Director Skills/Competency Assessment
Effective Governance are leaders in establishing robust director competency frameworks that can be used by boards to identify director skill gaps, and ensure the skills of the current directors are being properly utilised.
Questions that should be asked:
- Do board members continually challenge themselves?
- Can they justify their skills sets to shareholders/members and key stakeholders?
- Does the board have the skills and competence to address the strategy of the organisation?
Many boards have a simple matrix, however shareholders/members and key stakeholders are demanding a more structured process to achieve a professional outcome.
Director Skills/Competency Assessment Process
Effective Governance’s standard director skills assessment process provides the board with a deep insight into what skills the individual board members posses and the skills the board requires. Collection of the data is via online survey, and is broken up into four sections:
- Behavioural – The attributes and competencies enabling the individual director to use their knowledge and skills to function well as a team member and to interact with key stakeholders.
- Governance – The essential governance knowledge and understanding all directors should possess or develop if they are to be effective directors.
- Technical – Skills and specialist knowledge to assist the ongoing aspects of the board’s role.
- Industry – Experience and knowledge of the industry in which the organisation operates in. In the assessment, this section will be customised to include relevant competencies to your organisation.
Alignment with ASX Principles
Our approach to assessing director skills and reporting allows board’s to comply with ASX Principles and Recommendations:
- Recommendation 1.6 A listed entity should: (a) have and disclose a process for periodically evaluating the performance of the board, its committees and individual directors;
- Recommendation 2.2 – A listed entity should have and disclose a board skills matrix setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership;
- Recommendation 2.3 A listed entity should disclose:…(c) the length of service of each director.
Sample of Director Skills/Competency Assessment Questionnaire
Each competency has three questions asked to assess director skills and board requirement:
- Self Assessment of personal skill
- Maximum Rating Required on the Board for this Competency
- Number of Directors Required with Maximum Rating
Sample of Director Skills/Competency Assessment Report
The reports allow a clear view of the skills available to the board for shareholders/members to select a skills-based board, and to assist in determining appropriate professional development for existing directors.
Internal Reporting of Director Skills/Competencies
External Reporting of Director Skills/Competencies
Please feel free to contact us if you have any queries about the process or wish to arrange a Director Skills/Competency Assessment today.