 The Institute of Directors in South Africa (IoDSA) lays out five key trends for boards and directors to focus on in 2023. Parmi Natesan, CEO of the IoDSA argues that boards need to begin planning their agendas for 2023 to ensure they are on top of these trends—and that their members have the requisite skills to fulfil their duties. “Short-sightedness is one of the most damaging traits in directors, so companies must ensure that directors have the knowledge and skills necessary to embrace these trends and create a sustainable future for the company,” she says. The five disruptive trends are: Less time, more pressure. Businesses have to respond fast to a rapidly changing global environment that is increasingly automated - directors are under increasing pressure to take important decisions rapidly. The chair’s role becomes even more critical in striking a balance between facilitating an inclusive exchange of views while preventing unprepared directors or individual agendas to hijack or prolong the board’s deliberations. By the same token, directors must be properly prepared to make decisions on agenda items. Less paper, more AI. Boards will specifically need to acquire the skills to interpret real-time data accurately in order to incorporate it into their decision-making process. They can no longer simply base their deliberations on the board pack but will need to ensure that artificial intelligence (AI) is effectively used to process large amounts of data to deliver relevant insights. In a similar vein, directors will need to allocate resources to streamline business processes within the company using AI and other Fourth Industrial Revolution technologies. Less focus on operational issues, more oversight. The traditional view that extensive operational or managerial experience makes for a good director must now be discarded once and for all—directors need a distinct knowledge base and skill set. “Continuing learning is vital. The IoDSA’s advice is to plan training topics into the meeting calendar for the year and, if necessary, integrate training sessions into the board’s or committee’s meeting agenda,” Ms Natesan says. “The IoDSA can help by providing this phased and structured learning via two-hour snapshot training sessions.” Less stability, more agility. Today’s world is volatile, uncertain, complex and ambiguous (VUCA), with economic and geopolitical issues more intertwined and harder to interpret than ever. Long and complex supply chains also expose companies to contingent risks and thus require extensive planning to ensure alternatives are in place. In this VUCA world, the ability to respond rapidly and strategically is critical. Less greed, more green. Environmental issues, including but not limited to climate change, should be prominent on the board agenda for a multitude of reasons. Directors need to have the skills not only to understand these complex issues but also how to measure and report credibly on the company’s progress in meeting its environmental targets. ENDS MEDIA CONTACT: Stephné du Toit, [email protected], 084 587 9933, www.atthatpoint.co.za For more information on the IoDSA please visit: Website: www.iodsa.co.za Twitter: @The_IoDSA LinkedIn: Institute of Directors South Africa Company Page Facebook: Institute of Directors South Africa
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Recent boardroom dramas reveal some common issues with which directors need to come to grips. By Sikkie Kajee CD(SA), facilitator at the Institute of Directors in Southern Africa (IoDSA)
A recent training session I conducted at the IoDSA highlighted a few common issues that seem to be causing boards a lot of problems. During the session, we looked at five companies that had or are still undergoing some turbulence, in order to learn from their experiences. While each one of them obviously had their own specific dynamics and personalities, it became fairly easy to discern some common challenges that the boards of these respective companies faced. I would like to highlight three such challenges in this article because, in my experience, they are particularly relevant to South African boardrooms. The need for courage The IoDSA has been highlighting the need for corporate leaders to be courageous for some years now. But the notion of what kind of courage directors need to show is more nuanced than one might expect. The obvious requirement is for directors to ask the hard questions, not to be afraid of ruffling feathers and to be prepared to put forward a view that they believe to be in the best long-term interests of the company. Very often, this could mean advocating decisions that make the company money or provide advantage in the short term but potentially compromise its future. This kind of courage must be exercised within the framework of the collective, and this is not always an easy balance to strike. There is tremendous pressure to go with the group, especially as a divided board is never a good thing for the company. Here’s where the second kind of courage comes in, call it “the courage to be independent”. It comes with none of the drama associated with the courage outlined above. I am talking here about the courage to do your own thinking, to give the company the benefit of your thought processes. This is probably what the overworked phrase “exercising his or her mind” really means. It depends on retaining true intellectual independence, examining the board packs critically, and resisting the temptation to be swept along by the accepted narrative or status quo. Humans are storytellers by nature, and everything we say or do advances a particular story, or view of reality. For a director, the courage to be independent is to remember, at all times, never to surrender to the dominant narrative, be it around the boardroom table or more generally. Striking the right balance of power It was clear from the various cases studies that there needs to be a correct power relationship between several of the governance role-players. The first, and this is particularly evident in the public sector, is between shareholder and board. The State, as sole shareholder, often compromises board performance and effectiveness by making appointments based on political considerations rather than skill, experience and probity; some of our parastatals are hamstrung by ineffective boards whose members do not necessarily have the skills to direct and oversee massive enterprises, and who are potentially distracted by political wrangling. In particular, when the shareholder appoints members of the executive team, their loyalties are divided. This overreach by a powerful shareholder can also be a factor in the private sector. Another potential imbalance of power can occur when a Chairman is able to dominate the board, effectively shutting down all voices of dissent. This is a particular challenge when a charismatic, respected company founder takes on the chairmanship late in life. One of the case studies also highlighted the way in which a powerful CEO can unduly influence the board, at least for a time. Indeed, CEO-Board conflict is a hallmark of several of the case studies. Finding the right Chairman is absolutely critical. Appointing directors of the right quality Ultimately, of course, it all comes down to the skills, professional and personal, that directors bring to the table. Establishing what skills a director actually has, and how committed he or she is to ethical action, is something that is hard to ascertain in an interview. This is why the IoDSA is putting so much effort behind independent facilitation of board appraisals and the establishment of a formal designation for directors, the Chartered Director(SA), or CD(SA) designation. By professionalising the boardroom role, the IoDSA is enabling the skills of directors to be evaluated objectively and expertly, as well as providing ways for directors to expand and update their skills through director development and other initiatives. Even more importantly, becoming a CD(SA) would entail formal acceptance of a professional code of ethics and disciplinary code as well as the ability to revoke the designation under certain circumstances. In conclusion, there is no doubt that directors face numerous challenges when it comes doing their jobs. At the same time, though, just understanding what the challenges entail can be half the battle won. 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 |
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