Selection and Director Training

Director training is feature of the international and New Zealand governance associations, but it does not stand out as having been strongly scrutinised in the governance literature. Perhaps this is because training is not widely available, or perhaps aspiring directors have not seen it as important. In his 1990 United Kingdom survey, Coulson-Thomas found that: “Over nine out of ten respondents had either not received any preparation for the board or had been prepared by such informal means as “experience” (p. 29). Coulson-Thomas (1990) was referring here to preparatory training [not] received by current directors before taking up their governance roles. At that time, however, there was already an official awareness of the need for development opportunities. For example, the Commonwealth Association for Corporate Governance (CACG) Principle 11, Board Performance Assessment, stated: “The board should regularly assess its performance and effectiveness as a whole, and that of the individual directors, including the chief executive officer” and added in the explanatory section that: “Training opportunities for existing and potential directors should be identified and appropriate development undertaken” (Commonwealth Association for Corporate Governance, 1999, p 13). Similarly, New Zealand’s Institute of Directors (IoD), established in 1968, has as its mission to “enable and encourage New Zealand boards and board members to add value to their organisations and adopt the highest standards

presents a series of professional development programmes tailored to the governance role including a course on governance essentials and one aimed to augment the skills of experienced directors.

Content of training programmes may emphasise a range of different aspects of the director role. Lauer (2008), a Corporate Counsel in America, recently described legal- technical training in relation to the legal environment in which companies operate, and particularly the liabilities that directors face. Lauer expressed the need for directors to be fully informed of “rules regarding directors’ conflicts of interest, insider trading and anti-trust concerns” (p 754). In New Zealand, this ‘self-protection’ orientation is also a feature of CCMAU’s training, into which McGregor (2000) provides an intriguing personal insight, after attending a training programme and reporting on it.

McGregor (2000) described the CCMAU training as “intensive” (p. 135) and going well beyond the legal-technical aspects of governance. Training covered: “boardroom practice and relationships, strategic planning, evaluating performance, financial reporting, legal duties and working on a Crown company board” (p. 135). It was a comprehensive programme of, in McGregor’s words, “‘hard’ and ‘soft’ skills development” (p. 135). In 2006/2007 CCMAU reviewed its training programme and currently contracts Massey University to deliver professional development courses.

Although CCMAU provides training for both newly appointed and serving directors, it does not target appointees for support and encouragement as they enter governance positions nor does it tailor professional and personal development. This targeted approach is reflected in other business contexts where it can be enacted through professional supervision, mentoring, coaching or internship programmes (as reported by Beenen & Mrousseau, 2010; Cook, Gibson, Williams & Douglas, 2009; Hales, Wiener & Lynn, 2007; Klaus, 1981). With these arrangements, new appointees (or mentees) can be matched with either formally trained mentors or professionals in the field, (in this case, governance). Typically, opportunities are provided for regular meetings to discuss issues pertaining to the role and for the new recruit to develop the confidence and capacity to operate effectively and independently. Apparently, “Coaching can shorten the learning curve of those with new roles and help them adapt more quickly to a changing environment” (Sweeney, 2007, p. 171). Coaching, Sweeney argues,

“enhances skills and ability and can raise a person’s game. It gives individuals the opportunity to review themselves, their performance and identify where enhancements can be made” (Sweeney, p. 172).

Corresnpondingly, Jayne’s (2004) exploration of the value of coaching had earlier presented some fairly hefty claims for the business benefits:

A recent MetrixGlobal survey found business coaching produced a 788 percent return on investment and significant intangible benefits to the business. A Personnel Management survey found that training alone increases performance by around 22 percent whereas training plus coaching lifts productivity by 88 percent. (p. 47)

Furthermore, Jayne provided examples of successful coaching arrangements within New Zealand companies, such as Vodaphone, Auckland City, and the Waikato District Health board (2004, pp. 49-50). She noted that “at least 1200 [coaches] are registered with Business in the Community” (2004, p. 47) but also that any successful coaching programme needs someone who “has the appropriate credentials [and] is the right fit in terms of current coaching needs” (p. 47). A cautionary note is sounded in the feedback from one consultant, who hints at the difficulty of sustaining coaching benefits:

The problem with sending people to expensive, one-off workshops is that any application of what they’ve learned tends to evaporate once they’re caught up on their usual workaday world. (p. 50)

Other observations suggest that coaching and other coaching-like training components warrant consideration. Mentoring, for example, is an established practice in executive roles within the federal government in the US, with Klaus (1981, p. 493) reporting that recipients appreciated “a special opportunity to obtain career development guidance … [and to broaden] their perspective on executive life”. Similarly, Arnold and Davidson (1990) interviewed 30 managers in an attempt to identify strategies that assist progression of women, in particular. They concluded that “mentoring is an important training and development tool for the career success of both men and women managers” (p. 17). Allen, Eby, Poteet, Lentz and Lima (2004) conducted an analysis of research on mentoring which had featured for three decades (1970s to 1990s) to discern whether

results of the present analyses shed positive light on the benefits associated with mentoring” (p. 134). Virtual mentoring using new technologies provides a flexible alternative. Headlam-Wells (2004) conducted an e-mentoring project in the United Kingdom for aspiring women managers and concluded it was “a valuable complement to other forms of mentoring,” (p. 216).

Burgess and Tharenou (2002) signaled the value of women in governance as potential mentors: “Corporate women directors are also thought to serve as role models (Catalyst, 1998a), mentors and champions for high performing women” (p. 40). Bettridge, (2009) discusses the value that individualised training can provide in the governance realm:

The new generation of corporate governance also requires that individuals and teams have the self-reflective capacity and conscious approach to their own mission and development that will enable them to take leadership roles in these increasingly complex circumstances. Coaching can play an important role in the engagement process which is critical to building an appropriate culture in support of a new strategic direction. (p. 11)

A cautionary note should be sounded in that setting up training opportunities also establishes expectations that, if the training is focused on actually attaining board membership, may not be met. For instance, McGregor (2000) noted that at the end of a two-day director training course she attended, another woman participant contacted her and asked “What next?” (p. 138), adding:

What strategies should we use to get positions – it wasn’t good enough to tell us ‘it’s all about knowing the right people’. If you are going to have affirmative action in the form of free training you need to take the initiative further. (p. 138)

This observation also highlights that, as for their male counterparts, social networks, or the personal ties, with other women, and ‘knowing the right people’ (McGregor, 2000; Burgess & Tharenou, 2000) are acknowledged aspects of women achieving governance positions and perhaps some informally conveyed governance ‘know-how’. Burgess and Tharenou (2000, p. 123) attached some significance to these “ties with other women going through the same circumstances”, reporting that the bonds women have through their interaction together, impact positively on the advancement of women (much as I

have demonstrated that men’s bonds with men impact positively on the advancement of men).

Notwithstanding training benefits and the opportunities described above for fresh approaches, the complex ownership structures and coinciding interests of major shareholders of most large private companies may not lend themselves to responsiveness or change in relation to board composition, training and selection processes. However, more closely held companies, or those directly influenced by government directive may help break down some of the barriers to change in boardroom composition and culture and be open to innovations such as those suggested by Bettridge (2009). We could speculate as to how much more open to new training and development opportunities Crown companies might be, since they are so strongly influenced by Government. The juxtaposition of legislative control, formal training, coaching and/or mentoring, combined with both structured and informal selection processes and the power of Ministers regarding director appointments may mean Crown companies can pave the way for novel governance training practices.