Directors cite ‘reputational risk’ as main deterrent to sitting on State boards

Almost two-thirds of directors and business leaders have cited the “personal or reputational risk” as the main deterrent to sitting on State boards, according to a survey by the Institute of Directors (IoD) Ireland.

The finding comes amid the ongoing payments controversy at RTÉ, which last month resulted in the departure of chairperson Siún Ní Raghallaigh, who was appointed in late 2022.

Her tenure in charge was marked by scandals including undisclosed payments to former presenter Ryan Tubridy, RTÉ barter accounts, Toy Show the Musical and exit payments to former RTÉ executives.

The IoD’s survey indicated that three out of five (60 per cent) directors had concern about the personal or reputational risk involved in serving on a State board.

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However, when asked if they would consider applying for a position on a State board, nearly 72 per cent signalled they would still consider applying for a position.

The survey, undertaken last month, canvassed the opinion of 382 directors and business leaders.

[ Who would want to serve on the board of RTÉ? ]

Sentiment towards the code of practice for the governance of State bodies among directors was found to be mostly positive, with almost 73 per cent saying “it has been effective in supporting good corporate governance standards in State organisations” and nearly 74 per cent saying “it has improved governance standards” since its revision in 2016.

“The results of this survey are very thought-provoking and shine a light on the reputational concerns directors now have when considering serving on State Boards in Ireland,” IoD Ireland chief executive Caroline Spillane said.

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“And while there was a largely positive perspective offered by respondents on the value of having a code of practice in place, several respondents voiced the need to review its oversight, accountability and implementation.

“There were also concerns raised on the recruitment process to State boards in respect of the relevant experience and skills. Directors also expressed the desire for the code to be revised to reflect the latest in governance developments.”

Ms Spillane said her organisation would be conducting further research with directors and members with the aim of providing practical recommendations to the Government.

The Department of Public Expenditure and Reform issued a revised the code of practice for the governance of State bodies in 2016.

The department said the revised code was “designed to ensure that both commercial and non-commercial State bodies meet the highest standards of corporate governance”.

“It provides a framework for the application of best practice and is intended to take account of developments in respect of oversight, reporting requirements and the appointment of board members,” it said.

The new code requires each State board to establish an audit and risk committee, which must meet four times a year and be able to invite outsiders to attend meetings if necessary and for appointments to be limited to 10 years.

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