Blueprint for a better-balanced board: Proposals to provide benchmarks for directors' performance are published today

Click to follow
PLANS for raising the standards of company boards are published today by the Institute of Directors and Henley Management College.

The draft standards of 'Good Practice for Boards of Directors', produced on behalf of the Department of Employment's training, education and enterprise directorate, are intended as a guide for senior executives. They aim to provide benchmarks for professionalism and enterprise - the qualities needed to ensure the company survives and prospers - as well as helping executives meet their responsibilities to employees, customers and suppliers.

John Harper, professional development director at the IoD, said the purpose was to provide 'a framework for good practice and a checklist of questions boards should constantly ask themselves about how they are structured and organised'.

He added: 'They cannot guarantee outstanding business performance or produce business flair, entrepreneurial judgement or high- quality decision-making, but they offer a template of criteria against which performance can be assessed.'

The recommendations centre on the need for continuous self-assessment in boardrooms. They encourage training, development and performance appraisal for both present and prospective board members. They provide checklists to help executive teams maximise efficiency - such as through the demarcation of certain duties.

They try to clarify the responsibilities of the board for such matters as establishing vision for the business, setting strategy, supervising the management and dealing with the different interests of shareholders and the wider community. And, finally, they help directors decide the relevant criteria for evaluating performance under these responsibilities.

The proposals, which will be finalised later this year following consultation with a wide range of companies and individuals, are seen as complementing the work of the Cadbury Committee on the Financial Aspects of Corporate Governance. But they also fit into the wider debate about the role of companies and their managements.

Earlier this month, the Royal Society for the encouragement of Arts, Manufactures & Commerce published a report on 'Tomorrow's Company' that suggested only an 'inclusive approach' would ensure future prosperity for businesses. Meanwhile, the Management Charter Initiative is establishing tests of senior managers' 'competences'.

Henley Management College, which carried out the research on which the recommendations are based, will also be involved in trying to put the principles into practice. In the summer it will be one of three management centres running pilot courses for non-executive directors. These programmes have been developed with the help of Sir Adrian Cadbury, chairman of the Cadbury Committee.

At a briefing last week on progress since the Cadbury Report was published late in 1992, Sir Adrian said: 'There is a real need to strengthen the training side of directors. The great majority still pick it up as they go along.'

Victor Dulewicz, co-leader of the Henley research team, agreed with Sir Adrian's comments, saying that training of directors had become an issue 'not before time'. While instruction for managers further down the hierarchy had become widespread, it had tended to stop below board level. The next few months would be very important in assessing whether that attitude had changed, he added.