The rationale for setting up an institute for directors
The thinking and the rationale for setting up an institute set apart for directors of companies was the fact that there were a plethora of associations and institutes operating in Sri Lanka to service the needs of every profession from engineers and accountants, to lawyers and architects, but non for corporate directors.
A director was identified as a unique breed of professional.
Lawyers or accountants follow a prescribed route to their chosen profession; whereas the roads to the boardrooms were many. There is no professional or academic qualification that comprehensively prepares a director for this role. Instead, individuals from a variety of educational, professional and socioeconomic backgrounds feed into this pool of directors. Those falling within the ambit of directorship may range from the entrepreneurs to the veteran business leaders.
Whilst other professions could regulate the minimum level of competence and uphold standards, there was no common yard stick by which prospective directors could be measured. In these circumstances, the need for an organization that gave directors strategic direction and guidance was acute.
Despite the diversity of backgrounds from which directors come, it was nevertheless possible to identify a common set of goals shared by all directors alike. Directors have the same rights, duties and liabilities, they all operate within common economic and market parameters and in the final analysis, they are all answerable to their shareholders. An organization to actively pursue these goals was urgently needed.
Further, directors mould the financial future of companies in both their individual capacities as well as collectively in the corporate sector. They are the key decision makers, whose impact at microeconomic level, have ramifications on macroeconomic indicators. By addressing the needs of business leaders, an institute of directors could sustain a buoyant corporate sector and a thriving economy.
Lessons learnt in the Asian financial debacle strengthened the need for an institute of directors. In the aftermath of the economic strife, corporate governance reforms emerged as the universal panacea for Asia’s economic problems. Effective corporate governance was proposed as the means to avert future catastrophes. Attempts to address corporate governance issues brought directors to the focal point of that effort. An institute of directors could be the vehicle through which good corporate governance practices could be assimilated quickly and effectively from the top down to the grass-root levels.
In these circumstances the establishment of an institute of directors was an urgent priority and a matter of significant national importance.
The birth of the Sri Lanka Institute of Directors
In response to this urgent need, the Ceylon Chamber of Commerce launched the Sri Lanka Institute of Directors (SLID) on 8th April 2000. In so doing, the Chamber filled a void felt by the business leaders in this country for an organization that effectively addressed the pressing needs of directors to enhance the level of professionalism among directors of companies in Sri Lanka. The Chamber initiated many measures to promote the adoption of good corporate governance practices and SLID was seen to play a pivotal role in this initiative.
It was planned to functioning initially under the auspices of the Chamber and thereafter as a wholly independent body which would strive to educate, inform and assist directors in effectively governing the corporates on whose boards they served.
The members would join SLID in their individual capacities as directors of the private and public sector companies and in return they would receive advice, information and guidance on being effective directors. SLID would act as the medium of knowledge through which directors could be transformed in to dynamic stalwarts of business leadership.
It was envisaged that the objectives would be achieved by providing a comprehensive range of services including seminars, conferences, workshops and publications to educate and update members on various aspects of directorship. In addition to directors, senior level managers at the threshold of becoming directors would also fall within the purview of such training and development efforts. Its aim was to create a forum for key business leaders to meet, fraternize and exchange ideas.
In an environment where much business was transacted through contacts, it was thought imperative that directors should build strong peer-networks. SLID aims to be, the cohesive force amongst directors in Sri Lanka, providing members with a much needed support network in times of crisis, and a forum to meet, fraternize and exchanged ideas. In addition to importing new knowledge from external sources, SLID would open channels for the transfer of knowledge within the organization, from veterans to less experienced members.
In becoming an effective director, it was thought that experience was key, but knowledge was the next best alternative. The rapid assimilation of knowledge was the best way of leveling the playing field between veteran directors and their less experienced counter parts.
Thus, SLID was born to transfer the knowledge and to curtail the time lag needed to transform young directors into productive members of the boards on which they served.