Certification Program Aims to Ensure Directors Know Their Stuff
As focus intensifies on boards and how they are exercising their oversight responsibilities, and as more people without board experience are tapped to serve on boards in response to demands for greater diversity and inclusion, a new certification program is designed to ensure directors have the skills and knowledge necessary to be effective board members.
The voluntary certification program from the National Association of Corporate Directors, which represents more than 20,000 board members, will complement a director’s work experiences and will be in addition to any onboarding being done by the organization.
A certification exam will cover key areas of governance, and the program will require continuing education to maintain the certification. The program will launch in October.
The job of being a director is increasing in complexity, said Peter R. Gleason, president and chief executive of NACD. Because the pressure on directors to meet or exceed a growing scope of expectations is greater than ever before, he said director education needs to be bolstered by exam-based certification.
Increasingly, directors and other key stakeholders regard directorship as a profession, and exam-based certification is an effective way for directors to test and prove their growing knowledge, skills, and abilities, he said. Exam-based certification is already a practice in many parts of the world.
"The decades we have spent building a community of directors have enabled us to create a test by directors, for directors, based on the real issues encountered by boards and the lessons we have learned," said Gleason.
New board members need to know from their first day on the job the fundamentals of governance, including directors’ fiduciary duties, general corporate governance requirements, and an awareness of important issues pertaining to board meetings and culture, he said.
All board members, new and experienced alike, need to know how to read and understand financial statements, said Gleason. "Financial literacy is not just for audit committee members; it is for all board members," he said.
"A well-rounded director will have at least some knowledge of the key drivers of organizations," he said. "Namely, the importance of knowing what a company aims to do (strategy), and what forces could prevent them from accomplishing these goals (risks)."
Discussion of ethics and compliance will be a fundamental part of the program, said Gleason, who added: "We consider this absolutely crucial."
The exam includes a module on oversight of ethics and compliance. Ethics also is a key component in NACD's Director Professionalism program, and as part of recertification, ensuring director integrity is core to the initial and continuous learning.
Gleason said the certification will help organizations working to improve board diversity and inclusion. Mostly, boards have used narrow search criteria, or often rely on personal networks, to identify candidates. While some boards may want to bring in talent with different skill sets, they may not feel that those candidates have a strong grounding in the role of the board, he said.
"Having a certification program will provide a new way to help boards meet their diversity goals, as they will be able to choose from candidates who not only bring new skills and experiences to the table but also come prepared with a baseline understanding of the knowledge, skills, and abilities needed to serve on a board," he said.
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