IoD Director Competency Framework - Inspiring business Director Competency... · 2 Director...

IoD DirectorCompetency Framework

110 years inspiringBritish business

2 Director Competency Framework

Foreword

ForewordThe Director Competency Framework isthe Institute of Directors' (IoD’s) latestdevelopment to help its members andall business leaders, in the UK andbeyond, to succeed.

The launch of the framework comes ata crucial time when, regrettably,governance scandals – also known aspoor leadership – are daily news.

Whether you work in the public, private, charitable or not-for-profit sector, the need for exceptional leadership has neverbeen greater.

Directors are rightly expected to understand and fulfil theirresponsibilities with confidence and clarity, and yet their ownlearning and development needs are often overlooked. Theframework has been designed to address exactly this issue. Itplaces traditional commercial expectations alongside abroader mix of behaviours and skills.

Crucially it addresses the so-called “soft skills”, which are infact often the hardest to master, putting knowledge of financeand business strategy on the same level as the ability toencourage diverse views, communicate effectively and makedecisions in the face of uncertainty.

The Director Competency Framework expresses the standardswithin our unique Chartered Director programme, which is theonly qualification of its kind for directors. The CharteredDirector programme leads to both a Masters level qualificationand professional status, and addresses all three dimensions ofthe Director Competency Framework: knowledge, skills andmind-set.

The competency framework is free and available to allbusiness leaders. It is our hope that it will be used as a tool bydirectors to see how they are performing and that ultimately itwill become a blueprint for great organisational leadershipand success.

Louise GulliverManaging Director, Professional Development

Contents 2. Foreword

3. Introduction

4. Development Application

5. Structure

Knowledge

6. K1 Corporate governance

7. K2 Leadership and stakeholder relations

K3 Strategy

8. K4 Finance

Skills

9. S1 Strategic thinking

10. S2 Analysis and use ofinformation

S3 Decision-making

11. S4 Communication

S5 Leadership

12. S6 Influencing

Mind-set

13. M1 Ethical

14. M2 Professional

M3 Performance oriented

15. M4 Independent

M5 Aware of self and others

Director Competency Framework 3

Introduction

Introduction Competency frameworks have been used to define the requisiteskills, knowledge, attitudes, practices and standards of behaviourof a wide range of professions for years. In a number ofprofessions, meeting these standards is mandatory forprofessional practice. However, a comprehensive statement of thecompetencies needed for effective performance by thoseindividuals on the boards of governing bodies has been absent –an omission which carries increasing significance given thesubstantial and manifold responsibilities of today’s leaders.

Many directors possess specialist expertise which is governed by professional bodies,including in the fields of finance, IT, marketing and HR, while others have risen topositions of responsibility through varied business and managerial experience, or throughentrepreneurial spirit and drive. Most have acquired considerable knowledge and skillsalong the way, but may not have developed the key competencies that are so importantfor good leadership.

The IoD believes that the effective leadership of an organisation demands a set ofdistinct and wide-ranging competencies encompassing interpersonal skills, legal andbusiness knowledge, financial acumen, ethical questioning, decision-making abilities andhigh standards of professional conduct. These are the standards of governance which arerightly demanded by an increasingly astute and discriminating public and which areneeded for well-functioning public institutions and a strong and stable economy.

We recognise the challenges that directors face in meeting these demands. This is whywe champion directorship as a profession and why we work hard to support directors toachieve these standards.

The IoD Director Competency Framework is the first clear attempt to set out thecompetencies which define the standards of practice for directors as a professionalgroup – regardless of sector, industry, role or location. The creation of this frameworkreflects the purpose of the Institute as expressed in our Royal Charter:

To promote for the public benefit high levels of skill, knowledge, professional competenceand integrity on the part of directors and equivalent office holders of companies andother organisations.

Directorship is a skilled and demanding profession. The IoD is here to help directors riseto the challenge, and our Director Competency Framework provides a clear andcomprehensive guide to the standards they should aim to reach.

Dr Claire WardellHead of Learning Content


Development of the framework

Development

Application

The IoD has many years of experience educatingand developing senior leaders around the world,consulting with boards and providing specialistqualifications for directors. As an awarding body,we set the standards of professional practice fordirectors, expressed through our Chartered Directorprogramme. We conduct our own research andemploy teams of specialist facilitators, coaches andconsultants, all of whom are themselvesexperienced directors and board advisors.

The Director Competency Framework wascreated by amassing and distilling thisconsiderable knowledge and experience,reinforced with:

• current research and best practice• collaboration with learning and development

experts• consultation with high-performing directors

and boards

We recognise that the world of business andindustry doesn’t stand still, and neither do thingsin the public and third sectors. The needs ofdirectors, and those impacted by their actions,are constantly fluctuating and evolving inresponse to social, cultural, political andeconomic change.

The Director Competency Framework will beperiodically reviewed to ensure it stays currentand relevant and provides the effective guidancedirectors – and aspiring directors – need.

The framework provides an accessible andmeasurable guide to the knowledge, skills andmind-set required to lead an organisation tosuccess. Whether you are an aspiring or currentlypractising director, occupy an executive or non-executive role, lead learning and development inyour organisation, or are responsible for theevaluation and development of your board, youwill find a range of ways to apply the framework.

These include:

• Self-assessment to identify and address anydevelopment needs

• Undertaking continuing professionaldevelopment

• Planning your learning to meet your careergoals

• Performance measurement and 360°assessment

• Board evaluation to review performance andthe balance of competencies

• Recruitment, selection and successionplanning for boards

The IoD's experience shows that high-performingdirectors take their development seriously,undertaking formal training and self-directedlearning at various stages of their career.However, professional competence can only befully achieved when this learning is accompaniedand consolidated by experience and skills are putinto practice, and there are many ways in whichan individual may demonstrate the standards.

The framework functions at the level of bestpractice principles. Directors and boards knowthe environment in which they operate and weexpect that you will apply the competencies andstandards in the framework to suit your particularcontext. The IoD’s professional developmentspecialists can provide guidance on how to tailorthe framework so that it meets your specificneeds as an individual and the needs of yourorganisation.


Structure of the framework

“As a founder of the IoD’s Chartered Director qualification with many years’experience as a director internationally, I believe this framework capturesthe essence of the competencies every director needs to perform effectively.It has never been more important for directors to be able to understand andfulfil their responsibilities with confidence and clarity. This frameworkprovides an ideal blueprint for the director’s professional growth.”Lady Barbara Judge, chairman, Institute of Directors

Structure of the framework The Director Competency Framework contains 15 core competencies across three dimensions:

The competencies are numberedK1–K4 (knowledge), S1–S6 (skills)and M1–M5 (mind-set).

• Each competency isaccompanied by astatement of purpose,which explains its role in thedirector’s effectiveperformance

• Each competency is definedby a set of standards, whichare expressed in terms thatare observable andassessable and whichidentify the behaviour that adirector or organisationalleader should demonstrate

KNOWLE

DGE

MIND-SET

SKILL

SStr

ate

gic

thin

kin

g

Decisi

on-mak

ing

Communication

Leadership

Influencing

Corporate

governance

Leadership and stakeholder relations

Strategy

Fin

ance

Ethica

l

Pro

fess

ional

Indep

enden

t

Awar

e of s

elf

and o

ther

s

Perf

orm

ance

ori

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Ana

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of in

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Director CompetencyFramework

KNOWLEDGE SKILLS MIND-SET

The director’s understandingand appropriate applicationof essential practical andtheoretical information

The expertise that a directorbrings to their role

The attitude and dispositionthat shape a director’sresponses and behaviour


The framework: Knowledge

The framework

Knowledge The director’s understanding and appropriate application ofessential practical and theoretical information

# Knowledge area Standard: The director should demonstrate an understanding of...

K1.1Laws andregulations

Laws and regulations applicable to your industry/sector and itsjurisdiction, and how your organisation complies with these

K1.2Corporategovernance practice

Best practice in corporate governance, including relevantgovernance codes and the roles, duties, responsibilities and accountabilities of individual directors and of the board as a whole

K1.3Your organisation’s governance structures, processes andpractices

K1.4 Board dynamicsBoard and director relationships, board composition andboardroom behaviours

K1.5

Ethics

Business ethics, ethical codes and ethical decision-making

K1.6 The ethical policies and practices of your organisation

K1.7

Risk oversight

Risk appetite and the role of risk in growth and value creation

K1.8The structures and systems which enable your organisation toeffectively identify, assess and manage risks and crises

COMPETENCY K1

Corporate governance

Purpose Why is it important? Directors need to have the knowledge to steer the organisation towards achieving its objectiveswhile operating effectively, responsibly, legally and sustainably.




K2.1

Values

The nature and purpose of organisational values and how tocreate and embed them

K2.2 The values of your organisation

K2.3

Culture

Organisational culture, its role in performance, and thedirector’s role in developing and shaping culture

K2.4 The existing and envisioned culture of your organisation

K2.5 Leadership Theory and good practice in organisation and team leadership

K2.6Stakeholderengagement

Methods and tools for effective stakeholder engagement andmanagement

K2.7Your organisation’s key stakeholders, their perspectives andrelative influence

COMPETENCY K2

Leadership and stakeholder relations

Purpose Why is it important? Directors need to understand how to deliver effective leadership, build good stakeholder relationsand develop a strategically aligned and values-based organisational culture in order to achievegood organisational performance.


K3.1Vision and valuecreation

The need for a clear vision and purpose which guide the strategy

K3.2Your organisation’s vision and purpose, and how it adds valuein the context of its industry or sector

K3.3

Strategydevelopment

Models and methods of strategic analysis, option evaluationand creating an organisational strategy

K3.4Your organisation’s strategic objectives and current strategicposition

K3.5Your organisation’s political, economic, social and technologicalenvironment and changes of relevance to the organisation’sstrategy and future direction

K3.6Strategyimplementation and change

The factors involved in successful strategy implementation andleading organisational change

COMPETENCY K3

Strategy

Purpose Why is it important? A thorough knowledge of the strategic process can enable directors to create and implementeffective strategies which will deliver value and growth for the organisation.




K4.1 Financial reportingThe collective responsibility of the board for accurate financialreporting

K4.2

Financial health andperformance

How to interpret financial statements and accounts in order toassess the financial health of an organisation

K4.3The financial performance of your organisation in the contextof its strategic objectives

K4.4 Sources of financeThe sources of finance available to an organisation and theirrelative merits and risks

K4.5 ValuationHow to assess the financial value of an organisation andpotential business opportunities

COMPETENCY K4

Finance

Purpose Why is it important? Directors need to understand how to assess the organisation’s financial position and steer itsfinancial performance in order to stay solvent and develop sustainable plans.


The framework: Skills

The framework

Skills The expertise that a director brings to their role

# Skill area Standard: The director should be able to...

S1.1Identifyingopportunities andthreats

Identify opportunities and threats to the organisation, takingaccount of the internal and external business environment

S1.2Taking a broadperspective

Offer a broad view beyond the immediate problem and ownarea of expertise, including short, medium and long-termperspectives

S1.3 Proposing optionsPropose alternative options and present creative solutions andinnovations

S1.4Considering theimpact of decisions

Identify the potential impact of decisions and offercontingency plans and risk mitigation

COMPETENCY S1

Strategic thinking

Purpose Why is it important? The ability to think strategically enables directors to propose ideas, options and plans which takeadvantage of available opportunities while reflecting a broad and future oriented perspective.




S2.1Using a range ofsources

Actively seek reliable, sufficiently detailed and timelyinformation from a wide range of sources

S2.2Synthesisinginformation

Assimilate and synthesise financial, technical and qualitativeinformation

S2.3Evaluating andinterpretinginformation

Consider the applicability and limitations of the informationand make objective interpretations

S2.4Simplifyingcomplexity

Simplify complex information

COMPETENCY S2

Analysis and use of information

Purpose Why is it important? Directors need to be able to obtain, analyse, interpret and use information effectively to developplans and take appropriate decisions.


S3.1Evaluatingproposals

Evaluate proposals using a range of criteria and identify theiradvantages and disadvantages

S3.2Handlinguncertainty

Make decisions, even in the face of uncertainty and incompleteinformation

S3.3Taking appropriaterisks

Take calculated risks in the context of the organisation’s strategyand the appetite of the board

COMPETENCY S3

Decision-making

Purpose Why is it important? Directors need good decision-making skills in order to arrive at a course of action in a timelymanner which provides a clear direction and moves the organisation forward.



S4.1 Listening carefully Listen dispassionately, carefully and attentively

S4.2Communicatingfrankly and openly

Demonstrate transparency, frankness and openness, whereverpossible

S4.3Communicatingclearly

Communicate articulately, clearly and concisely

S4.4Adapting toaudience

Tailor their communication style to the needs of the audienceand the situation, using appropriate modes and channels

COMPETENCY S4

Communication

Purpose Why is it important? The ability to communicate effectively through a variety of modes and channels and with a rangeof audiences is necessary for directors to work successfully with others and to fulfil their duties onthe board.


S5.1Conveying self-assurance

Display confidence, self-assurance and conviction

S5.2 Taking actionTake action quickly, under pressure and in difficultcircumstances when necessary

S5.3 Embracing change Show flexibility, adaptability and willingness to embrace change

S5.4 Defusing conflictDefuse conflicts and arguments and facilitate compromise whennecessary to achieve an acceptable outcome

S5.5 Inspiring others Inspire, support and motivate others, generating willing followers

COMPETENCY S5

Leadership

Purpose Why is it important? Strong leadership skills enable directors to solve problems, cope with crises and change, andinspire others to follow them in pursuit of the values and goals of the organisation.





S6.1 Developing contacts Build and maintain a wide range of contacts in relevant andinfluential areas

S6.2Persuading andinfluencing

Persuade and influence others, including those of equal,greater or subordinate status and power

S6.3Building effectiverelationships

Identify the needs, interests and influence of internal andexternal stakeholders and build appropriate and effectiverelationships

S6.4Commandingrespect

Command respect within the industry and in the widerbusiness community

S6.5Demonstratingpolitical astuteness

Demonstrate shrewdness and political astuteness

COMPETENCY S6

Influencing

Purpose Why is it important? The ability to build good networks and relationships within and beyond the organisation isimportant for the director to gain influence, have impact and progress organisational goals.


The framework: Mind-set

The framework

Mind-setThe attitudes and disposition that shape a director’sresponses and behaviour

# Mind-set area Standard: Directors should...

M1.1Modellingorganisational values

Model the values of the organisation

M1.2Displaying highstandards ofconduct

Demonstrate behaviour which conforms to high standards ofpublic conduct

M1.3Prioritising theinterests of theorganisation

Place the interests of the organisation above personal self-interest in all business matters

M1.4Identifying andmanaging conflictsof interest

Identify and disclose conflicts of interest relating to both selfand others when they become apparent, and ensure these aremanaged appropriately

M1.5 Treating others fairly Treat others justly and fairly

COMPETENCY M1

Ethical

Purpose Why is it important? Directors with an ethical mind-set demonstrate high standards of conduct and will be betterplaced to serve, advocate for and represent the organisation.




M3.1Focusing on goalsand priorities

Focus on the goals of the organisation and the prioritiesagreed by the board

M3.2Showingentrepreneurial spirit

Identify and take opportunities to increase the organisation’sbusiness advantage

M3.3Setting highstandards ofperformance

Set challenging but achievable goals and standards ofperformance for themselves and others

M3.4Supporting alearning culture

Learn from their own successes and mistakes and encourage aculture of learning in the organisation

COMPETENCY M3

Performance oriented

Purpose Why is it important? Directors should have the organisation’s current and future performance in mind as they carry outtheir role in order to bring the most value to the organisation.


M2.1Showing care anddiligence

Maintain high standards of skill, care and diligence inprofessional activities

M2.2Investing in owndevelopment

Invest time in learning and personal development applicable totheir directorial role, including relevant training and boardexperience

M2.3 Taking responsibilityTake responsibility for their own performance and behaviour andthat of their organisation

M2.4 Acting with integrity Act with integrity and honesty in all dealings

M2.5Championing theorganisation

Act as an advocate for the organisation, both internally andexternally

COMPETENCY M2

Professional

Purpose Why is it important? Directors need to bring a professional attitude and outlook to their role in order to have influenceand to command respect.




M5.1Displaying emotionalcontrol

Demonstrate an understanding of their own emotional responsesand an ability to manage their emotions appropriately

M5.2Demonstratingcultural sensitivity

Demonstrate social and cultural awareness and an ability torelate well with a diverse range of people

M5.3Showing empathyand perceptiveness

Display empathy and respond appropriately and sensitively tothe emotions of others

M5.4Recognising andlimiting bias

Demonstrate efforts to explore, understand and limit their ownbiases and preconceptions as well as those of others

COMPETENCY M5

Aware of self and others

Purpose Why is it important? Directors need an insight into their own emotions and behaviours and sensitivity to the feelingsand responses of others in order to be good leaders and high performers.


M4.1Displayingindependence

Be willing to disagree and take an independent stance in theface of dissenting views and potential personal detriment

M4.2Encouraging diverseviews

Encourage rigorous discussion and diverse views in order toprevent and dispel groupthink

M4.3Questioningassumptions

Adopt an inquisitive approach and actively question assumptionsand test propositions

M4.4Asking forclarification

Ask for clarification and explanation

M4.5Challenging thestatus quo

Be willing to challenge the status quo and historical ways ofdoing things

COMPETENCY M4

Independent

Purpose Why is it important? An independent mind-set enables directors to provide the challenge and rigour required to helpthe board achieve a comprehensive understanding of information and options and high standardsof decision-making.

IoD ProfessionalDevelopmentThe IoD is committed to providingcontinuing professional development inthe competencies specific to theknowledge, skills and behaviours requiredof directors and senior leaders.

Our world-class courses, qualifications andboard development services, delivered byexperienced directors and practitionersare available across the UK andinternationally, and are immediatelyapplicable in both an individual andorganisational context.

To find out how the IoD can support youand your organisation contact:

IoD Professional Development

T: +44 (0)20 7766 2601E: [email protected] W: iod.com/developing

Copyright © 2016 Institute of Directors

For media enquiries includingcomment and interview requests,please contact:

Press OfficeT: +44 (0)20 7451 3285E: [email protected]

The Institute of Directors

The IoD has been supportingbusinesses and the leaders whorun them since 1903. As the UK’slongest running and leadingbusiness organisation, the IoD isdedicated to supporting itsmembers, encouragingentrepreneurial activity, andpromoting responsible businesspractice for the benefit of thebusiness community and societyas a whole.

www.iod.com

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