Institute of
Corporate D
irectors, the Institutes of Directors in East A
sia (IDEA
.net) was
successfully launched to strengthen corporate governance practices and
standards in the region. IDEA
.net includes mem
bers from C
hina, Hong K
ong,
Indonesia, Korea, M
alaysia, the Philippines, S
ingapore, Taiwan, and Thailand.
The network has developed “train the trainer” program
s and is currently
developing a corporate governance scorecard to enable cross-border
assessment of com
panies and banks. Coordination of the netw
ork rotates from
country to country; Thailand is currently in charge of coordinating the network.
PA
RT
NE
RIN
G W
ITH
INT
ER
NA
TIO
NA
LO
RG
AN
IZA
TIO
NS
CO
MM
ON
WEA
LTH
SECR
ETAR
IAT
The C
om
mo
nwealth S
ecretariat has develo
ped
a generic
directo
r training p
rog
ram in co
rpo
rate go
vernance that has been
adap
ted and
used b
y directo
r training o
rganizatio
ns in several
Co
mm
onw
ealth countries. D
esigned
to teach essential skills and
know
ledg
e, this particular p
rog
ram co
nsists of a five-d
ay course
with nine m
od
ules covering
such issues as corp
orate g
overnance
structures and system
s, bo
ard d
ynamics and
perfo
rmance,
business strateg
y and finance fo
r directo
rs, and co
rpo
rate ethics
and so
cial respo
nsibility. (A
com
plete d
escriptio
n of ratio
nale of
the Co
mm
onw
ealth core curriculum
can be fo
und in annex 6.)
GLO
BAL C
OR
PO
RAT
E GO
VER
NA
NC
E FOR
UM
The F
orum
build
s local cap
acity to und
ertake reform
by
strengthening
the org
anizations that can b
ring ab
out chang
e.
Exam
ples includ
e:
•R
esidential p
rog
rams fo
cusing o
n training d
irectors o
f
com
panies and
org
anizations active in co
rpo
rate go
vernance
from
East A
sia and Latin A
merica
•W
orksho
ps o
n directo
r training and
curriculum d
evelop
ment in
Africa, E
ast Asia, E
urop
e and C
entral Asia, and
Latin Am
erica
(An o
utline of a C
orp
orate G
overnance Lead
ership P
rog
ram can
be fo
und in annex 7.)
E X A M P L E S
Page 126
14
•The G
CG
F network.The G
lobal Corporate G
overnance Forum is supporting
the development of a global director training netw
ork linking organizations
actively seeking to develop director training. These organizations and
associations may be based in academ
ic, private, or public sector
institutions. The objective of the network is to identify needs, pool
resources and experience, exchange best practices, develop core
curriculum based on international standards and adapted to local
circumstance, and build local capacity for training.
•The Latin A
merican netw
ork.The Latin Am
erican Institute for Corporate
Governance (form
erly the Latin Am
erican Corporate G
overnance Netw
ork)
was launched by A
rgentina, Brazil, C
olombia, and M
exico to exchange
experiences and materials that foster corporate governance reform
efforts
and director development. The institute is currently chaired by B
razil’s
Institute of Corporate G
overnance and coordinated by the Colom
bian
Confecám
aras and has been joined by chambers of com
merce, director
institutes and associations, and corporate governance organizations from
Bolivia, C
hile, Peru, and Venezuela. The institute has recently developed a
website w
here people from around the w
orld can access information and
check out various initiatives (ww
w.latincorporategovernance.net).
Pa
rtnerin
g w
ith a
n in
terna
tiona
l orga
niza
tion
To support and encourage director training activities in developing countries,
some international organizations have developed core training curricula that
are adapted to the local environment.
DE
LIV
ER
ING
A T
RA
ININ
G C
OU
RS
E
Most training program
s provide a course of a defined length in a specified
location. These courses typically consist of presentations and interactive
workshops w
here participants build their knowledge and skills.
Training is typically most effective w
hen it is delivered in a comfortable setting
by competent and credible instructors w
ho have experience as directors. An
organization that trains directors may hold its training courses in its ow
n
offices or, if it is partnering with a university or business school, in classroom
space. Courses custom
ized for an individual client are likely to be conducted
at the client’s location or at a selected retreat, where office distractions can
be minim
ized.
Page 127
MO
DU
LE
3
Trainin
g15
Altern
ative lea
rnin
g option
s
Organizations that train directors m
ay want to explore other possibilities for
delivering training and professional development program
s especially to
satisfy individual learning needs and accomm
odate specific time schedules:
•Individual learning opportunities.To accom
modate individual learning
needs, some organizations are providing one-on-one tutoring support,
where directors are given the opportunity to have open access to
facilities and source materials. This alternative is typically location-specific
but time-flexible. O
ther options are developing coaching and mentoring
services, in which an experienced director w
orks individually with a less
experienced director on specific skills and needs.
Further information on coaching and m
entoring can be found in MO
DU
LE 4:
EXPAN
DIN
G.
•D
istance learning.This delivery mechanism
is neither time-specific nor
location-specific, as it provides learning materials in appropriate form
ats that
directors can study at their convenience, either from hom
e or from
the office or while traveling. This can be especially useful for courses
that last over a longer period of time and for directors based in
rural areas.
DE
LIV
ER
ING
TR
AIN
ING
PR
OG
RA
MS
: BR
AZ
IL
The B
razilian Institute of C
orp
orate G
overnance (IB
GC
) has trained
697 students fro
m m
ore than 100 co
mp
anies since 1998. The
institute believes that its co
mp
etitive advantag
e in training d
erives
from
:
•S
ynergy w
ith other IB
GC
activities and b
rand
•Links w
ith stock m
arkets and reg
ulators
•N
onacad
emic, hand
s-on p
ractical app
roach
•S
enior instructo
rs who
are able to
com
municate w
ith students o
f
different b
ackgro
unds, ag
es, and ed
ucation levels
•C
onstant up
dating
and internatio
nal coo
peratio
n
E X A M P L E S
TH
INK
ING
P
OIN
TA
re there more flexible learning
options you can offer to potentialcourse participants?
Page 128
16
•E-learning.Initially a subset of distance learning, e-learning is em
erging as a
new type of learning opportunity. The com
bination of desktop or laptop
computers and Internet netw
orking enables interactivity between the
directors and the trainers and remains extrem
ely flexible for the directors.
•B
lended learning.This alternative is a combination of elem
ents from all the
delivery mechanism
s outlined above. It is designed to meet the learning
needs and day-to-day time constraints of directors but is quite difficult to
manage effectively.
If the curriculum has been developed on a m
odular basis (by topic, for
example), directors can decide how
to tackle each element of their chosen
syllabus on a pick-and-mix basis. They m
ay elect to attend some
presentations and workshops, w
ork with printed m
aterials at home,
and use online facilities in the office or at home. D
espite the convenience,
many directors find the com
puter lacks the motivational energy they get from
attending, for example, a tw
o-day workshop w
here they can converse directly
with other directors from
different companies about com
mon problem
s and
ways to solve them
.
All these alternative delivery m
echanisms can be supported by help lines
through which directors can raise learning issues w
ith course leaders or
administrative issues w
ith the office staff.
Learn
ing
styles
Training directors is no easy task. Typically directors are a heterogeneous
group of people from various backgrounds. They m
ay be reluctant to go
through training after years of experience in dealing with boards. D
irectors
may som
etimes show
initial apathy and “know it all” attitudes.
Research into learning effectiveness suggests that people have preferred
learning styles. Integrating these various learning styles in the organization of
the course may be of considerable help in catching and retaining the attention
of participants.
In a classic 1992 study, a research team led by P
eter Honey and A
lan
Mum
ford classified learning styles into four categories:
•A
ctivists involve themselves in new
experiences, enjoy imm
ediate
experiences, and are open-minded and enthusiastic about anything new
.
Their philosophy is, “I’ll try anything once.” They tend to act first and
consider the consequences afterward.
Page 129
MO
DU
LE
3
Trainin
g17
•R
eflectorsare cautious by nature and like to observe, ponder experiences,
collect data, and think thoroughly before drawing any conclusions. They tend
to postpone reaching definitive conclusions.
•Theorists integrate observations into sound theories, think problem
s through
logically, and tend to be perfectionists. Their philosophy prizes rationality
and logic.
•P
ragmatists try out techniques to see if they w
ork in practice, search out new
ideas, experiment w
ith applications, and get on with things. Their philosophy
is, “There is always a better w
ay” and “If it works, it’s good.”
(Honey and M
umford’s w
ork is summ
arized in Honey and M
umford 2000. The
questionnaire can be found at ww
w.peterhoney.co.uk)
Som
e learning styles arise from cultural and educational norm
s rather than
individual preferences. If a training program is presented in a single form
at,
then unforeseen difficulties may arise. S
ome individuals m
ay find the delivery
method unappealing because it does not fit w
ith their learning style or
their perceived social position. For example, participants accustom
ed
to an instructional approach may find interactive w
orkshops unsettling
and ineffective.
DE
LIV
ER
ING
A T
RA
ININ
G C
OU
RS
E
“Directo
rs typically co
me fro
m a w
ide rang
e of b
ackgro
unds and
have a
practical b
ias. They are d
emand
ing, d
o no
t suffer foo
ls glad
ly, have
limited
time, and
are not p
articularly academ
ically orientated
. Thus to
retain their interest the develo
pm
ent activities must b
e relevant, to the
po
int, high q
uality, and d
evoid
of technical jarg
on.
“Given these characteristics o
f the directo
r market…
a princip
le-based
app
roach, w
here the princip
les of a p
articular issue are clearly
articulated and
simp
le case studies then used
to d
emo
nstrate the
princip
les, wo
uld seem
app
rop
riate. In my exp
erience, this is far
preferab
le to the typ
ical alternative of d
etailed case stud
ies in which the
princip
les are never draw
n out o
r are subm
erged
in a mo
rass of num
eric
analysis.”—Ian D
unlop
, form
er head o
f the Australian Institute
of C
orp
orate D
irectors
Page 130
18
To meet this variety of needs, the delivery m
echanism should include a m
ixture
of learning strategies:
•A
n experience of some kind, such as case studies or discussions of specific
experiences
•A
period of facilitated reflection, such as Q&
A sessions or group exercises
•A
n opportunity to draw conclusions, such as sum
marizing lessons learned,
or discussion groups
•A
chance to plan the use of the experience in practice, such as role playing
or exercises where participants w
ork on a case involving the principles and
techniques they learned during the course
A w
ide range of learning activities is available (see figure, below). The table on
page 19 lists the methods and indicates som
e advantages and disadvantages.
TH
E R
EL
AT
IVE
EF
FE
CT
IVE
NE
SS
OF
VA
RIO
US
LE
AR
NIN
G M
ET
HO
DS
Lecture
Read
ing
Aud
io Visual
Dem
onstration
Discussion G
roup
Practice b
y Doing
Teaching Others
Learning method
s effectiveness indicators
Note: G
ood techniques can boost the effectiveness indicator by as much as 15 percent.
Source: N
ational Training Laboratories, Bethel, M
aine.
Page 131
MO
DU
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3
Trainin
g19
LE
AR
NIN
G A
CT
IVIT
IES
MET
HO
D
Brainsto
rming
Case stud
ies
Gro
up d
iscussion
Gro
up exercise
Learner presentatio
n
Lecture
Plenary feed
back session
Ro
le play
Tutorial
PU
RP
OSE
Prob
lem solving,
consolidating p
reviouslearning.
Pro
blem
solving
, d
evelop
ing analytical and
decisio
nmaking
skills,m
od
ifying attitud
e,introd
ucing and consol-
idating
other sessio
ns.
Pro
blem
solving
, form
ing
or m
old
ing attitud
es,stim
ulating interest,
sharing kno
wled
ge.
Develo
ping
interactive or
interperso
nal skills, teamb
uilding
, pro
blem
solving
.
Giving
inform
ation o
nsp
ecialized sub
ject.
Getting
across facts,
princip
les, concep
ts.
Rep
orting
back to
ind
ividual g
roup
.
Develo
ping
interperso
nalskills, resp
ond
ing to
changing
situations.
Conveying facts, principles,
concepts. Possible to build
in skill development.
AD
VAN
TAG
ES
Uses learners’ exp
eriences andid
eas. Active intellectually.
Pro
vides realistic fram
ewo
rk. C
an use perso
nal experience
of learners. P
articipative.
High learner activity. O
pportunity to share entire group’s ideas, facts, and opinions.
Hig
hly particip
ative. Mo
tivation
of learners can b
e high.
Exercise selected
to m
eet sp
ecific aim.
Involves exp
ertise of g
roup
mem
ber. C
an develo
pp
resentation skills.
Useful fo
r large g
roup
s or to
co
ver a large am
ount o
f info
rmatio
n. Relatively
inexpensive.
Share d
iffering p
erspectives o
fvario
us gro
ups.
Creates interest. A
ctivep
articipatio
n. Live examp
les and
emo
tions invo
lved.
Closer contact betw
een tutor andlearner. P
ace can be modified if
feedback suggests need.
DISA
DVA
NTA
GES
Can b
e time co
nsuming
. So
me
learners may no
t particip
ate. Hig
hlevel o
f tutor skills need
ed.
Can b
e time-co
nsuming
. So
metim
esd
ifficult to valid
ate. A cred
ibility g
apcan o
ccur if scenario d
iffers from
learners’ experience.
Tim
e consum
ing; need
s to b
e well
contro
lled. P
revious level o
fkno
wled
ge need
ed b
y tutor.
Pro
cess skills can be o
bscured
by
exercise. Exp
erience and facilitatio
nskills need
ed b
y tutor. D
ifficult top
redict o
utcom
e.
Involves o
nly the presenter if
subject is no
t of g
eneral interest.
Little chance of learner feed
back.
Overlo
ad o
f inform
ation can o
ccur. R
estricted to
know
ledg
e input.
Req
uires go
od
presentatio
n skills.R
etention is p
oo
r.
Can rep
eat similar areas. G
oo
d tuto
rskills need
ed to
facilitate.
Ro
le players m
ay benefit m
ore than
ob
servers. Success d
epend
s on ro
lep
layers.
Attitud
e change m
ay be sho
rt lived.
Tutor m
ust be exp
ert in the subject.
Page 132
20
OV
ER
SE
EIN
G A
ND
MA
NA
GIN
G T
RA
ININ
GA
CT
IVIT
IES
Typically the organization’s governing body (and its professional development
comm
ittee if there is one) oversees the development and m
aintenance of the
training program. It should m
onitor all director training and development issues
including:
•The developm
ent of the curriculum and initial syllabus
•The m
anagement of the long-term
maintenance of the program
•The evaluation of courses by participants
•The certification process of course participants
•C
omplaints and appeals procedures
•M
atching all proposed course materials against the set criteria
•B
udgeting and pricing of courses
•Q
uality control
To help with that task, the organization m
ight want to establish a course
approvals team, com
posed of practitioners, academics, and course leaders
who w
ould review and approve any change in course content.
The organization might also w
ant to create a course leaders group that is
responsible for monitoring changes in broad subject areas and funneling that
information to the course leaders responsible for developing new
content for the training program.
Ma
na
gem
ent
The efficient managem
ent of a training program for directors requires skilled
managers and trainers as w
ell as support staff to ensure the smooth running
of the training programs.
A program
manager or head of professional developm
ent is typically responsible
for the development and m
anagement of the entire training and professional
development program
. The program m
anager oversees the design of the
materials to ensure consistency of approach in all aspects, including house
style, delivery strategy and mechanism
s, and overall learning design.
Lead tutorsare responsible for developing the training courses in their speciality
subject area. This includes drawing up a training plan as w
ell as gathering
associated training materials such as guidance notes for course leaders, case
Page 133
MO
DU
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3
Trainin
g21
studies, slides, activity sheets, and reference notes. Lead tutors should
collaborate with the appropriate course leaders as they prepare the course
training plan. Mature organizations have found that having a lead tutor w
ho
draws up the course syllabus in consultation w
ith the course leaders is more
effective than having several different people each working on a different section
or aspect of the training program, only to find subsequent inconsistencies
and gaps.
Course leaders
are responsible for contributing to the development of the training
courses and, of course, for presenting them. The role of the course leader is a
subtle mixture of teacher, trainer, facilitator, tutor, com
municator, and coach. The
knowledge, experience, authority, and gravitas of the course leaders are
extremely im
portant to ensure that directors leave the course feeling that the
time and energy put into it w
as worth their w
hile. Individuals that are serving as
directors are already knowledgeable on business issues and expect an
extremely high quality of service.
Course leaders can be professors or professionals, business executives, or
directors of companies—
in short, course leaders need to have expertise in the
field, be willing to train, and be good at it. W
here possible, the organization
should ensure that the delivery of courses is “by directors for directors.”
Course leaders are seldom
on the staff of the training organization but are
instead available on a contract basis. It is advisable to have at least two course
leaders competent to deliver the training for any given subject area or course.
The program m
anager is responsible for appointing course leaders, but others,
including subject experts, should be consulted to consider how appropriate the
trainer’s experience and knowledge are for a particular course. Form
ing a pool
of course leaders is a key process in ensuring the quality of training.
Recruiting and selecting specific trainers involves the follow
ing considerations:
•H
ow experienced the person is in the relevant subject area(s). M
ost training
organizations find that course leaders who have served or are currently
serving on an organization’s board of directors have more credibility w
ith
course participants than trainers without such experience.
•H
ow know
ledgeable the person is in the relevant subject. That assessment
can usually be made from
the person’s résumé (C
V) and an interview
.
•H
ow com
petent the person is as a trainer. Subject know
ledge and ability to
comm
unicate with a group are tw
o different skills. A potential trainer should
Page 134
22
be observed in an appropriate practice session before being asked to join the
training team.
•H
ow w
ell the person manages the training environm
ent. A good trainer is
capable of efficiently organizing small group activities and plenary sessions,
maintaining a focus on the learning outcom
es, and limiting verbose or
unfocused contributors. Again, observation of a practice session can reveal a
potential trainer’s skill in this area.
In many developing countries there is a scarcity of trainers experienced w
ith
issues of corporate governance. To overcome that scarcity and to help develop
appropriate training styles, the organization may w
ant to run “train the trainers”
workshops on a regular basis.
Ma
na
gem
ent su
pport
An organization that trains directors w
ill need support staff to deal with:
•C
ourse administration and operations, including course bookings, sending
out information in advance of the course, arranging for necessary room
s,
food, special needs, and equipment, and providing staff support on the day(s)
of the course itself.
•C
ourse support materials, including designing, printing, and distributing
training materials.
•A
ccounts and finance, including billing and overseeing the training program
budget.
TR
AIN
ING
TH
E T
RA
INE
RS
: KE
NY
A
The C
entre for C
orp
orate G
overnance in K
enya has a netwo
rk of
trained trainers o
n which it d
raws. T
he trainers are pro
fessional
directo
rs who
themselves have b
een trained in co
rpo
rate
go
vernance, have excelled, and
have been trained
as trainers
under the ausp
ices of the center. Trainers also
underg
o reg
ular
refresher courses to
review the m
aterials and up
grad
e their skills.
In add
ition, they are evaluated
by p
articipants at every sessio
n at
which they facilitate, and
any issues are raised in an evaluatio
n. E X A M P L E S
Page 135
MO
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3
Trainin
g23
•S
ales and marketing, including gathering and analyzing data on potential
customers, designing and producing m
arketing materials, planning sales
campaigns and prom
otional activities, and contacting potential clients.
This department w
ill need to gather and analyze data on potential
customers.
•P
rogram m
anagement, including oversight of course content and delivery
and all other quality assurance issues.
Bu
dg
eting
Training courses can provide substantial revenue streams. B
ut costs are
also substantial. They include tutor fees and expenses, course materials,
brochure production, marketing, room
rental, catering, and technical
support.
From the m
oment that the organization decides to establish a professional
development program
for directors, it must set up the financial procedures
for managing the program
. In brief the financial issues to be taken into
account include:
•P
reparation of budgets.Budgets should be prepared for all stages of the
process, especially the substantial start-up investment required for
research and development of the program
, with realistic estim
ates of
ongoing costs and revenue.
•The pricing policy for courses.O
bviously the organization will w
ant to
recover the cost of producing and delivering the training plus a
percentage. The prices for the courses should be comparable to prices
for similar professional courses in the country or region. The price should
not be more than the m
arket will bear nor less than the course costs to
produce and present.
•B
reak-even points for programs and individual courses. To find that
point, a calculation must be m
ade to determine the num
ber of directors
that must take any given course to cover all fixed and variable costs
associated with that course. P
olicies governing payment procedures and
cancellation fees must also be set.
For further information on budgeting procedures, see M
OD
ULE 5:
MO
NITO
RIN
G.
Page 136
24
EV
AL
UA
TIN
G T
HE
TR
AIN
ING
PR
OG
RA
M
Any training program
, whether it is a sem
inar, a short training course, or a long
professional development program
, must be constantly evaluated and updated
to keep abreast of new developm
ents in the business or regulatory environment.
As the Institute of C
orporate Directors in the P
hilippines has noted, “There is no
substitute to continual testing and improvem
ent based on actual runs of our
training program to m
any different directors. Each training experience for us is
new. W
e are constantly looking for ways to im
prove.”
It is important that organizations put procedures in place to ensure that each
course meets director learning needs w
hile meeting the overall goals of the
organization. Each course should m
eet certain standards and goals. Each
course should have an identifiable target market and be financially viable. A
nd
each course should fit well into the overall curriculum
. Resources, including
qualified trainers and materials, m
ust be available.
The various elements of a training program
that should be closely monitored and
updated or modified w
hen necessary include:
•C
ourse content and its relevance to directors, in line with syllabus
development
•E
ffectiveness of course delivery
•S
upport and learning materials
•C
ourse administration, including booking procedures, housekeeping,
and catering matters
•P
rocedures for handling customer dissatisfaction and form
al complaints
For more inform
ation on setting up an effective complaints procedure, see
MO
DU
LE 4: EXPAN
DIN
G.
Solicitin
g feed
back
Feedback from directors taking the courses is probably the m
ost effective way
to monitor their quality and relevance. A
traditional feedback or evaluation form
can be used to collect information from
participants at the end of the day.
Page 137
MO
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3
Trainin
g25
Other evaluation techniques include soliciting opinions in discussions
with participants at the end of a course and doing follow
-up opinion
surveys on courses. If the organization assesses the performance of
course participants in some w
ay, the assessments m
ay also provide
useful information on both the content and delivery of the course and
on the impact in the board room
as a result of the course.
(For examples of course evaluation form
s, see annexes 9 and 10.)
Feedback should be used not only to evaluate and, where necessary,
improve individual courses and program
s, but also to evaluate the
overall range of the programs. The program
manager and all course
leaders associated with any given course title should participate in
sessions evaluating that particular program. It m
ay also be useful to
have the person(s) responsible for developing and producing the
training materials for the course available for such events.
En
surin
g q
ua
lity
In addition to gathering and responding to feedback on the course
content, the organization should also review the perform
ance of
course leaders. The purpose of these reviews is not to look for
faults, but to confirm that the training standards are being m
et
and continually improved.
The reviews should be as objective as possible and should include:
•O
bservation by the lead tutor or an independent expert
of each course leader running a program
•D
iscussion of the performance and any corrective action
agreed to be necessary
•C
onsideration of feedback on the course leader from
course attendees
Page 138
26
DIR
EC
TO
R C
ER
TIF
ICA
TIO
N
In most places, a director does not need official qualifications to sit on a board.
Yet certification is growing in the w
ake of increasing demand for know
ledgeable
directors and public pressure for accountability. A variety of organizations
therefore have started to develop director certification programs.
Typically organizations that train directors give certificates to directors who have
attended a course or a program. The certificate is a public acknow
ledgement
that the director has taken his or her professional training seriously.
RE
QU
IRIN
G D
IRE
CT
OR
TR
AIN
ING
: MA
LA
YS
IAA
s one o
f its listing req
uirements, the K
uala Lump
ur Sto
ck
Exchang
e in Malaysia is req
uiring all d
irectors o
f pub
licly listed
com
panies to
attend training
courses. S
om
e of the to
pics co
vered
in this training includ
e the fiduciary ro
le of d
irectors, the reg
ulatory
framew
ork g
overning
listed co
mp
anies, and und
erstanding
the new
Malaysian C
od
e on C
orp
orate G
overnance.
AC
CR
ED
ITA
TIO
N: U
NIT
ED
KIN
GD
OM
The Institute o
f Directo
rs, UK
has develo
ped
the pro
fessional
Chartered
Directo
r accreditatio
n op
en to all its m
emb
ers and
fellow
s. Cand
idates m
ust dem
onstrate that they have the
know
ledg
e and exp
erience required
to b
ecom
e a mem
ber o
f the
pro
fession. T
he accreditatio
n is given up
on the successful
com
pletio
n of a training
pro
gram
and exam
ination in co
mp
any
directio
n and a p
rofessio
nal review o
f the directo
r’s com
pany
perfo
rmance.
CE
RT
IFIC
AT
ION
: HO
NG
KO
NG
The H
ong
Ko
ng Institute o
f Directo
rs has been o
rganizing
training
courses lead
ing to
a Dip
lom
a in Co
mp
any Directio
n, based
on its
develo
ped
definitio
n of C
ore C
om
petencies fo
r Directo
rs. The co
re
com
petencies co
ver know
ledg
e and skills in the ro
les and
respo
nsibilities o
f directo
rs, strategic co
rpo
rate functions,
develo
pm
ent of the b
oard
and b
usiness ethics, as well as p
ersonal
qualities and
attributes. Training
courses are held
in Eng
lish,
Canto
nese, and P
utong
hua.
E X A M P L E S
Page 139
MO
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Trainin
g27
Assessm
ent
Som
e director training organizations have gone further and developed
assessment procedures for evaluating how
much directors have learned from
their training and professional development courses.
There are many reasons for assessing individual directors w
ho have attended
training programs:
•To recognize his or her level of achievem
ent at the end of a course
•To establish his or her progress during a course and give
feedback on it
•To diagnose strengths and w
eaknesses, which can lead to rem
edial action
or extended learning if needed
•To consolidate the learning done so far—
a learning experience in itself
•To m
otivate the director
•To build confidence and credibility in his or her likely perform
ance level
in the future
•To determ
ine his or her aptitude to perform the duties of a board m
ember
•To conform
to the requirements of external regulatory bodies
Developing an assessm
ent procedure can be a lengthy and costly exercise and
therefore one in which organizations m
ay want to engage only if training is
mandatory or once they are w
ell established. In deciding whether to develop an
assessment procedure, the organization should consider legal requirem
ents for
training as well as cultural and social factors. S
ome cultures, as w
ell as
experienced directors in general, may be reluctant to participate in an
assessment process in w
hich, for example, failure becom
es public knowledge or
seniority is not recognized. In addition an organization should bear in mind that
its assessments m
ust be objective and effective. Subjective and incorrect
assessments could be harm
ful not only to the directors being assessed but also
to the overall credibility of the training organization.
The first step in establishing an assessment process for directors is to clarify the
purpose. In very simple term
s, success in an examination or an assessm
ent
indicates that the director has achieved a standard established for the specific
activity. The next steps, in order, are selection of an appropriate assessment
method and developm
ent of any written exam
ination to be used, development
of the criteria by which the director is evaluated, the appointm
ent of examiners
and eventually the creation of an examination board, and finally the developm
ent
of a procedure for appealing an assessment.
Page 140
28
The range of methods for assessing know
ledge and skills is wide and needs to be
managed by specialists w
ho can ensure the standards, reliability, and validity of
the process.The table below gives exam
ples of some typical director training
activities and the assessment standards that m
ight be used with each.
SA
MP
LE
AS
SE
SS
ME
NT
ST
AN
DA
RD
S F
OR
TY
PIC
AL
TR
AIN
ING
AC
TIV
ITIE
S
TR
AIN
ING
AC
TIV
ITY
A o
ne-day co
nference on a
pro
po
sed chang
e in emp
loym
ent
law ad
dressed
by g
overnm
ent
emp
loym
ent specialists, atto
rneys,
a corp
orate finance d
irector, and
trade unio
n representatives
A stud
y day o
n aspects o
f
emp
loym
ent law reg
arding
the
rights o
f certain mino
rity gro
ups in
small co
mp
anies
One year full-tim
e po
stgrad
uate
academ
ic course
A series o
f courses o
n a variety of
directo
r-related sub
jects, including
presentatio
ns, gro
up activities, and
repo
rts to p
lenary sessions
A three-m
onth p
eriod
of learning
supp
orted
by a senio
r directo
r
acting as a co
ach or m
entor
ASSESSM
ENT
STAN
DA
RD
Attend
ance certificate confirm
ing
one d
ay of co
ntinuing p
rofessio
nal
develo
pm
ent, which can also
be
credited
to fulfilling
som
e bro
ader
develo
pm
ent course
Co
rrect answers to
75 percent o
f
the questio
n on a m
ultiple-cho
ice
written test
An o
verall achievement sco
re of 70
percent in w
ritten examinatio
ns of
know
ledg
e, a written research
repo
rt, and o
ral presentatio
n
An o
verall achievement sco
re of 75
percent o
n written tests o
f
know
ledg
e and assessm
ent of
team skills b
y an ob
server
Statem
ent of achievem
ent for
inclusion in a co
ntinuing
pro
fessional d
evelop
ment p
ortfo
lio
Page 141
MO
DU
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3
Trainin
g29
FU
RT
HE
R R
EA
DIN
G
Clutterbuck, D
avid, and David M
egginson. 1999. Mentoring Executives and
Directors. London: B
utterworth H
einemann.
Dick, W
alter, Lou Carey, and Jam
es Carey. 2000. The S
ystematic D
esign of
Instruction. California: A
ddison Wesley.
Garratt, B
ob. 2000. The Learning Organization: D
eveloping Dem
ocracy at Work.
New
York: Harper C
ollins.
Honey, P
eter, and Alan M
umford. 2000.
The Learning Styles H
elper’s Guide.
London: Peter H
oney Publications
Mager, R
oger. 1997. Preparing Instructional O
bjectives. Atlanta: C
enter for
Effective P
erformance.
Morrison, G
ary. 2003. Designing Effective Instruction. London: John W
iley.
PAR
N (P
rofessional Associations R
esearch Netw
ork). 2001. Continuing
Professional D
evelopment in the U
K: A
ttitudes and Experiences of Practitioners.
Bristol, U
.K.
——
—. 2002. C
ontinuing Professional D
evelopment in the U
K: Evaluation of
Good P
ractice. Bristol, U
.K.
Pierce, C
hris. 2001. The Effective Director: A
n Essential Guide to D
irector and
Board D
evelopment. London: K
ogan Page.
Wiggins, G
rant. 1998. Educative Assessm
ent. New
York: Jossey-Bass.
Page 143
MO
DU
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3
Trainin
g
A N N E X E S
31
AN
NE
XE
S
1.E
xamp
les of training
courses
2.S
amp
le curriculum fo
r an orientatio
n pro
gram
, India
3.S
amp
le curriculum, Ind
onesia
4.C
ase study p
reparatio
n for a d
irector training
course
5.S
amp
le reading
list for a training
course
6.S
amp
le core curriculum
, Co
mm
onw
ealth
7.S
amp
le train-the-trainers course
8.S
amp
le residential training
course, Z
amb
ia
9.S
amp
le course evaluatio
n form
, Brazil
10.Sam
ple co
urse evaluation fo
rm, U
K
Page 144
A N N E X 1 32
AN
NE
X 1
.E
XA
MP
LE
S O
F T
RA
ININ
G C
OU
RS
ES
AU
ST
RA
LIA
INS
TIT
UT
E O
F C
OM
PA
NY
DIR
EC
TO
RS
Pro
gram
descrip
tion
•A
dvanced
Pro
gram
.Explores and develops good practices for directors and boards of public com
panies andgovernm
ent entities. Develops director research and inquiry skills and extends strategic thinking and learning.
Explores board and C
EO
relationships and board dynamics.
•C
om
pany D
irectors C
ourse.D
efinitive director program covering corporate governance and board
effectiveness, strategy, finance, law, risk, and current issues facings directors.
•D
irectors E
ssentials Certificate P
rog
ram
—R
ole of the director —
Introduction to board meetings
—Introduction to financial statem
ents for directors—
Assessing com
pany performance
—D
irectors as leaders—
Introduction to the strategic role of boards—
Trade practices—
Issues for director-owners
—Issues for not-for-profits
•C
ontinuing
Ed
ucation.The A
ICD
offers a range of courses under the category of continuing education,including program
s for:—
The new director
—B
oard director and CE
O assessm
ent—
Com
pany audits—
Forensic investigation for directors—
Fundamentals of financial statem
ents for directors—
Going public
—H
andling difficult situations in the boardroom—
Implem
enting great governance —
An introduction to not-for-profit governance
—Im
plementing a com
pliance program—
Skills updates
—S
trategic financial skills—
The strategic board—
The role of the chairman
•Tailo
red (in-ho
use) pro
gram
s•
Wo
rkshop
s
Backg
round
Director training and developm
ent has been taking place in Australia for the last 30 years. The C
ompany
Directors C
ourse was launched in 1975. S
ince 1990 more than 10,000 participants have com
pleted the program.
The AIC
D has a sophisticated exam
ination system and aw
ards a diploma to successful candidates of the
Com
pany Directors C
ourse. In 2003 it added two additional aw
ards: a Certificate in D
irectors Essentials
(successful completion of six m
odules from the D
irectors Essentials suite of program
s) and an Advanced D
iploma
(successful completion of the A
dvanced Program
).
The AIC
D undertakes regular quality assurance through a system
of participant surveys, participant interviews,
and spot audits of programs. It currently licenses m
aterials to two local universities and to the Thai Institute of
Directors A
ssociation.
Co
ntactP
amela M
urray-Jones, General M
anager National E
ducation, pmurray-jones@
companydirectors.com
.au
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g
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BR
AZ
ILIA
N IN
ST
ITU
TE
OF
CO
RP
OR
AT
E G
OV
ER
NA
NC
E
Pro
gram
descrip
tion
The curriculum for the director training program
(duration, 64 hours) covers:•
Introduction to corporate governance •
Corporate tax and securities law
and regulations•
Interpretation of financial statements
•Finance and capital m
arkets•
Boardroom
practice•
Strategic direction
•D
ividend policy and investor relations
In addition the institute runs a Corporate G
overnance in Family B
usiness Program
(duration, 48 hours) that covers:•
Introduction to corporate governance•
Family governance
•Fam
ily law•
Planning and control system
s•
Finance and capital markets
•S
trategic direction
Backg
round
Local training started in 1997 and by February 2003, 697 executives from m
ore than 100 companies had been
trained through 24 courses in three Brazilian cities.
Co
ntact P
aulo Villares, P
[email protected]
.br
HO
NG
KO
NG
INS
TIT
UT
E O
F D
IRE
CT
OR
S
Pro
gram
descrip
tion
The Hong K
ong Institute of Directors (H
KIoD
) offers the following program
s leading to a diploma:
•C
redits P
rog
ram.S
eminars are offered throughout the year on an advance schedule, w
hereby attendees may
selectively enroll, for seminars that fit in their ow
n timetables. The fulfillm
ent of a required number of sem
inarsattended, including the m
andatory modules, qualifies an attendee for a D
iploma in C
ompany D
irection. Thesem
inars can be attended as a stand-alone course and diploma holders m
ay continue to attend selectedcourses for updating purposes.
•F
astrack Pro
gram
s.From tim
e to time, a packaged course is offered on a fixed schedule. A
n attendee who
enrolls for this course must com
plete the minim
um required num
ber of sessions of the course and make a
project presentation before qualifying for a diploma. These Fastrack program
s are usually jointly organized with
another body and designed to target specific groups. An exam
ple is the course leading to a Professional
Diplom
a in SM
E D
irectorship.
Apart from
these courses, regular educational programs include half-day public forum
s with a team
of speakersfrom
HK
IoD's experienced m
embers to enlighten the public on the roles and responsibilities of directors and the
significance of corporate governance.
Backg
round
The Hong K
ong Institute of Directors has been organizing training courses leading to a diplom
a in company
direction, based upon HK
IoD's developed definition of core com
petencies for directors. The training programs are
held in English, C
antonese, and Putonghua.
Co
ntactC
arlye Tsui, Executive@
hkiod.com
Page 146
A N N E X 1 34
TH
E IO
D C
EN
TR
E F
OR
CO
RP
OR
AT
E G
OV
ER
NA
NC
E A
T U
CD
, IRE
LA
ND
Pro
gram
descrip
tion
The program, now
in its second year of operation, includes ten practical courses. The courses assist directors inim
proving their personal and professional effectiveness while giving them
time to look at their broader
responsibilities in terms of shareholder satisfaction and the needs of stakeholders. The program
covers the coreissues faced by every director: •
Regulatory developm
ents—current developm
ents in corporate governance•
Directors' responsibilities
•R
ole of nonexecutive directors and company boards
•Finance for nonfinance directors
•R
isk managem
ent and the role of nonexecutive directors•
Role, function, and responsibilities of audit com
mittees
•B
usiness strategy and company boards
•R
ole of nonexecutive directors in improving business perform
ance•
Nonexecutive directors and executive rem
uneration and incentives
The IoD C
entre for Corporate G
overnance at UC
D has also recently introduced in-house custom
ized courses forthe directors of public and private com
panies, family businesses, sem
i-state organizations, charities and othernot-for-profit entities. The center also plans to launch an accredited program
of education for directors in 2004.Full details of this and other education program
s will be available on w
ww
.corporategovernance.ie
Backg
round
To meet the grow
ing educational needs of company directors, The Institute of D
irectors in Ireland and University
College D
ublin jointly established The IoD C
entre for Corporate G
overnance at UC
D in February 2002. In its first
year of operation, the center ran six courses covering all aspects of corporate governance. The center alsobegan w
ork on several research projects and will produce papers and reports on an ongoing basis.
Co
ntact S
usan Thornber, [email protected]
CO
RP
OR
AT
E G
OV
ER
NA
NC
E C
EN
TR
E O
F K
EN
YA
Pro
gram
descrip
tion
The residential courses comprise:
•C
orporate governance•
Board dynam
ics and human resources developm
ent•
Strategy
•Finance
•Legal
•G
eneral
Backg
round
The Centre has developed training m
aterials based upon the guidelines put out by the Com
monw
ealthA
ssociation of Corporate G
overnance (CA
CG
) and has adapted them to m
eet the needs of Kenya and the
region. The center has run about twelve five-day residential courses based upon the C
AC
G m
odel in Kenya, and
one each in Malaysia, R
wanda, and Zim
babwe. In addition the center has conducted tw
o intensive training-the-trainers courses in K
enya, and one in Zimbabw
e. It has held consultative meetings w
ith professional associationsand hopes to introduce corporate governance as a subject of study in professional courses offered byprofessional bodies. It has developed postgraduate and diplom
a curriculum and has initiated discussions w
ithlocal universities w
ith the objective of facilitating introduction of diploma and graduate courses in corporate
governance.
Co
ntactK
arugor Gatam
ah, Executive D
irector, Pscgt@
insightkenya.com
Page 147
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35
PH
ILIP
PIN
ES
INS
TIT
UT
E O
F C
OR
PO
RA
TE
DIR
EC
TO
RS
Pro
gram
descrip
tion
•Training
Pro
gram
.The institute offers an Orientation S
eminar on C
orporate Governance to corporate
directors of both banks and nonbanks. It offers the same sem
inar to other professionals who serve as
key reputational agents for corporate governance. Specialized courses on audit com
mittees, risk
managem
ent comm
ittees, governance comm
ittees, and financial issues (financial numeracy) for
directors are also on offer. These form part of the C
ore Course on C
orporate Governance that the
institute is developing and eventually offering jointly with other director training organizations in the
East A
sia network (ID
EA
.net). •
Certificatio
n Pro
gram
(to be established). Jointly with other director training organizations in E
ast Asia,
under the auspices of the Global C
orporate Governance Forum
and Yale University, the institute w
ill becertifying as P
rofessional Directors those w
ho complete all the requirem
ents of the Core C
ourse onC
orporate Governance. A
dditional requirements for certification include acceptance of a subm
ittedcase on a successful initiative tow
ards corporate governance improvem
ent and a comm
itment to
continuing professional education as well as to a code of professional ethics. The corporate directors
and other professionals who gain certification are adm
itted as Fellows of the institute.
Backg
round
The Institute has been providing training to directors of banks since the end of 1999.
Co
ntactJesus E
stanislao, [email protected]
RU
SS
IAN
INS
TIT
UT
E O
F D
IRE
CT
OR
S
Pro
gram
descrip
tion
The corporate director course consists of six eight-hour courses:•
Introduction to corporate governance•
How
to make an effective board
•The board's role in developing and im
plementing strategy
•The board's role in risk m
anagement and restructuring
•The board's role in ensuring disclosure and transparency
•Finance for non-financial directors
Backg
round
The Russian Institute of D
irectors has developed special courses for board mem
bers and company
secretaries. Betw
een 2001 and 2002, 200 board mem
bers attended courses.
Co
ntactIgor B
elikov, Belikov@
rid.ru, ww
w.rid.ru
Page 148
A N N E X 1 36
INS
TIT
UT
E O
F D
IRE
CT
OR
S O
F S
OU
TH
ER
N A
FR
ICA
Pro
gram
descrip
tion
One-d
ay Overview
Pro
gram
s•
Corporate governance, directorship, and board effectiveness
Two
-day P
resentations
•B
oard construction, director selection, board and individual director evaluation•
Legal aspects affecting organizations and individual directors•
Succession planning, coaching, m
entoring to world-class standards
•R
olling out corporate governance through business and government organizations
Three-d
ay Directo
r Develo
pm
ent Pro
gram
s•
Finance for nonfinancial directors•
Risk strategies for the board
•E
thical practices for the board
Grad
uate Dip
lom
a in Co
mp
any Directio
n•
Six-m
onth distance learning with three sessions totaling 10 days of interactive w
orkshops
Co
rpo
rate Go
vernance Certificate P
rog
ram —
12 weeks w
ith two blocks of tw
o-day lectures•
Business ethics and corporate governance
•Law
and corporate governance•
Audit, control, and corporate governance
•C
orporate financial reporting, disclosure, and risk managem
ent•
Corporate governance in practice
•M
ultidisciplinary corporate governance case study
Backg
round
The Institute established the Centre for D
irectorship and Corporate G
overnance (CD
CG
) in early 2001 and hastutored m
ore than 4,000 individuals through the various programs in just over tw
o years. In addition the CD
CG
provides board learning opportunities in alliance with leading business schools and universities. A
lthough the majority of
programs are held in S
outh Africa, presentations have been held in B
otswana, Lesotho, M
alawi, M
auritius,M
ozambique, N
amibia, and Zim
babwe.
Co
ntactR
ichard Wilkinson, E
xecutive Director
David H
utton-Wilson, D
irector, Centre for D
irectorship and Corporate G
overnance, [email protected]
TH
AI IN
ST
ITU
TE
OF
DIR
EC
TO
RS
Pro
gram
descrip
tion
The institute runs a five-day program based upon the program
developed by the Australian Institute of C
ompany
Directors. In addition a few
one-day courses are run that cover: •
The chairman
•The audit com
mittee
•A
ssessing board performance
Backg
round
Courses began in 1999 in co-operation w
ith the Australia Institute of C
ompany D
irectors.
Co
ntactC
harnchai Charuvastr, cc@
thai-iod.com
Page 149
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DU
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Trainin
g
A N N E X 1
37
INS
TIT
UT
E O
F D
IRE
CT
OR
S, U
K
Pro
gram
descrip
tion
Co
mp
any Directio
n Pro
gram
—C
ertificate•
The role of company director and the board (tw
o days)•
The director and the board (one day)•
Finance for nonfinancial directors (three days)•
Strategic business direction (three days)
Co
mp
any Directio
n Pro
gram
—D
iplo
ma
•C
ertificate courses plus•
Effective m
arketing strategies (two days)
•P
eople mean business ( tw
o days)•
Effective board decisionm
aking (one day)•
Leading and directing change (one day)
Other sho
rt courses
•The role of the com
pany chairman (one day)
•The role of the m
anaging director (one and one-half days)•
The role of the nonexecutive director (one day)•
The role of the company secretary (one day)
•The role of the finance director (one day)
•M
arketing for non marketing directors (one day)
•A
n introduction to the director’s role (one day)•
Successful business strategies (one day)
Finance
•A
directors guide to the City (tw
o days)•
Buying and selling com
panies (two days)
Leadership
and skills
•B
usiness presentations and public speaking (two days)
•N
egotiating skills and techniques (two days)
•C
hairing successful meetings (one day)
•K
eys to personal effectiveness (one day)•
Transformational leadership (tw
o days)
Backg
round
The IoD provides a range of director developm
ent services that include:•
Courses: one-three days, practical and participative for all sizes of organizations
•C
onferences: overviews on topical issues led by business leaders (for 60–120 delegates)
•C
hartered director: a professional standard for experienced directors•
Board developm
ent services: workshops and briefings specifically designed to address board, strategy,
and team issues
•In-com
pany training and development
•E
xecutive coaching and mentoring: a tailored and confidential service driven by the needs of the client.
All services are designed for directors by directors and are led by subject experts. The U
K has sophisticated
examination and professional review
of director experience systems. The U
K provides training and developm
entin Japan and is currently assisting the C
aribbean and Turkey in developing director training programs.
Co
ntactC
hris Pierce, C
[email protected]
Page 150
A N N E X 1 38
CO
MM
ON
WE
ALT
H A
SS
OC
IAT
ION
OF
CO
RP
OR
AT
E G
OV
ER
NA
NC
E(C
AC
G)
Pro
gram
descrip
tion
The CA
CG
run a five-day Com
pany Directors C
ourse consisting of:•
Corporate governance
•B
oard dynamics and hum
an resources development
•S
trategy•
Finance•
Legal•
General
Course w
orkshops under development include:
•C
hairman and the board
•C
FO and the board
•The com
pany secretary and the board•
CE
O and the board
•Finance for nonfinancial directors
•M
arketing for directors•
Risk m
anagement and the board
Backg
round
The five-day program has been undertaken by 600 directors from
20 countries. The CA
CG
has in place activitiesthat w
ill see another 600 directors attend in 2003. Feedback from participants in over 30 countries w
here CA
CG
has worked indicates that the activites are respected and successful.
Co
ntactG
eoffrey Bow
es, g.bowes@
xtra.co.nz
WO
RL
D B
AN
K IN
ST
ITU
TE
Pro
gram
descrip
tion
The World B
ank Institute has developed a corporate governance and strategy distance learning core course consisting of:•
Corporate governance
•C
ompetition and regulation
•C
orporate strategy•
Good governance
•C
orporate responsibility, business ethics, and reputational risk managem
ent•
Governance and anticorruption
The corporate social responsibility (CS
R) course consists of six m
odules:•
CS
R m
ain concepts•
Decisionm
aking framew
orks•
Corporate social responsibility
•B
uilding sustainable competitiveness through C
SR
•C
SR
and the poor•
An introduction to coalition building and action plans
Backg
round
These core courses are aimed at policym
akers, private and public sector leaders, and company directors.
The corporate governance and strategy distance learning course can be found atw
ww
.worldbank.org/w
bi/corpgov/core-course/modules.
Co
ntactD
jordjija Petkoski, D
petkoski@w
orldbank.org
Page 151
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A N N E X 2
39
AN
NE
X 2
. SA
MP
LE
CU
RR
ICU
LU
M F
OR
AN
OR
IEN
TA
TIO
NP
RO
GR
AM
, IND
IA
From the Indian Institute of M
anagement B
angalore.
SE
SS
ION
1
Bo
ard o
fD
irectors
and C
orp
orate
Go
vernance(N
B)
SE
SS
ION
5
Co
ntrol in
Co
rpo
rate G
overnance
Case:
Universal
Eng
ineering(N
B &
DS
)
SE
SS
ION
9
Disso
ciation
Behavio
ur inH
ost
Co
untries:
Case
Discussio
n: P
fizer & T
VS
Suzuki
(DB
, VK
V &
TS
S)
SE
SS
ION
2
Trends in B
oard
Co
mp
ositio
n, Ind
epend
ence &
Co
ntributio
n(N
B)
SE
SS
ION
6
Aud
it Co
mm
ittee E
ffectiveness(N
B)
SE
SS
ION
10
CS
R - W
here are W
e Head
ing?
Indian &
Australian
Exp
erience(D
K, S
V, FS
)
SE
SS
ION
3
Measuring
Shareho
lders
Wealth C
reation
EVA
– MVA
(PG
)
SE
SS
ION
7
Co
rpo
rateC
om
municatio
ns
Case: T
itan Ind
ustries;P
olyp
ack(S
S)
SE
SS
ION
11
Em
erging
Directo
rsin C
orp
orate
Go
vernance(K
RR
, MR
R, D
K, F
S&
NB
)
SE
SS
ION
4
Strateg
y Fo
rmulatio
n&
Mo
nitoring
Case D
iscussion:
Jack Welch: G
eneralE
lectric’s Revo
lution
(SR
)
SE
SS
ION
8
Merg
ers &D
emerg
ers: B
oard
Ro
le andR
espo
nsibilities
Case D
iscussion:
Dig
ital – Co
mp
aq in
India
(SM
& S
ingh)
PR
OG
RA
MM
E9.30 – 11.00
11.30 – 1.002.15 – 3.30
4.00 – 5.30
DB
:M
r. Dip
ankar Basu, F
orm
er Chairm
an, SB
ID
K:
Pro
f. David
Kim
ber, A
ssociate P
rofesso
r, RM
IT, Pro
ject Directo
r, St Jam
es Ethics C
enter, M
elbo
urneD
S:
Deep
jee Sing
hal, Practising
Internal Aud
itor
FS
:M
s. Fran S
iemensm
a, Lecturer of B
usiness Ethics at V
ictoria U
niversity, Melb
ourne
KR
R:
Mr. K
. R. R
amm
oo
rthy, Chairm
an, Vysya B
ankM
RR
:D
r. M. R
. Rao
, Directo
r, IIMB
PG
:M
r. Pavan G
andho
k, Co
untry Head
, Stern S
tuart India P
vt. Ltd.
SS
:P
rof. S
undararajan, P
rofesso
r of F
inance and C
ontro
l, IIMB
Sing
h:M
r. Sajay S
ingh, P
artner, Sag
ar Asso
ciates, So
licitors
SV:
Mr. S
hankar Venketeswaran, C
EO
, Partners in C
hange
SR
:P
rof. S
. Rag
hunath, Pro
fessor o
f Co
rpo
rate Strateg
y & P
olicy, IIM
BT
SS
:M
r. T.S. S
uresh, Partner, K
ing &
Partrid
e, Bang
alore
VK
V: M
r. V.K. V
ishwanathan, Jt. M
anaging
Directo
r, Mico
Bo
shN
B:
Pro
f. N. B
alasubram
anian, Pro
fessor o
f Co
rpo
rate Finance, S
trategy &
Go
vernance, IIMB
6/1
2/0
1T
HU
RS
DA
Y
7/1
2/0
1F
RID
AY
8/1
2/0
1S
AT
UR
DA
Y
Page 152
A N N E X 3 40
AN
NE
X 3
.S
AM
PL
E C
UR
RIC
UL
UM
, IND
ON
ES
IA
The following is a set of training courses offered by the Indonesian Institute for
Corporate D
irectors.
Esse
ntia
l Dire
cto
r & C
om
missio
ne
r Pro
gra
m
•T
he Practice o
f Directo
rship:
—C
reating and Sustaining B
oard Value—
Core C
ompetence of C
omm
. & D
irector—
Com
missioner and D
irector Independent—
Role of the B
oard in Strategic P
lanning—
Com
m. &
Director R
esponsibilities—
Accountability and Liabilities
—E
valuation of Com
m. &
Director P
erformance
—R
elationship between C
omm
issioner-Director-S
enior M
anager—
Succession P
lanning—
Enhancing S
hareholder & S
takeholder Relations
—E
ffective Board M
eeting—
Best P
ractices in Board G
overnance—
Top Priorities for C
omm
issioner and Director
—C
ritical & E
merging B
oard Issues—
Board size, S
tructure, Com
position & Tenure
—S
etting up comm
ittees (audit, compensation,
nominating, special purpose)
—C
omm
ission & D
irector Fiduciary Responsibilities:
Business Judgm
ent Rule
Distinguishing C
are and Loyalty Violations
High R
isk Transaction: Risk A
ssessment
Shareholder
•Introduction to Financial S
tatements
•Indonesian C
ompany Law
Duration
: 5 days, 40 teaching hoursC
ourse Fee : U
S$
No. of P
articipants : M
ax. 24 (ideally 12)
Pro
fessional D
irector &
Co
mm
issioner P
rog
ram
•T
he Practice o
f Directo
rship:
i. The Role of C
ompany D
irectors & C
omm
issionersii. Im
proving Board Effectiveness & C
ompliance P
rocedure•
Strategic B
usiness Direction in the N
ew E
conomy
•C
orporate Ethics and S
ocial Responsibility
•Im
proving & A
ssessing Com
pany Perform
ance•
Law &
Regulation: Issues for D
irectorsi. C
ompany and C
apital Market Law
ii. Contract Law
, including Em
ployment C
ontract•
Finance for Directors
•M
arketing for Directors
•O
peration for Directors
•Leading M
ajor Change and O
rganizing for Tomorrow
•Intellectual C
apital/Strategic H
R for D
irectors
Duration
: 14 days, 112 teaching hoursC
ourse Fee : U
S$
No. of participants
: Max 24 (ideally 12)
Directo
r & C
om
m. C
ontinuing
Dev. C
ourses
Sam
ples o
f the Sho
rt-Co
urses:•
Selecting &
Managing Independent D
ir. & C
omm
.P
rograms
•S
etting-up and Maxim
ising Audit C
omm
ittee•
Director &
Com
missioner E
valuation•
Corporate governance &
Ethical Investm
ent•
Finance for Director &
Com
missioner
•C
orporate-Capital-C
ontract Law and B
usinessJudgm
ent
Duration
: 1-2 days, 8-16 teaching hoursC
ourse Fee : U
S$
No. of participants
: 24
Page 153
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A N N E X 4
41
Essential M
aterials Need
ed to
Build
a Case:
1. The facts about the basic transactions to beanalyzed w
ith all their supporting information
2. The set of materials that directors or board
mem
bers are likely to use in order to reach a decision.For exam
ple, for the case of a transaction or anacquisition, one needs:
the offers,the m
anagement analysis,
independent opinions and analysis.
3. Ow
nership structure of firm, alliances, independence
information, etc…
that may point to potential conflicts
of interests in the case of transactions
4. Financial information of the com
pany or companies
involved
5. Information about the outcom
e of the decisions thatw
ere taken to provide an analysis of the results
Po
tential Cases O
rganized
around
Relevant
Issues Co
vered in the C
ourse
1. Fiduciary Duties in E
xceptional Transactions
Duty of loyalty and care in a takeover or m
ajortransaction are one of the central issues that com
e toboards in em
erging markets.
Fiduciary duties are not well developed concepts in
many countries and it becom
es important to illustrate
to directors the many aspects and specific form
sw
here these take a special and essential role.
So
me exam
ples o
f transactio
n are:
Acquisition: E
nersis (Chile)
Takeover: Ultrapar (B
razil)
2. The Role of the B
oard in Unavoidable C
onflictTransactions
The role of the board of directors, and particularlythose independent directors, becom
es largelycom
plicated in the likely situations of transactions with
potential conflicts of interest of various mem
bers of theboard or m
anagement.
This helps illustrate:The role of safe haven rules to try to avoid tainted transactionsThe role of various B
oard Com
mittees
The role of the independent contractor
Case exam
ple: C
CR
(Brazil)
3. Board B
uilding in a Family B
usiness
Privately-held firm
s run and managed by fam
ilies arethe m
ost comm
on firm structure in Latin A
merica.
One of the m
ost relevant issues for these firms is how
to make the jum
p to a situation where fam
ily mem
bersstart to behave as shareholders and not only asm
anagers or board mem
bers. This helps alignincentives for various actions and decisions.
Another central issue in these firm
s is the activity of“board building.”
Case exam
ple: Puertas Finas (M
exico)
The information for building cases in this area is difficult
to get and can only be achieved with the full
cooperation of the family in question.
4. Board B
uilding in Publicly Traded Firm
s
These firms have typically already m
ade the jump
to a more professionalized board and
managem
ent team.
AN
NE
X 4
.C
AS
E S
TU
DY
PR
EP
AR
AT
ION
FO
R A
DIR
EC
TO
RT
RA
ININ
G C
OU
RS
E
This document w
as prepared by Florencio Lopez-de-Silanes, Yale International Institute
for Corporate G
overnance, and Mike Lubrano, International Finance C
orporation, for theC
orporate Governance Leadership P
rogram, Latin A
merican session, July 27 to
August 2, 2003.
Page 154
A N N E X 4 42
The issues here typically have to do with:
Further institutionalization of the boardThe creation of com
mittees
Establishm
ent of rules to control interested party transactionsA
llowing independent directors and non-
controlling shareholders to access the required inform
ation, etc…
Case exam
ple: Odebrecht (B
razil)
This case also illustrates aspects of another typicalform
of ownership in em
erging markets that creates
corporate governance issues: the Holding C
ompany
and its conflicts.
5. The Role of the D
irectors in Improving C
orporateG
overnance
Understanding w
hat the market w
ants when firm
s gopublic is a key issue to help directors guide thetransition.
Accessing capital m
arkets for the first time is one of
the most agonizing decisions that a fam
ily firm needs
to make. This process requires:
The restructuring of the Board and the m
anagement
teamD
ecisions about various currently-involved family
mem
bersThe im
provement of accounting and auditing
standardsThe need for a change in disclosure policyThe establishm
ent of shareholder rights
Case exam
ples are:Inversura: (C
olombia) a result of w
hat happens (in a still private firm
)B
avaria: (Colom
bia) a result of what happens (in a
publicly traded firm)
Other To
pics T
hat Co
uld B
e Used
as Ideas fo
rC
ase Develo
pm
ent for the C
ourse
6. Accounting and A
uditingIssues about the conflicts and challenges for auditcom
mittees
Issues about poor disclosure or misleading disclosures
7. Strategy
The board plays a key role in strategy decision making
and keeping managem
ent in line with the goals of the
corporation without w
asting shareholder assets
8. CE
O S
uccessionThis is probably one of the m
ost agonizing boardissues that take place in em
erging markets, w
heredom
inant shareholders also occupy key positions inthe m
anagement of the corporation.
It is also a key issue even in widely held firm
s, andboards are the m
ost appropriate mechanism
forpreparing the transition.
Page 155
MO
DU
LE
3
Trainin
g
A N N E X 5
43
RE
AD
ING
LIST
All participants should have read the B
usiness Sector
Advisory G
roup on Corporate G
overnance’s Report:
Corporate G
overnance: Improving C
ompetitiveness
and Access to C
apital in Global M
arkets (1998), andthe O
ECD
Principles of C
orporate Governance (1999)
prior to the start of the program. They w
ill be referredto throughout.
1-Review
of co
rpo
rate go
vernance theory: O
therp
eop
le’s mo
ney
•E
xcerpts from B
erle & M
eans, The Modern
Corporation and P
rivate Property
(1932): Property in
Transition & The D
ivergence of Interest between
Ow
nership and Control, B
ook I, Chs. I &
VI (pp. 1 –9
& 119 –125); E
volution of the Modern C
orporateS
tructure, Book II, C
h. I (pp. 127 –152); TheTraditional Logic of P
roperty, The Traditional Logic ofP
rofits, The Inadequacy of Traditional Theory, & The
New
Concept of the C
orporation, Book IV, C
hs. I-IV(pp. 333 –357).
•A
merican Law
Institute, Vol. 1, Principles of
Corporate G
overnance (1994) (Section 2.01).
2-The ro
le of the reg
ional netw
ork in sup
po
rtingtraining
and curriculum
develo
pm
ent
•The Econom
ist(M
ay 2nd, 2002): Fallen Idols.•
Shleifer and V
ishny, Journal of Finance(June 1997):
A S
urvey of Corporate G
overnance, Vol. 52, No.2,
pp. 737 –783.•
Am
erican Law Institute, Vol. 1, P
rinciples ofC
orporate Governance (1994) (S
ections 5.02, 5.03,5.04, 5.05, 5.07).
•The Econom
ist(Jan. 5th, 2002): C
onglomerates in
Developing C
ountries. Monsters S
till, but Prettier
(pp. 59 –60). •
The Economist (D
ec. 11th, 1999): Protection M
oney(p. 69).
•La P
orta et al, Journal of Finance (April 1999):
Corporate O
wnership around the W
orld, Vol. LIV, No.
2, pp.471 –517.
3-Shareho
lders’ ro
les, rights and
respo
nsibilities
•E
xcerpts from C
harkham &
Sim
pson, Fair Shares:
The Future of Shareholder P
ower and R
esponsibility(1999): The R
ole of Shareholders in the U
K, C
h. 2(pp. 27 –39); S
hareholders: The Legal Framew
ork,C
h. 6 (pp. 61 –78); The Ow
nership of Com
panies,C
h. 8 (pp. 88 –94); The Obligations of S
ignificantO
wnership, C
h. 21 (pp. 223 –230).•
Anandarajah, C
orporate Governance: A
Practical
Approach (2001): The S
hareholder, Ch. 7
(pp. 219 –233).
4-Key b
oard
respo
nsibilities &
directo
r duties
•C
adbury, Corporate G
overnance and Chairm
anship:A
Personal View
(2002): The Board Task, C
h. 3 (pp. 33 –49).
•A
merican Law
Institute, Vol. 1, Principles of
Corporate G
overnance (1994) (Sections 3.02, 3.03,
4.01, 5.01).•
Millstein &
MacA
voy, Colum
bia Law R
eview (June
1998): The Active B
oard of Directors and
Perform
ance of the Large Publicly Traded
Corporation, Volum
e 98, No. 5.
•G
regory, International Com
parison of Corporate
Governance G
uidelines and Codes of B
est Practice:
Asia (2002).
•R
eport of the NA
CD
Blue R
ibbon Com
mission on
Director P
rofessionalism (1996; 2001 ed.).
•C
adbury, Corporate G
overnance and Chairm
anship:A
Personal View
(2002): Board M
embership, C
h. 4(pp. 50 –63); The C
hairmanship and B
oard Structure,
Ch. 5 (pp. 64 –78); Taking the C
hair, Ch. 6 (pp.
79 –100).•
Weil, G
otshal & M
anges, LLP, Com
parative Study of
Corporate G
overnance Codes R
elevant to theEuropean U
nion and its Mem
ber States (January
2002): Executive S
umm
ary (pp. 1 –23), Code
Enforcem
ent and Com
pliance (pp. 68 –73).
AN
NE
X 5
.S
AM
PL
E R
EA
DIN
G L
IST
FO
R A
TR
AIN
ING
CO
UR
SE
From the C
orporate Governance Leadership P
rogram developed by the Yale International
Institute for Corporate G
overnance and the Global C
orporate Governance Forum
, LatinA
merican session, July 27–A
ugust 2, 2003
Page 156
A N N E X 5 44
5-Ro
le of the b
oard
in setting strateg
y
•R
eport of the NA
CD
Blue R
ibbon Com
mission on
the Role of the B
oard in Corporate S
trategy (2000).•
Report of the N
AC
D B
lue Ribbon C
omm
ission onR
isk Oversight: B
oard Lessons in Turbulent Times
(2003).
6-Introd
uction to
other co
ntrol m
echanisms –
law, finance &
markets
•The Econom
ist (April 19th, 1997): The Law
of theM
arket (p. 108).•
Dornbusch, B
usiness Week (O
ctober 28th, 1996):C
heck the Laws B
efore you Invest Abroad (p. 34).
•La P
orta et al., Journal of Financial Economics
(2000): Investor Protection and C
orporateG
overnance, No. 58, pp. 3 –27.
•Johnson et al., A
merican Econom
ic Review
Papers
and Proceedings (M
ay 2000): Tunneling, Vol. 90, No.
2, pp. 22 –27.•
Millstein &
Katsh, The Lim
its of Corporate P
ower:
Existing C
onstraints on the Exercise of C
orporateD
iscretion: Table of Contents.
7-Go
vernance enforcem
ent and anti-co
rruptio
neffo
rts
•S
porkin, Services Industry B
usiness Conduct and
Com
pliance Sem
inar (June 6, 2002): It’s Time to S
etO
ur Accounts S
traight – A C
all For a Special
Program
of Am
nesty.•
Sporkin, C
ounseling the Audit C
omm
ittee.
8-Aud
it reform
, audit co
mm
ittees and o
versight
•R
eport and Recom
mendations of the B
lue Ribbon
Com
mittee on Im
proving the Effectiveness ofC
orporate Audit C
omm
ittees (1999).•
Am
erican Law Institute, Vol. 1, P
rinciples ofC
orporate Governance (1994) (S
ection 3.05).•
Egon Zehnder International, The R
ole of the Audit
Com
mittee in C
orporate Governance (2001).
9-Acco
unting stand
ards and
disclo
sure: Enro
nand
beyo
nd
•S
alter, Levesqu & C
riampa, The R
ise and Fall of Enron. •
United S
tates Senate, R
eport prepared byP
ermanent S
ubcomm
ittee on Investigations of theC
omm
ittee on Governm
ental Affairs: The R
ole of theB
oard of Directors in Enron’s C
ollapse.•
White H
ouse Talking Points, “A
New
Ethic ofC
orporate Responsibility.”
•B
ackman, D
ickson, Hyatte &
Taylor, “Reform
ing theU
S Financial R
eporting and Corporate G
overnanceS
ystems in the w
ake of Enron: A
review of various
reform proposals offered by the B
ushA
dministrations, the S
EC
, and various constituenciessubject to S
EC
oversight and the US
Congress”:
Proposed legislation, (pp. 26 –43).
10-Go
vernance and related
lending
issues for
bank d
irectors
•Lopez-de-S
ilanes, Bank For International
Settlem
ents-Financial Stability Institute N
ewsletter
(Forthcoming, July 2002): W
hy are Banks O
ftenB
ankrupt? Corporate G
overnance in Banks.
•B
eim and C
alomiris, Em
erging Financial Markets
(2001): The Trouble with B
anks, Ch. 8
(pp. 256 –291).•
La Porta et al., Q
uarterly Journal of Economics
(Forthcoming, 2002): R
elated Lending.
11-Sp
ecial issues relating to
family firm
s ando
wnership
structures
•C
adbury, Family Firm
s and their Governance:
Creating Tom
orrow’s C
ompany from
Today’s(2000).
•E
strin, Corporate G
overnance, State-O
wned
Enterprises and Privatisation (1998): S
tateO
wnership, C
orporate Governance and P
rivatisation(pp. 11 –31).
•B
rumby &
Hyndm
an, Corporate G
overnance, State-
Ow
ned Enterprises and Privatisation
(1998): State
Ow
ned Enterprise G
overnance: Focus on Econom
icE
fficiency (pp. 33 –61).
12-Ad
visory b
oard
s and the transitio
n from
private to
pub
lic
•Jones, U
SA
Today (Tuesday, June 11, 2002):H
omeland S
ecurity: A tough m
erger.•
Sonnenfeld, The N
ew York Tim
es (Wednesday, June
12, 2002): Expanding w
ithout Managing.
•S
onnenfeld & Q
uinn, The Atlanta Journal-
Constitution (Friday, June 28, 2002): C
EO
s Can’t
Keep S
hirking Duties.
•S
onnenfeld, The Hero’s Farew
ell:Chapters 4, 5 &
12.
Page 157
MO
DU
LE
3
Trainin
g
A N N E X 6
45
AN
NE
X 6
.S
AM
PLE
CO
RE
CU
RR
ICU
LUM
, CO
MM
ON
WE
ALT
H
The following is the rationale underlying the core curriculum
offered by the Com
monw
ealthA
ssociation for Corporate G
overnance.
Co
mm
onw
ealth Co
mp
any Directo
r Training P
rog
ramm
e in Co
rpo
rate Go
vernance
•The short term
target of Phase 1 (com
menced in
May 2001) is to train an initial group of 40 directors
and trainers in a systematic Five D
ay Corporate
Governance C
ourse for Directors, in each of at least
11 Com
monw
ealth countries, through designatednational/regional training organisations. To datecourses have been delivered for E
ast Africa (covering
5 countries, located in Kenya), C
entral Africa
(covering 5 countries, located in Zambia), Jam
aica,the P
acific (covering 7 countries, located in University
of South P
acific, Fiji), Sri Lanka, and state of K
erala(India).
•The longer term
vision is to establish self-sufficientin-country capacity to train a critical m
ass of all thedirectors of all the boards of all the top state andprivate sector com
panies in all Com
monw
ealthcountries, led by the initial group of 40. In som
ecountries the second phase training has alreadycom
menced (one country has already com
pletedtw
elve courses and trained over 500 directors) and aportfolio of shorter courses has been designed.
•The ultim
ate outcome is to dem
onstrate thecountries w
ith a national action plan and establishedpractice for good corporate governance as preferreddestinations for dom
estic and internationalinvestm
ent, thereby stimulating capital m
arkets,fuelling grow
th, and creating employm
ent
•The underlying reason is that there is significantevidence that m
ost board directors are deficient inthe essential know
ledge and skills to do their job,and have never been provided appropriate training
•The m
ain method of delivery is a five day course
(normally residential) w
ith nine modules covering the
essential knowledge and skills for a com
panydirector in the global m
arket:
1) corporate governance structures and systems
2) board dynamics, perform
ance and director
recruitment
3) business strategy for directors (including IT and
technology strategy)
4) finance for directors
5) company law
, legal duties and obligations of
directors
6) company risk analysis (financial, political, policy,
technological risk)
7) company asset direction (financial, land, plant,
equipment, hum
an and knowledge assets)
8) corporate ethics, social and environmental
responsibility
9) corporate governance action plans and changes to
company reports
•The strategic purpose is to transform
the ‘corporatelandscape’ of C
omm
onwealth countries, through
•turning ‘D
irector’ from an ascribed title to an
achieved profession establishing new benchm
arks ofcorporate governance and board perform
ance
•training the leadership of state and private sectorcom
panies - thereby facilitating a “Chain R
eaction”for national developm
ent
•The “C
hain Reaction” for developm
ent aims for a
sequence of objectives :
Page 158
A N N E X 6 46
1) a strategic improvem
ent in the quality and efficiency
of all boards of directors
2) improved perform
ance of state enterprises, to stop
their fiscal haemorrhage, and gain their real
contribution to GD
P
3) increased performance and profitability of private
companies, leading to both increased exports and rate
of GD
P grow
th, and thus to increased share prices of
listed companies
4) improved understanding and standards of corporate
environmental and social responsibility
5) the mass training for directors, and the national
corporate governance action plan, should send a
strong signal to the markets to encourage dom
estic
and international investor confidence,
6) all of which should lead to increased inflow
of
national and international investment funds,
7) which w
ill lead to increased growth, em
ployment
and alleviation of poverty
•A
special feature of the programm
e is the purposeto change board behaviour, by establishingstandards and benchm
arks of corporate governanceand board perform
ance, in particular to applyessential practices (for exam
ple board comm
ittees,board and director perform
ance appraisals,separation of chairm
an and C.E
.O. and at least 50%
of board time allocated to proactive strategy and risk
managem
ent, and less time on retrospective review
of accounts and past performance)
•These am
bitious objectives can be achievedbecause the program
me has been designed w
ith acom
bination of special features:
a) the training programm
e is built on a platform of
several years of policy formulation, international,
regional and in-country promotion and exposure
training by the Com
monw
ealth Fund for Technical
Cooperation, to create the fertile soil of initial
understanding, infant institutional capacities and policy
support for corporate governance in the countries
involved
b) it is also built on the direct experience of training
by the Com
monw
ealth Association for C
orporate
Governance (C
AC
G), and on the design of a new
curriculum specifically for developing countries,
incorporating director training experiences from
Australia, B
ritain, India, Kenya, M
alaysia and New
Zealand
c) it is based on the direct experience of New
Zealand, which has succeeded in transform
ing its
‘corporate landscape’ by this type of large scale
director training, led by government corporations,
and has also managed to achieve a num
ber of
associated objectives such as recruiting and training
wom
en and minority com
munity directors, w
hich
can also be applied in this larger Com
monw
ealth
programm
e
d) it is directly linked to the support and influence of
central banks (following endorsem
ent at
Com
monw
ealth Finance Ministers M
eeting 2000,
and Central B
ank Governors M
eeting in June 2001),
which can exert a high degree of com
pulsion as
well as m
oral suasion in the banking sector and
thereby on the banks’ corporate customers, in
addition to stock exchanges and privatisation
agencies
e) it will initially target a critical m
ass of directors in
each participating country, thereby creating a
demonstration effect, and ultim
ately cover all directors
of the leading companies
f) training is examined and accredited to international
standards by CA
CG
and Deakin U
niversity (Australia),
thereby assuring the credibility required by investors,
governments and the public that the quality of
corporate leadership will be high
Page 159
MO
DU
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g
A N N E X 6
47
g) the training courses incorporate action plans for
the directors to introduce specific improvem
ents to
corporate governance in their own com
panies, in
their sectors through industry associations, and
nationally through professional institutes and national
task forces
h) the training courses will also incorporate changes to
company annual reports to dem
onstrate the
innovations in corporate governance
i) the training should be combined w
ith institutional
capacity building, to strengthen the infant professional
institutes of directors and corporate governance so
that they can take over the training and policy
development for continued and sustained activity
j) the programm
e also incorporates a research project
which w
ill monitor the changes in perform
ance in the
participating companies and evaluate the im
pacts on
the investment inflow
and growth of their sectors; the
research will also help to identify other policy factors
which are needed to achieve the overall developm
ent
objectives to which corporate governance contributes.
Page 160
A N N E X 7 48
DA
Y 1
AR
RIVA
L AN
D
WELC
OM
E
(5:00 – 6:00)
Reg
istration
Welco
me
dinner &
introd
uctions
DA
Y 2
BO
AR
D R
ELATIO
NS W
ITH
OU
TSID
E SHA
REH
OLD
ERS
Overview
of co
urse ob
jectives
review o
f corp
orate g
overnance
theory: o
ther peo
ple’s m
oney
Co
nflicts betw
een
insiders/o
utsiders &
mino
rity
sharehold
ers
Ro
le of the reg
ional netw
ork in
supp
orting
training and
curriculum d
evelop
ment
Ro
le of fam
ily-ow
ned firm
s and
cong
lom
erates in Latin Am
erica
Shareho
lders’ ro
les, rights &
respo
nsibilities
Co
nstructing cases fo
r directo
r
pro
gram
s
DA
Y 3
SPEC
IAL R
OLES O
F TH
E BO
AR
D
Key b
oard
respo
nsibilities &
directo
r
duties
Board
indep
endence, lead
ership roles,
comm
ittee structure, board
evaluation,
codes of cond
uct & b
est practice
Ro
le of the b
oard
in setting strateg
y
Risk m
anagem
ent, including
when a
risk beco
mes a crisis
Case stud
y/discussio
n
CO
RP
OR
AT
E G
OV
ER
NA
NC
E O
RIE
NT
AT
ION
PR
OG
RA
M F
OR
CO
MP
AN
YD
IRE
CT
OR
S
AC
TIV
ITY
/
TH
EM
E
9:0
0-
10
:15
10
:30
-
12
:00
12
:00
-
1:0
0
LUN
CH
BR
EAK
1:0
0 –
2:1
5
2:4
5 –
4:0
0
4:1
5 –
5:3
0
6:0
0 –
8:0
0
AN
NE
X 7
.S
AM
PL
E T
RA
IN-T
HE
-TR
AIN
ER
S C
OU
RS
E
Page 161
MO
DU
LE
3
Trainin
g
A N N E X 7
49
DA
Y 4
LEGA
L FRA
MEW
OR
K
Introd
uction to
other co
ntrol
mechanism
s—law
, finance &
markets
Reg
ional leg
al constraints:
lessons fro
m the Latin
Am
erican ‘white p
aper’
Go
vernance enforcem
ent and
anti-corrup
tion effo
rts
Ro
le of the b
oard
inco
rpo
rate social
respo
nsibility in Latin
Am
erica
Case stud
y/discussio
n
DA
Y 5
AC
CO
UN
TIN
G A
ND
AU
DIT
ING
Aud
it reform
, audit co
mm
ittees &
oversig
ht
Acco
unting stand
ards &
disclo
sure:
enron and
beyo
nd
Go
vernance & related
lending
issues
for b
ank directo
rs
A regulator’s international p
erspective
on the imp
act of U.S
. legislation(S
arbanes-O
xley) on corporate
governance
Case stud
y/discussio
n
DA
Y 6
OW
NER
SHIP
STR
UC
TU
RES
Sp
ecial issues relating
to fam
ily firms &
ow
nership structures
Sp
ecial issues relating
to p
rivate equity &
corp
orate g
overnance
Ad
visory b
oard
s & the
transition fro
m p
rivate
to p
ublic
CE
O successio
n: focus
on fam
ily-ow
ned firm
s
Governance b
y ad hoc
agreement b
etween
investors and com
panies
Case stud
y/discussio
n
From the C
orporate Governance Leadership P
rogram developed by the Yale
International Institute for Corporate G
overnance and the Global C
orporate Governance
Forum, Latin A
merican session, July 27– A
ugust 2, 2003.
DA
Y 7
WR
AP
-UP
/P
RESEN
TATIO
NO
F CERT
IFICAT
ES
Build
ing sustainable
organizationsP
romoting d
irectorp
rofessionalism
Wrap
-up, next
steps &
pro
gram
evaluation
Presentatio
n of
certificates
& farew
ell lunch
Page 162
A N N E X 8 50
AN
NE
X 8
.S
AM
PL
E R
ES
IDE
NT
IAL
TR
AIN
ING
CO
UR
SE
,Z
AM
BIA
The following is the program
for a residential training course for directors offered by theInstitute of D
irectors, Zambia. This program
was developed w
ith the support of theC
omm
onwealth A
ssociation for Corporate G
overnance and in association with the
Private S
ector Corporate G
overnance Trust.
MO
ND
AY
27 MA
Y 2002
08:00 - 09:00O
pening
Ad
dress and
Intro
ductio
n to the C
ourse
09:00 -14:30C
orp
orate G
overnance
09:00 - 10:00Introduction
10:00 -10:30B
reak
10:30 - 11:30P
rinciples and Codes of B
est P
ractice - Com
parative Review
A
pplicability of Principles and C
odesin A
frica
11:30 - 12:00C
ase Study - C
orporate G
overnance in Africa
12:00 -13:00R
ole and Functions of the Board
Role of the C
hairman
Role of the C
hief Executive O
fficerD
uties of Executive and N
on-executive D
irectorsB
oard Work P
lan
13:00 - 14:00Lunch
14:00 - 14:30C
ase Study - S
tarting from S
cratch:The E
ast African C
entre for C
orporate Governance
14:30 - 17:30Leg
al Duties and
Liabilities o
f D
irectors
14:30 - 16:00Legal D
uties and LiabilitiesP
owers and R
esponsibilitiesC
orporate Social R
esponsibility
16:00 - 16:30B
reak
16:30 - 17:30C
ase Study - M
aji Water C
ompany
17:30 - 18:00Lesso
ns for the D
ay
19:00D
inner
TU
ES
DA
Y 28 M
AY
2002
08:00-11:00C
orp
orate G
overnance
08:00-09:00B
oard composition
Selection, Induction and
Developm
ent of Directors
Recruitm
ent of CE
OB
oard Rem
unerationB
oard Effectiveness
-Crafting the B
oard-B
oard Dynam
ics and Group Think
-Board C
omm
ittees-B
oard Evaluation
-Conventions
10:00-10:30C
ase study
10:30-11:00B
reak
11:00-14:00N
avigating
the Kno
wled
ge
Eco
nom
y
11:00-13:00Inform
ation Technology, Creativity,
Innovation and the Electronic B
oard
13:00-14:00Lunch B
reak
14:00 -17:30S
trategy M
od
ule
14:00- 15:00G
etting the Board to Think and A
ct S
trategically
15:00- 16:00S
trategic Analysis and S
trategic D
irection
16:00- 16:30B
reak
16:30- 17:30C
ase Study : H
araka Corporation
17:30-18:00Lesso
ns for the D
ay
19:00D
inner
Page 163
MO
DU
LE
3
Trainin
g
A N N E X 8
51
WE
DN
ES
DA
Y 29 M
AY
2002
08:00 - 11:00S
trategy M
od
ule
08:00 - 10:00S
trategic Change and S
trategic E
valuation
10:00 - 10:30C
ase Study : V
ideo
10:30 - 11:00B
reak
11:00 - 17:00F
inance Mo
dule
11:00 - 12:00U
nderstanding Financial Reports
12:00 - 13:00C
ase Study - R
etail Public C
ompany
Ltd
13:00 - 14:00Lunch B
reak
14:00 - 16:00A
ssessing Com
pany Perform
ance
16:00 -16:30B
reak
16:30 - 17:30C
ase Study : R
etail Public C
ompany
17:30 - 18:00Lesso
ns for the D
ay
19:00D
inner
TH
UR
SD
AY
30 MA
Y 2002
08:00 - 11:00F
inance Mo
dule
08:00 - 09:30R
isk Managem
ent and Financing an O
rganisation
09:30 - 10:00C
ase Study : C
anadian Bus
Com
pany
10:30 -11:00B
reak
11:00 - 12:00R
epo
rting o
n Co
rpo
rate G
overnance
12:00 - 15:30D
iscussion F
orum
and P
reparatio
nfo
r Exam
ination
12:00 - 13:00D
iscussion and Work G
roups
13:00 - 14:00Lunch B
reak
14:00 - 15:30D
iscussion and Work G
roups
15:30 - 17:30W
ritten Exam
ination
17:30 - 18:00Lesso
ns for the D
ay
19:00D
inner
Page 164
FRID
AY
31 MA
Y 2002
08:00 - 11:00R
ole o
f Pro
fessional A
dviso
rs and
Bo
ard A
dvice
08:00 - 09:30R
ole of Professional A
dvisor
09:30 - 10:30C
ase Study : The P
rofessional and C
orporate Governance
10:30 -11:00B
reak
11:00 -12:00C
ase Stud
y Exam
ination
12:00 - 15:3021st C
entury Bo
ard
12:00 - 13:00K
ey Issues
13:00 - 14:00Lunch B
reak
14:00 - 15:30D
iscussion Forum
15:30 - 17:30P
resentation o
f Certificates
17:30C
losing
Functio
n
A N N E X 8 52
Page 165
MO
DU
LE
3
Trainin
g
A N N E X 9
53
Course:________________________________________________________________
Subject:________________________________________________________________
Date:
_____________________C
ourse leader:_____________________
Criteria
excellent good average weak poor
Points
5 4 3 2 1
1. Sub
ject/content
1.1 Importance of this m
odule for this program as a w
hole . . . . . . . . . . . . . . . . . . . . . . .[_]
1.2 Sequence of presentation
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .[_]1.3 Level of inform
ation and references . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .[_]
1.4 Balance betw
een theory and practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .[_]
1.5 Has the course m
et your expectations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .[_]
2. Co
urse leader
2.1 Self-confident and expertise on the subject . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .[_]
2.2 Speech preparation
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .[_]2.3 O
bjectivity and comm
unication skills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .[_]
2.4 Audio-visual equipm
ent, slides, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .[_]2.5 P
rogram com
pliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .[_]
2.6 Timing com
pliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .[_]2.7 Involvem
ent of participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .[_]
2.8 Use of case studies and exam
ples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .[_]
2.9 Clarification of unclear issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .[_]
3. Particip
ants3.1 C
ourse preparation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .[_]
3.2 Perform
ance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .[_]
4. Locatio
n and infrastructure
4.1 Course room
(Lighting, A/C
) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .[_]
4.2 Meals and coffee (quality and service) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .[_]
4.4 IBG
C support, reservations, etc.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .[_]
Total (to be filled out by IBG
C) ___________________________________
Other co
mm
ents and sug
gestio
ns:
Nam
e of p
articipant (o
ptio
nal):_______________________________________________
Thank yo
u for yo
ur contrib
ution, w
hich is imp
ortant to
the continuo
us imp
rovem
ent of o
ur ed
ucational p
rog
rams.
AN
NE
X 9
.S
AM
PL
E C
OU
RS
E E
VA
LU
AT
ION
FO
RM
, BR
AZ
IL
This course evaluation form w
as provided by the Brazilian Institute of C
orporateG
overnance and was translated from
Portuguese.
Page 166
A N N E X 1 0 54A
NN
EX
10
. SA
MP
LE
CO
UR
SE
EV
AL
UA
TIO
N F
OR
M, U
K
Page 167
MO
DU
LE
3
Trainin
g
A N N E X 1 0
55
Page 168
56
Peer R
eview G
roup
To develop this toolkit and gather lessonslearned from
developing and developedcountries alike, the G
lobal Corporate
Governance Forum
invited representatives from
director trainingorganizations from
various regions of thew
orld to share their experiences and discuss m
ilestones and challenges in building director training organizations. The Forum
would especially like to thank
the following people for their contribution
to this toolkit by providing materials,
examples, and extensive com
ments on
building director training organizations:
Cou
ntry con
tributors
Australia
Ian Dunlop,
Governance and S
ustainability Advisor
John Hall,
Australian Institute of C
ompany D
irectorsP
amela M
urray-Jones, A
ustralian Institute of Com
pany Directors
Brazil
Heloisa B
edicks, B
razilian Institute of Corporate G
overnanceB
engt Hallqvist,
Brazilian Institute of C
orporate Governance
Leonardo Viegas, B
razilian Institute of Corporate G
overnanceP
aulo Villares, B
razilian Institute of Corporate G
overnance
Canada
Bernard W
ilson, Institute of C
orporate Directors
Colom
biaP
aola Gutierrez Valandia, C
onfecámaras
Hong K
ongC
arlye Tsui, H
ong Kong Institute of D
irectors
IndiaS
heela Bhide,
Ministry of Finance and C
ompany A
ffairs N
. Balasubram
anian, Indian Institute of M
anagement B
angalore
IndonesiaA
nugerah Pekerti,
Institute for Corporate D
irectorship
IrelandS
usan Thornber, Institute of D
irectors in Ireland
Kenya
Karugor G
atamah,
Centre for C
orporate Governance
New
Zealand
David N
ewm
an, Institute of D
irectors New
Zealand
Th
e Ph
ilippinesJesus Estanislao, Institute of C
orporate Directors
Jon
athan
Juan
Mo
reno
, Institute of C
orporate Directors
Russia
Igor Belikov,
Russian Institute of D
irectorsA
lexander Ikonnikov, Independent D
irectors Association
South A
fricaR
ichard Wilkinson,
Institute of Directors in S
outhern Africa
TurkeyM
elsa Ararat,
Corporate G
overnance Forum, Turkey
United K
ingdomP
hilippa Foster Back,
Institute of Business E
thicsA
lan Morkel,
Institute of Directors, U
K
United States
Roger R
aber, N
ational Association of C
orporate Directors
Alexandra Lajoux,
National A
ssociation of Corporate D
irectors
Zam
biaP
atrick Chisanga,
Institute of Directors Zam
bia
Zim
babwe
Peter B
roadway,
Institute of Directors Zim
babwe
Intern
ation
al con
tributors
Alexander B
erg, W
orld Bank G
roupG
eoffrey Bow
es, C
omm
onwealth A
ssociation of C
orporate Governance
Michael G
illibrand, C
omm
onwealth S
ecretariatD
arrin Hartzler,
International Finance Corporation
Florencio Lopez de Silanes,
Yale’s International Institute for C
orporate Governance
Mike Lubrano,
International Finance Corporation
Alyssa M
achold, G
lobal Corporate G
overnance ForumA
nne Molyneux,
CS
InternationalB
ehdad Now
roozi, W
orld Bank G
roupD
jordjija Petkoski,
World B
ank InstituteS
ue Rutledge,
World B
ank Group
John Sullivan,
Center for International P
rivate Enterprise
CO
NT
RIB
UT
OR
S
Page 169
M O D U L E 4
Expanding
BU
ILD
ING
DIR
EC
TO
R T
RA
ININ
G O
RG
AN
IZA
TIO
NS
MO
DU
LE
4
EX
PA
ND
ING
4
Global CorporateGovernance Forum
T O O L K I T 1
Building
Director Training
Organizations
1818 H Street NWWashington, DC 20433 USA
Telephone: +1 (202) 458-1857Facsimile: +1 (202) 522-7588
Internet: www.gcgf.orgEmail: [email protected]
Global CorporateGovernance Forum
P R I N T E D O N R E C Y C L E D PA P E R
Page 170
TOOLKIT 1
Building Director Training Organizations
Project OfficerMarie-Laurence Guy, Global Corporate Governance Forum
ConsultantsChris Pierce, Institute of Directors, UK Kerrie Waring, Institute of Directors, UK
EditorsMarty Gottron, Stockbridge, MassachusettsNancy Morrison, Falls Church, Virginia
Graphic designStudio Grafik, Herndon, Virginia
PrintingUpstate Litho, Rochester, New York
Page 171
MO
DU
LE
4
Expanding
Glo
ba
l C
orp
ora
teG
overn
an
ce Fo
rum
TO
OL
KI
T
1
Building
Director Training
Organizations
Page 172
Copyright 2003.
The International Bank for
Reconstruction and D
evelopment/
The World B
ank 1818 H
Street N
W
Washington, D
C 20433
All rights reserved.
The findings, interpretations, and conclusions expressed in this publicationshould not be attributed in any m
annerto the W
orld Bank, to its affiliated
organizations, or to mem
bers of itsboard of Executive D
irectors or thecountries they represent. The W
orldB
ank does not guarantee the accuracyof the data included in this publicationand accepts no responsibility for anyconsequence of their use.
The material in this w
ork is protected bycopyright. C
opying and/or transmitting
portions or all of this work m
ay be aviolation of applicable law
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Bank encourages dissem
ination of itsw
ork and hereby grants permission to
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ercial use, without any right to
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ny other copying oruse of this w
ork requires the expressw
ritten permission of the W
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ation to:The W
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eskO
ffice of the Publisher
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opyright Clearance C
enter, Inc.222 R
osewood D
riveD
anvers, MA
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ll queries on rights and licensesincluding subsidiary rights should beaddressed to:The O
ffice of the Publisher
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ank1818 H
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ashington, DC
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Page 173
MO
DU
LE
4
Expan
ding
1
Expanding
To p
rom
ote d
irector p
rofessio
nalism and
imp
rove co
rpo
rate go
vernance
practices, d
irector training
org
anizations o
ffer training and
pro
fessional
develo
pm
ent pro
gram
s, mo
st of them
for a fee. To
beco
me self-sustaining
and g
row
, successful directo
r training o
rganizatio
ns need to
develo
p
add
itional reliab
le means o
f financing their o
peratio
ns. Besid
es the incom
e
generated
from
training p
rog
rams, m
ain sources o
f revenue may co
me
from
other activities and
services, spo
nsorship
s, and m
emb
ership d
ues.
Altho
ugh no
t all directo
r training o
rganizatio
ns are based
on m
emb
ership,
many have fo
und that the m
emb
ership fo
rmat p
rovid
es a firm fo
undatio
n
on w
hich to b
uild a vib
rant and exp
anding
org
anization. M
emb
ership is a
po
pular m
ethod
of running
a directo
r training o
rganizatio
n, in part b
ecause
the interests of such o
rganizatio
ns are aligned
with tho
se of their key
stakehold
ers.
WH
AT
YO
U W
ILL
FIN
D IN
TH
IS M
OD
UL
E
This m
od
ule discusses several typ
es of activities and
services that an
org
anization m
ay offer b
esides training
. No
t all org
anizations w
ill want o
r
be ab
le to p
rovid
e all of them
. No
r will every o
rganizatio
n want to
charge
for every service and
activity. Mem
bership
org
anizations in p
articular are
likely to o
ffer som
e of these activities and
services as a benefit o
f
mem
bership
. Decisio
ns on w
hat incom
e-generating
activities to und
ertake
should
be b
ased o
n sound
market research and
focused
on the unm
et
needs of d
irectors—all in accord
ance with the organization’s stated
mission.
In this mo
dule, yo
u will find
inform
ation o
n:
•A
ctivities and services that can g
enerate incom
e
•S
po
nsorship
s and affinity p
rog
rams
•D
evelop
ing a m
emb
ership b
ase
•P
ricing m
emb
ership fees
•R
ecruiting and
retaining m
emb
ers
•M
anaging
mem
bership
data
Page 174
2
RE
VE
NU
E-G
EN
ER
AT
ING
SE
RV
ICE
S A
ND
AC
TIV
ITIE
S
The activities and services that a director training organization offers can be an
important source of revenue to help sustain the organization in the long run. In
well-established organizations, revenues from
comm
ercial activities and services
may provide 60 percent or m
ore of the organization’s total income.
While generating revenue is im
portant, the means m
ust be consistent with
the overall mission of providing professional developm
ent to directors and
advancing best corporate governance practices.
The chief activity is, of course, the training program. W
hile training programs
may generate revenue for the organization, they are key to helping it fulfill
its mission. Tw
o other important activities are researching and form
ulating policy
and representing the interests of directors to government officials and opinion
leaders in the business world, the m
edia, and academia.
For further information on developing a training program
, see MO
DU
LE 3:
TRA
ININ
G. For a discussion on the role of director training organizations, see
MO
DU
LE 1: STA
RTIN
G.
In addition to these important activities, how
ever, there are numerous other
activities and services that both produce income and advance the professional
development of directors. These activities m
ay include:
•C
oaching and mentoring for individual directors
•N
ewsletters and publications
•C
onsulting and advisory services
•B
oard evaluation
•P
roviding premises and m
eeting rooms
•D
irector registration and search service
•Forum
s for discussion and networking
(For an overview of key activities provided by several director training
organizations, see annex 1.)
Coa
chin
g a
nd
men
toring
To complem
ent its training activities, an organization that trains directors may
also want to offer additional learning strategies for its m
embers or nonm
embers
by providing coaching and mentoring services. These are w
ork-based and focus
on the imm
ediate issues with w
hich a director may be confronted.
TH
INK
ING
P
OIN
TW
hat activities should yourorganization consider starting?
Page 175
MO
DU
LE
4
Expan
ding
3
PO
PU
LA
R A
CT
IVIT
IES
AN
D M
EM
BE
R B
EN
EF
ITS
HO
NG
KO
NG
In a survey cond
ucted in 2001, m
emb
ers of the H
ong
Ko
ng Institute o
f
Directo
rs ranked the activities o
f value to them
in the follo
wing
ord
er:
1.C
ontinuing
pro
fessional d
evelop
ment fo
r directo
rs
2.S
tandard
s and g
uidelines o
n directo
rs’ cond
uct
3.P
rom
otio
n of integ
rity and resp
onsib
ilities
4.A
uthoritative ad
vocacy o
n go
od
corp
orate g
overnance
5.U
p-to
-date info
rmatio
n and p
ublicatio
ns on d
irector p
ractices
6.S
tatus of b
eing p
art of a p
rofessio
nal gro
up w
ith high stand
ards
7.F
riendship
and b
usiness op
po
rtunities throug
h netwo
rking
8.P
artnership w
ith other p
rofessio
nal bo
dies fo
r the betterm
ent of
Ho
ng K
ong
9.B
eing p
art of a co
llective voice o
n significant issues
10.Asso
ciation and
recipro
cal service with eq
uivalent org
anizations
internationally
11.Accred
itation fo
r directo
rs
12.Meeting
and interacting
with co
lleagues o
f various cultures and
econo
mic secto
rs
13.Enjo
yment o
f mem
ber b
enefits
UN
ITED
KIN
GD
OM
The Institute o
f Directo
rs, UK
offers a b
road
variety of services to
mem
bers. M
emb
er usage o
f pro
ducts and
services is regularly
measured
, and fro
m this info
rmatio
n the mo
st po
pular m
emb
er
benefits are categ
orized
as:
1.A
ccess to p
remises (includ
ing ro
om
hire and catering
facilities)
2.E
ducatio
n and training
3.N
etwo
rking and
events
4.F
ree business info
rmatio
n and use o
f the library
E X A M P L E S
Page 176
4
Coach
ing
One-on-one coaching takes place w
hen a director has the opportunity to work
with an experienced professional, w
ho may be from
another organization, to
solve a specific problem the director has. The tw
o first identify the knowledge
and skill that the director needs to develop and agree on some potential
solutions to the performance deficiencies. They then set som
e objectives and
identify any changes coming up or any new
challenges likely to arise. With this
as a basis they plan a series of opportunities for the director to implem
ent the
strategies they have developed together. They also set up a series of meetings
to chart progress and assess the learning.
The advantages of coaching are that the level and pace are geared to the
individual director's needs. How
ever, the process can be expensive if the
organization pays the highly experienced “coach” for his or her time. In addition,
the quality of the outcome depends on the ability of both the coach and the
learning director to identify and resolve problems.
Mentoring
Mentoring is another learning approach that is relatively new
in director
development. The basic idea is that a m
entor, who is usually experienced, helps
a protégé, who is usually less experienced, to learn and develop over tim
e.
The mentor is a kind of role m
odel, whom
the protégé seeks to emulate.
Mentors typically:
•Invest tim
e and effort into their relationships with protégés, m
aking time to
respond to their needs and discussing issues of importance to them
.
•C
reate an open, candid relationship, based on mutual respect and trust,
within w
hich difficult situations and problems can be sensitively discussed.
•E
ncourage their protégés to look at problems and explore possible solutions,
respect their views and opinions, and give them
a fair hearing but do not
provide the answers.
•Foster self-esteem
, especially in young and inexperienced directors, and help
them to recognize their ow
n skills and abilities.
Mentors can do a great deal to create a continuous learning environm
ent within
which their protégés can grow
and develop. They can provide a gentle guiding
hand and sympathetic ear, w
henever needed. They may help their protégés
negotiate practical opportunities to broaden experience through special projects,
attendance at meetings and conferences, and introductions to the m
entors’
network of contacts. The advantages and disadvantages are sim
ilar to those of
the coaching relationship.
Page 177
MO
DU
LE
4
Expan
ding
5
New
sletters an
d pu
blication
s
For any corporation to prosper, its directors must be continually engaged in
making entrepreneurial decisions involving innovation, risk, and investm
ent.
Informed decisions depend upon know
ledge and experience. An im
portant
source of information com
es from a range of top-quality m
agazines, newsletters,
guides, and books that director training organizations typically publish. Best
practice codes and guidelines as well as new
sletters are typically provided free
of charge to mem
bers and the organization’s network. A
cost-effective and
efficient way of producing a new
sletter is by electronic mail. B
ooks, magazines,
and specific reports may be sold, especially to nonm
embers. In general,
publications are not a high-income generating activity, but they contribute
importantly to the organization’s visibility. N
ewsletters are an especially im
portant
networking tool that can help expand the m
embership base or recruit
participants for events and training courses.
PU
BL
ICA
TIO
NS
BR
AZ
IL
Since 2000 the B
razilian Institute of C
orp
orate G
overnance (IB
GC
) has
been p
ublishing
a bim
onthly new
sletter containing
articles written b
y
IBG
C m
emb
ers and asso
ciates. The new
sletter also rep
rints articles
from
Brazilian and
international new
spap
ers and m
agazines o
n
go
vernance matters.
HO
NG
KO
NG
The H
ong
Ko
ng Institute o
f Directo
rs has pub
lished a b
oo
k on
Guid
elines for D
irectors and
a bo
oklet entitled
Guid
e for Ind
epend
ent
No
nexecutive Directo
rs. It is currently wo
rking o
n a set of G
uidelines
on C
orp
orate G
overnance fo
r SM
Es (sm
all and m
edium
-size
enterprises) to
be p
ublished
by m
id-2003. T
he Trade and
Industry
Dep
artment o
f the go
vernment o
f Ho
ng K
ong
is supp
orting
pub
lication
of the S
ME
guid
elines with a sub
stantial grant. A
ll of the institute’s
pub
lications are b
ilingual, p
rinted in b
oth C
antonese and
Eng
lish.
E X A M P L E S
Continued next page
Page 178
6
Con
sultin
g a
nd
ad
visory services
In the course of their work, directors often need specific legal or financial advice
or precise information on how
to solve an imm
ediate problem. A
n organization
that trains directors may set up a library in its prem
ises, offer access to
databases, and monitor a w
ebsite to update its network and m
embers on new
legal, financial, or regulatory issues.
Information provided online or by the organization’s library or inform
ation service
staff is typically provided free of charge to mem
bers or training participants. The
information provided should be reliable, succinct, and take only a short tim
e to
access. When a director or board requires legal, financial, or corporate
governance advice or consultancy services tailored to specific needs, a fee may
be charged.
PU
BL
ICA
TIO
NS
(CO
NT
.)
IRELA
ND
The Institute o
f Directo
rs in Ireland p
ublishes a new
sletter, IoD
New
s,
three times a year. T
he newsletter has b
ecom
e a useful reference too
l,
regularly p
rovid
ing info
rmatio
n on co
mp
any law and
corp
orate
go
vernance issues, as well as d
etails on events and
pro
fessional
develo
pm
ent pro
gram
s held thro
ugho
ut the year.
UN
ITED
STATES
The N
ational A
ssociatio
n of C
orp
orate D
irectors o
ffers a wid
e range o
f
pub
lications includ
ing:
•A
mo
nthly newsletter “D
irectors M
onthly” (feature articles)
•R
egulato
ry alerts “DM
X” (D
irectors M
onthly E
xtra)
•A
nnual Blue R
ibb
on C
om
missio
n Rep
orts o
n a wid
e variety of b
oard
and co
mm
ittee practices—
from
Executive C
om
pensatio
n to the R
ole
of the B
oard
in Risk O
versight
•B
oard
and b
oard
com
mittee hand
bo
oks w
ith practical info
rmatio
n
abo
ut structure, roles, and
respo
nsibilities as w
ell as samp
le
do
cuments fo
r charters and b
oard
po
licies.
E X A M P L E S
Page 179
Boa
rd eva
lua
tion
An organization that trains directors m
ight provide advice on board structure
and governance and even develop a board evaluation or rating system. The
Philippines Institute of C
orporate Directors, for exam
ple, is in the process of
developing a corporate governance scorecard to monitor board perform
ance;
the scorecard can be adapted to specific target markets.
Provid
ing
premises a
nd
meetin
g room
s
Providing prem
ises, such as meeting room
s can supply mem
bers and
nonmem
bers with the necessary base, m
eeting point, and venue for events.
Director training organizations that are just starting out and do not yet have
enough meeting space to offer m
ay be able to make an arrangem
ent for
meeting space w
ith a nearby club or hotel. Providing prem
ises is a popular
mem
ber benefit and nonmem
ber service (often for a small fee). It can also be a
useful way to take advantage of em
pty training space in between scheduled
courses.
MO
DU
LE
4
Expan
ding
7
INF
OR
MA
TIO
N S
ER
VIC
ES
: UN
ITE
D K
ING
DO
M
The Institute o
f Directo
rs, UK
offers a rang
e of info
rmatio
n and
adviso
ry services, including
a legal help
line, tax advice, a b
usiness
inform
ation research facility, a lib
rary, and o
n-line inform
ation. M
ore
than one in six o
f the mem
bers so
ught info
rmatio
n and ad
vice from
the institute at least once in 2002. Inq
uiries covered
such top
ics as:
•C
om
pany acco
unting and
taxation
•B
oard
structures and g
overnance
•D
irectors’ d
uties and resp
onsib
ilities
•D
irectors’ rem
uneration p
ackage
•E
mp
loym
ent contracts
•F
inancial inform
ation ab
out co
mp
anies and b
usinesses in the United
King
do
m and
elsewhere
•M
arket trends in vario
us industries.
E X A M P L E S
Page 180
Director reg
istration
an
d sea
rch service
Nonexecutive directors play a critical role in the developm
ent of companies,
providing independent judgement, w
eight, and experience to their boards.
Nonexecutive directors supply special skills w
here needed to complem
ent those
of executive directors. Many established director training organizations are
promoting better corporate governance practices by helping to place
nonexecutive directors on the boards of companies. A
s with any outplacem
ent
agency, in most cases the organization charges the com
panies a fee for this
service. Organizations w
ith a developed mem
bership base typically register and
recomm
end only those directors who are m
embers, as this service constitutes a
strong incentive for joining the organization. Nonm
embership organizations m
ay
also offer this service, using as a base the directors they have trained or have in
their network. In either case, it is im
portant that the registry of directors be
accurate and up to date.
8
ME
ET
ING
SP
AC
E
NEW
ZEA
LAN
D
The Institute o
f Directo
rs, New
Zealand
has branches in each o
f the
five main b
usiness centers in the country. T
hree of these centers
(Auckland
, Welling
ton, and
Christchurch) o
ffer access to o
ffice
facilities for use b
y local and
out-o
f-tow
n mem
bers.
UN
ITED
KIN
GD
OM
Mem
bers o
f the Institute of D
irectors, U
K can m
ake use of a rang
e of
institute prem
ises located
in Lond
on, B
ristol, M
anchester, Birm
ingham
,
No
ttingham
, Belfast, and
Ed
inburg
h. Each p
rovid
es free meeting
facilities and the o
pp
ortunity fo
r mem
bers to
netwo
rk with their p
eers.
The institute has recently set up
a partnership
to m
ake mo
re meeting
facilities available and
to o
ffer state-of-the-art o
ffice space o
n flexible
terms and
at com
petitive rates.
E X A M P L E S
Page 181
MO
DU
LE
4
Expan
ding
9
Forum
s for discu
ssion a
nd
netw
orking
Conferences, sem
inars, workshops, breakfast m
eetings and other forums w
here
matters relevant to com
pany direction are discussed provide an ideal
opportunity for directors to keep apprised of trends and best practices while
networking and exchanging ideas and experiences. W
ell-organized, well-
produced, and well-m
arketed conferences and events can provide the
organization with significant revenue stream
s from participants and
sponsorships. Costs of m
ounting the conference can be substantial and need to
be taken into consideration when setting the fee schedule. E
ntry fees may need
to cover speaker fees and expenses, materials and brochure production,
marketing, catering, room
rental, and the rental of sound and visual equipment.
Sponsorship is often sought for these events. (S
ponsorship is discussed below.)
Conferences
Conferences should be produced to m
eet the current demands of the m
arket.
Som
e conferences are speaker-led, where delegates hear from
a successful
business leader.
DIR
EC
TO
R S
EA
RC
H S
ER
VIC
ES
IRELA
ND
The Institute of Directors in Ireland
took over the activities of the
Board
room C
entre (nonexecutive directors) in 2001. A
mong other things,
the center assists client comp
anies with the ap
pointm
ent of indep
endent
and nonexecutive d
irectors. The center maintains a d
atabase of
nonexecutive directors at the Institute of D
irectors in Ireland, w
ith some
400 suitably q
ualified ind
ividuals on the register. The d
atabase is
reviewed
and up
dated
regularly to ensure that the institute is in a
position, as far as p
ossible, to satisfy the req
uirements of any com
pany.
In 2002, 48 comp
anies app
roached the center seeking assistance w
ith
the selection and ap
pointm
ent of nonexecutive directors.
UN
ITED
STATES
The N
ational A
ssociatio
n of C
om
pany D
irectors m
aintains a list of
directo
r bio
grap
hies, which is free to
corp
orate b
oard
s and recruiters
seeking d
irectors. T
he associatio
n also has several p
ublicatio
ns to
help b
oard
nom
ination co
mm
ittees find the d
irectors w
ith the
necessary qualificatio
ns.
E X A M P L E S
Page 182
10
Annual events
Most director training organizations put on an annual event to show
case the
organization’s successes and raise awareness of its activities and m
ission.
Annual events are often produced on a m
uch larger scale than conferences and
often attract leading speakers. The annual event is often perceived as a flagship
occasion and should be informative and interactive.
DIS
CU
SS
ION
FO
RU
MS
SPEA
KER
S’ MEET
ING
S: HO
NG
KO
NG
The H
ong
Ko
ng Institute o
f Directo
rs org
anizes eight o
r nine luncheon
meeting
s a year, each with a hig
h-pro
file speaker ad
dressing
an issue
of im
po
rtance to m
emb
ers. It also ho
sts an annual dinner w
ith a
keynote sp
eaker. These m
eetings are very w
ell attended
by m
emb
ers,
their guests, and
med
ia representatives, and
often receive w
ide m
edia
coverag
e. To take ad
vantage o
f its multicultural and
international
environm
ent, the institute pro
vides sim
ultaneous translatio
n at these
meeting
s in Eng
lish and C
antonese.
NET
WO
RK
ING
: IRELA
ND
The Institute o
f Directo
rs in Ireland ho
lds reg
ular high-p
rofile, exclusive
netwo
rking events fo
r its mem
bers. In 2002 the institute ho
sted five
directo
rs’ luncheons, a p
resident’s d
inner, and a N
orth-S
outh d
inner.
These events o
ffer mem
bers and
guests uniq
ue access to b
usiness
leaders, p
oliticians, and
celebrities, and
pro
vide unp
aralleled
netwo
rking o
pp
ortunities.
CO
NFER
ENC
ES: UN
ITED
KIN
GD
OM
Jack Welch, fo
rmer head
of G
eneral Electric, and
Michael D
ell, found
er
of D
ell Co
mp
uter, have bo
th spo
ken at conferences held
by the
Institute of D
irectors, U
K. E
ach speaker attracted
around
500
deleg
ates. So
me co
nferences are subject-led
, where d
elegates are
inform
ed ab
out to
pical b
usiness issues, such as the roles,
respo
nsibilities, and
liabilities o
f directo
rs.
E X A M P L E S
Page 183
Aw
ard occasions
Som
e director training organizations host award program
s to recognize role
models of good practice or to celebrate an achievem
ent. These programs,
which are often sponsored by outside businesses or associations, can also be a
good way to focus m
edia attention on the organization’s work.
Developin
g services a
nd
activities
Before developing a large num
ber of activities and services, comprehensive
market research should be conducted to understand the needs of directors and
the environment in w
hich they operate. The activities and services can then be
tailored accordingly. It is not the quantity of services that is offered that creates
value, but rather the quality of those services and their ability to meet clear needs.
Market research can help the m
anagement of a director training organization:
•P
roduce new director developm
ent activities, such as courses and conferences
•A
nalyze the activities of competitors, including product range and pricing
•Identify and react to changes in the environm
ent, such as changes in
regulations affecting corporate governance
Market research should be conducted regularly:
•A
t training courses or conferences and other events to seek information on
expectations, the quality of the event, and other areas of interest
•Through the organization’s publications to seek feedback on content, style,
and areas of interest
•Through m
ail campaigns to gather m
ore general information on favorite
activities, expectations, and issues to be addressed
MO
DU
LE
4
Expan
ding
11
AN
NU
AL
EV
EN
TS
: BR
AZ
IL
The B
razilian Institute of C
orp
orate G
overnance held
its first Natio
nal
Co
ngress o
n Co
rpo
rate Go
vernance on its fifth anniversary in 2000. It
was fo
cused o
n the key actors o
f corp
orate g
overnance—
ow
ners,
bo
ards o
f directo
rs, manag
ement, and
indep
endent aud
itors. T
he
cong
ress was held
in the audito
rium o
f the stock exchang
e in Sao
Paulo
. So
me 190 p
articipants reg
istered, w
hich was sub
stantially
abo
ve the break-even fig
ure. The seco
nd co
ngress w
as held a year
later and w
as attended
by 187 p
articipants. T
he registratio
n fee was
app
roxim
ately US
$ 400.
E X A M P L E S
TH
INK
ING
P
OIN
TH
ow can you provide high-
quality activities and servicesthat m
eet directors’ needs?
Page 184
12
•Through the organization’s w
ebsite to gather feedback on online information,
expectations, and needs to develop more online activities and courses
•Through telephone research to gather quick responses on specific questions
(A sam
ple conference evaluation form is provided in annex 2.)
AW
AR
DS
AU
STR
ALIA
The A
ustralian Institute of C
om
pany D
irectors sp
onso
rs the
Australasian R
epo
rting A
ward
s that recog
nize excellence in
org
anizations’ annual rep
orts. T
he award
s are mad
e for rep
orts that
meet b
enchmark criteria that are b
ased o
n wo
rld b
est practice.
HO
NG
KO
NG
In 2001 the Ho
ng K
ong
Institute of D
irectors launched
Directo
rs of the
Year Aw
ards, the first such aw
ards ever g
iven in Asia. S
ince then, the
award
s have been g
iven annually. Ho
norees are reco
gnized
in the
catego
ries of executive d
irectors, no
nexecutive directo
rs, and b
oard
s
of listed
com
panies, p
rivate com
panies, and
nonp
rofit organizations.
More than 50 p
artners from am
ong government, regulatory agencies,
other professional b
odies, cham
bers of com
merce, and
major
consultancy firms sup
port the institute’s aw
ards p
rograms.
Som
e of the reasons a panel of judges cited in making the aw
ards included:
•“Firm
comm
itment to good
corporate governance and
the princip
les
set by the com
pany…
and a cham
pion of the com
pany’s values and
practices”
•“D
emo
nstrated skills in …
steward
ship …
and acco
untability to
stakehold
ers, particularly g
iving p
recise and insig
htful briefing
s … to
facilitate bo
ard m
emb
ers arriving at ap
pro
priate d
ecisions …
com
plete d
esign and
effective oversig
ht of co
ntrol system
s.”
•“…
being
ded
icated and
outstand
ing in the ro
le of ind
epend
ent
nonexecutive d
irector …
a significant facilitato
r in transition fro
m
being fam
ily-owned
/controlled to …
an active board
with p
rofessional
managem
ent … acting as a check and
balance, b
eing vocal and
add
ressing issues with courage, know
ledge and
experience …
.”
E X A M P L E S
Page 185
MO
DU
LE
4
Expan
ding
13
SP
ON
SO
RS
HIP
S A
ND
AF
FIN
ITY
PR
OG
RA
MS
Sponsorship is another w
ay to provide a healthy revenue stream for the organization.
Yet care should be taken regarding the level of influence given to any third party.
A sponsor is a com
pany or organization willing to provide financial support to the
organization, usually for a specific activity. In return, the organization identifies the
sponsor as a supporter and often allows the sponsor to prom
ote its own brand
name and possibly products or services to the organization’s m
embers or training
participants. The decision to accept sponsorship should be based upon a variety
of factors, particularly the reputation of the sponsor and the “fit” of the sponsor
with the m
ission and goals of the director training organization.
It is wise to m
ake clear that the sponsoring organization is associated with a
specific event or activity and not with the organization as a w
hole. This limited
sponsorship preserves the independence of the organization. Furthermore the
organization should be careful not to support or endorse a sponsor’s products or
services.
Types of sponsorsh
ips
A director training organization m
ay not necessarily make a profit per se from
sponsors, but their funding can help cover expenses. Sponsorship can be used
either to support a specific activity or to help subsidize services and benefits often
provided free of charge to mem
bers or training participants. Organizations m
ay
typically invite sponsors to support:
•W
orkshops and seminars, for exam
ple on corporate social responsibility or
corruption issues
•C
onferences and events, such as a luncheon where a key leader or policym
aker
makes a presentation, or a sm
all forum w
here experts discuss new trends or
the implem
entation of new regulations
•A
wards, such as best annual report, best corporate social strategy, or best
shareholder comm
unication strategy
•R
esearch and publications, such as codes of best practice, training manuals, or
newsletters
Sponsorship m
ay come either in cash or through a nonfinancial contribution.
For example, the sponsor of a conference or event m
ay provide support by
transferring a sum of m
oney to the organization, paying directly for some expenses
such as the catering fees, or providing the conference facilities free of charge.
TH
INK
ING
P
OIN
TW
hat sponsors might help fund
some of your activities?
Page 186
14
Ackn
owled
gin
g th
e sponsor
In most cases the sponsoring organization w
ill expect to be acknowledged for
its support. The terms and conditions of the sponsorship relationship should be
clearly outlined in a contract. Under such an arrangem
ent, the logo of the
sponsoring company or organization is norm
ally permitted on:
•P
romotional flyers and invitations
•C
onference programs
•M
enu cards
•S
ignage (including banners, flags, and staging) and stands
A w
ell-established organization may also look into generating revenues from
advertising as long as the advertising does not challenge its independence or
comprom
ise its reputation and mission.
Affin
ity partn
ers
Another possibility for generating incom
e, especially for mem
bership
organizations, is called an “affinity” arrangement. A
ffinity partners provide
discounts or value added on services that directors might otherw
ise not have
access to. Exam
ples include discounts on car rental and hotels, use of
executive lounges at airports, and affinity charge cards that give the
organization’s mem
bers discounts or other attractive perquisites. Opportunities
to enter into affinity arrangements m
ay be greater for director training
organizations that are well-established w
ith an active mem
bership and a position
of influence and stature within the business com
munity.
Typically an organization tries to arrange affinity partnerships for certain products
and services that are of benefit to mem
bers but that the organization either
cannot or does not want to m
anage as a business area. By creating an
attractive array of benefits that mem
bers may not be able to get elsew
here,
affinity partnerships can help the organization retain existing mem
bers and
attract new ones. The partnership is also a source of revenue for the
organization. The affinity partners pay a small com
mission for the business they
conduct with the organization’s m
embers. S
ome partnerships m
ay be more
profitable than others—but all should generate incom
e.
If the organization decides to seek affinity partners, it should take care to ensure
that the products and services offered are of high quality and likely to be useful to
a significant portion of the mem
bership. The organization, in effect, recomm
ends
the affinity partner to its mem
bership and therefore should ensure to the extent
possible that the product or service is a benefit that mem
bers want and w
ill use.
Page 187
MO
DU
LE
4
Expan
ding
15
Con
tractin
g for a
ffinity services
The decision to offer mem
bers an affinity benefit, such as discounts on car
rentals or hotel rooms, should be based on m
ember interest, requests to enter
into affinity partnerships from the providers of the goods or services, and
analysis of benefits the organization’s competitors are offering. O
nce the
organization has decided that mem
bers should be offered a particular product
or service, it should then ask potential providers of the service or product to
submit an application stating w
hat they are prepared to provide the organization
under what term
s. Each applicant should be judged on its ability to:
•P
rovide a credible product with unique selling points for m
embers
•B
e a market leader w
ithin its field
•O
ffer an exclusive or highly competitive offer to m
embers
•Financially support ongoing m
arketing campaigns
•D
emonstrate excellent custom
er handling facilities and an infrastructure of
appropriate quality
•P
rovide the organization with a sufficient level of com
missions resulting from
business written w
ith mem
bers
A key feature of the partnership is agreem
ent on an annual marketing plan using
a wide variety of com
munications channels. Typically, a director training
organization will prom
ote the partnership in direct mail, advertising, sponsorship
activities, the organization’s website, new
sletters, displays of literature, and
generic mem
bership brochures. Any leaflet show
ing the organization’s
endorsement should clearly state that the organization is not providing, but
recomm
ending, the service.
AF
FIN
ITY
PA
RT
NE
RS
HIP
S: U
NIT
ED
KIN
GD
OM
The Institute o
f Directo
rs, UK
pro
vides a variety o
f pro
ducts and
services to m
emb
ers offering
add
ed value and
preferential rates fo
r
mem
bers. T
hese include:
•Travel services, includ
ing executive airp
ort lo
unges, vacatio
ns,
flights, car rentals, ho
tels, airpo
rt car parking
, and travel insurance
•F
inancial services, such as an IoD
Visa G
old
card, d
irectors p
ersonal
indem
nity insurance, perso
nal loans, car finance ,and
corp
orate
finance advice
•A
utom
ob
ile services, such as mem
bership
in a mo
tor club
and
disco
unts on new
and used
cars
E X A M P L E S
Page 188
16
DE
VE
LO
PIN
G A
ND
MA
NA
GIN
G A
ME
MB
ER
SH
IPB
AS
E
Structuring the director training organization as a m
embership organization can
provide a much-needed source of revenue to a young organization w
hile
providing valuable services to its mem
bership. Directors w
ho are mem
bers of a
professonal organization may also feel a greater sense of responsibility to foster
and disseminate good corporate governance practices.
Directors decide to join a director training organization for m
any reasons. They
may feel a need to sharpen certain skills or be encouraged to join by the
chairman of their board to stay current w
ith best practices of corporate
governance. A key reason m
any mem
bers join is for the opportunity to network
with other directors. B
efore engaging in a mem
bership recruitment cam
paign, it
is important to identify the benefits and services potential m
embers w
ant as well
as to determine w
hat the organization can and is willing to provide in
accordance with its overall m
ission. The first steps in setting up a mem
bership
organization are targeting the market, establishing eligibility criteria, and setting
up mem
bership fees.
ME
MB
ER
SH
IP B
AS
E
AU
STR
ALIA
The A
ustralian Institute of C
orp
orate D
irectors has a m
emb
ership o
f
mo
re than 17,000 individ
uals. Averag
e gro
wth o
ver the past five years
has been 4.8 p
ercent a year. Mo
re than half (51 percent) o
f the
directo
rs of the to
p 200 co
mp
anies on the A
ustralian Sto
ck Exchang
e
are mem
bers o
f the institute, as are 119 of the chairm
en of tho
se
com
panies.
UN
ITED
KIN
GD
OM
Mem
bership
in the Institute of D
irectors, U
K has risen m
ore than 45
percent in the p
ast seven years to aro
und 55,000 ind
ividuals. M
emb
ers
include d
irectors fro
m m
any sectors o
f the econo
my—
from
med
ia to
manufacturing
, from
e-business to
the pub
lic sector, fro
m C
EO
s of
large co
rpo
rations to
entrepreneurial d
irectors o
f start-up co
mp
anies.
Directo
rs from
97 of the F
TS
E 100 co
mp
anies are mem
bers o
f the
institute. Mo
re than three-fourths o
f the institute’s mem
bers rep
resent
small and
mid
-sized enterp
rises.
E X A M P L E S
Continued next page
Page 189
MO
DU
LE
4
Expan
ding
17
Targ
eting
the m
arket
The research required to target the director market for m
embership is sim
ilar to
the research an organization conducts to determine w
hat sorts of training and
professional programs to offer. Indeed, to som
e extent the target mem
bership
market m
ay mirror the target m
arket for the training programs.
The market m
ay be segmented in several w
ays:
•B
y size of company as m
easured by assets and number of em
ployees,
such as the top quartile of companies
•B
y type of organization, such as companies listed on stock exchanges,
banks and financial institutions, small and m
edium-size organizations, or fam
ily
businesses
•B
y director’s function, such as chairman, chief executive officer, chief
operating officer, chief financial officer, company secretary, or nonexecutive
director
•B
y sector, such as industry, e-business, services
•B
y region, such as cities or states
•B
y level of expertise, such as aspiring director, certified director
Once the organization has decided on the m
arket segments that it w
ants to
target for mem
bership, it draws up a m
arketing campaign aim
ed specifically
at providing the activities and services that these directors say they want.
Market targets should be revisited on a regular basis as the organization
grows because the needs of com
panies and directors change over time.
ME
MB
ER
SH
IP B
AS
E (C
ON
T.)
UN
ITED
STATES
The N
ational A
ssociatio
n of C
orp
orate D
irectors in the U
nited S
tates
focuses o
n nonexecutive d
irectors. In the p
ast two
years, mem
bership
gro
wth has d
oub
led fro
m und
er 2,000 to o
ver 4,000. Ap
pro
ximately 75
percent o
f mem
bership
is mad
e up o
f directo
rs. Half the m
emb
ers
enroll thro
ugh co
rpo
rate bo
ard m
emb
erships, a q
uarter are individ
ual
directo
rs, and the o
ther quarter are b
oard
adviso
rs or acad
emics.
E X A M P L E S
Page 190
18
Ch
arg
ing
mem
bership fees
For mem
bership organizations in their start-up phase, annual mem
bership dues
are likely to be the main source of revenue. A
s a mem
bership organization
matures, a grow
ing proportion of its revenue is likely to come from
director
training, professional development, and com
mercial activities. In w
ell-established
organizations, mem
bership fees nevertheless account for a major part of the
organizations revenues. An established nonm
ember organization m
ay therefore
also want to consider developing a m
embership base.
Som
e director training organizations have both an election fee and an annual
mem
bership fee. The election fee is paid only once, when the m
ember first joins
the organization. Director training organizations that are just starting up m
ay
waive this election fee for a year or tw
o to encourage potential mem
bers to
apply. In addition to waiving the election fee, the organization could create a
“founders” mem
bership category as an extra inducement to joining. O
nce the
organization is up and running, it might w
ant to consider offering a reduced
election fee to applicants who sign up for several years. D
iscounts might also be
offered to applicants from the sam
e organizations who apply at the sam
e time.
INC
OM
E F
RO
M M
EM
BE
RS
HIP
FE
ES
BR
AZ
IL
The B
razilian Institute of C
orp
orate G
overnance is a self-financed
,
nonp
rofit m
emb
ership o
rganizatio
n. During
its first years, new
mem
bers w
ere charged
an initiation fee o
f US
$ 200 so that the
institute could
build
up so
me w
orking
capital. T
he annual mem
bership
fee was also
US
$ 200. Mem
bership
fees represented
77 percent o
f
total revenues in the institute’s first year. S
ince then the numb
er of
mem
bers has increased
mo
re than fivefold
, but b
ecause of the
institute’s other inco
me-g
enerating activities, m
emb
ership fees no
w
account fo
r only ab
out 15 p
ercent of to
tal revenues.
UN
ITED
KIN
GD
OM
The Institute o
f Directo
rs, UK
typically receives aro
und 40 p
ercent of
its revenue from
mem
bership
subscrip
tions and
60 percent fro
m
directo
r develo
pm
ent and b
usiness services activity.
E X A M P L E S
TH
INK
ING
P
OIN
TH
ow m
uch should the annualm
embership fee be?
Page 191
MO
DU
LE
4
Expan
ding
19
As the nam
e implies, annual dues are payable yearly. In addition, m
embers
typically pay for training and professional development courses, conferences,
and workshops. If any of these activities are open to nonm
embers, m
embers
are usually charged a discounted rate.
Setting m
embership and other fees is both an art and a science. It is advisable
to investigate the fees that competitors or sim
ilar mem
bership organizations
charge. Price, quality, and location are all im
portant factors helping to position
the organization. Just as it is important not to price the organization out of the
market, it is im
portant not to set mem
bership, course, or conference fees too
low. N
ot only will this cut into the revenue stream
; it will undervalue the quality of
services provided and send mem
bers and potential mem
bers the wrong signal
about the importance of the organization and its services.
Esta
blishin
g elig
ibility criteria a
nd
categ
ories of mem
bership
Eligibility criteria for m
embers help ensure that m
embership is of high caliber,
thus contributing to the organization’s quality, status, influence, and
sustainability. Mem
bership criteria may need to be updated over tim
e.
EL
IGIB
ILIT
Y C
RIT
ER
IA: Z
AM
BIA
To q
ualify for m
emb
ership o
f the Institute of D
irectors o
f Zam
bia, an
app
licant must b
e 21 or o
lder and
:
•A
partner in a p
rofessio
nal practice o
r hold
er of a p
rofessio
nal
qualificatio
n wo
rking in co
mm
erce or ind
ustry;
•A
sole p
rop
rietor o
f an unincorp
orated
business;
•A
senior executive o
f a national o
r international co
mp
any repo
rting
directly to
the bo
ard o
r a mem
ber o
f the bo
ard o
f such a com
pany;
•A
senior executive in the central, p
rovincial, o
r local g
overnm
ent;
•A
com
pany d
irector o
f go
od
standing
.
In exceptio
nal cases, app
licants may b
e consid
ered fo
r mem
bership
if
they do
not satisfy any o
f the abo
ve criteria but are nevertheless ab
le
to d
emo
nstrate that they have an equivalent senio
r level of
respo
nsibility and
that they supp
ort the o
bjectives o
f the institute.
E X A M P L E S
Page 192
20
Each director training organization should set its ow
n eligibility criteria, which can
be based on a number of variables:
•B
usiness entity.Mem
bers may be required to be associated w
ith an entity
whose business affairs and strategies require direction, w
hether a listed
company, a private com
pany, a business unit, an institute, a trust, a local
authority, a business association, a state-owned enterprise, a
nongovernmental organization, a charity, a professional partnership, or a
similar organization.
•P
osition.Mem
bers are mostly board directors but can also be corporate staff
mem
bers in charge of corporate governance issues or other stakeholders
concerned with good corporate governance practices.
•A
ge.The use of age as a criterion for eligibility is somew
hat dependent on
cultural norms. In Japan, for exam
ple, seniority is regarded as a measure of
experience, knowledge, and skill. H
owever, m
any entrepreneurs begin their
careers at a very early age, often proving to be more successful than their
more senior peers. The organization should also give consideration to any
laws in the country relating to age discrim
ination.
•Experience.The num
ber of years of experience as a director may be used to
determine the category of m
embership to w
hich an applicant belongs. Som
e
organizations create a senior mem
bership level for mem
bers with long
experience as directors. There might also be a category for aspiring directors
who are not yet actively engaged in the supervision and direction of an entity
but who are interested in and likely to hold such a position in the near future.
ME
MB
ER
SH
IP C
AT
EG
OR
IES
: UN
ITE
D K
ING
DO
M
The Institute o
f Directo
rs, UK
has four categ
ories o
f mem
bership
based
on ag
e and exp
erience. In add
ition to
general m
emb
ership, the
institute has a Fello
ws categ
ory fo
r experienced
and hig
hly qualified
directo
rs; an Asso
ciate catego
ry for executives o
f com
panies that d
o
not have d
irectors o
r who
are otherw
ise ineligib
le to jo
in as a mem
ber,
and a R
etired M
emb
ers catego
ry, for d
irectors w
ho have retired
from
their po
sitions.
(Details o
f the mem
bership
catego
ries for the Institute o
f Directo
rs, UK
and fo
r the Australian Institute o
f Co
mp
any Directo
rs can be fo
und in
annexes 3 and 4.)
E X A M P L E S
TH
INK
ING
P
OIN
TW
hat should the eligibilitycriteria be for yourorganization’s m
embership?
Page 193
MO
DU
LE
4
Expan
ding
21
Pla
nn
ing
the recru
itmen
t cam
paig
n
Mem
bership campaigns should be carefully planned and tested to achieve
maxim
um effectiveness. C
ertain types of mem
bership campaigns, such as direct
mail, can be quite expensive, and the organization should be sure its recruiting
materials w
ill have their desired impact. It is also useful to exam
ine how other
mem
bership organizations market their activities.
Factors to consider in planning a mem
bership campaign include:
•W
ho will be responsible for m
embership recruitm
ent. Som
e organizations
have their own sales team
, while others hire an outside m
embership
recruitment firm
•W
hat methods w
ill be used to reach the target market, such as telephone
sales, Internet, appeals, and direct mail
•W
hat kinds of selling aids will be used, such as brochures, high-profile
speakers, or patronage
•The efficiency and costs of the m
arketing strategy
•The projected volum
es and revenues
The goal is to find the best channel for raising awareness of the organization
among the target audience at the low
est possible cost.
In an organization’s start-up phase, word of m
outh and advertising in local
newspapers are effective w
ays to raise public awareness of the organization and
its training programs and other events. O
ther relatively inexpensive ways to
reach the target audience include:
•Inviting potential m
embers to an open m
eeting where they can m
eet the
organization’s leaders and staff and learn more about its activities and
services
•H
anding out materials at international exhibitions of relevance to directors
•M
aking top managers from
the organization available to speak at corporate
meetings and other relevant venues
•D
istributing materials and m
embership form
s at the organization’s events,
workshops, and training courses
•M
ember recruitm
ent schemes, w
hereby mem
bers are rewarded w
ith a small
gift such as a watch, a pen, or a publication for bringing in a new
mem
ber
•M
aking materials available at partner organizations such as the cham
ber of
comm
erce or other business associations
TH
INK
ING
P
OIN
TW
hat marketing strategies could
you use to recruit mem
bers?
Page 194
22
As the organization grow
s financially stable, other recruitment tools becom
e
available. These include direct mail, advertising in publications related to
corporate governance, and telemarketing.
Direct m
ail is the most com
mon m
ethod of comm
unicating with m
embers and is
a proven and cost-effective way to assist in the recruitm
ent process. Mailing lists
may be com
piled from application form
s or market research. A
lternatively lists
may be purchased from
professional list brokers. These brokers can provide
mailing lists of directors that fit specified profiles.
Mailing lists can be tested first, as can the appeals letters that are sent. It is
relatively easy to measure the effectiveness of direct m
ail by the response rate.
A different source code can be put on different m
ail materials to identify w
ho
received which appeal. It is im
portant to constantly update and manage the list
and delete “returns” from directors w
ho do not wish to be contacted.
Telemarketing can be very effective in the research phase as w
ell as in the
recruiting phase. The job of the sales team is to identify and follow
up potential
“leads” (directors) to offer them m
embership or to participate in a m
embership
activity, such as a training course. The sales team records details regarding the
outcome of the telephone call and any follow
-up action required. All sales and
other comm
unications with m
embers should be carefully coordinated to prevent
duplication of activity and annoyance to the mem
ber.
Filling
out a
n a
pplication
Potential m
embers should com
plete a mem
bership application form. These
forms provide an excellent tool for capturing data about potential m
embers and
should be well designed, concise, efficient to process, and easy to com
plete.
The content of the form can be divided into three categories: details provided by
the applicant, details provided by the institute, and payment m
ethods and
signature. (Sam
ple application forms are provided in annexes 5 and 6.)
Com
mon content of an application form
includes the following:
•P
ersonal details■
Nam
e, date of birth, gender, qualifications, and honorifics ■
Hom
e contact details■
Address, telephone, fax, em
ail, and mobile phone
Page 195
MO
DU
LE
4
Expan
ding
23
RE
CR
UIT
ING
ME
MB
ER
S
AU
STR
ALIA
The Australian Institute of C
omp
any Directors uses a m
ix of
telesales [telephone outreach], d
irect marketing cam
paigns,
and netw
orking/information evenings to attract new
mem
bers. The nonm
emb
ers who take courses and
attend
other events make up
a high percentage of the new
mem
bers. Tw
o marketing channels are esp
ecially helpful in
this regard. First, nonm
emb
ers are encouraged to review
the
institute's web
site, where they can join online. S
econd,
attendance at the institute's training course includ
es built-in
mem
bership
.
UN
ITED
KIN
GD
OM
A recent survey o
f the mem
bers o
f the Institute of D
irectors
in the United
King
do
m fo
und that the m
ost effective
metho
ds o
f attracting new
mem
bers w
ere, in ord
er:
1. Telepho
ne outreach
2. Mem
ber recruitm
ent pro
gram
schemes
3. Direct m
ail
4. Visits to
prem
ises
UN
ITED
STATES
Fo
r many years, the N
ational A
ssociatio
n of C
orp
orate
Directo
rs relied o
n direct m
ail (perso
nalized first-class
letters app
ealing fo
r mem
bership
). In recent years, efforts
to attract m
emb
ers have been linked
to the asso
ciation's
expand
ed ed
ucational o
fferings. M
any peo
ple jo
in the
associatio
n after attending
an educatio
nal event at one o
f
the regio
nal chapters o
r an event spo
nsored
by
headq
uarters, often in affiliatio
n with ano
ther org
anization
such as a university or a shareho
lder g
roup
.
E X A M P L E S
Page 196
24
•B
usiness details■
Com
pany name, address, telephone, fax, and em
ail■
Business inform
ation, such as annual turnover (sales), number of directors,
number of em
ployees, company registration num
ber, and main business
activity ■
Personal business details, such as job title, num
ber of years of business
experience, professional interests, and educational aspirations
•D
eclaration (it should be located on the application form near the area w
here
the applicant signs)■
Conditions of m
embership (w
hich may include agreeing to the organization’s
code of ethics)■
Revocation of m
embership for violating m
embership conditions
•D
isclaimer
■S
tating that the details on the form are accurate at the tim
e of printing but
that the organization reserves the right to make changes w
hen necessary
•P
rivacy statement
■Telling applicants how
they can obtain a copy of the privacy policy
•P
ayment details
■Include m
ethods of payment and am
ount payable■
State clearly to w
hom checks should be m
ade payable
•C
ontact details■
Address (w
here the completed form
may be sent)
■Telephone, fax, em
ail, and website details
DE
CL
AR
AT
ION
S: A
US
TR
AL
IAN
INS
TIT
UT
E O
FC
OM
PA
NY
DIR
EC
TO
RS
“I hereby ap
ply fo
r mem
bership
of the A
ustralian Institute of
Co
mp
any Directo
rs (AIC
D) and
agree to
be b
ound
by its
Co
nstitution and
By-law
s which includ
e the Co
de o
f Co
nduct. I
understand
the Australian Institute o
f Co
mp
any Directo
rs is a not-
for-p
rofit co
mp
any limited
by g
uarantee and that m
y guarantee is
limited
to tw
enty do
llars ($20). I meet the g
eneral criteria for
mem
bership
to A
ICD
.”
E X A M P L E S
Page 197
MO
DU
LE
4
Expan
ding
25
Providing a w
ebsite on the Internet for potential mem
bers to apply online can
be a very cost effective and efficient way for directors to join the organization.
An organization can encourage nonm
ember visitors to its w
ebsite to sign up
for mem
bership or register as a user by offering email updates w
ith news and
special offers. As a registered user, the individual is norm
ally able to book
courses, conferences, and events online. Som
e organizations block certain
areas of their website from
nonmem
bers, while others encourage all brow
sers
to view the site as an enticem
ent to join.
Reta
inin
g m
embers
Mem
bers of a director training organization must be very satisfied w
ith the
services provided to them in order to renew
their mem
bership. The performance
of the organization should be measured not only by revenue taken in or total
number of m
embers, but also by m
embership retention rates. O
ne key way to
retain mem
bers is to ensure their objectives and expectations are aligned with
PR
IVA
CY
PO
LIC
Y: A
US
TR
AL
IAN
INS
TIT
UT
E O
FC
OM
PA
NY
DIR
EC
TO
RS
“We co
llect your p
ersonal info
rmatio
n in connectio
n with o
ur role as a
pro
fessional o
rganisatio
n for co
mp
any directo
rs pro
viding
educatio
n,
inform
ation and
advo
cacy (which includ
es pro
viding
inform
ation and
pro
ducts and
services to yo
u). We m
ay disclo
se your p
ersonal
inform
ation to
event particip
ants and service p
rovid
ers that perfo
rm
services on o
ur behalf (such as m
ailing ho
uses). If you d
o no
t pro
vide
your p
ersonal info
rmatio
n, we m
ay not b
e able to
do
these things. In
mo
st cases, you are ab
le to g
ain access to yo
ur perso
nal inform
ation
which w
e hold
on req
uest.”
“In add
ition fro
m tim
e to tim
e, we m
ay share perso
nal inform
ation w
ith
corp
orate p
artners, joint venture p
artners or third
parties (and
disclo
se
it to o
ur service pro
viders) to
pro
mo
te throug
h direct m
ail or em
ail a
service or p
rod
uct that we co
nsider to
be o
f perso
nal and/o
r
pro
fessional b
enefit to yo
u. By sub
mitting
this form
, you co
nsent to us
using and
disclo
sing yo
ur perso
nal inform
ation fo
r this purp
ose. A
cop
y of o
ur Privacy P
olicy can b
e found
on o
ur web
site at
ww
w.co
mp
anydirecto
rs.com
.au.”
E X A M P L E S
Page 198
26
the organization’s mission. A
nalyzing the reasons why a director m
ay decide to
leave the organization can be useful in understanding errors in the mem
bership
marketing strategies and show
how the quality of the organization’s benefits and
services are perceived.
Following are a few
of the methods director training organizations use to help
retain mem
bers:
•W
elcome new
mem
bers with an invitation to a “new
mem
bers” open evening.
Holding an inform
al “getting to know you” evening attended by senior
managem
ent provides an ideal opportunity for mem
bers to hear about the
organization’s activities and aspirations.
•U
nderstand mem
bers and their professional needs, tastes, and preferences.
This information can be gleaned from
mem
bership application forms,
responses to surveys, and completed conference questionnaires.
•Inform
mem
bers of the latest high-profile events the organization is holding
before they are advertised to the general public. Such advance notice m
akes
mem
bers feel part of an inclusive group and gives them an opportunity to
book priority tickets at exclusive events.
•C
omm
unicate with m
embers in a m
onthly or quarterly newsletter or electronic
news bulletin to keep them
informed about issues that relate to them
. Many
organizations publish a newsletter or a m
agazine provided free of charge to
mem
bers.
TH
INK
ING
P
OIN
TD
oes your organization try tofind out w
hy mem
bers do notrenew
their mem
berships?
ON
LIN
E A
PP
LIC
AT
ION
AU
STR
ALIA
The p
rop
ortio
n of m
emb
ers joining
the Australian Institute o
f Co
mp
any
Directo
rs on line has increased
rapid
ly since the service was first
mad
e available in D
ecemb
er 2002. The ab
ility to review
and b
oo
k
courses, p
urchase pub
lications, answ
er (limited
) FAQ
s, and review
po
licy initiatives and lo
cal events is available to
mem
bers and
the
general p
ublic. To
date no
differentiated
service exists betw
een
mem
bers and
nonm
emb
ers but this p
olicy is b
eing review
ed.
UN
ITED
KIN
GD
OM
The Institute of Directors, U
K allow
s registration as an iod.com
user, but
this does not entitle the ind
ividual to the b
enefits of IoD m
emb
ership.
Brow
sers are encouraged to join b
y clicking on the Join the IoD b
utton.
E X A M P L E S
Page 199
MO
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4
Expan
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27
•E
ncourage mem
bers to participate in activities by providing them w
ith a free
gift such as a coffee mug, necktie, or pin w
ith the organization’s logo on it or
vouchers offering a discount to mem
bers attending particular courses or
conferences.
•S
how gratitude to m
embers by thanking them
for being a mem
ber for a
certain number of years and for participating in various activities and events.
Letters of appreciation are always w
elcome. M
embers can also be recognized
in other venues, such as luncheon or dinner meetings, m
embers’ new
sletters,
and news releases.
•Financially rew
ard mem
bers by offering them discounts on courses and
conferences. A price differential betw
een mem
bers and nonmem
bers is
comm
on practice and is a good way for m
embers to justify the costs of
mem
bership.
•P
rovide mem
bers with exclusive services free of charge w
here possible. One
example is letting m
embers use the organization’s m
eeting rooms. A
nother
example is the affinity partnerships, discussed earlier, that provide an array of
services (such as access to airport lounges or preferential rates on car rentals)
exclusively to mem
bers.
An abnorm
ally high number of resignations can signal a problem
in the
organization that must be found and corrected. S
imilarly, m
ounting levels of
complaints, or com
plaints in a particular area, also signal weakness in the
organization.
Ad
dressin
g com
plain
ts
A director training organization should alw
ays strive to provide excellent service
to mem
bers. How
ever, on occasion a mem
ber may w
ish to complain about a
specific issue, and so a clear procedure for dealing with com
plaints should be
put in place. Every com
plaint should be taken seriously and the circumstances
investigated. All com
plaints should be handled quickly and courteously, whether
the organization is at fault or not.
The organization could appoint an individual to assume responsibility for
ensuring that all complaints are dealt w
ith swiftly. A
staff mem
ber who receives
a complaint should refer it to the relevant m
anager. The staff mem
ber should
also be sure to get as many details as possible, including the correct nam
e,
mem
bership number, and contact inform
ation of the complaining m
ember, and
the nature of the problem. The staff in charge of com
plaints should investigate
quickly and formulate a prom
pt and appropriate response.
TH
INK
ING
P
OIN
TH
ow can your organization
improve the w
ay it handlescom
plaints?
Page 200
28
Every com
plaint should receive a response. The complaining m
ember should be
notified if the investigation is going to take some tim
e.
Once the situation is dealt w
ith, the staff in charge of complaints should w
rite up
a report on the complaint and its resolution, attaching all supporting
documentation. A
registry of complaints should be kept to help resolve
subsequent complaints in sim
ilar circumstances and to flag any recurring
complaints. The organization m
ay also want to tag the com
plaining mem
ber’s
file and follow up to ensure that the m
ember is happy w
ith the way the situation
was resolved.
A m
onthly summ
ary of complaints should be included in m
anagement reports. If
the complaints m
anager or any other staff mem
ber receives repeated
complaints about the sam
e aspect of its activities, remedial action should be
taken at once.
Ma
na
gin
g m
embersh
ip da
ta
A good data m
anagement system
is vitally important for m
anaging the
organization’s relations with m
embers. D
ata may be captured from
a number of
sources including mem
bership and course application forms, sales slips, delivery
addresses, and other information detailing w
hich of the organization’s activities
and services are being most frequently used by m
embers. These data are m
ost
useful if they are collated into a single database.
The data can be used for effective strategic planning and marketing cam
paigns.
It is important to circulate m
embership inform
ation internally to assist in
decisionmaking. M
embership reports that provide m
onthly updates on
mem
bership applications, renewals, and departures can reveal the overall health
of the organization, as can breakdowns of participation rates in various activities.
High levels of participation in a specific type of activity m
ight indicate a need to
repeat the activity more often or develop sim
ilar activities. Conversely, low
levels
of participation or a high level of complaints or resignations signal problem
s that
must be addressed. Inform
ation collated on mem
ber profiles or sources of
mem
bership recruitment can guide subsequent m
embership cam
paigns.
Categorizing th
e data
The organization generally depends on information from
individual mem
bers to
keep its records up to date. Mem
bers might be asked to update their personal
and business information at regular intervals, perhaps in connection w
ith
renewing their annual m
embership.
TH
INK
ING
P
OIN
TH
ow could you better m
anageyour m
embership data?
Page 201
MO
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4
Expan
ding
29
A w
ebsite can be another cost-effective, fast, and efficient method of collating
information about both potential and existing m
embers. The inform
ation can
then be used for new product developm
ent, marketing cam
paigns, and
mem
bership drives. Because the Internet is open to a global m
arket, it can
attract a diverse group of directors. The website can be developed specifically
to collect personal data volunteered by the user, who can then benefit from
a
customized training or other experience.
Mem
bership information m
ay be sorted by any combination of the details
captured. The table on page 30 shows som
e examples of the kinds of m
ember
details that might be held on a database.
Calculating th
e data
Calculating the total num
ber of mem
bers in the organization can be
complicated. A
s the mem
bership grows, so does the com
plexity of the data that
should be maintained and updated on a regular basis. A
n example of how
total
mem
bership is calculated is detailed on page 30:
Information technology is required for the efficient m
anagement of m
embership
data and for keeping track of information that m
ight be useful in retaining
mem
bers and providing them w
ith the relevant activities and services. The use
of software packages can help an organization becom
e more cost-effective,
particularly by providing support for day-to-day administration and providing a
system to m
anage booking procedures for events.
MA
NA
GIN
G D
AT
A: U
NIT
ED
KIN
GD
OM
The Institute o
f Directo
rs, UK
sorts its d
ata by the status o
f its
mem
bers: new
app
licants, new electio
ns, reactivations, lap
sings,
resignatio
ns, deaths, and
transfers out. D
ata can be p
rovid
ed in list o
r
label fo
rmat o
r in a file used fo
r merg
ing into
do
cuments such as
letters, invoices, o
r form
s. Data can b
e used b
y the marketing
dep
artment to
target m
emb
ers who
mig
ht be interested
in attending
specific events o
r develo
pm
ent courses and
by the ad
ministrative
office to
prep
are renewal no
tices, mem
bership
cards, and
receipts.
E X A M P L E S
Page 202
30
CA
LC
UL
AT
ING
ME
MB
ER
S: U
NIT
ED
KIN
GD
OM
The Institute o
f Directo
rs, UK
calculates total m
emb
ers as follo
ws:
STA
RT
TO
TAL (at d
ate show
n)
PLU
SN
ew electio
ns
PLU
SR
e-activations
PLU
STransfers-in
LES
SLap
sings
LES
SR
esignatio
ns
LES
SD
eaths
LES
STransfers-o
ut
EN
D T
OTA
L (at date sho
wn)
E X A M P L E S
EX
AM
PL
ES
OF
TH
E K
IND
S O
F M
EM
BE
R D
ET
AIL
SH
EL
D O
N A
DA
TA
BA
SE
MEM
BER
SHIP
DETA
ILS
Mem
bership
numb
erP
revious categ
ory
Electio
n date
Paym
ent history
Mem
bership
catego
ryS
ource co
de
Categ
ory up
grad
eS
tatus (current or p
ast)
Lapsing
date
PER
SON
AL D
ETAILS
Nam
eC
orresp
ond
ence add
ress
Telepho
ne / Fax
Gend
er
Natio
nalityQ
ualifications
E-m
ail add
ressesS
econd
add
ress
Chang
e of ad
dress d
ateD
ate of b
irth
Co
untry of resid
enceO
ther directo
rships
CO
MPA
NY
DETA
ILS
Job
titleInd
ustry cod
e
Co
mp
any turnover
Co
mp
any add
ress
Ho
lding
com
pany
Num
ber o
f emp
loyees
Page 203
MO
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4
Expan
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31
Protecting data confidentiality
Although m
embership data needs to be circulated internally, any data that can
be used to identify individual mem
bers should be kept confidential. Generally
speaking, mem
bership data should not be shared with third parties unless there
is a disclosed and genuine reason for doing so. For example, an organization
may em
ploy an independent mailing house to dissem
inate publications or other
materials. In such cases the third party m
ust sign a form stating that it pledges
to use the information only for the purposes agreed w
ith the organization.
An organization m
ay wish to share inform
ation with like-m
inded organizations
(such as a sponsor or an affinity partner). In that case, the mem
bers should be
given prior written notice and an opportunity to rem
ove their names from
the
database. Mem
bership data should not be sold for a profit.
As already noted, the organization should develop a policy detailing the
circumstances under w
hich it will disclose m
embership inform
ation to third
parties. Director training organizations should be m
indful that some countries
have privacy protection laws that m
ight affect them. A
n organization may need
to register under those laws both as a data user and a com
puter bureau.
Under som
e circumstances, the organization m
ight allow the sponsors of an event
to insert publicity material into a m
ailing. The material concerned should alw
ays be
forwarded directly to the m
ailing house. Envelopes addressed to mem
bers should
not be sent to a sponsoring company for inserting in their m
aterials.
Aggregating the data can be very useful. A
ggregated statistical details about
sales, website visits, and survey results are good perform
ance indicators and
may be disclosed to the board and m
embership, as w
ell as to prospective
partners and other reputable third parties and for other lawful purposes. These
statistics should never include personally identifiable information.
Issuing mem
bership cards
An organization m
ay want to issue m
embership cards to help it track m
ember
usage of its services. Using the m
embership card to m
onitor the number of
delegates attending specific courses or events, for example, can quickly
highlight which subjects are popular and w
hich are not. Strategic decisions can
be made on the basis of such data, and products can be developed
accordingly. It is important to update inform
ation constantly, accounting for
changes in mem
bership status.
Page 204
32
FU
RT
HE
R R
EA
DIN
G
De S
antis, James. 1998. S
tart an Interdisciplinary Association. C
alifornia: De
Santis P
ublications.
IoD (Institute of D
irectors). 1999. Custom
er Relationship M
anagement. London.
——
—. 2000. Internet S
ecurity. London.
——
—. 2000. M
anaging Know
ledge in the Digital A
ge. London.
——
—. 2001. R
elationship Managem
ent. London.
——
—. 1999. R
eputation Managem
ent. London.
Kotler, P
hilip, Thomas H
ayes, and Paul B
loom. 2002. M
arketing Professional
Services. N
ew York: P
rentice Hall.
PAR
N (P
rofessional Associations R
esearch Netw
ork). 2002. Mem
bership
Structures of U
K P
rofessional Associations. B
ristol, U.K
.
——
—. 2003. A
nalyzing Mem
ber Services: A
Strategic P
erspective for
Professional A
ssociations. Bristol, U
.K.
Page 205
MO
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Expan
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A N N E X E S
33
AN
NE
XE
S
1. Key activities o
f org
anizations that train d
irectors
2. Sam
ple co
nference evaluation fo
rm
3. Exam
ples o
f mem
bership
catego
ries, Australia
4. Exam
ples o
f mem
bership
catego
ries, UK
5. Sam
ple ap
plicatio
n form
, UK
6. Sam
ple ap
plicatio
n form
, Zam
bia
Page 206
CO
UN
TRY
/REG
ION
OR
GA
NIZ
ATIO
N
Australia
Australian Institute of C
ompany
Directors
Brazil
Brazilian Institute of C
orporate
Governance
Colom
biaC
onfecámaras
Hong K
ongH
ong Kong Institute of
Directors
Kenya
Corporate G
overnance Centre
New
ZealandInstitute of D
irectors,
New
Zealand
Russia
Independent Directors
Association
Russia
Russian Institute of D
irectors
South A
fricaInstitute of D
irectors in
Southern A
frica
TurkeyC
orporate Governance Forum
United K
ingdomInstitute of D
irectors, UK
United S
tatesN
ational Association of
Corporate D
irectors
TR
AIN
ING
EVEN
TS
PU
BLIC
ATIO
NS
DIR
ECTO
RM
EMB
ERSEA
RC
HP
REM
ISES
A N N E X 1 34
AN
NE
X 1
.K
EY
AC
TIV
ITIE
S O
F O
RG
AN
IZA
TIO
NS
TH
AT
TR
AIN
DIR
EC
TO
RS
XX
XX
XX
XX
X
XX
X
XX
XX
X
XX
X
XX
XX
X
XX
XX
X
XX
XX
XX
X
XX
XX
XX
X
Page 207
WEB
BEST
AD
VO
CA
CY
AP
PR
AISA
LA
DV
ISORY
CO
UR
SEC
OU
RSE
RESEA
RCH
PRA
CTIC
ESERV
ICES
ATT
END
AN
CE
EXA
MIN
ATIO
NSTAT
EMEN
TS
CERT
IFICAT
ION
AC
CR
EDITAT
ION
MO
DU
LE
4
Expan
ding
A N N E X 1
35
XX
XX
XX
XX
X
XX
X
XX
XX
XX
XX
XX
XX
XX
XX
XX
XX
X
XXX
XX
XX
XX
XX
XX
X
XX
XX
XX
X
XX
XX
X
Page 208
We w
ould be grateful for your help with our continual efforts to m
aintain high standards and develop products. To assist us please com
plete the following:
Your name (O
ptional)_____________________________________C
onference attended_____________________________________C
ompany nam
e________________________________________D
ate___________________________________________
1. Please tick the box w
hich best represents your opinion of:
a) CO
NFE
RE
NC
E C
HA
IRP
ER
SO
N[_]
[_] [_] [_]
EXC
ELLE
NT G
OO
D AV
ER
AG
E P
OO
RK
nowledge of subject
Presentation
Time m
anagement
Com
ments_______________________________________
b) SP
EA
KE
RS
’ KN
OW
LED
GE
[_][_] [_] [_]
EXC
ELLE
NT G
OO
D AV
ER
AG
E P
OO
RS
peaker 1S
peaker 2S
peaker 3
Com
ments___________________________________
c) SP
EA
KE
RS
’ PR
ES
EN
TATION
[_][_] [_] [_]
EXC
ELLE
NT G
OO
D AV
ER
AG
E P
OO
RS
peaker 1S
peaker 2S
peaker 3
Com
ments___________________________________
d) CO
NFE
RE
NC
E C
ON
TEN
TW
ere there any other topics that you think should have been included?
Were there any other speakers that you think should have been included? (please list)
e) AD
MIN
ISTR
ATION
[_][_] [_] [_]
EXC
ELLE
NT G
OO
D AV
ER
AG
E P
OO
RE
ase of bookingJoining instructionsC
atering on the dayFacilities on the day
Com
ments________________________________________
f) CO
NFE
RE
NC
E M
ATER
IALS
[_][_] [_] [_]
EXC
ELLE
NT G
OO
D AV
ER
AG
E P
OO
RU
sefulnessQ
uality of notes/handouts
Com
ments________________________________________
[_][_] [_] [_]
g) SU
MM
AR
YE
XCE
LLEN
T GO
OD
AVE
RA
GE
PO
OR
Value for money
Value of time spent
Overall satisfaction
A N N E X 2 36
AN
NE
X 2
.S
AM
PL
E C
ON
FE
RE
NC
E E
VA
LU
AT
ION
FO
RM
This form w
as provided by the Institute of Directors, U
K.
Page 209
MO
DU
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4
Expan
ding
A N N E X 2
37
What aspect of the conference did you find particularly valuable?
___________________________________________
Any other suggestions/com
ments?
_____________________________________________
May w
e use your comm
ents for future marketing activity?
Yes [_]N
o [_]
How
did you hear about this conference?[_]
Enquiry
[_]D
irect mail brochure
[_]e-m
ail[_]
Fax[_]
IoD N
ews
[_]D
irector magazine
[_]O
ther (please state below)
___________________________________________
7. Why did you book this conference?
[_]C
ontent[_]
Price
[_]R
eputation[_]
Speakers
[_]O
ther (please state below)
___________________________________________
8. What other conferences / subjects w
ould be of interest to you?
[_]S
ecuring business funding; how to access grants, subsidies and loans
[_]E
ffective project managem
ent[_]
Em
ployment law
update[_]
E-m
ail marketing
[_]P
ublic sector tendering
Other, please state
9. How
likely are you to attend another XXX conference?
[_]D
efinitely[_]
Possibly
[_]U
nlikely - if so, please say why:
10. If you would like to becom
e a mem
ber of the Institute or require further information about m
embership please tick this box.
[_]
11. RE
CO
MM
EN
DATIO
N
Please indicate below
the name and address of the individual responsible for training in your com
pany or anyone else who
might appreciate being inform
ed about Institute conferences, courses and other products:
Nam
e
Job Title
Com
pany
Address
Post C
ode
Telephone
e-mail
Thank you for taking the time to com
plete this form. Your feedback is m
uch appreciated and will continue to help us im
prove the quality of our conferences.
Page 210
A N N E X 3 38
AN
NE
X 3
.E
XA
MP
LE
S O
F M
EM
BE
RS
HIP
CA
TE
GO
RIE
S,
AU
ST
RA
LIA
The following is a description of the four m
embership categories used by the A
ustralianInstitute of C
orporate Directors (A
ICD
).
FellowThe category of fellow
is open by application to
persons who have:
•C
ompleted the A
ICD
Com
pany Directors C
ourse
and passed the Diplom
a examination, and have had
five years’ experience either as a director of a
company or governm
ent business enterprise or as a
senior executive reporting to the board; or
•A
t least ten years’ experience as a director of a
listed public company; or of a com
pany or nonprofit/
not-for-profit organization with a turnover in excess
of $20 million and/or 100 em
ployees.
Two references from
referees who are fellow
s of AIC
D
must also be provided, and the application ratified by
National C
ouncil.
Mem
ber
The category of mem
ber is open by application to
persons with tw
o or more years as:
•A
director or alternate director of a company,
•A
senior executive with m
anagerial responsibilities
equivalent to those of an executive director,
•A
mem
ber of local Boards of A
dvice of companies,
•A
partner or sole proprietor of a professional practice
(such as accountants, architects, solicitors, and
stockbrokers) or unincorporated business, or
•A
cademic personnel at the level of, or equivalent to,
professor (heads of appropriate faculties in technical
colleges are included under this category).
Gra
du
ate M
emb
erThe category of graduate m
ember status is open by
application to persons who m
eet mem
bership criteria
and who have passed the C
ompany D
irectors Course
Diplom
a examination, but w
ho do not yet qualify as a
fellows.
Affilia
te Mem
ber
Individuals may apply for affiliate m
embership if they:
•A
re interested in the affairs of AIC
D and aspire to
become full m
embers of A
ICD
but do not meet the
full mem
bership requirements;
•D
esire to enrol in the Com
pany Directors C
ourse; or
•A
re full-time students in an institute of higher
education
Page 211
MO
DU
LE
4
Expan
ding
A N N E X 4
39
AN
NE
X 4
.E
XA
MP
LE
S O
F M
EM
BE
RS
HIP
CA
TE
GO
RIE
S,
UN
ITE
D K
ING
DO
M
The following is a description of the m
embership categories used by the
Institute of Directors, U
K.
Fellow
To qualify as a fellow, an applicant m
ust be a mem
ber
of the Institute for at least one year and
(a)a director for at least 10 years, of a com
pany with
a board of at least three directors (or if the
company has m
ore than 50 employees, tw
o
directors); or
(b)a director for at least 5 years, w
ith no fewer than
10 years business experience, and an IoD
Diplom
a in Com
pany Direction or its equivalent.
Elections to Fellow
are approved by the mem
bership
comm
ittee quarterly.
Mem
ber
To become a m
ember, an applicant m
ust be over age
21, and be a “director” of an “entity” that is a solvent
going concern of “substance,” normally defined as
minim
um annual business turnover or budget of
£200,000 / 306,000 Euros. A
n applicant must also:
(a)have w
orked in business for at least seven years
and been a director for at least three years; or
(b)have w
orked for at least five years, been a director
for at least one year, and have attended the IoD
course “The Role of the C
ompany D
irector and the
Board.”
Asso
ciate M
emb
erTo becom
e an associate mem
ber, an applicant must
be over age 21 and be:
(a)a partner in a professional practice,
(b)a sole proprietor of an unincorporated business, or
(c)a senior executive reporting directly to a board
mem
ber in an education or health authority or
other public body of similar standing or of a
substantial national or international company;
or(d)a person w
ho has lost their a directorship through
redundancy during the past two years but w
ho
would otherw
ise qualify as an associate mem
ber;
or
(e)a director w
ho does not qualify as a mem
ber.
Retired
Mem
bersh
ipThose w
ho have been mem
bers for five or more years,
are over age 60, and have retired or semi-retired from
their main occupation are eligible to transfer to the
retired mem
bership category. Retired m
embers pay a
reduced annual subscription.
Note: P
resent practice allows som
e flexibility in the
“aged 60” rule, but maintains the “m
inimum
five-years
mem
bership” rule. That allows som
e mem
bers ages
58 or 59 into the retired category so long as they have
been mem
bers for at least five years. The five-year
minim
um ensures that m
embers w
ho have joined only
recently cannot take unfair advantage of the much
reduced subscription rate for retired mem
bers.
Lon
g S
ervice
Any m
ember w
ho is over age 70 and has been a
mem
ber of the Institute for more than 25 years
continuously pays a nominal sum
per year.
Page 212
A N N E X 5 40A
NN
EX
5.
SA
MP
LE
AP
PL
ICA
TIO
N F
OR
M F
RO
M T
HE
INS
TIT
UT
E O
F D
IRE
CT
OR
S, U
NIT
ED
KIN
GD
OM
Page 213
MO
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LE
4
Expan
ding
A N N E X 5
41
Page 214
A N N E X 6 42
AN
NE
X 6
.S
AM
PL
E A
PP
LIC
AT
ION
FO
RM
, ZA
MB
IA
Surnam
eF
orenam
es (s)
Titles, d
istinction, etc, to
be used
on co
rrespo
ndence
Natio
nalityD
ate of B
irth
Acad
emic, p
rofessio
nal or b
usiness related q
ualifications
Desig
nation/P
ositio
n in Co
mp
any
Nam
e and ad
dress o
f Em
plo
yer/Co
mp
any/Pro
fessional F
irm/Institute etc
Business Telep
hone N
umb
er
Business F
acsimile N
umb
er
Cell P
hone N
umb
er
E-m
ail Ad
dress
Main activity o
f Business/P
rofessio
n
Num
ber o
f Directo
rs/Partners in em
plo
yer org
anisation
I am a D
irector,
Partner,
Pro
prieto
r,C
hief Executive,
or o
ther S
tate:
Majo
r respo
nsibility area:
Num
ber o
f years business exp
erience:N
umb
er of years as C
om
pany D
irector:
Other co
mp
anies of w
hich I am D
irector/P
artner (attached list if necessary)
Marital S
tatus: S
po
use’s Fo
rename
Preferred
corresp
ond
ence add
ress B
usinessR
esidential
Resid
ential Ad
dress
Resid
ential Telepho
ne No
.
Resid
ential Facsim
ile No
.
Sig
nature of ap
plicant:
Date:
SP
ON
SO
RS
HIP
(The Io
D w
ill assist app
licants arrange a sp
onso
r).
I,……
……
……
……
……
……
……
……
……
……
……
……
……
……
being
mem
ber o
f the IoD
, in go
od
standing
,
have pleasure in no
minating
the abo
ve candid
ate for m
emb
ership.
Sig
natureM
emb
ership N
umb
erD
ate
Ap
plicatio
n app
roved
by M
emb
ership C
om
mittee o
nR
atified at C
ouncil M
eeting o
n:
Allo
cated N
ew M
emb
er Num
ber:
INS
TIT
UT
E O
F DIR
EC
TO
RS
OF Z
AM
BIA
AP
PLIC
AT
ION
FOR
ME
MB
ER
SH
IP FO
RM
SU
BS
CR
IPT
ION
FOR
YE
AR
_________
Page 216
44
Peer R
eview G
roup
To develop this toolkit and gather lessonslearned from
developing and developedcountries alike, the G
lobal Corporate
Governance Forum
invited representatives from
director trainingorganizations from
various regions of thew
orld to share their experiences and discuss m
ilestones and challenges in building director training organizations. The Forum
would especially like to thank
the following people for their contribution
to this toolkit by providing materials,
examples, and extensive com
ments on
building director training organizations:
Cou
ntry con
tributors
Australia
Ian Dunlop,
Governance and S
ustainability Advisor
John Hall,
Australian Institute of C
ompany D
irectorsP
amela M
urray-Jones, A
ustralian Institute of Com
pany Directors
Brazil
Heloisa B
edicks, B
razilian Institute of Corporate G
overnanceB
engt Hallqvist,
Brazilian Institute of C
orporate Governance
Leonardo Viegas, B
razilian Institute of Corporate G
overnanceP
aulo Villares, B
razilian Institute of Corporate G
overnance
Canada
Bernard W
ilson, Institute of C
orporate Directors
Colom
biaP
aola Gutierrez Valandia, C
onfecámaras
Hong K
ongC
arlye Tsui, H
ong Kong Institute of D
irectors
IndiaS
heela Bhide,
Ministry of Finance and C
ompany A
ffairs N
. Balasubram
anian, Indian Institute of M
anagement B
angalore
IndonesiaA
nugerah Pekerti,
Institute for Corporate D
irectorship
IrelandS
usan Thornber, Institute of D
irectors in Ireland
Kenya
Karugor G
atamah,
Centre for C
orporate Governance
New
Zealand
David N
ewm
an, Institute of D
irectors New
Zealand
Th
e Ph
ilippinesJesus Estanislao, Institute of C
orporate Directors
Jon
athan
Juan
Mo
reno
, Institute of C
orporate Directors
Russia
Igor Belikov,
Russian Institute of D
irectorsA
lexander Ikonnikov, Independent D
irectors Association
South A
fricaR
ichard Wilkinson,
Institute of Directors in S
outhern Africa
TurkeyM
elsa Ararat,
Corporate G
overnance Forum, Turkey
United K
ingdomP
hilippa Foster Back,
Institute of Business E
thicsA
lan Morkel,
Institute of Directors, U
K
United States
Roger R
aber, N
ational Association of C
orporate Directors
Alexandra Lajoux,
National A
ssociation of Corporate D
irectors
Zam
biaP
atrick Chisanga,
Institute of Directors Zam
bia
Zim
babwe
Peter B
roadway,
Institute of Directors Zim
babwe
Intern
ation
al con
tributors
Alexander B
erg, W
orld Bank G
roupG
eoffrey Bow
es, C
omm
onwealth A
ssociation of C
orporate Governance
Michael G
illibrand, C
omm
onwealth S
ecretariatD
arrin Hartzler,
International Finance Corporation
Florencio Lopez de Silanes,
Yale’s International Institute for C
orporate Governance
Mike Lubrano,
International Finance Corporation
Alyssa M
achold, G
lobal Corporate G
overnance ForumA
nne Molyneux,
CS
InternationalB
ehdad Now
roozi, W
orld Bank G
roupD
jordjija Petkoski,
World B
ank InstituteS
ue Rutledge,
World B
ank Group
John Sullivan,
Center for International P
rivate Enterprise
CO
NT
RIB
UT
OR
S
Page 217
M O D U L E 5
Monitoring
BU
ILD
ING
DIR
EC
TO
R T
RA
ININ
G O
RG
AN
IZA
TIO
NS
MO
DU
LE
5
MO
NIT
OR
ING
5
Global CorporateGovernance Forum
T O O L K I T 1
Building
Director Training
Organizations
1818 H Street NWWashington, DC 20433 USA
Telephone: +1 (202) 458-1857Facsimile: +1 (202) 522-7588
Internet: www.gcgf.orgEmail: [email protected]
Global CorporateGovernance Forum
P R I N T E D O N R E C Y C L E D PA P E R
Page 218
TOOLKIT 1
Building Director Training Organizations
Project OfficerMarie-Laurence Guy, Global Corporate Governance Forum
ConsultantsChris Pierce, Institute of Directors, UK Kerrie Waring, Institute of Directors, UK
EditorsMarty Gottron, Stockbridge, MassachusettsNancy Morrison, Falls Church, Virginia
Graphic designStudio Grafik, Herndon, Virginia
PrintingUpstate Litho, Rochester, New York
Page 219
MO
DU
LE
5
Monitoring
Glo
ba
l C
orp
ora
teG
overn
an
ce Fo
rum
TO
OL
KI
T
1
Building
Director Training
Organizations
Page 220
Copyright 2003.
The International Bank for
Reconstruction and D
evelopment/
The World B
ank 1818 H
Street N
W
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C 20433
All rights reserved.
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orld Bank, to its affiliated
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bers of itsboard of Executive D
irectors or thecountries they represent. The W
orldB
ank does not guarantee the accuracyof the data included in this publicationand accepts no responsibility for anyconsequence of their use.
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opying and/or transmitting
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ay be a violation of applicable law
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ork and hereby grants permission to
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Page 221
MO
DU
LE
5
Mon
itoring
1
Monitoring
To ensure its sustainab
ility and rem
ain targeted
on its m
ission, a d
irector
training o
rganizatio
n needs to
have a numb
er of m
onito
ring p
roced
ures in
place. To
be successful in the lo
ng run, the o
rganizatio
n needs to
be ab
le
to b
udg
et prud
ently and effectively, to
evaluate op
erations ad
equately, to
disclo
se its ob
jectives, and to
account fo
r revenues and exp
enditures.
WH
AT
YO
U W
ILL
FIN
D IN
TH
IS M
OD
UL
E
This m
od
ule pro
vides an o
verview o
f bud
geting
princip
les and
manag
ement acco
unting structures. It co
ntains inform
ation o
n financial
statements, risk, internal co
ntrol p
roced
ures, and p
erform
ance measures.
Sp
ecifically, this mo
dule w
ill help w
ith the follo
wing
:
•D
rawing
up a b
udg
et
•P
utting to
gether the key financial statem
ents that need to
be in the
annual repo
rt
•U
sing ind
icators to
assess and m
onito
r the perfo
rmance o
f the
org
anization
•S
etting internal co
ntrols to
ensure that the org
anization is run in
accord
ance with leg
al requirem
ents and the o
rganizatio
n’s ow
n cod
e
of ethics
Page 222
2
BU
DG
ET
ING
AN
D F
INA
NC
IAL
PL
AN
NIN
G
To meet its goals and fulfill its m
ission, an organization that trains directors
needs to engage in strategic financial planning through budgeting procedures.
In contrast to financial statements, w
hich measure effective perform
ance (and
which are discussed below
), budget planning is a forward-looking exercise,
which enables the chief executive and the senior m
anagement team
to prepare
a program that m
eets the financial needs and objectives of the organization.
Pla
nn
ing
an
initia
l bud
get
If an organization is just getting started, the initial budget will be an im
portant
feature of the business plan and essential to finding financial partners. Because
the costs of starting up an organization are likely to outstrip the revenues a new
organization can generate, the initial budget shows how
the organization plans
to cover the shortfall, cover start up costs, and repay any loans.
Most budgets are based on past perform
ance. But because it has little or no
past performance on w
hich to build, a start-up organization typically uses what
is called a zero-base budget approach. In this approach each line item in the
budget must be based on specific assum
ptions about the organization’s income
and expenses. A zero-base budget requires that the business operations be
TE
RM
S C
OM
MO
NLY
US
ED
IN B
UD
GE
TIN
G
ASSET
Anything
having co
mm
ercial or exchang
e value that is ow
ned b
y the org
anization.
BU
DG
ETE
stimate o
f revenues and exp
enditures fo
r a special p
eriod
.
CA
PITA
L EXP
END
ITU
RE
Outlay o
f mo
ney to acq
uire or im
pro
ve assets such as build
ings and
facilities.
CU
RR
ENT
ASSET
SA
ssets that can be co
nverted into
cash, consum
ed, o
r sold
within the no
rmal
business cycle.
CU
RR
ENT
LIAB
ILITIES
Deb
t or o
ther ob
ligatio
ns ow
ed b
y the org
anization that fall d
ue within the year o
r no
rmal b
usiness cycle.
DIR
ECT
CO
STS
Co
sts to the o
rganizatio
n that are directly asso
ciated w
ith the develo
pm
ent and
delivery o
r sale of sp
ecific pro
ducts o
r services.
IND
IREC
T C
OST
SC
osts to
the org
anization that are no
t directly asso
ciated w
ith the develo
pm
ent andd
elivery or sale o
f specific p
rod
ucts or services, such as o
verhead.
LIQU
IDIT
YA
bility to
convert assets to
cash quickly.
MA
RG
IND
ifference betw
een the price received
by the o
rganizatio
n for its p
rod
uct andservices and
the cost o
f develo
ping
and d
elivering them
.
PAYBA
CK
MET
HO
DA
technique fo
r evaluating the financial viab
ility of a p
roject.
SOLV
ENC
YS
tate of b
eing ab
le to m
eet all maturing
ob
ligatio
ns as they com
e due.
G L O S S A R Y
Page 223
MO
DU
LE
5
Mon
itoring
3
carefully considered so that as many item
s as possible are foreseen and
included. As a first step, the expected costs and the expected incom
e of the
organization are identified. A distinction is also m
ade between costs that are
fixed, such as office rental, and variable costs, such as catering needs of a
training course. Care is needed so that the assum
ptions used on the income
side match those used to predict expenditures.
A zero-base budget should be neither too pessim
istic nor too optimistic.
To help determine budget line item
s as well as the level of costs and revenues
to expect, the organization or its founding comm
ittee can base its assumptions
on the market analysis it m
ay have conducted or seek advice from other
organizations. (An exam
ple of a zero-base budget can be found in annex 1.)
Although m
ost mature organizations base their budgets on past perform
ance, a
well-established organization m
ay also decide to return to a zero-base budget
approach if its circumstances have changed so m
uch that measures of past
performance are no longer reliable budgeting tools. A
n established organization
may also w
ant to use zero-base budgeting for any new program
s or activities it
is considering undertaking.
Bu
dg
eting
on a
n on
goin
g ba
sis
On an ongoing basis, the finance departm
ent or an experienced accountant is
typically responsible for providing overall guidance on the budgeting process
and integrating and interpreting the budgets for all departments, especially as
they interrelate.
At least once a year but preferably on a quarterly basis, the finance departm
ent
or the organization’s accountant collects the information needed from
individual
departments or project m
anagers to prepare the overall budget. For example,
the publications department provides forecasts of the volum
es of publications
to be sold multiplied by standard (or estim
ated) prices as well as the forecast of
the cost to produce them. The m
embership departm
ent provides a budget
forecasting mem
bership recruitment and retention levels, along w
ith the
mem
bership fees to be accrued.
TH
INK
ING
P
OIN
TW
hat are the key budget lineitem
s that belong in your budget?
Page 224
4
The ongoing budgeting process may be based either on past results or on
performance goals:
•The historical approach
bases the budget projections on previously achieved
costs and revenues, or what is know
n to have happened in the past. The
advantage of this approach is that it uses empirical data to determ
ine what
budgeted costs and revenues can be achieved. The obvious drawbacks are
that bad and inefficient practices are perpetuated and that changes in the
external environment m
ay not be taken into account. For example, recently
adopted regulations affecting board practices might raise the dem
and for
training during the next budget cycle, but if the organization has budgeted its
training cost and revenues based on last year’s results, it might be unable to
meet the challenges of increased dem
and.
•The perform
ance approachbases the budget projections on realistic levels of
expected performance. These projections m
ay allow for a certain level of
variation in operations or market fluctuation but m
ay not take into account
lessons learned from the past. O
ne of the drawbacks of this approach is the
risk that projections in fact may not be realistic. For exam
ple, an organization
that has just been asked to conduct several board induction training sessions
might factor that anticipated incom
e into its revenue projections—w
ithout
considering that it has only been able to conduct three training sessions over
the last two years because of a lack of trainers. A
continuing lack of qualified
trainers might m
ake it impossible for the organization to deliver the induction
training, thus forcing it to forgo the anticipated income—
and incurring a
possible loss in reputation.
Once the appropriate inform
ation is gathered from the organization’s various
departments or m
anagers, the chief executive officer, the finance department,
and other senior managers together assess and discuss the overall draft
budgets. The chief executive officer is responsible for mediating any conflicts
that might arise am
ong various departments or m
anagers over priorities and
available funds. Once any necessary adjustm
ents are made, the budget is
submitted to the organization’s board for review
and approval.
Goa
ls an
d ben
efits of the bu
dg
eting
process
The benefits of the budgeting process go well beyond financial considerations.
The process helps the organization clarify its goals and priorities and is essential
to keeping the organization on target to achieving its mission. P
lanning for a
budget is a time to take stock of the organization’s strength and w
eaknesses
and to think about new projects, discuss the business strategy of the
organization, improve com
munication betw
een departments, and associate all
staff mem
bers in a team-building exercise.
Page 225
MO
DU
LE
5
Mon
itoring
5
The process of drawing up a new
budget provides staff mem
bers with the
opportunity to express their needs and concerns but also to better understand
the organization’s financial constraints. If budgets are simply im
posed rather
than discussed and negotiated, many benefits w
ill be lost. The budgeting
process is an opportunity to:
•A
gree on what is realistic given the constraints
•C
larify the important issues facing the organization
•A
ssess the sensitivity of the budget to changes in the underlying assumptions
(such as a failure to sell the expected number of publications or to attract the
expected numbers of new
mem
bers)
•A
ssess and understand the financial mechanics of the organization
The budgeting process generates ownership and com
mitm
ent. Once agreed,
budgets become the standard of future perform
ance. The budget reflects what
all parties agree should be delivered and defines how their contributions support
the activities of the organization as a whole. To enhance m
otivation, the level of
responsibility must be m
atched to the level of authority. Staff should be held
responsible only for figures they control and influence.
New
managers or staff m
embers can be provided w
ith a guide on budget
procedures to ensure that their understanding of the organization’s budgetary
process is correct. A budget procedures guide m
ay also be distributed to board
mem
bers as they may not alw
ays be aware of the detailed budgeting practices
actually employed at the grassroots of the organization. Form
alizing the
budgetary process in writing can also expose som
e of the difficult trade-offs that
can be confusing to junior managers. E
xamples of key trade-offs are:
•P
rofessionalism versus com
mercialism
•R
isk versus reward (selling and purchasing strategies)
•Investm
ent versus liquidity
•S
hort-term versus m
edium-term
financial performance
•A
utonomy versus cooperation
The regular comparison of actual perform
ance with budget projections
throughout the year provides a good basis for monitoring the organization’s
results against expectations and enables managem
ent to make necessary
adjustments in a tim
ely manner. The budgets m
ight usefully be split quarterly or
preferably monthly to enable the m
anagement team
to assess financial
performance on a regular basis and address any shortfall.
Page 226
6
Young director training organizations may not have the resources to engage the
services of full-time accountant and w
ill often start by drawing up their budgets
on an annual basis. (For an example of an annual budget for a director training
organization, see annex 2.)
Project a
ppraisa
l
Each project the organization initiates m
ust be incorporated into the overall
budget. But each project should also be appraised on its financial viability. Is the
project likely to break even, make m
oney, or lose money? A
break-even analysis
shows the level of sales required to generate sufficient gross profit to cover the
organization’s overhead. It is a means for m
easuring the potential sustainability
or the revenue-generating potential of an activity. In deciding whether to pursue
the project, the organization needs to take into account the importance of that
project in fulfilling its overall goals and mission. For exam
ple, a training program
might lose m
oney initially but be pursued because it is essential to the
organization’s mission. A
ctivities that are expected to generate revenue to help
sustain core activities must be sim
ilarly appraised. But such projects m
ay be
dropped if the appraisal indicates they will not be profitable.
A technique com
monly used to evaluate a project is know
n as the payback
method. P
ayback compares the cash outflow
s needed to get a project up and
running with the net cash inflow
s that will be earned if the project is successfully
implem
ented. Since risk and uncertainty increase as the tim
e horizon stretches,
payback is an excellent measurem
ent tool. The board of directors should clearly
define the parameters of an acceptable payback period.
HO
W T
HE
PA
YB
AC
K T
EC
HN
IQU
E W
OR
KS
Sup
po
se that your o
rganizatio
n is consid
ering p
urchasing a m
eeting ro
om
for 20,000 and
the net cash inflow
that the roo
m w
ould
generate is 10,000.
The p
ayback w
ould
be calculated
as follo
ws:
Year 0Investm
ent20,000
Year 1N
et cash inflow
10,000
Pro
ject expo
sure-10,000
Year 2N
et cash inflow
10,000
Pro
ject expo
sure0
Year 3N
et cash inflow
10,000
Pro
ject expo
sure10,000
In this case the payb
ack perio
d is tw
o years.
Page 227
MO
DU
LE
5
Mon
itoring
7
RIS
K A
ND
INT
ER
NA
L C
ON
TR
OL
S
Internal controls are the mechanism
s set up to ensure that the organization is
managed honestly and that problem
s and risks are correctly identified and dealt
with in a tim
ely manner. A
board comm
ittee specifically charged with this
function is the audit and risk comm
ittee.
Key features of internal control system
s are:
•A
clear organizational structure for monitoring the conduct and operation of
the business with defined reporting lines, levels of responsibility, and
delegation of authority.
•C
omm
unication of ethical values and controls awareness, through w
ritten
codes of ethics, codes of conduct, formal standards of discipline, and
employee perform
ance appraisal.
•A
system for review
ing and monitoring the key areas of risk.
•R
egular review of m
anagement accounts by the board of directors.
•R
egular meetings of the audit and risk com
mittee, to review
the organization’s
risk register and to meet w
ith the external auditors regarding the scope of the
audits and the contents of the auditors’ reports to managem
ent.
For information on structuring a director training organization, audit and risk
comm
ittees, and ethics codes, see MO
DU
LE 2: STR
UC
TUR
ING
.
A process should be established for continuously identifying, evaluating, and
managing risks faced by the organization. K
ey elements of this process include:
•The m
aintenance of a risk register, which identifies key risks
•A
ssessing the probability of risks occurring
•A
ssessing the associated potential impact
•D
eciding on the appropriate action to be taken
The register should be regularly maintained and review
ed by the audit and risk
comm
ittee. Potential risks can be divided into several categories: strategic,
financial, operational, and hazards. The table on potential risks on p. 8 shows
some of the specific risks that fall under each of these categories.
TH
INK
ING
P
OIN
TW
hat are some of the risks your
organization might encounter?
What rem
edial actions couldyou take?
Page 228
Once the audit and risk com
mittee has identified the risks facing the
organization, criteria can be developed for dealing with the risk based on its
nature and potential impact. The severity of the risk can be divided into four
levels, ranging from risks having little effect on the organization’s operations to
those that could jeopardize the continuation of the organization. The table below
details the likely outcome at each of the four levels of risk. The audit and risk
comm
ittee and the chief executive officer need to monitor these risks regularly
so that they can develop appropriate and timely solutions.
A director training organization m
ay take years to develop its mem
bership,
reputation, and brand name. It is of param
ount importance that an effective risk
managem
ent strategy is in place to safeguard its growth and sustainability.
PO
TE
NT
IAL
RIS
KS
FAC
ING
DIR
EC
TO
R
TR
AIN
ING
OR
GA
NIZ
AT
ION
S
8
CAT
EGO
RYSP
ECIFIC
RISK
STR
ATEG
IC•
Market recruitm
ent and retentio
n
•D
elivery and training
•E
cono
mic co
nditio
ns
•P
olitical enviro
nment
FINA
NC
IAL
•C
ash flow
shortag
e
•E
xchange risk
•B
ad d
ebts
OP
ERAT
ION
S•
Mem
bership
recruitment and
retention
•D
elivery of training
•Techno
log
y failure
HA
ZA
RD
S•
Natural d
isasters
•Terro
rism
•Lo
ss of rep
utation
•C
rime and
corrup
tion
LE
VE
LS
OF
RIS
K A
ND
LIK
ELY
OU
TC
OM
ES
LEVEL
IMPA
CT
OU
TCO
ME
1Little
The o
rganizatio
n wo
uld suffer little harm
in terms o
f cash or surp
lus.
2P
ainfulT
he org
anization w
ould
survive but in a w
eakened and
vulnerable co
nditio
n.
3P
otentially term
inalT
he org
anization w
ould
be severely w
eakened, w
ith ultimate reco
very in do
ubt.
The b
oard
of d
irectors w
ould
beg
in to lo
se contro
l.
4C
ollap
seT
he org
anization w
ould
collap
se due to
high exp
osure to
risky pro
jects.
The b
oard
of d
irectors w
ould
loo
k into shutting
do
wn the o
rganizatio
n.
Page 229
MO
DU
LE
5
Mon
itoring
9
PE
RF
OR
MA
NC
E M
EA
SU
RE
ME
NT
AN
DS
US
TA
INA
BIL
ITY
The key measure of the perform
ance of a director training organization is its
financial condition. An organization that has been earning m
ore on operational
activities than they cost to deliver and using its resources efficiently might still
suffer embarrassm
ent if it is short on cash and cannot imm
ediately pay for some
of its inputs such as salaries and electricity bills or cover obligations such as debt.
The traditional measure of liquidity is the ratio of current assets to current
liabilities. This is the simplest and crudest m
easure of liquidity. If current assets
exceed current liabilities, then the organization is considered solvent and can
build reserves. If current liabilities exceed current assets, the organization may
be experiencing a cash shortage and further funding through grants,
sponsorships, or loans will m
ost likely be needed.
An organization that trains directors should strive to build a reasonable level of
cash reserves to weather any econom
ic downturn, fund any required capital
expenditures (such as setting up new offices), develop new
training and
certification programs, and expand the services it offers. A
n operating surplus
should be planned and budgeted for each year. In particular, as the organization
grows, it w
ill require additional reserves to preserve the strength of its balance
sheet. (An exam
ple of an operating surplus statement by activity is provided in
annex 3.)
Perform
ance indicators are used to monitor and control the profitability and
sustainability of an organization and its activities. Any trends indicating
increasing or falling profitability will quickly show
up in operating revenues or
operating costs.
Opera
ting
revenu
es
Changes in the level of revenues can provide an early w
arning of any peaks or
troughs in the activities of a director training organization. When review
ing the
revenue derived from incom
e-generating activities, the following questions
should be asked.
•W
hich categories of activities are performing w
ell?
•W
hich categories of activities are performing poorly?
•H
ow are the priority products and services (those w
ith the best margins and
the best payment term
s) performing?
TH
INK
ING
P
OIN
TW
hat are the financial andnonfinancial perform
ance measures
used by your organization?
Page 230
10
•W
hat has each revenue-generating employee or team
achieved?
•W
hat are the conversion rates (the ratio, for example, of the num
ber of
directors inquiring about training courses to the number actually taking the
courses) and are they changing?
•W
hat are the reasons for these changes (has the marketing budget been cut,
for example)?
Managem
ent typically reviews on a w
eekly basis the number of inquiries about
activities and services, the number of activities and services ordered, and the
number actually sold. This inform
ation can be comm
unicated to board mem
bers
on a monthly basis and review
ed at board meetings.
Opera
ting
costs
An organization m
ust also monitor its costs, adjusting them
where necessary to
maintain a balanced budget. C
osts are categorized into direct and indirect
costs. Direct costs are those that relate directly to production of a good or
service, while indirect costs do not. E
xamples of direct costs for an organization
that trains directors include paper for publications, food and drink for
conferences and events, and tutor fees for training programs. E
xamples of
indirect costs are office rental, staff salaries, travel expenses, fees paid for
accounting and other professional services, and marketing costs.
The level of costs, and any marked changes in them
, need to be continually
monitored and questioned. C
an indirect costs be reduced? Are travel expenses
excessive? Are salaries reasonable? S
ome of these costs w
ill be much m
ore
difficult to control than others, but all should be monitored.
Som
e other comm
on performance indicators that director training organizations
might use include:
•Training
(number of training courses held, course evaluations from
participants,
number of custom
ized training programs developed, net surplus or loss from
training).
•M
embership
(number of new
mem
bers, number of m
ember resignations, net
mem
bership growth).
Page 231
MA
NA
GE
ME
NT
AC
CO
UN
TS
AN
D F
INA
NC
IAL
ST
AT
EM
EN
TS
It is incumbent upon an organization that trains directors to keep proper
accounting records and provide full and timely disclosure to its financial partners,
mem
bers, and other stakeholders on a regular basis and in accordance with
highest international standards and regulations. All transactions should be
documented. The docum
entation may be required by the organization’s external
auditors, tax authorities, financial partners, and others.
The organization should be able to produce and disclose sound and accurate
financial information. S
uch information is used to:
•M
easure the financial position of the organization and the performance
of its operations.
MO
DU
LE
5
Mon
itoring
11
SE
LE
CT
ED
PE
RF
OR
MA
NC
E IN
DIC
AT
OR
S
CO
LOM
BIA
So
me o
f the indicato
rs Co
nfecámaras, in C
olo
mb
ia, uses to m
easure
imp
act, health, and o
utreach as part o
f overall p
erform
ance include:
•N
umb
er of p
eop
le trained in training
pro
gram
s
•S
cop
e of m
edia co
verage
•N
umb
er of visits to
its web
site
•N
umb
er of new
corp
orate g
overnance reg
ulations that
Co
nfecámaras has b
een associated
with
•Internatio
nal recog
nition
•F
inancial and no
nfinancial supp
ort received
•M
eeting internatio
nal quality stand
ards
RU
SS
IA
So
me o
f the indicato
rs used b
y the Indep
endent D
irectors A
ssociatio
n
in Russia to
measure success includ
e:
•N
umb
er of m
emb
ers
•Level o
f incom
e from
fund raising
•Level o
f incom
e from
revenue-generating
activities
•N
umb
er of affiliatio
ns with p
artners
•N
umb
er of events held
and p
articipants attend
ing
•R
egularity o
f the pub
lishing o
f the newsletter
•R
egularity o
f upd
ating the w
ebsite
•F
requency o
f being
quo
ted in the m
edia
E X A M P L E S
Page 232
12
•C
ompare perform
ance from year to year or activity to activity and shed light
on the reasons for successes and failures.
•H
elp managem
ent manage the organization.
•E
nable potential donors, partners, or benefactors to evaluate the organization
and make decisions about its viability.
•H
elp mem
bers and stakeholders or interested parties monitor the
organization’s activities and performance.
•H
elp the organization be accountable to its financial partners, mem
bers, and
current donors.
To disclose financial information and m
onitor results, an organization typically
uses two broad types of accounting assessm
ents. Managem
ent accounts are
primarily used w
ithin the organization and may be required by the board and
financial partners. Financial statements are aim
ed at outside users and figure in
the annual report.
Ma
na
gem
ent a
ccoun
ts
Managem
ent accounts reflect the use of the organization’s funds and enable the
chief executive and senior managers to plan and control operations and develop
long- and short-term goals. These accounts are basically decisionm
aking tools.
Managem
ent accounts include budgeting, planning for income, and cost
controls.
The managem
ent accounts compare actual results w
ith the forecasted budget
projections. They are presented in a format that is easy for nonexperts to
understand, but are detailed enough to give an accurate picture of all major
financial developments. These accounts should provide the im
petus to search
for effective corrective action if and when significant variances appear betw
een
the forecast and the actual situation.
In contrast to financial statements, there is no legal requirem
ent to prepare
managem
ent accounts. The board of directors and executive managem
ent
stipulate what inform
ation they require, when it should be m
ade available, and in
what form
it should be presented. Managem
ent accounts are typically prepared
by the organization’s accountant or finance department and are issued at
quarterly or preferably monthly intervals. S
ome item
s, such as fixed costs, need
to be reviewed only once a year, as part of the annual budgeting cycle. M
any
organizations consequently use exception reporting to limit the m
onthly or
quarterly reporting to results that are above or below budget projections by, for
Page 233
MO
DU
LE
5
Mon
itoring
13
example, 5 percent or m
ore. To make im
portant trends easy to spot, more
sophisticated managem
ent accounts include “red light” systems to signal
potential drawbacks or opportunities.
Fina
ncia
l statem
ents
Like other comm
ercial entities and business organizations, organizations that
train directors are typically required to prepare three financial statements each
year: a balance sheet, an income statem
ent, and a cash-flow statem
ent. The
three financial statements are typically prepared by the finance departm
ent or
accountant, reviewed by the chief executive officer, audited by an independent
external auditor, disclosed to the board of directors, and published in an annual
report. The annual report also contains an overview of the organization’s
financial condition (see below).
Four major accounting concepts are fundam
ental in the preparation and
interpretation of the three financial statements and m
ay guide the board as well
as mem
bers and financial partners in understanding the performance of the
organization:
•The going concern concept. This principle assum
es that there is no intention
or necessity to liquidate the organization. If liquidation is looming, a special
report called a statement of financial affairs is usually required This statem
ent
of affairs shows the am
ounts that are expected to be realized from disposing
of the assets and the claims on the proceeds of the providers of funds.
•The accruals or m
atching concept. This principle calls for recognizing
sales, costs, and profits as they are earned or incurred rather than when they
are received or paid.
•The consistency concept. This principle requires consistent treatm
ent of
like items w
ithin each accounting period and from one accounting period
to the next.
•The prudence concept.U
nder this concept revenues and profits cannot be
anticipated. They should be recognized by inclusion in the profit and loss
account only when they are realized—
in the form of cash or w
hen there is
reasonable certainty that the debt can be collected.
The financial statements should be accom
panied by a written com
mentary or
financial notes, prepared by the financial department or accountant. This should
explain the figures and any important changes since the previous period,
including the reasons behind them. For exam
ple, revenues might be low
Page 234
14
because a particular course has been delayed or cancelled. These financial
notes should be reviewed by the chief executive officer.
Th
e balance sheet
The balance sheet is a “photograph” of the financial situation of the organization
at a given point in time. The snapshot identifies w
hat the organization owns (the
assets) and how the assets are arrayed against liabilities and equity. The term
“balance sheet” is a reflection of the fact that the net assets must exactly equal
equity and the accumulated liabilities. The balance sheet is the listing of the
items m
aking up the two sides of the equation. This is achieved using the
principles of double entry bookkeeping (recording each transaction as both a
credit and a debit). (A sam
ple balance sheet for a director training organization is
shown in annex 4.)
FIXED
ASSET
S•
Tangib
le fixed assets (such as real estate,
equip
ment)
•Intang
ible fixed
assets (nonp
hysical resources
such as cop
yrights that are p
resumed
to
represent an ad
vantage to
the org
anization in
the marketp
lace)
•Investm
ents
CU
RR
ENT
ASSET
S•
Deb
t ow
ed b
y individ
uals or o
rganizatio
ns to
the directo
r training o
rganizatio
n
•S
hort-term
investments
•S
hort-term
bank d
epo
sits
•C
ash in hand
CU
RR
ENT
LIAB
ILITIES
•D
ebt o
r other o
blig
ations that the o
rganizatio
n o
wes that fall d
ue within o
ne year
•B
ank overd
rafts
LON
G-T
ERM
LIABILIT
IES•
Am
ounts the o
rganizatio
n ow
es that fall due
after one year
RESERV
ES•
Accum
ulated surp
luses
ITE
MS
IN A
TY
PIC
AL
BA
LA
NC
E S
HE
ET
Page 235
MO
DU
LE
5
Mon
itoring
15
Th
e income statem
ent
The income statem
ent is also known as a profit and loss statem
ent. It is a
summ
ary of the revenues and expenses of the organization during an
accounting period. The income statem
ent is significantly different from the
balance sheet in that it presents the operating results (profits or losses) for a
specific period of time. The m
ost important thing about the incom
e statement is
that it does not just report movem
ents in cash. It compares the revenues for the
period with the costs that relate to the period, w
hether paid for or not.
When calculating expenses, only costs applicable to the reporting period are
included; all others are excluded. For example, the portion of an insurance
premium
that applies to the following year is not included. E
xpenses that have
not been billed to the organization by the end of the financial period, such as
bills for electricity and telephone, should also be excluded from the incom
e
statement until they are actually accrued. (A
sample incom
e statement for a
director training organization is shown in annex 5.)
Th
e cash-flow
statement
The cash-flow statem
ent describes the cash inflows and outflow
s over a period
of time. D
ay-to-day control of cash typically rests in the finance department or
with the organization’s accountant, w
hich typically prepares a forecast of inflows
and outflows on a w
eek-by-week basis at least six m
onths in advance. Provided
that the forecast is prepared accurately, the organization should not run out of
cash to meet payroll and other bills com
ing due. If the finance department
forecasts a cash shortfall in the coming m
onths, the organization would have
ITE
MS
IN A
TY
PIC
AL
INC
OM
E S
TA
TE
ME
NT
INC
OM
E
Mem
bership
subscrip
tions
Revenue fro
m training
activities,
events, services, and p
ublicatio
ns
Sp
onso
rships
Grants
EXP
END
ITU
RES
Co
st of training
activities,
pub
lications, events and
services
Indirect co
sts and o
verhead
(administration, rent, purchases for
running activities, insurance, marketing)
The am
ount necessary to
meet tax
bills and
other fees.
Page 236
16
time to find additional funds from
other sources or to reduce its expenses. The
organization’s bank, for example, m
ight be willing to grant a term
loan or allow
an overdraft. (Sam
ple cash-flow statem
ents are shown in annex 6 and 7.)
Th
e an
nu
al report
An annual report, including the annual financial statem
ents, is typically made
available to all mem
bers, financial partners, and other stakeholders. It provides
relevant information on the perform
ance and credibility of the organization over
the previous year. For increased transparency, some organizations that train
directors also publish their annual reports on their website. The annual report
serves as an important m
arketing tool for the organization and may help retain
and recruit training participants, mem
bers, or new financial partners.
The board of the organization reviews and approves the annual report, w
hich is
then circulated to mem
bers and/or financial partners and discussed at the
annual general meeting. The key elem
ents of an annual report are:
•The chairm
an’s message, w
hich often states the major achievem
ents and
goals that have been met during the past year and objectives for the future.
•The chief executive’s review
, which often reports on the organization’s
performance and on new
activities launched to meet future m
arket demand.
•G
overnance of the organization, including a description of the governing body,
types of board comm
ittees and their mem
bership, and the organization’s
internal control procedures.
•N
ames, biographies, affiliations, conflicts of interest and rem
uneration of
senior officers, and mem
bers of the governing body.
ITE
MS
IN A
TY
PIC
AL
CA
SH
-FL
OW
ST
AT
EM
EN
T
CA
SH
INF
LOW
S•
Cash p
ayments b
y mem
bers
and/ o
r beneficiaries
•C
redit card
paym
ents by
mem
bers and
/ or b
eneficiaries
•C
hecks from
mem
bers and
/or
beneficiaries
•G
rants
CA
SH O
UT
FLOW
S•
Paym
ents to sup
pliers
•Taxes p
aid
•S
taff salaries
•P
urchase of assets
•E
xpenses
Page 237
MO
DU
LE
5
Mon
itoring
17
•Financial review
:
—O
verall financial performance for the past year, including inform
ation on
profits and losses and the major factors contributing to the perform
ance.
—M
embership incom
e, including any increase or decrease in recruitment and
retention and the reasons for the result (if applicable).
—A
dditional sources of income, including all revenue-generating activities and
highlighting particular successes (or failures) and the major factors
contributing to the result.
—O
perating costs, including reductions or increases in costs such as salaries
and employee benefits, indirect costs (general adm
inistration and
marketing), and property expenditure.
—Investm
ent for the future, including major new
projects and cash
investments, such as developing a new
training or certification program.
•Independent auditors report and accom
panying managem
ent letter.
•B
alance sheet.
•Incom
e statement.
•C
ash-flow statem
ent.
•N
otes explaining the accounts.
•The organization’s code of ethics.
Page 238
18
FU
RT
HE
R R
EA
DIN
G
Bryson, John M
., and Farnum K
. Alston. 1999. C
reating and Implem
enting a
Strategic P
lan: A W
orkbook for Public and N
onprofit Organizations.S
an
Francisco: Jossey-Bass.
Hussey, D
avid, and Robert P
errin. 2003. How
to Manage a Voluntary
Organization. London: K
ogan Page.
ICS
A (Institute of C
hartered Secretaries and A
dministrators).2003. C
orporate
Financial Managem
ent. London
——
—. 2003. Financial A
ccounting. London.
——
—. 2003. M
anagement A
ccounting. London.
IoD (Institute of D
irectors). 2000. Business C
ontinuity. London.
——
—. 2001. Financing G
rowth. London.
——
—. 2002. S
ustainable Developm
ent. London.
Koch, R
ichard. 2000. The Financial Times G
uide to Strategy. London: Financial
Times.
Page 239
A N N E X E S
AN
NE
XE
S
1. Sam
ple zero
-base b
udg
et
2. Sam
ple annual b
udg
et
3. Sam
ple o
perating
surplus statem
ent
4. Sam
ple b
alance sheet
5. Sam
ple inco
me statem
ent
6. Sam
ple cash-flo
w statem
ent, United
King
do
m
7. Sam
ple cash-flo
w statem
ent, Turkey
MO
DU
LE
5
Mon
itoring
19
Page 240
A N N E X 1 20
AN
NE
X 1
SA
MP
LE
ZE
RO
-BA
SE
BU
DG
ET
The fo
llow
ing exam
ple w
as pro
vided
by the C
orp
orate G
overnance F
orum
of Turkey.
PL
AN
NE
D P
RO
JEC
TS
(AD
DIT
ION
AL
CO
ST
AN
D IN
CO
ME
ES
TIM
AT
ES
)
Co
sts1. Int. Co
nference Prep
erations
00,0002. D
irector Training
Develo
pm
ent00,000
3. Investors O
pinio
n Survey
00,0004. B
oard
Stand
ards S
urvey00,000
Incom
e1. Int. C
onference P
reparatio
ns00,000(G
CG
F)
2. Directo
r Training D
evelop
ment
CIP
E00,000
TU
SIA
D00,000
3. Investors O
pinio
n Survey
TB
D4. B
oard
Stand
ards S
urveyT
BD
No
te: Co
st mo
del used
is based
on S
U's trad
itional p
rojects.
Actual co
sts will b
e follo
wed
closely and
the mo
del w
ill be revised
if necessary.
SU
MM
AR
Y C
ON
TR
IBU
TIO
NS
TU
SIA
DC
ontrib
ution to
Op
erating B
udg
et 00,000
Co
ntributio
n to D
irector Training
Pro
ject00,000
TU
SIA
D's to
tal contrib
ution fo
r op
erating b
udg
et00,000
TU
SIA
D's co
ntributio
n inc. directo
r training000,000
SA
BA
NC
I UN
IVE
RS
ITY
Co
ntributio
n in kind00,000
Co
ntributio
n general exp
enses and allo
cation
00,000S
AB
AN
CI U
NIV
ER
SIT
Y's to
tal contrib
ution
000,000
Total C
ontrib
ution o
f Fo
unders to
op
erating b
udg
et000,000
(*) Sab
anci University's co
st of acad
emic p
ersonnel is allo
cated to
the Fo
rumin acco
rdance w
ith the percentag
e of their tim
e allocated
to the F
orum
.
Page 241
The fo
llow
ing exam
ple w
as pro
duced
by a d
irector training
org
anization.
IN A
BS
OLU
TE
AM
OU
NT
S2003
2004June
JulyA
ugust
Sep
temb
erO
ctob
erN
ovem
ber
Decem
ber
JanuaryF
ebruary
March
Ap
rilM
ayT
OTA
L
Pro
jecte
d R
eve
nues
Orientatio
n Co
urse B
anks250
250250
750S
tate Ow
ned E
nterprises
250250
500Listed
Co
mp
anies250
250250
250250
250250
250250
250250
2,750F
amily C
orp
oratio
ns250
250250
2501,000
NG
Os
100100
200S
pecial S
essions
100100
100100
100100
100100
100100
1,000Insurance &
Pre-need
com
panies
Sp
ecialized C
ourses
Aud
it 250
250250
250250
1,250R
isk Manag
ement
250250
250250
2501,250
Finance
250250
250250
2501,250
Bo
ard A
ssessment/G
overnance
250250
250250
2501,250
Fam
ily Co
rpo
ration
250250
250750
Co
mp
ensation
250250
500Ind
epend
ent Directo
rs250
250500
Bo
ard R
epo
rting250
250500
Co
re course
1,0001,000
Total C
ourse fee p
roceed
s850
1,1001,100
9501,100
850500
2502,600
1,7001,600
1,85014,450
Rep
orts
100100
100100
100100
100100
100100
100100
1,200P
ublicatio
ns700
140140
140140
1,260M
emb
ership Fees
150150
300300
300300
300300
300300
300300
3,300C
orp
orate S
po
nsorship
s300
600300
1,0002,200
TO
TAL R
EV
EN
UE
S1,400
1,9501,800
1,3501,500
2,9501,040
7903,140
2,2402,000
2,25022,410
Dire
ct c
osts
Training
340440
440380
440340
200100
1040680
640740
5,780R
epo
rts30
3030
3030
3030
3030
3030
30360
Pub
lications
00
00
0350
7070
7070
00
630M
emb
ership P
rog
ram90
90180
180180
180180
180180
180180
1801,980
Co
rpo
rate Sp
onso
rships
120240
1200
0400
00
00
00
880
TO
TAL D
IRE
CT
CO
ST
S580
800770
590650
1,300480
3801,320
960850
9509,630
Gro
ss Marg
in820
1,1
50
1,0
30
760
850
1,6
50
560
410
1,8
20
1,2
80
1,1
50
1,3
00
12,7
80
Opera
ting E
xpense
sS
alaries and W
ages
438438
438438
438438
438438
438438
438438
5,256.00P
rofessio
nal Fees
275275
275275
275275
275275
275275
275275
3,300.00R
ent, parking
and o
ther build
ing fees
9797
9797
9797
9797
9797
9797
1,164.00R
epresentatio
n Exp
ense50
50 50
50 50
50 50
50 50
50 50
50 600.00
Light &
Water, o
ther fees11
1111
1111
1111
1111
1111
11132.00
Statio
nary & S
upp
lies10
1010
1010
10 10
10 10
10 10
10 120.00
Rep
airs & M
aintenance10
1010
1010
10 10
10 10
10 10
10 120.00
Po
stage , Telep
hone &
Telegrap
h41
4141
4141
4141
4141
4141
41492.00
Mem
bership
dues and
subscrip
tion
3030
3030
3030
3030
3030
3030
360.00M
iscellaneous
1010
1010
1010
1010
1010
1010
120.00T
OTA
L OP
ER
AT
ING
EX
PE
NS
E972
972972
972972
972972
972972
972972
97211,664.00
Exc
ess o
f receip
tsove
r disb
urse
ments
152
178
58
212
122
678
412
562
848
308
178
328
1,1
16
Pro
jecte
d N
et P
roceeds
from
Gra
nts
100
100
200
100
100
300
100
100
200
100
100
500
2,0
00
MO
DU
LE
5
Mon
itoring
A N N E X 2
21
AN
NE
X 2
SAM
PLE
AN
NU
AL B
UD
GE
T
Page 242
A N N E X 3 22
AN
NE
X 3
SA
MP
LE
OP
ER
AT
ING
SU
RP
LU
S S
TA
TE
ME
NT
The fo
llow
ing exam
ple w
as pro
vided
by the Institute o
f Directo
rs, UK
.
ME
MB
ER
SH
IP IN
CO
ME
Mem
bership
subscrip
tions
0,000E
lection fees
0,00000,000
ME
MB
ER
SH
IP E
XP
EN
SE
SM
arketing and
mem
bership
(0,000)0,000
RE
VE
NU
E E
AR
NIN
G A
CT
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and functio
ns000
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lications
000C
ourses
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onferences
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vents000
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duct m
arketing000
0,000
ME
MB
ER
SE
RV
ICE
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emb
er inform
ation and
advice
(000)(0,000)
OP
ER
AT
ING
AN
D O
VE
RH
EA
D C
OS
TS
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perty co
sts(0,000)
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reciation
(0,000)IT
and w
ebsite
(0,000)C
entral adm
inistration
(0,000)Interest receivab
le and sim
ilar incom
e000
(0,000)
RE
PR
ES
EN
TA
TIO
N A
ND
DIR
EC
TO
RA
TE
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resentation (P
olicy unit)
(000)D
irectorate
(0,000)C
om
munciatio
ns(000)
(0,000)
Page 243
MO
DU
LE
5
Mon
itoring
A N N E X 4
23
AN
NE
X 4
SA
MP
LE
BA
LA
NC
E S
HE
ET
The fo
llow
ing sam
ple w
as pro
vided
by the Institute o
f Directo
rs, UK
.
FIX
ED
AS
SE
TS
Intangib
le fixed assets
Pub
lications rig
hts of m
agazine
0Tang
ible fixed
assets0,000
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00
CU
RR
EN
T A
SS
ET
SD
ebto
rs0,000
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rt-term investm
ent0,000
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rt-term b
ank dep
osit
000C
ash at bank and
in hand00
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RR
EN
T LIA
BILIT
IES
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itors – am
ounts falling
due w
ithin one year
(0,000)D
eferred m
emb
ership inco
me
(0,000)B
ank overd
raft—
Net current liab
ilities(0,000)
Total assets less current liab
ilities0,000
CR
ED
ITO
RS
Am
ounts falling
due after m
ore than o
ne year(000)
Net assets
0,000
Rep
resented b
y:
AC
CU
MU
LAT
ED
FU
ND
Accum
ulated fund
at 1 January0,000
Revenue (d
eficit)/surplus fo
r the year(00)
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ulated fund
at 31 Decem
ber
0,000
Page 244
A N N E X 5 24
AN
NE
X 5
SA
MP
LE
INC
OM
E S
TA
TE
ME
NT
The fo
llow
ing sam
ple w
as pro
vided
by the Institute o
f Directo
rs, UK
.
INC
OM
EM
emb
ership inco
me
000R
evenue earning activities
000O
ther trading
incom
e000
Interest receivable and
similar inco
me
000000
EX
PE
ND
ITU
RE
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plo
yment co
sts000
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sts000
Indirect co
sts000
Pro
perty exp
enditure
000D
epreciatio
n000
Branch exp
enditure
000000
Surp
lus on o
rdinary activities b
efore taxatio
n000
Taxation
(000)
(Deficit)/S
urplus o
n ord
inary activities after taxation
000
Page 245
MO
DU
LE
5
Mon
itoring
A N N E X 6
25
AN
NE
X 6
SA
MP
LE
CA
SH
-FL
OW
ST
AT
EM
EN
T, U
K
The fo
llow
ing sam
ple w
as pro
vided
by the Institute o
f Directo
rs, UK
.
Net cash inflow
from operating activities
(see reconciliatio
n belo
w)
000
Returns on investm
ents and servicing of financeInterest received
000
TaxationU
K C
orp
oratio
n tax paid
(000)
Capital expenditure
Paym
ent to acq
uire tangib
le fixed assets
(000)P
ayment to
acquire investm
ents(000)
Cash inflow
/(outflow) before use of liquid resources
000
Managem
ent of liquid resourcesP
urchase of sho
rt-term investm
ents(000)
Realisatio
n of sho
rt-term d
epo
sits000
(Decrease)/Increase in bank current account in the year
000
Reconciliation of surplus on ordinary activities
to net cash flow from
operating activities:
Surp
lus on o
rdinary activities b
efore taxatio
n000
Dep
reciation o
n tangib
le fixed assets etc
000
Loss o
n disp
osal o
f fixed assets
000
Interest receivable and
similar inco
me
(000)000
(Increase)/decrease in d
ebto
rs000
(Decrease) in cred
itors
(000)Increase in m
emb
ership d
eferred inco
me
000
Net cash inflo
w fro
m o
perating
activities000
Page 246
A N N E X 7 26
AN
NE
X 7
SA
MP
LE
CA
SH
-FL
OW
ST
AT
EM
EN
T, T
UR
KE
Y
The fo
llow
ing exam
ple w
as pro
vided
by the C
orp
orate G
overnance F
orum
of Turkey.
CA
SH
-FL
OW
ST
AT
EM
EN
T
PE
RIO
D: 1
/3/2
00
3 - 2
8/2
/20
04
EX
PE
NS
ES
One-o
ff Exp
ensesTrad
emark reg
istration
000Lo
go
Desig
n, stationary and
fold
ers0,000
Web
desig
n0,000
Launch(S
U,T
US
IAD
direct)
Total “O
ne -off”
0,000
Running
Exp
ensesH
uman Talent(*)G
ross S
alary Fo
rum D
irector
(5 mo
nths)00,000
Gro
ss Salary S
ecretary0,000
Gro
ss Salary P
rojects C
oo
rdinato
r00,000
Gro
ss Salary A
cadem
ic Co
ord
inator
0,000G
ross S
alary Acad
emic C
oo
rdinato
r0,000
PhD
student(4 m
onths)
0,000S
ub-to
tal Hum
an Talent00,000
External A
udit
000To
tal Running
Exp
enses00,000
Pro
mo
tion and
representatio
nF
lier, bro
chure, press
0,000R
epresentatio
n0,000
Total P
rom
otio
n0,000
TravelD
om
estic Travel0,000
International Travel
00,000To
tal travel00,000
Research P
reparatio
nand
Pro
ject Develo
pm
ent00,000
Aw
areness Sessio
ns(P
anels, Med
ia, etc)0,000
Miscellaneo
us/Sund
ry Exp
enses0,000
Total E
xpend
iture000,000
SU
Allo
cated C
osts inc.
Overhead
(%25)
00,000T
OTA
L CO
ST
000,000
(SU
in kind)
(SU
in kind)
(SU
in kind)
Page 247
MO
DU
LE
5
Mon
itoring
A N N E X 7
27
INC
OM
E
TU
SIA
D C
ontrib
ution
00,000S
U C
ontrib
ution (A
llocated
Co
stsinc. O
verhead)
00,000O
ffice space
Office m
aterialsO
ffice Eq
uipm
entC
om
municatio
ns Eq
uipm
entS
tamp
duties and
legal co
stU
tilitiesM
aintenance and security co
stsInfo
rmatio
n Technolo
gy C
osts
Insurance costs
Rental and
leasing co
stsW
eb services (W
eb m
aster and W
eb server)
Cam
pus co
mm
utation co
stsS
U in kind
contrib
utions
(exc. Allo
cation)
00,000To
tal Incom
e for O
peratio
ns000,000
CA
SH
-FL
OW
ST
AT
EM
EN
Tco
ntin
ued
Page 248
28
Peer R
eview G
roup
To develop this toolkit and gather lessonslearned from
developing and developedcountries alike, the G
lobal Corporate
Governance Forum
invited representatives from
director trainingorganizations from
various regions of thew
orld to share their experiences and discuss m
ilestones and challenges in building director training organizations. The Forum
would especially like to thank
the following people for their contribution
to this toolkit by providing materials,
examples, and extensive com
ments on
building director training organizations:
Cou
ntry con
tributors
Australia
Ian Dunlop,
Governance and S
ustainability Advisor
John Hall,
Australian Institute of C
ompany D
irectorsP
amela M
urray-Jones, A
ustralian Institute of Com
pany Directors
Brazil
Heloisa B
edicks, B
razilian Institute of Corporate G
overnanceB
engt Hallqvist,
Brazilian Institute of C
orporate Governance
Leonardo Viegas, B
razilian Institute of Corporate G
overnanceP
aulo Villares, B
razilian Institute of Corporate G
overnance
Canada
Bernard W
ilson, Institute of C
orporate Directors
Colom
biaP
aola Gutierrez Valandia, C
onfecámaras
Hong K
ongC
arlye Tsui, H
ong Kong Institute of D
irectors
IndiaS
heela Bhide,
Ministry of Finance and C
ompany A
ffairs N
. Balasubram
anian, Indian Institute of M
anagement B
angalore
IndonesiaA
nugerah Pekerti,
Institute for Corporate D
irectorship
IrelandS
usan Thornber, Institute of D
irectors in Ireland
Kenya
Karugor G
atamah,
Centre for C
orporate Governance
New
Zealand
David N
ewm
an, Institute of D
irectors New
Zealand
Th
e Ph
ilippinesJesus Estanislao, Institute of C
orporate Directors
Jon
athan
Juan
Mo
reno
, Institute of C
orporate Directors
Russia
Igor Belikov,
Russian Institute of D
irectorsA
lexander Ikonnikov, Independent D
irectors Association
South A
fricaR
ichard Wilkinson,
Institute of Directors in S
outhern Africa
TurkeyM
elsa Ararat,
Corporate G
overnance Forum, Turkey
United K
ingdomP
hilippa Foster Back,
Institute of Business E
thicsA
lan Morkel,
Institute of Directors, U
K
United States
Roger R
aber, N
ational Association of C
orporate Directors
Alexandra Lajoux,
National A
ssociation of Corporate D
irectors
Zam
biaP
atrick Chisanga,
Institute of Directors Zam
bia
Zim
babwe
Peter B
roadway,
Institute of Directors Zim
babwe
Intern
ation
al con
tributors
Alexander B
erg, W
orld Bank G
roupG
eoffrey Bow
es, C
omm
onwealth A
ssociation of C
orporate Governance
Michael G
illibrand, C
omm
onwealth S
ecretariatD
arrin Hartzler,
International Finance Corporation
Florencio Lopez de Silanes,
Yale’s International Institute for C
orporate Governance
Mike Lubrano,
International Finance Corporation
Alyssa M
achold, G
lobal Corporate G
overnance ForumA
nne Molyneux,
CS
InternationalB
ehdad Now
roozi, W
orld Bank G
roupD
jordjija Petkoski,
World B
ank InstituteS
ue Rutledge,
World B
ank Group
John Sullivan,
Center for International P
rivate Enterprise
CO
NT
RIB
UT
OR
S
