The Role of Being a Company Director

Being A Company Director

Every company must have one legal director, and with 5.9 million companies in the UK, that's a lot of people who have the title director in their role. 

Many people get excited by the title director, but it is not just a title of authority it is a role of office within the legal structure of a limited company.  The director has several responsibilities, some are about leadership and decision making others are legal obligations 

What is a Company Director?

A Company Director is an individual, executive (or non-executive), engaged by a company to represent the interests of stakeholders and to ensure a high level of corporate governance. Directors are responsible for setting, maintaining and communicating the vision, values and strategy of the company within the legal framework of the country within which they operate.

The role of Company Director is wider than that of a manager and needs to consider the needs of various stakeholders, from shareholder to employees and even the local community. The Manager, in executing the agreed strategy, is free to focus on his department under instruction from the Director or Board. Although much of the role of the Director might be thought of as onerous, in fact the opposite is true. The legislation is designed to ensure good corporate governance and minimise the potential for bad behaviour, which as history shows has happened spectacularly with some individuals. When the Director acts in accordance with best principles then the role provides great possibilities.

What sort of Director do you want to be?

“We should remind ourselves that being a company director is a wonderful thing for the person who is a company director. But it is a position of great responsibility which involves running the affairs of a company for the benefit of other people.”

Lord Goldsmith, Lords Grand Committee, February 2006

As Lord Goldsmith so eloquently puts it, the promotion to Company Director is indeed wonderful but it requires a bit of thought and some understanding of the new wider role. Interpretation of this role can be broken into three categories:

• Dubious
• Obligatory
• Leadership

Dubious

What you do as a Director may not be illegal but it may well get you disqualified from acting as one. If is illegal it might even entitle you to a stay at one of Her Majesty’s boarding houses. Directors that fall into this category often see the company only as a way of personally enriching themselves. Conflicts of interest are inconveniences to be subverted and hidden; in any case, rules and regulations are only there for suckers to follow.

Obligatory

You might be able to get by doing the bare minimum but you have to ask yourself about the impact that you have had, or are having, on the company that employs you. Are you really promoting the best interests of the company? Or are you taking a higher salary purely for doing a higher level of management than you had previously?
If you want to fit into one of these two categories then the rest of this article probably isn’t for you. If you want to make a difference in your role as Company Director then read on.

Leadership

If you want to be a great Director and make a significant impact on your company and its fortunes the duties, obligation and responsibilities that come with the role should be seen as a guiding framework. Great Directors work with the very best interests of the company at heart, they recognise that the company is not there purely to enrich themselves and they understand that their biggest challenge is to promote the success of the company at all times. Being a Director is a full time job which has an impact even when you are not on work time.  expidoms . Moulding culture and shaping strategy are where the leader make his or her mark.

The duties, obligations and responsibilities

As the established legal principle states: Ignorantia juris non excusat or Ignorance of the law is no excuse. As a Director you should be aware of your duties and how to discharge your obligations as well as how these impact on the general responsibilities that are now yours. We can break these responsibilities in to four parts:

1. Legal and Statutory: The General and Specific Duties of the Company Director
2. Financial: Key Financial Documents – P&L, Balance Sheet and Cash Flow Statement
3. Culture – The Company Director as a role model
4. Strategy – The critical role of providing strategic direction

If it is the first two parts of the framework which represent the bare minimum of requirements then it is the last two parts where the great Director gets to make a real difference to the company he or she serves.

Strategy

Driving strategy and creating culture are where the Director directly effects change and promotes the success of the company.

“The only thing of real importance that leaders do is to create and manage culture…if the concept of leadership, as distinguished from management, is to have any value we must recognise the centrality of this culture management function in the leadership concept.”
Edgar Schein

Culture

Culture is central to the duties of a Director. Establishing and maintaining the right kind of culture is key to the organisation’s future and success across a wide range of areas of operation.

Culture is the collection of attitudes, beliefs, ideologies and values which shape how organisations function and behave; in short, how we talk to each other about each other. Every organisation has its own culture and it is a determining factor in its success and has a significant impact on how employees interact with you, each other, and customers.

“Leaders establish the vision for the future and set the strategy for getting there; they cause change.” 
John Kotter

Ultimately, strategy is about shaping the future; determining the vision for the company and setting the objectives that let you know when you achieve it. Where will your company be in 3 years? Who will your customers be and which products or services will they require from your company? What will turnover or margin look like? These are all questions that should be asked by a Director as it is his or her responsibility for setting the vision, for daring to dream.

So what sort of Director do you want to be?