boardroom
Deirdre Hannigan
Sylvia Cronin
and ticking the box that you’ve had those meetings. Five meaningful quality meetings would be much more preferable.” Cronin notes that regulation is obviously vital in
finance-related industries like her own. “But there is a fine line between over-regulation and under-regulation. If we can increase individuals’ competence, knowledge and professionalism in terms of their role as directors, I think that’s as important as increased regulation.” She notes that failing to understand or to even have
the ability to discharge their responsibilities as non- executive directors (NEDs) has often been a problem in the past. “When you look at the failures in the recent past, you would have to question the effectiveness of NEDs in challenging what the executive were doing,” she points out. “Going through the chartered director pro- gramme, you’ve got to demonstrate through your portfo- lio of experience how you’ve contributed to the company’s development and what you’ve done in five key areas. “Because you’ve got to prove them, you’ve got to con-
stantly question and ask yourself ‘What amI doing, what did I do, and how can I do what I’m doing better?’ It puts you into a different mindset. “Without the confidence of being a chartered director,
you wouldn’t be as assertive in coming out with your reservations and concerns and challenging decisions that are taken.” Cronin is also interested in the fact that the IoD sur-
vey found that fewer than 38pc of SMEs have appointed NEDs to their boards. “That was probably the statistic that I was startled with most,” she says. “In my own experience, I feel the benefit of the independent NED is huge in terms of company development. In particular, I think the stage that Ireland is at in terms of the eco- nomic environment and wanting to drive forward entre- preneurship, the key role of the independent NED is one of being a challenger. “Both the executive directors and shareholder direc-
tors are interested in profit maximisation, whereas the independent NED is standing apart from the busi- ness, questioning what the board is doing and the way it’s doing it. For me it is even more important for SMEs to have an independent NED than it is for the larger, more established corporations, because they
36 Irish Director Winter 2010
would tend to have all those different functions within the company.” While Hannigan believes that boards will increasingly
seek people with corporate governance qualifications, she’s not inclined to think that having these kinds of skills will become mandatory. “I think boards always want a mix of people. “You might not have a case where everyone who’s a
director has a professional qualification, but youmay find that boards of companies will need to have a minimum number of people who are professionally qualified.” People are likely to be more and more careful about
taking up directorships in the future, she says. “I think people are more aware of their responsibilities. That will lead people to make sure that they’re very comfortable about the company and that they can get sufficient over- sight of the company to discharge their duties. I think people would probably do a lot more due diligence now than they would have done before and that’s a good thing. “My view would be if they aren’t more reticent about
taking up directorships, they absolutely should be,” adds Cronin. “There have been quite significant changes in the director’s role, in particular for regulated companies in the financial sector. “Anybody who’s taking a role in financial services now
needs to understand the quite steep change in the regu- latory environment. That change has resulted in a requirement on all directors to have an understanding of what’s coming down the track, both on the Solvency II side for insurance and on the banking side. A fourfold increase in the number of staff on the regulatory side is planned so that in turn has a significant impact on the companies’ board directors. “I think the important aspect of any director education
that’s offered is that it can only help you in your role,” concludes Cronin. “It’s probably now becoming necessary to be educated in what your role is, both for board mem- bership and also for committee memberships. “There is certainly that need to become familiar with
what the legal and regulatory changes are at national and EU level and what you need to understand from them. You need to educate yourself and continuous learning is what it’s all about.”
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