Institute of Directors ANNUAL REPORT AND ACCOUNTS 2018 Integrity & Enterprise www.iod.com Objects of the Institute of Directors' Royal Charter | Annual Report and Accounts 2018 Objects of the Institute of Directors' Royal Charter To promote for To promote the To represent To advance the public benefit study, research the interests of the interests high levels of and development members and of members of skill, knowledge, of the law of the business the Institute, professional and practice community to and to provide competence of Corporate government facilities, services and integrity Governance, and in the public and benefits for on the part of and to publish, arena, and to them. directors, and disseminate or encourage and equivalent office otherwise make foster a climate holders however available the favourable to described, of useful results entrepreneurial companies of such study activity and and other or research. wealth creation. organisations. Our Mission Our Vision Our Values To develop, support and To be the professional institute for Integrity and Enterprise. represent skilled, knowledgeable responsible directors and leaders. and responsible leaders, for the benefit of the economy and society at large. For further information on the IoD, please explore our website found at: www.iod.com 2 www.iod.com Annual Report and Accounts 2018 | Contents Contents “ It is the calibre of our Objects of the Institute of Directors' 2 Royal Charter members, their belief in our Royal Charter mission, Chair of the Institute’s Report 4 and the standing of the Director General’s Operational Review 6 IoD across the world that provide great Director General’s Policy Review 8 optimism for the 2018 Overview 9 future of our Institute.” • Policy 9 Charlotte Valeur • Professional Development 14 Chair of the IoD • National and Regional Highlights 16 • Our People and Culture 24 Governance of the Institute of Directors 28 Statement of Board Responsibilities 38 Financial Review 39 Independent Auditor’s Report 41 The Accounts 43 IoD Chairs from Geographical Areas 63 IoD Premises 65 www.iod.com 3 Chair of the Institute’s Report | Annual Report and Accounts 2018 Chair of the Institute’s Report 2018 was a challenging year, but also At the same time, our provision of a much-needed catalyst for change professional development continued for the UK’s longest-running to expand as we trained thousands organisation for business leaders. of directors not just in the UK, but globally. This growth reflects the The Institute’s Royal Charter mission quality of education provided and the – to support, develop and represent standing the Institute has as a leader in directors – remains as relevant this field. In the year ahead we will look today as it was a century ago, if not to further enhance the accessibility more so. In order to fully live up to of our training through our Digital these obligations, we cannot shirk Academy, seeking to reach more Charlotte Valeur the task of evolving our approach directors with online tools they can as an institute, to adapt to a rapidly fit around their other responsibilities. Chair of the IoD changing business environment. Joining the Institute as Chair in Complementing this work, we held September, I found an organisation a broad range of informative and eager to embrace change. engaging events across our UK and international branches, helping members With a refreshed board and leadership to develop and connect with each other. team, I am confident the IoD stands ready to deliver an even stronger Financial Performance service for members. While numbers have increased in all of our community-focussed membership categories – Advance, IoD 99 (start-ups), Progress in 2018 and Student – over 2018, we saw an Our value as an organisation is the overall decline of 2,422, ending the impact we can make on behalf of year at 29,612. directors and the wider business community. In this regard, we We remain the largest body for continued to deliver a good return directors in the UK, with a majority of for our members. our members having been with us for 5 years or more. With that said, the Last year we helped thousands Board recognises the need to address steer their organisations through membership decline, and to set this widespread uncertainty and around as a high priority. We are pleased frequent obstacles, providing advice to say that we have already seen an and resources on key issues such as improvement in member retention GDPR, director liabilities and many rates in the first quarter of 2019. more. We maintained, and in many areas strengthened, our advocacy It is essential that the IoD is in a position voice representing members’ interests to invest for the future. We cannot shy across crucial areas of government away from the challenge. policy, making significant interventions in areas including skills and Brexit. In 2018, we finished the calendar year Drawing on our Royal Charter, the IoD with an overall financial loss of £4.2m. was at the forefront of the UK corporate There were a number of one-off governance policy debate, playing a costs, including legal fees related meaningful role in the development of to an independent HR investigation, both the revised Corporate Governance preparation for regulatory changes, Code and the new Wates Principles as well as a decline in membership for large private companies. income and outstanding debts owed to the business for training courses. 4 www.iod.com Annual Report and Accounts 2018 | Chair of the Institute’s Report At the same time, we also invested Looking to the Future It is the calibre of our members, their in a change programme to improve our A programme of change was put belief in our Royal Charter mission, internal operations and membership in train by former Director General, and the standing of the IoD across the offering which will continue Stephen Martin, in 2018 and has been world that provide great optimism for throughout 2019. continued and developed by interim the future path of our Institute. I am Directors General Anna Daroy and proud to serve as Chair, and believe Action was taken in the second half Edwin Morgan, who bring significant that if we truly embrace change, we of 2018 to reduce costs, including experience in business transformation can improve the attractiveness of IoD a number of redundancies. This will and policy advocacy respectively. membership and breathe new life into reduce our wage bill for 2019, but there the organisation’s founding values. were redundancy-related costs incurred From the beginning of this process, in 2018. emphasis was placed on putting members’ perspectives at the heart With these, and other cost saving of our decision-making. The Institute “ Bolstering our measures enacted this year, the Board carried out extensive consultation capabilities on the has set a firm objective of achieving with members, including through a surplus in 2019 and is monitoring a roadshow of events across the ground across the this closely throughout the year. country. This consultation reaffirmed UK’s regions and the esteem in which our Royal Charter Governance and Diversity is held. Accordingly, we are refocussing nations is a key While no-one can change the past, upon the central purpose laid out in area of focus for the the Institute has sought to learn from this Charter, the values of integrity the governance challenge it faced in and enterprise, and our social impact coming months.” 2018. With a new board, I am confident as drivers for change. we are in strong position to make headway and continue to develop Bolstering our capabilities on the our offering. As well as the four ground across the UK’s regions and independent directors who were nations is another key area of focus for added to the Board last year, I would 2019. Additionally, we intend to improve like to welcome Femi Bamisaiye and the function of and our engagement Amaechi Nsofor, who have joined us with the IoD’s international branches. more recently, and bring particular expertise in finance, digital and Many countries look to the UK as business transformation. a standard-bearer for corporate governance. In the year ahead we While all appointments to the Board will work on expanding the global and senior team are based on merit, reach of our director training through the IoD recognises the value that partnerships, improving our footprint a diverse leadership brings to any in other parts of the world in a way that organisation. Indeed, as the UK’s can also help develop the connections corporate governance institute, of our UK-based members, so many of I believe we have a responsibility to whom operate on an international basis, set an example for the companies we or are seeking to do so. speak for. In this light, I am confident that this is now the most diverse board in the organisation’s 116 year history. www.iod.com 5 Director General’s Strategic Review | Annual Report and Accounts 2018 Director General’s Operational Review While the principles behind our As highlighted by the Chair, we have Royal Charter have not changed taken swift action to put the organisation since the IoD was founded in 1903, in a position where it can invest to the world has. Technology, business further strengthen our offering. models, and society’s expectations The Board has set a firm objective of of business leaders have dramatically achieving a surplus in 2019 and in the shifted throughout the past 116 years. first few months alone, we have made We must change too. significant headway towards this target. Since I joined the Institute in November Our purpose 2018, much work has already taken Financial stability is fundamental for Anna Daroy place to streamline our operations to any organisation, whether commercially ensure we can deliver value for our driven or not.