The Institute of Directors in South Africa (IoDSA) has released a research report investigating the processes for recruiting, selecting and appointing non-executive directors in South Africa. The report is structured to offer practical assistance to prospective non-executives who want to understand what organisations are looking for, and what the processes leading up an appointment are. It also offers guidance for nominations committees.
Dr Ven Pillay, an IoDSA member and the main author of the report, says that the processes by which organisations fill non-executive board positions need to be made more transparent, especially when selecting independent non-executive directors. “The place to start is the nomination committee, which has a critical role to play in ensuring the credible composition of the board through an open, transparent and formalised appointment process; a process that needs to be adhered to without undue influence from dominant members of the board or executive, political parties, or anyone else who seeks to have a strong influence over the decisions of the board” she says.
A key finding of the report is that organisations still rely heavily on internal networks to source non-executive candidates: 75% of respondents use the current board’s network, while 48% rely on personal recommendations from the executive committee or other trusted sources.
It seems that boards continue to favour this approach because of the need to ensure a good cultural fit but it makes it hard for them to achieve genuine diversity.
“Board appointments are generally understood to be unattainable without the support of influential social and/or political networks; the lack of access to these networks creates a barrier for new entrants who may have a meaningful contribution to make to the effective functioning of a board,” Dr Pillay comments. “There is a new cohort of potential directors waiting in the wings, and companies must seek out and appoint active, independent, ethical, knowledgeable and skilled directors who exhibit diversity of thought and experience, and demonstrate courage in the board room. None of these qualities are negotiable!”
Vikeshni Vandayar, Executive: Governance and Corporate Services, IoDSA, says that the research should be seen within the context of the IoDSA’s ongoing efforts to improve governance in South Africa and to create a bigger pool of qualified candidates for non-executive roles.
“As the Dudu Myeni case shows, the quality of an organisation’s non-executive board member has a direct impact on its sustainability. This report goes a long way towards unpacking what boards are looking for and how they go about filling these positions, and it is complemented by the IoDSA’s one-day training ‘So you want to be a non-executive director’. In response to demand from our members, we will also soon launch one-on-one coaching for would-be non-executive directors,” Ms Vandayar says.
The IoDSA NED Nomination Process Research Report is available at here.
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