Lifeline Ekurhuleni urged to strengthen board nominations processes in line with King IV

According to a recent news article[1], Lifeline Ekurhuleni experienced challenges in forming a stable and credible board of directors.  "Having an capable board is absolutely essential for the effective functioning, oversight and control of an organisation," says Parmi Natesan, CEO of IoDSA. "When a board is effective, it significantly boosts an organisation’s ability to deliver on its objectives and maintain stakeholder trust."

The news article refers to ongoing challenges at Lifeline Ekurhuleni regarding the election of their board, noting that irregularities and issues with the nomination process have previously hampered board elections.” It describes an incident where board candidates were absent at an initial meeting intended to establish the governance structure, resulting in the meeting needing to be rescheduled. Given that every candidate missed the initial meeting date, it is unclear whether they were fully informed of their obligation to attend, which raises concerns regarding the communication process.  Additionally, it was reported that during the nomination period, technical issues caused the nomination submission method to be changed from email to WhatsApp, with not all the candidates being notified about this change, leading to claims that some candidates, despite applying, were not included in the original list.

Natesan points out that King IV clearly emphasises the need for a formal, rigorous, and transparent board nomination process. This approach ensures candidates selected are well-equipped to fulfil their responsibilities and meet the needs of the board.  It also provides credibility to the process and ultimately trust in the candidates being put forward for election.

The report further states that selected board members would now undergo vetting and training through the Department of Social Development (DSD).  Natesan, however, questions whether candidates were sufficiently vetted prior to their recommendation to the board.  Due diligence during the initial nominations process, prior to selection, is absolutely critical to ensure that candidates have the knowledge, skills and experience needed to perform their duties well.  It also provides some level of assurance regarding the lack of reputational risk by association with the prospective candidates.

Regarding the planned training by DSD, Natesan stresses the importance of clarity about its scope.  "Director training should explicitly cover crucial governance elements such as directors’ legal duties, strategic oversight, and accountability," according to Natesan. In order to be assured that board members are fully aware of their responsibilities and able to fulfil them, such training should be in line with King IV, which establishes the standard for efficient corporate governance.

Crucially, a major funder's remarks in the news report suggest that Lifeline Ekurhuleni must raise its governance standards in order to maintain financial support. This demonstrates unequivocally the growing significance of sound governance. Organisations need to understand that stakeholders are becoming increasingly aware of governance issues, especially funders. "Financial support and organisational sustainability can be directly threatened by poor governance practices," cautions Natesan.

The IoDSA strongly advises organisations to implement the recommended governance practices, such as a transparent and clear nominations process, rigorous due diligence procedures before appointment, and then extensive training programs for directors once appointed. Natesan concludes, "Good governance not only ensures board stability but also significantly mitigates reputational risks, enhancing trust and confidence among stakeholders."

[1] Fresh start for LifeLine Ekurhuleni as new board takes the helm | African Reporter

ENDS

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