LONDON -- The United Kingdom's Institute of Directors is trying to bring some professionalism to company directors.
Unveiling what is believed to be the world's first professional qualification for company directors, Tim Melville-Ross, the institute's director-general, said the new qualification would promote professionalism and good boardroom standards, and fits with national and global trends toward improving corporate governance.
The new qualification of chartered director would require candidates to have a firm grasp of company law, boardroom practices, finance, marketing and business strategy.
The new qualification would "establish a benchmark for what it means to be a professional director," said Lord Tony Newton, a former Tory cabinet minister who now serves as the institute's director of professional standards. While the credential is not viewed as a panacea to avoid poor management, it is hoped the qualification would make it less likely that a company would experience dire problems.
To qualify, candidates would have to:
* pass an institute-administered test;
* show at least three years' experience in contributing to a board;
* sign a professional code of conduct and be subject to an investigation and possible penalties if any breach of the code is alleged; and
* take continuing education programs to keep their knowledge up-to-date.
Institute officials don't expect company directors to seek qualification all at once. Longtime directors might not seek it at all, and it might take years for a new generation of directors to apply for the qualification.
Observers generally praised the new professional qualification, which is akin to those offered engineers, architects and surveyors.
John Rogers, director, investment services for the National Association of Pension Funds, London, said: "I think anything you can do to improve the (ability) of directors to act more professionally is probably a good thing."
Alan MacDougall, managing director of Pensions Investment Research Consultants Ltd., London, said: "I think it's a valuable initiative, but one of its drawbacks is that it might get too closely tied to the IoD's views on corporate governance." The institute generally has taken a conservative stance on corporate governance issues.
Karl Van Horn, chairman of Arlington Capital Management, London, thinks it's more important for directors to understand how boards work together and how they relate to management than to obtain qualifications: "What you're really looking for is a classical liberal arts type of person."