 Parmi Natesan offers advice on the type of directors that should serve on the SAA board The Minister of Finance, Pravin Gordhan, has recently renewed his calls for a new board to be appointed at South African Airways (SAA). His comments come as the national carrier’s financial statements are delayed, owing to the Treasury not providing the guarantees needed to convince its auditors that it is a going concern.
Minister Gordhan is quoted as stating that the guarantees will only be considered once the airline has a new board and executive team. This‚ Gordhan told a business breakfast‚ would require a “whole new board” of “credible people… with the right balance of skill and exposure”. According to Parmi Natesan, Executive: Centre for Corporate Governance at the Institute of Directors in Southern Africa (IoDSA), “The IoDSA’s Board Appraisal Benchmark Study shows that public sector boards perform less well than those in the private sector. One of the reasons for this, sited by public sector board members themselves, is that board members are often political appointees, and thus lack the necessary knowledge, skills, experience and independence to fulfil their roles adequately.” The IoDSA’s Board Appraisal Benchmark Study concluded that board composition is probably the single most important governance factor in respect of an organisation’s future success. Interviews with members of these boards indicate that key challenges include the fact that incorrect criteria are used in appointing board members, lines of accountability are not clear, and a lack of industry knowledge resulting from the high turnover of ministers, MECs and directors. Need for professional directors “When it comes to appointing new members to the SAA board, it would be wise to ensure they have the correct knowledge and skills—public-sector directors have a tough job and the company’s performance is dependent on their competence,” Natesan says. “Directors generally have such an important role to play, and the issues they face are so complex, that a new cadre of professional directors is required.” In response to this need, the IoDSA has introduced a formal professional designation for directors, the Chartered Director(SA) or CD(SA). In addition, a structured pathway has been designed to enable directors/aspiring directors to acquire the director competencies they need to complement their existing business skills whilst working towards the designation. The CD(SA) designation also enables directors to demonstrate objectively their fitness to serve on a board, and provides a vehicle for continuing professional development. “While the pool of CD(SA)s is still relatively small, the pathway and ultimate designation should be used as a benchmark for competency to serve as a director in South Africa,” says Natesan. “If SAA is to turn the corner, it needs board members with the right knowledge, skills and personal competencies; and a clear understanding of their responsibilities to the organisation, to the state and, ultimately, to the citizens.” ENDS MEDIA CONTACT: Cathlen Fourie, 082 222 9198, [email protected], www.atthatpoint.co.za For more information on the IoDSA please visit: Website: www.iodsa.co.za Twitter: @The_IoDSA LinkedIn: The Institute of Directors in Southern Africa group
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 South Africa’s state-owned enterprises have a key role to play not only in delivering services to citizens, but also in funding the National Development Plan. However, it is clear that many major parastatals are still not in a position to fulfil this mandate.
A recent editorial in Business Day places the blame squarely on a lack of governance. Parmi Natesan, Executive: Centre for Corporate Governance at the Institute of Directors in Southern Africa (IoDSA) broadly agrees, arguing that solving this problem begins with the board. “The challenges besetting our parastatals are complex, so it would be naïve to suggest that there is a silver bullet that can magically fix them. But, as many commentators have pointed out, one common shortcoming is the effectiveness of the boards. One of the findings of the IoDSA’s board appraisals benchmark study was that public sector boards lag behind private sector boards in their performance. Given that boards play such an important strategic and governance role, the IoDSA believes that the parastatals should seriously consider a professionalisation mandate including Chartered Director(SA)’s for the boards of state-owned entities,” she says. Natesan says that greater attention needs to be paid to the selection of board members at parastatals to ensure that they have the necessary professional and personal skills, as well as industry knowledge and experience. As the IoDSA’s annual board appraisal benchmarking study consistently shows, public-sector boards suffer from the fact that board members (as well as members of the executive team) are often seen to be appointed or political reasons. “It’s vital that proper due diligence on potential directors is carried out. Being a director is a tough job, particularly in the public sector, and much depends on his or her performance,” Natesan says. “Care must be taken to find and appoint such people, or the board’s—and ultimately the company’s—performance will be adversely affected.” According to Angela Oosthuizen, Chief Executive Officer at the IoDSA, the directorship role in both the public and private sectors is so important and so complex now that the IoDSA has launched a formal professional designation, the Chartered Director(SA), or CD(SA). The IoDSA’s intent is to professionalise directorship. The CD(SA) initiative recognises that directors require specialist skills, experience and integrity alongside their purely business skills. Administered by the IoDSA, the CD(SA) designation gives directors a way to demonstrate their qualifications objectively, and to enhance them through a formal continuous professional development programme. Professional directors also subscribe to a code of professional ethics, and can be subject to the designation being revoked under certain circumstances. A credible professional designation also helps selection committees identify candidates with the right skills, objectively assessed. Oosthuizen says that government is aware of the potential for using the CD(SA) designation as a way of identifying the right calibre of directors. For example, at a recent IoDSA event, the Public Protector, Thuli Madonsela, indicated that the Minister of Public Enterprises, Lynne Brown, would support the certification of directors as part of the appointment criteria for parastatal boards. “The CD(SA) designation is relatively new, so the pool of people entitled to use it is still small, but the Minister should certainly be encouraging parastatal board members to begin the process of certification,” Oosthuizen says. “In the meantime, members of parastatal boards need to keep abreast of developments, attend governance training, and generally make sure they understand their role. Board members who are professional in their attitude, their skillsets and their commitment to a code of conduct will do better for the company.” Another benefit of improving the skills of directors would be the strong signal that government is serious about governance, and that it respects the role that boards have to play. “The board sets the tone for the whole company, oversees its strategy and ensures it is governed properly—a successful company needs a good board,” says Natesan. “If parastatals are going to be able to become contributors to the fiscus, they need to be properly governed, and ensuring that their directors are at the match makes sound business sense.” Editor’s note: Click http://bit.ly/1gGntmW for supportive audio of Parmi Natesan, Executive: Centre for Corporate Governance at the Institute of Directors in Southern Africa ENDS MEDIA CONTACT: Cathlen Fourie, 012 664 2833, [email protected], www.atthatpoint.co.za For more information on the IoDSA please visit: Website: www.iodsa.co.za Twitter: @The_IoDSA LinkedIn: The Institute of Directors in Southern Africa group Development of women must turn from an August flash in the pan to a conveyor belt of new talent6/8/2014  Every August, new initiatives are launched to promote the empowerment and development of women—with many of them disappearing equally quickly. To be effective, development programmes need to be viewed holistically according to Angela Oosthuizen, newly appointed CEO of the Institute of Directors in Southern Africa (IoDSA).
“We would like to encourage both professional associations and companies to adopt a holistic approach that aims to elevate women to a new professional level, and so contribute to greater gender diversity in business, the boardroom and society as a whole,” says Oosthuizen. “We need to turn the development of women from an August flash in the pan to a conveyor belt of new talent.” The IoDSA is working with a variety of identified stakeholders to help design and deliver a programme that embodies such a holistic approach. The programme aims to broaden and deepen the pool of female talent available for non-executive board positions. “We have seen studies recently confirming that board diversity dramatically increases the value that boards contribute to organisational performance,” says Oosthuizen. “However, we can’t keep tapping into the same set of resources when it comes to finding female non-executive directors. We have to expand access to existing talent and groom new talent.” Oosthuizen emphasises that potential candidates are readily available, and can often be found via the professional associations to which they belong. These women would obviously have qualifications and experience in their current disciplines, such as engineering, accounting and so on—what’s needed is a way to help them elevate or evidence their director competencies and, ultimately, obtain the coveted Chartered Director, or CD (SA), designation. “To do this in a sustained and sustainable way, we have created a model one could call the ‘circle of engagement’,” explains Oosthuizen. “We take a holistic approach that begins by providing knowledge via training, testing it via assessment and then practising how to use it via simulation.” Thereafter, a personal development plan can be created for each woman and matched to continuous professional development and ongoing mentoring. To close the circle, it’s important to map progress towards the stated goals. “Throughout, candidates can be supported via their membership of the professionals associations relevant to directorship, such as the IoDSA,” Oosthuizen concludes. ENDS _______________________________________________________________________________________________________ MEDIA CONTACT: Cathlen Fourie, 012 664 2833, [email protected] For more information on the IoDSA please visit: Website: www.iodsa.co.za Twitter: @The_IoDSA LinkedIn: The Institute of Directors in Southern Africa group |
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