How do you tell if someone is qualified to sit in the boardroom

2022-02-13 07:49:25
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How do you tell if someone is qualified to sit in the boardroom

The question of whether board membership should be viewed as a profession in the same way as law, finance, or medicine, and therefore require the awarding of qualifications by an independent body, is a subject of current global debate.

At present, in Middle Eastern countries, as elsewhere, no formal qualifications are required to be appointed to a board of directors. Candidates must generally be a person in “good standing”, i.e. someone with no history of crime or financial irregularity, but even this requirement may be interpreted differently from one jurisdiction to another.

However, it’s clearly beneficial for businesses to ensure as far as possible that the directors they appoint will be effective in their role.

In the absence of specific formal qualifications, we’ve looked at some of the alternative methods which can be used to assess and evaluate potential appointees, or to support current board members in developing the skills and knowledge needed to benefit the business.

Professional qualifications

Many organizations look to strengthen their board of directors by recruiting members with specific professional qualifications which will help them carry out their role, and add to the overall skill set of the board. This is usually needs-based, rather than being a criterion for every appointment to the board.

For example, many companies aim to have at least one director with a professional financial qualification, or one qualified in corporate law, to provide informed advice to their fellow board members on questions within their area of expertise.

Some organizations may have more specialized needs. It may be advantageous for a medical technology company to have a qualified doctor on the board, a manufacturing business to appoint an industrial engineer, or a construction company to include an architect.

Up-to-date knowledge

More generally speaking, it’s important that individuals serving on a board of directors have up-to-date knowledge about the various external factors affecting the business they represent.

Examples include the rapidly changing technological landscape, with the opportunities offered by disruptive tech or digital currencies, as well as the new threats posed by cybercriminals; or developments in environmental, social, and governance matters, which are increasingly crucial to the stability and longevity of businesses.

Ultimately it is the responsibility of the individual board member to ensure they have the current knowledge required to discharge their duties effectively, but in practice, it may be prudent for businesses to lead the way on issues of particular importance, arranging training or briefing sessions for board members to refresh or update their knowledge.

Board specific qualifications

In some cases, board members are appointed based on their technical skill, nominated by investors for their industry expertise, or brought in based on their preexisting relationship with the business, but may not have specific experience serving on a board.

It’s important to ensure that such board members have the basic knowledge needed to be effective in their roles. This includes understanding the role and duties of the board, and their own legal and fiduciary responsibilities, as well as the fundamentals of how a board operates—the structure of meetings, the process for voting, and so forth.

For those new to board roles, or returning to the boardroom after some time away, MEIoD runs a one-to-one coaching program for board members of companies operating in the Middle East to help develop their skills and experience and handle the specific demands associated with their role.

We also offer the Board Ready Program, which helps individuals prepare for their board positions by helping them identify their board value proposition. For more information on the program, please here.

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