Behind Directors Certification Programs:

Key Points To Consider

One of the best ways to demonstrate commitment to career growth is by obtaining industry-
recognized certification. This is true for finance, accounting, insurance, and legal professionals, but
is it also applicable to board directors? Certification programs trigger debates among corporate
governance experts: some are strongly against it, saying nothing can replace real boardroom
experience, while others see it as a valid method for improving the knowledge and skills of
directors. In April 2013, we raised this question with over 70 director training organizations
to better understand the benefits and challenges of certification and to compare experiences,
including pioneering work in Brazil, the Caribbean, France, India, Mauritius, Morocco, New
Zealand, Slovenia, South Africa, the United Arab Emirates, and the United Kingdom.

Practice
Brief
December 2013

Our donor partners

Background and Rationale
Effective governance training programs can Sometimes training organizations will engage
exponentially improve national capacity “accredited certification bodies” to certify their
to achieve wider adherence to corporate training processes and outputs and evaluate
governance best practices. In 2008, the their trainers against official standards. S chweizeris che Eidg enos s enschaf t
IFC Global Corporate Governance Forum Conféd ération suis s e

launched the Corporate Governance Board We are witnessing a growing demand for Confed erazione Sviz zera

Leadership Training Resources (BLTR) to certification and accreditation coming from Confed eraziun s vizra

strengthen the expertise and skills of corporate various sources: Sw is s Confed eration

governance trainers, who in turn work directly Governments. Many of the recent Reports F ed eral Depar tment of Economic Af fair s,
Educ ation and Res earch E A ER
with company directors. To date, over 750 on the Observance of Standards and Codes State Secretariat for Economic Affairs SECO

participants in 75 countries have successfully (ROSCs) produced by the World Bank have
completed the BLTR Training of Trainers (ToT) recommended that governments encourage
about the forum
program. the establishment of directors institutes to
The BLTR and other similar resources have build capacity and enhance skills of company
IFC Global Corporate Governance Forum supports
been used to develop both certificated and directors. Mauritius established its Institute of corporate governance reforms in emerging markets

non-certificated training programs. However, Directors in 2008, and by 2013 it had gained and developing countries. The Forum develops
advanced knowledge and training products
it is important not to confuse certification more than 850 members.
promoting good practices in corporate governance
programs with non-certificated training Institutes often see certification as a good and facilitates capacity building of director training
organizations engaged in implementing corporate
programs, which imply a different objective, way to enhance directorship as a profession governance reforms.
design, and mindset. and further promote sound corporate
The Forum partners widely with international,
Traditionally, many institutes deliver a governance. IoD Southern Africa established regional and local institutions, and draws on the

“certificate of attendance” to participants who the “Chartered Director” designation, guidance of its global network of private sector
advisors and academic research network.
attended all sessions in the course. This is not “CD(SA),” to assess and credit the mastery
of directors while enhancing their skills. This The Forum is part of the IFC Corporate Governance
the same as actual certification. A certification Group, located in the Environment, Social and
program is normally associated with verifying recognition is intended to result in better Governance Department. It is a donor- supported
that the participant has acquired a certain level directors, better boards, and better business in facility, co-founded in 1999 by the World Bank and
the interest of South Africa. the Organisation for Economic Co-operation and
of knowledge, skills, or understanding. Development (OECD).
What is the Corporate Governance Board subscribe to it. For example, the Slovenian Directors Association
invites members who hold positions on supervisory boards of
Leadership Training Resources (BLTR)? listed companies to become a “chartered supervisory board
member” by passing an examination. All candidates who
The BLTR is a five-part curriculum package that offers
successfully complete the examination are listed in a national
comprehensive content resources and teaching methods to
register of supervisory board members.
enhance corporate governance training. It comprises:
• 17 corporate governance modules that progress from the
basics to advanced techniques and practices “Although there are benefits of becoming a certified
• A Training Skills Guide with practical and user-friendly director, no published study has validated the correlation
instructional tools and techniques between certification and higher performance on the board.
However, the U.K. Institute of Directors’ unpublished study
• A Training Program Providers Manual to orient trainers and of those directors who failed the certification identified that
training organizations on the content, structure, and use of 18 months later over 50 percent of these directors were no
BLTR materials longer on the board or the company no longer existed.”
• An in-depth case study to enhance learning and leadership
skills
The Resource Kit has recently been supplemented with training Mature Director Training Institutes
materials on Governing Banks, a number of customized country In recent years some of the more established director training
and regional programs, multiple case studies. Corporate institutes, such as the New Zealand Institute of Directors and
Secretaries training materials are currently under development. the U.K. Institute of Directors, have begun to rethink their role
and change their image so that they are generally perceived as a
professional institute rather than a membership organization.
Directors. Many of the participants in director training programs A professional institute typically has the following features:
have indicated that they would like to have had the opportunity
•C
 omposed of individuals with annual membership subscriptions
to demonstrate their new skills and knowledge through an
that focus on professional development needs, rather than of
effective assessment framework. Does having certification mean
corporations that use it for corporate lobbying purposes;
that the director is a better director than a director who has
not been certified? Not always. But it does enable directors to •A
 n exclusive rather than an inclusive membership, with full
demonstrate their commitment to professional development and membership typically associated with passing examinations;
to benchmark their own knowledge against clearly established • P roviding professional director development activities and
standards of good practice. programs;

Case study:
Institute of Directors in New Zealand
The IoD in New Zealand has over 6,250 members. The Chartered
Director program is designed to transition the IoD from a
membership organization to a professional body. The program
will offer members meaningful recognition for their experience
and expertise, and to the market it will assure the quality of
IoD members. The program was developed after extensive
consultation with members and stakeholders. The new structure
of the professional body involves six categories; the three most
relevant categories are:
Participant discussion at the global workshop for board
• A ssociate—required to meet all current membership
leadership trainers in Sao Paulo, Brazil, 2009.
requirements and subject to the IoD Code of Practice
• Member—nominated by a sponsor (experience guidelines,
Companies. Companies increasingly recognize the value that
currently being developed, measure the quality of minimum
board directors can provide to their organizations. In particular,
experience levels using the IoD’s Director Competency
some companies seek to identify current and aspiring directors
Framework); must engage in continuing professional
who proactively focus on improving their professionalism
development
through certification programs that demonstrate their
knowledge and understanding and suggest the willingness • Chartered Director—nominated by a sponsor and subject to a
for continual learning in what is an increasingly demanding higher level of experience guidelines; requires references and
profession. In some markets the director training institute meeting with an interview panel.
maintains a database of certified directors, and companies can
•M
 embership behavior requirements (normally involving a Newer Training Providers
code of ethics or standards) with expulsion powers for those
Some of the newer training providers, such Hawkamah in the
directors who do not comply;
United Arab Emirates, the Caribbean Institute of Corporate
•D
 eveloping thought leadership in the area of director activity Governance, and the Moroccan Institute of Directors (IMA), have
and corporate governance in general; and begun to use the BLTR as a basis for developing certification
• P roviding continuing professional development services to programs. They do not have entrenched legacy programs so
update the knowledge and skills of their members following can more swiftly respond to user demands. For example, IMA,
qualification. which is only a few years old, conducted a feasibility study to
determine the training preferences of its members: 88 percent
of respondents thought that a fully-fledged chartered directors
program would be useful, and 77 percent of companies that
responded have a training budget for staff and board directors.

Process and Key Points to Consider

Code of
Certification/ Criteria and
Assessment conduct/
Purpose Market study accreditation selection
methods quality
infrastructure process
control

1. The purpose of certification 2. Market study

Different stakeholders are likely to have alternative expectations A rigorous market study is important from the outset to
relating to a certification program (see Table 1). ascertain the potential appetite for a chartered directors
program. The study should analyse the needs and the risk-
Table 1: Expectations Relating to Program Certification related considerations as well as determine a pricing policy that
is adequate to the market and demand. For example, responding
Stakeholder Perspective to price sensitivities identified in its market research, Hawkamah
Director’s • Recognition of the participant’s level of covered the voluntary examination in the course fee rather than
perspective achievement at the end of the course establishing a supplementary fee.
• A process to diagnose strengths and weaknesses,
which can lead to remedial action or extended
learning, if required
• Consolidation of the learning so far Case study: The U.K. Institute of Directors
• Building confidence and credibility in the
participant’s likely future performance Over a decade ago, the U.K. Institute of Directors conducted
• Determination of aptitude to perform the duties of a market survey of its members to learn whether they
a board member were in favor of establishing examinations for the existing
Regulator’s • Focus on the process of quality assurance and development training program. The results were narrowly in
perspective conforming to the requirements that the external favor of having a voluntary examination: 51 percent for and 49
regulatory bodies have set
percent against!
• Need for directors in the banking sector to pass
“fit and proper” tests evaluated by the regulator The members against the proposal were mainly experienced
and successful directors who did not perceive any value to the
Company’s • Professionalization of boards
perspective qualification and expressed fear that, if the assessment were
• Identification of potential board directors and
assistance in searching for non-executive and rigorous, they might fail, which would be harmful to their
independent directors reputation among their peers!
• Continuing professional aspect, which ensures The members in favour of the proposal were mainly aspiring
that the company’s directors are regularly being
directors who felt that having evidence of their knowledge
updated on current issues, trends, and practices
levels of corporate governance and board matters would help
IoD’s • Evaluation of a participant’s progress them obtain their first seat on a board.
perspective during a course
• Diagnosis of strengths and weaknesses of In addition, some of the tutors were against the proposal that
the course the examination be voluntary, because they feared that it
• Building a market and demand for would lead to an emphasis on “teaching to the exam paper”
continual learning and that any topic not on the exam papers would not be
• Leading to a higher recognized calibre of taught.
director members
3. Development of a certification/accreditation
infrastructure
Many institutes have commented that once they decide to
Examination Checklist
go down the certification route they need to develop and • Is there a conflict of interest concerning the trainers’ setting
build up their project management structure. Unlike regular the exam questions and thereby leaving themselves open to
director training, certification programs that involve professional accusations of teaching to the exam paper?
accreditation entail stricter organization and program
management, for many reasons: 1) candidates are trained over • Does there need to be an examination committee with
a long period—several months, sometimes more than a year; 2) responsibility for all aspects of accreditation?
candidates are building comprehensive knowledge and skills on • Do procedures need to be drawn up concerning organization
different corporate governance topics; 3) the program—course of the examination? For example, how to handle exam
content and delivery across different cohorts or classes—must disruptions, cheating, and so on.
be administered consistently; and 4) examinations need to be
• Should there be identity checks so the institute can ensure
standardized and subject to control.
that the right person is taking the examination?
Institutes must therefore develop, monitor, and control course
• Does an appeal process need to be designed to address any
content and delivery through different governance models
participants’ grievances over results?
and bodies. For example, IMA in Morocco set up a number of
committees to manage the project: • Do allowances need to be made for learning disabilities, such
as dyslexia?
• A project management committee’s principal duties include
identifying sponsors as well as education partners, approving • Do examination centres have to comply with disabled rights
the course outline and certification methods, selecting the legislation?
coordinators of each module, and assisting the management of • Is there any need for honorary awards?
IMA in all activities related to program launch.
• Is there any need for “grandfather” provisions?
• A pedagogical committee comprises each module’s coordinator
• Are there any legal requirements to register accreditation
as well as representatives of partners and executives of IMA
with regulatory bodies or ministries, such as the Ministry of
and of the International University of Rabat. Its duties are to
Education?
review and approve the pedagogical content of each module
as proposed by the module coordinators. • Has the process been properly priced? For example, cost of
exam rooms, exam setters and markers, and so on.
• An admission committee is composed of executives of IMA, the
International University of Rabat, and the module coordinators.
It is in charge of reviewing the application packages.

The examination process

itself requires defining a
number of standards and
monitoring measures, especially
with regard to security and
confidentiality.
Often, institutes team up
with an academic partner,
such as a reputable university,
to administer the exam and
deliver the diploma. This
partnership also allows the
institute access to valuable
logistical support (facilities,
computers, Web-based
applications, and management
of the admission and exam
process). IMA teamed up with
the International University
of Rabat, and eventually the
university also became a
partner for the administration
of the chartered director
program as a whole. Similarly,
Certification award ceremony for French directors, September 2013.
a consortium in India—involving Hunt Partners (an executive 5. Assessment methods
search firm), PWC (the audit firm), and Board Evaluation Ltd An institute can opt for one or more assessment methods,
(a specialist consultancy)—formed an alliance with S P Jain including multiple-choice questions, essays, and face-to-face
University (a top-10 Indian Business School) to develop its interviews. For example, the U.K. Institute of Directors requires
assessment processes. the prospective chartered directors to follow a three-step
An existing curriculum may need to be developed or adapted process. First, the candidate takes a series of courses, backed
to accord with certification requirements, and some institutes up by a set of e-learning modules (10 days total) and leading
use this opportunity to introduce innovative elements into to a three-hour certificate examination with 60 multiple-choice
their training. The French Institute of Directors (IFA) launched questions. Next, a candidate takes a three-day interactive course,
its directors’ certification in 2010 in partnership with Sciences resulting in a diploma in company direction. Finally, the candidate
Po and the CAS (Quebec). One module is a board simulation. undergoes a professional review, including an interview by two
Following a case study, the participants are placed in a real peers drawn from an IoD panel consisting of chartered directors,
board-meeting situation and play the directors’ and committee members, and fellows of the institute.
members’ roles. These sessions are led by professionals, chief Several institutes recommended that the method of assessment
executive officers, managing directors, and directors in office. take into account language skills and cultural issues (for instance,
This “real situation” practice is considered particularly beneficial is the language that the assessment uses the second language
for participants who do not have experience attending board of the participants?). Also, many directors are not enthusiastic
meetings. The module, which occurs at the end of the program, about being tested via a formal and traditional examination.
is the one that creates the greatest link between the participants One respondent noted that quite a few of the directors had
and illustrates the issues of collegiality, the risk of conflict of not written anything more than a paragraph in the last decade,
interest, and the need for board diversity and complementary so how could they be expected to complete a university-type
skills and experiences among board members. written test lasting three hours?
4. Criteria and selection process For the participants’ ease, some institutes introduced online
certification exams. Since 2009, the Brazilian Institute for
The next step is for the institute to establish a clear set of criteria
Corporate Governance offers online examinations twice a
and a selection process. For example, the entrance criteria for the
year. The exam is made up of 60 questions divided into four
Chartered Director (South Africa) assessment requires that the
themes—corporate governance, corporate finance, regulatory
applicant:
environment, and strategic management—of which 60 percent
• Has been a practicing director of a company or has held an are technical questions and 40 percent are based on a case
equivalent position for at least three years during the five years study.
prior to application;
6. Development of a code of conduct and quality
• Be a member of the IoDSA; control issues
• Be at least 30 years old; A large number of institutes require their successful award
• Demonstrate a certain minimum level of educational holders to comply with their code of conduct/ethics code. Failure
achievement or be able to demonstrate experience of at least to comply can lead to revocation of membership as well as of the
10 years as a director; and certificate.

• Be sponsored by two members of the IoDSA, acting as Many director training institutes have recognised this as a
proposer and seconder. key quality control issue that needs to be carefully managed.
Mature institutes have often found that significant additional
An admission committee should be set up to review the
monitoring is often required so as to identify whether each and
application package to ensure that the minimum requirements
every award holder is abiding by their commitment to keep up to
are met. For example, the IMA admission committee awards
date with new developments through the institute’s continuing
suitable candidates places in a relevant cohort, depending on
professional development scheme. In addition, some institutes
the candidates’ profiles, to ensure diversity of skills, expertise,
have recognised a need to develop an additional committee
background, and gender in each cohort. As far as possible, no
to deal with any complaints concerning an award holder’s
more than two candidates sitting on the same board should
professional behaviour and activities. So far, these committees
be in the same cohort. Ideally, if applications from suitable
have yet to deal with many complaints but this may be due to
candidates from the same company are received, they are
the fact that the numbers of award holders are still relatively
distributed in different cohorts.
low. Other professional bodies in the fields of law, accounting,
According to many of the institutes, directors from outside of the and medicine report that dealing with professional misconduct
listed sector presented a number of assessment and selection can require important resources such as the development of
difficulties. In particular, directors from state-owned enterprises robust disciplinary procedures being in place (including a clearly
(SOEs), nongovernment organizations (NGOs), and small and identified appeal procedure) before any complaints occur.
medium enterprises (SMEs) often worked under different
regulations and legislation. The curriculum and the assessment
had to take this diversity of experience into account; otherwise
the system would be seen as unfair, comparing directors of SOEs,
NGOs, and SMEs unfavourably with directors in listed companies.
 Case study:
New Zealand IoD offers a chartered professional director pathway encompassing three stages

Mid-career Mastery
Early career
Broadly equivalent to Accreditation Broadly equivalent to Fellow

Entry • Pass 2 out of 4 IoD Essentials courses • Pass Company Directors’ course and • Pass a “Mastery” IoD course assessment
Thresholds and submission of “fit and proper” ethics assessments • Interview
portfolio • Interview • Peer review
• Qualifying experience of 2 board years • Peer review
or • Submission of “fit and proper” portfolio
• Submission of “fit and proper” portfolio • Qualifying experience of 10 board years
• Commensurate senior executive
experience • Qualifying experience of 4 board years on more than 1 type of entity

Activity • IoD Company Directors’ course or • IoD Chairing the Board course or • Service to the profession – e.g.
equivalent equivalent mentoring, participation in IoD working
• IoD Ethics course • IoD Ethics course groups (SIG, etc.)

Other tips for setting up a certification program

Continuing education. Many institutes require their successful Membership engagement. Development of certification
award holders to undertake continuing professional development provides an opportunity for greater member involvement, and
(CPD) on an annual basis. This activity can provide an important membership engagement is generally regarded as a key to the
regular stream of additional income for the institute. The U.K. success of an institute.
Institute of Directors requires its chartered directors to undertake Benefits. There is a need to clearly articulate the value addition
over 30 hours of CPD each year. of the assessment process, particularly in regions where
Standards. To encourage less-confident and less-experienced assessments at the director level are unheard of.
directors to start on the development pathway, institutes should Directors database. For institutes just starting in the field of
not place the certification bar too high initially. Once the critical certification, the certified-directors database is an important
number of certified directors has been reached, the bar can be tool to attract suitable candidates. Making the database freely
raised. Continuing professional development allows the institute available to the public may not be the best option, as it might
to raise standards gradually over time. “trivialize” the database and make it difficult to track the use of
Demand side. There is a tendency for institutes to focus solely the information. Other possible options include 1) offering fee-
on the supply of certified directors. Equal effort needs to be based access; 2) providing free access to the database through a
made to get companies to hire them. registration process; 3) signing protocols with large institutional
investors and executive search firms, giving them “privileged”
Networking opportunities. In addition to obtaining
access to the database; or 4) setting up reciprocity agreements
knowledge and accreditation, certified directors will expect to
with other institutes to give certified directors access to potential
be able to connect with their peers and feel that they are part
employers in other markets.
of a “club.” Follow-up networking and learning events targeted
specifically at certified directors will add value to the certification
program.

We are grateful to all the institutes of directors and corporate governance organizations that took the time to
complete the survey and provide us with the insights and information to write this paper. We might not have
surveyed all existing programs and similarly not each survey example is cited herein, but all responses were
instrumental in building the rationale and key thinking points for the paper.
FPO
FSC cert

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