Page 25 - Sept-2020-Issue

ARTICLE

• The next step is defining each skill/competency in simple and unam- competencies on other) will be
biguous terms, describing in key phrases as to what essentially con- prepared. This will help the
stitute the skill/competency. One such illustration is given below: Board/NRC to make an objec-
tive assessment of overall level
strategic orientation/expertise of skill/competency actually
• Ability to be future oriented, have long term view to have assessment of strategic available with the company and
choices available while keeping focus on objectives of the company arrive at a conclusion whether
• Ability to devise and evaluate business strategies taking into account strengths and a particular skill/competency
weakness to have competitive advantage is possessed by the board/di-
• Ability/experience of directing management in uncertain times and to take timely rectors at the desired level or
decisions in complex situations
not. For example, the board (8
• Competency levels or assessment scales can then be assigned for members) may identify that in
each skill/competency as illustrated below, so as to arrive at what is order to achieve desired level
the desired level of a particular skill/competency to be possessed by of skill/expertise in Financial
Board: Management/Accounting, 50%
(4 members) of the directors
level of requirements/attributes should have basic financial un-
Competency
derstanding and 25% (2 mem-
Basic (1) • Basic knowledge & understanding of skill/competency bers) should have advanced
• Some experience/training or exposure
financial/accounts/audit exper-
Good (2) • Sufficient knowledge & understanding of skill/competency tise. This will also help in iden-
• Relevant experience/formal training and exposure (No. of years) tifying gaps with regard to spe-
• Contribution in Board discussion on concerned complex issues
cific skill/competencies and the
Expert (3) • Extensive knowledge & expert understanding of skill/ desired level to be achieved by
competency
• Relevant experience/formal training and exposure (No. of years) the board.
• Provide superior idea, leading the discussion or significant • Similar exercise needs to be
contribution in Board discussions
carried out for Board Level
• The company should also director possess a particular Committees to ensure that
maintain database of each di- skill/ competency and at what skill/competency requirements
rector qualification, attributes, level. as per terms of reference of
experience (both professional • The directors may also be asked a specific Committee are ful-
as well as on board of other to carry out a self-evaluation filled. As, it will be difficult to
companies), skill/ competen- with respect to identified skill/ conceive that Audit Committee
cies & trainings undertaken competencies rating themsel- (most important Board Level
and keep on updating the same ves on competency levels. A Committee) can work effec-
regularly. Besides skills and ex- questionnaire may be used for tively as per its scope if it does
pertise, this database will also this purpose which contains not have required skills/compe-
help to understand age, gen- questions with regard to under- tencies/expertise in the field of
der, cultural and geographical standing/proficiency of direc- finance, accounts and under-
diversity on the board. tor with regard to key aspects standing of relevant regulatory
of each skill/competency. requirements. Along with skill
assessment of directors’ skills requirements, time commit-
and preparing a matrix of • On the basis of information ment, especially of non-exec-
required versus actual skills/ on director's attributes against utive directors is an important
competencies/expertise each identified skill and self- factor to be considered while
• On the basis of above informa- evaluation by directors, Board/ constituting committees.
tion, director-wise attributes/ NRC will make its own judge-
details may be plotted against ment and a Matrix of required Disclosure of skill matrix
each skills/ competencies/ ex- versus actual board skills as per statutory requirements
pertise identified by the NRC/ (with individual directors on in letter and spirit
board indicating whether a one side and identified skills/ The disclosure requirements of

Kaleidoscope September, 2020 25