Enhancing Board Effectiveness: What about Induction and Training Programs for Directors?

In the wake of the recent economic and financial crisis, board induction and training process has become highly important. This article discusses that an institutionalized and effective board induction and training process could maximize the director’s contribution thus improving board effectiveness in banks. Firstly, by using qualitative research methods, the study shows the state of the art measures on board induction and training programs for directors in European banks. And then, it also depicts the results of a survey about the opinions of an Italian panel on the topic. Findings confirm that directors are aware of the importance of induction and training programs as a tool to enhance the effectiveness of corporate governance. However, there is substantially limited dissemination of these practices in banks and, in those cases where these practices are used more extensively, it is possible to spot some areas of improvement compared to best practices. Our results may be justified by: a delay of regulation on governance; a possible disappointment of company executives and a consideration of these practices in terms of mere business “costs” rather than as “opportunities” to improve the bank board effectiveness. On the basis of our knowledge, there is no empirical analysis designed to describe the dissemination and the organizational characteristics of the initiatives of training and updating of directors in banks, so this article will improve the existing literature on bank governance and European boards.