JUL | AUG | SEP 2013
A VIEW FROM… Lucky Phakeng
AFRICAN CULTURAL TRADITIONS
Is there a place in the workplace?
CORPORATE GOVERNANCE IN BRICS
A comparative look at business ownership
CONTENTS 03 06
An IoDSA View | Ansie Ramalho, Chief Executive, IoDSA Editor’s Note | Jeremy Maggs Cultural traditions in the workplace – is there a place? | Andrew Smith
Doing good versus doing good business | James van den Heever
The integrated report: new international guidance | Leigh Roberts
To BEE or not to EE; that is the question | Jeremy Opperman
The ego has landed | Samantha Du Chenne
Corporate governance and ownership – A BRICS comparison | Andrew Smith
A view from Lucky Phakeng | Andrew Smith The POPI Bill – what you need to know | Dario Milo and Greg Palmer
Social media – What are directors’ responsibilities? | Rosalind Davey
From the Training Room | Linda de Beer
IoDSA FAQs | Angela Oosthuizen
Report Back: IoDSA Events
Cars – Passion runs deep | Chris Riley
Travel – 4 hours in Casablanca | Ramsey Qubein
King Free | Jeremy Maggs
Publisher: Richard Lendrum Editor: Jeremy Maggs Managing Editor: Debbie Bassa email@example.com Layout: Ruhan Gudmanz Production: Mabel Ramafoko Divisional Director: Ros Modlin A division of Future Group (Pty) Ltd
Directorship is published by Future Publishing (Pty) Ltd PO Box 3355, Rivonia, 2128 No 9, 3rd Avenue, Rivonia 2128 Telephone: (011) 803-2040 Fax: (011) 803-2022. Opinions expressed in Directorship are not necessarily those of the publishers. Permission to re-publish any article or image or part thereof must be obtained in writing from the publisher. © Future Publishing
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Leadership: the realism of idealism Office Bearers Patron Basil Hersov
eadership is essentially a romantic word. It evokes images of heroes like Nelson Mandela, Helen Suzman, Martin Luther King and Winston Churchill who are all icons of inspirational leadership. We stand in awe of their accomplishments. We want to emulate their leadership and aspire to their lofty ideals. With so many excellent examples in history one would have thought that we would have the leadership thing buttoned down. The academia has deconstructed the concept into measurable elements that has been written about ad nauseam. It has been the topic of more speeches than perhaps most other subjects. So, while we have examples of excellent leadership, why is it not more prevalent? A piece in the Saturday Star 1 gave me reason for pause. The article covered Dr Mamphela Ramphele’s endeavours to found a new political party and refers to her excellent track record and credentials. And here comes the kicker: One of the political commentators quoted in the article contends that Dr Ramphele’s endeavour was fraught with difficulty in that she was taking the moral high ground while political battles are, according to the commentator, not fought on morality. Morality is, apparently, not top of the agenda for voters. The article states that the very thing that drove Dr Ramphele into taking action – idealism – could be the cause of her downfall. If the commentator is correct – which my gut tells me he is, generally speaking, if not in the case of Dr Ramphele – then it could be that well-intended, idealistic leadership efforts may very well be ship-wrecked on the shores of reality. Perhaps the answer lies in being more pragmatic about leadership so that it can be more effective and have more of an impact. Perhaps the realities leave us no option but for governments to sanction torture in the name of public safety; that parliaments should adopt legislation in terms of which those who stand up for the truth can be prosecuted. Maybe reality also dictates that boards should approve CEO remuneration packages that are more suitable to recognise the abilities of those who can 1
President Reuel Khoza
walk on water than mere mortals. After all, the company may stand to lose its CEO to a competitor which is prepared to pay an even more excessive package. Pragmatic it may be, but none of this is even reminiscent of the inspiring magic that the Mandelas of the world have spun. My whole being comes into revolt against such a pale, emaciated version of leadership. Am I being naive? Probably. However, it will not stop me from believing that there must be an alchemy that involves both idealism and realism, and which transforms into effective leadership. I believe leadership, like almost everything else on earth, consists of a yin and a yang – perfect balance. Disrespect the realities and idealism will come to nought. Disrespect idealism and the leadership quest lacks vision and inspiration. Back to the article that spurred this line of thought: If morality is not the issue that appeals to the followers, what are the implications for leadership? Honestly, I do not know. What I do know is that leadership is a neutral concept. It can be either good or bad. Morality is the ingredient that gives direction to leadership. But then, morality has also become a tricky concept that does not necessarily hold the same meaning for everyone. Integrity may be the more workable term. It is often used synonymously with morality, but its meaning entails an additional dimension of being complete and undivided. To be a leader of integrity implies that the self cannot be separated from the leadership efforts. I think that is what some, including Dr Reuel Khoza, are referring to when advocating the case for authentic leadership. Michael Jackson said it well: I’m Starting With The Man In The Mirror I’m Asking Him To Change His Ways And No Message Could Have Been Any Clearer If You Wanna Make The World A Better Place If leadership is to be defined as the quest to effect change (which I think is accurate) then it must start with the self. So let us take it from there and somehow, I think, we will find that the self is the archetype for the society we may wish to lead– a sound grounding in reality indeed. C Ansie Ramalho
Saturday Star, Insight supplement: We can rule in coalition - Ramphele, 4 May 2013
First Vice-President Mervyn King Vice Presidents Roy Andersen, David Brink, Pam Golding, Bertram Lubner, Ronald Lubner Directors Non-Executive Richard Foster (chairman), Venete Klein (vice chairman), Prieur du Plessis, Yolan Friedmann, Sathie Gounden, John Kelly, Khutso Mampeule, Marichen Mortimer, Muhammed Seedat Directors Executive Ansie Ramalho (Chief Executive), Angela Oosthuizen (Chief Operating Officer) Regional Chairmen Sonny Ako-Nai (KwaZulu-Natal), Nico Henn (Western Cape) Offices National Office email@example.com Tel (011) 430 9900 Fax (011) 444 7907 Western Cape Branch firstname.lastname@example.org Tel (021) 715 3757 Fax (021) 715 3762 KwaZulu-Natal Branch email@example.com Tel 082 495 9596 Fax (031) 266 5196
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Unhappy ancestors around the boardroom table
rue story from the hallowed boardroom of a JSE-listed top 40 company: No names are used to protect the cultural sensitivities of those involved. A particularly large deal was going down. Tempers were frayed and the rosewood table was strewn with empty coffee cups and other detritus of corporate warfare. At a crucial point of decision, one of the black board members (MBA big American business school) quietly suggested things weren’t going well because the ancestors were unhappy. He told me he made the comment partly to lighten the mood, but also because he felt something bad in his cultural DNA. Others might call it a sixth sense. Anyhow he was roundly turned upon by his paler colleagues who were less than complimentary about his heritage. He didn’t take it seriously at the time, mainly because everyone was tired and irritable. He self-deprecatingly changed the subject and everyone segued into another conference call. It was only weeks later on the 10th tee that he recounted the story to me and wondered if those in senior management had a proper understanding of cross cultural nuance and what role it might play in business in South Africa. It’s a tricky area and we open the debate on the subject in this quarter’s edition of the magazine. We hope it leads to some searching questions being asked around your rosewood table. Now here’s the point where I introduce myself. I’ve taken
over as editor of South Africa’s premier tool of communication to the community of directors. While I’m principally known as a broadcaster, I’m also the director of a small media solutions company. I understand fully the issues and the daily fight for survival and I’ll make sure the title continues to articulate the problems and open debate, not for debate’s sake but to find real solutions to real directorship issues. Thanks for having me. Also in this issue – one of the most comprehensively covered points in King III is that of ownership. The BRICS alliance opens several opportunities for South African companies wanting to do business in or with those countries. We’ll look at the most salient points of ownership under corporate governance across the five countries and the strong views of Guy Taylor, of the BEESA Group, on how BEE should have contributed to ownership in South Africa, but in many ways has failed. And we take great pleasure in introducing you to the Takeover Regulation Panel Executive Director Lucky Phakeng. Lucky who, aside from being a serious professional dedicated to his work and both the regulatory and takeover environments in South Africa, is filled with a wry sense of humour. You need one in these tough times. It’s hard not to grimace when one says Rand or Bond market. C Jeremy Maggs
Cultural traditions in the workplace – is there a place? Andrew Smith
In a country comprising numerous cultures it is essential that people representing these cultures are able to work amicably – and profitably – to the benefit of the businesses in which they are employed. Whether this is achievable or not is the question. Directors need to take cognisance of the fact that individual cultures are important to each, and a diversified workplace can be the detriment of a business.
t’s been almost 20 years since South Africa was born into democracy. Minister Trevor Manuel recently took flak from his superiors when he publicly stated that there is no longer an excuse for incompetency in government or black business. However, the question is: ‘Is some of this incompetence because, in part, African cultural traditions, followed by some SA managers, do not complement business?’ Extreme example It is blatantly obvious that some traditions interfere with good business competence, even just plain business sense. A perfect example is the recent double digit deaths of initiates at initiation schools in Mpumalanga. Whether the schools are legal or not is not the point. The point is that our ‘educated’ and ‘competent’
MEC for Health Candith Mashego-Dlamini refused to intervene in this absurdity because ‘a woman cannot intervene in traditional matters’. Good cultural traditional adherence – yes! Good business sense – no! Redi Tlhabi, show host on Talk Radio 702, said on air: “…Is it not the minister’s job to uphold the constitution? Our constitution must take precedence over cultural traditions and practices.” Well said Redi! It shows the difference of opinion between two high-profile black women when it comes to culture vs. business. However, for the purposes of this article one needs to ask: Do South African Euro-centric or Western-based business practices have place for African traditions and customs? The answer, I’m afraid, appears to be blurred. The example with the minister is extreme, but proves that seniority in the workplace
An acknowledgement that understanding, facilitated through an open mind and education, is key to acceptance.
and sound business decisions can be negatively affected when incorporating traditional African customs into what is clearly a non-traditional role. But if we forget the extremes and focus instead on middle ground, there is no sound reason why at least some traditions cannot be accepted. Acceptance is key A common thread among opinions sought seems to be acceptance; and an acknowledgement that understanding, facilitated through an open mind and education, is key to acceptance. “Bringing cultural beliefs and values into a westernised business model is achievable, but will be difficult,” points out African Response Managing Director Mamapudi Nkgadima. “South Africa is, unfortunately, still racially divided and gaps between races make things difficult. Simple things such as an office meal can exclude or even offend some people. Cultural understanding can overcome this.” Nkgadima feels the only true areas of traditional culture still in effect are Lobola and funeral practices. “Most other traditions are being held onto by those not wanting change or understand societal evolution.” She says that funerals play the largest burden on corporate South Africa. “This can be easily resolved by an understanding on each participant’s part.” Employers need to understand this important cultural heritage while employees need to understand the basic principles of productivity and profit. “Finding common ground is essential, as is an understanding between the parties – an understanding that community issues are important and an understanding of the effect of these issues on business is necessary. Once these values are understood by both parties, we begin to establish common ground.” Tabea Magodielo, APSO President, is of the opinion that there is already an attempt to integrate African tradition into business. “This is seen through the incorporation of Ubuntu. Essentially, people are a product of their environment and individuals take their belief systems and values to work. Business needs to find ways of accommodating this, and vice versa. In this way the work
environment becomes a place where we can co-create a new reality.” With co-creation each of us brings a part of ourselves into the space, she says. “Between us, definitions of acceptable and nonacceptable are co-created. We need to redefine things together, not from the top down or bottom up. Co-evolving of a reality in the workplace calls for an open mind and an understanding that we can learn from one another.” Customs respected Almost leading on from this is the view of Ros Modlin, Director at The Future Group and HR professional, who says that what is of importance is that customs are respected in the workplace and consistency is applied across all cultures. “Any intelligent management mind-set takes cognisance of the fact that its employees do not operate in a vacuum. Respect for different cultural and religious beliefs that employees hold must be respected. However, in a country such as ours where there are vastly different cultures, formally acknowledging them all could possibly lead to an unproductive workplace.” She sites religious holidays as an example. Religion and culture, in many societies, are intertwined and each comes with strong traditions that are not always necessarily understood by others. Anglo American’s Corporate Division seems to be on the right track to facilitate awareness of various religions among employees. In 2011 it launched a diversity programme ‘Knowing Me, Knowing You’. “The programme,” says Anglo American’s Head of Transformation and Regulatory Affairs Lindiwe Zikhali, “seeks to deal with the broader issues of diversity in the workplace. We began on the premise that people can’t appreciate diversity without the necessary awareness being created.” Four religions practised in SA were selected and, for each religion, two main ‘religious holidays’ were identified to be used to create awareness among employees about each religion, focusing on the meaning, significance and history of the ‘holiday’. South African public holidays are also used to highlight their origins and relevance.
While it is imperative that individuals focus on performance and self-improvement, our belief in Ubuntu almost reverses this.
Proudly African She is of the opinion that some euro-centric business codes, dress codes for example, do not help achieve acceptance. “It is necessary to understand that while euro-centric business models have helped build South Africa’s economy, now is the time to recognise that certain euro-centric practices need to be a thing of the past. We need to be proud of being African! It is possible to dress for work while retaining traditional attire, should that be your preference. Clothing, religion and certain values are a starting point to facilitate understanding that can bring certain African traditions into profitable and sustainable businesses.” MD of the Black Management Forum Nicholas Maweni points out that one cannot legislate ethnical behaviour in order to find a place for it in the work environment. “Legislation,” he says, “would lead to either lack of communication or lack of understanding.” He also points out that there is a general misunderstanding that white people need to become cognisant of black people’s cultures and accommodate them.
A different culture “I look at traditions from a broader perspective,” Maweni says. “For example, the South African employment culture is vastly different to non-African business societies. While it is imperative that individuals focus on performance and self-improvement, our belief in Ubuntu almost reverses this. “Another aspect which some people refer to as ‘culture’ but has no place in the boardroom or workplace is the simple belief of: ‘I have spoken therefore I have contributed’. Most of the time there is no contribution – just repetition. It is a challenge to achieve understanding that business in the workplace is business and some cultural behaviours and beliefs simply cannot be accommodated.” A point in hand is, culturally, women’s lack of authority. “Change in attitude is imperative,” Maweni says, “although we must not ignore our African heritage. In fact our ‘Africanism’ can become the draw card needed to crack the markets. The West is looking to Africa for business and developments. China has grown to what it is by doing things the Chinese way – and the Chinese
11 culture is respected. It is possible to achieve this in South Africa without negatively affecting business. We need to do business the way business should be done, but if we don’t bring in acceptable African cultures or heritages we will lose our soul – our DNA. “Many South Africans seem to misunderstand the Rainbow Nation concept. Too many people see the ‘rainbow nation’ as a melting pot. However, a rainbow is made of different colours, they are not combined. Each colour contributes to the entity, but if they had to mix the effect wouldn’t be the same. In the same way, South Africans are culturally diverse and unique. We cannot combine them willy-nilly, but we can all contribute to make a productive and influential whole where all prosper. Conflicting interests HR consultant, John Dickerson agrees that problems accommodating different cultural practices in the workplace exist. It is essential they are resolved if South Africa is to succeed as a serious player in the world economy. However, debate that this topic creates is focused mostly on the symptoms which, in many cases, are peripheral. He refers to a book by Dr Fons Trompenaars: Riding the Waves of Culture-Understanding Cultural Diversity in Business(1993). Trompenaars defines culture as ‘the way in which a group of people solve problems’. It is these differing ‘ways’ that produce overt and recognisable different cultures. There are five orientations covering the way people deal with each other: • Individualism vs. Collectivism: Do people regard themselves primarily as individuals or as part of a group and consider the collective first? Most white business leaders here encourage individual freedom and responsibility . In collectivism, group activity is preferred as is representation of the group by more than one person (e.g. mass meetings, service delivery protests, strong resistance to individualised performance reward schemes and preference for equal payment). • Achievement vs. Ascription: In a goal-driven organisation individuals are judged on recent accomplishments (achievements and track record). In some societies status and leadership are conferred by birth, kinship, gender/age and connections (e.g. seemingly unsuited individuals elected as leaders or representatives; objections to young managers and women; and nepotism). • Universalism vs. Particularism: Managements create universally applied policies and rules regardless of special relationships. For particularists, considerations are given to relationships, and friendship may come first (e.g. demanding a colleague’s reinstatement). • Neutral vs. Emotional: Should the nature of interactions at work be objective and detached or, should these include the full gamut of emotions from loud laughter and singing, to anger, tears and violence (strike and protest behaviour). • Specific vs. Diffuse: Most local management supports the notion that business relationships are all about achieving objectives and prescribed by a contract. In diffuse thinking a close and personal relationship is required and cultivated.
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Most managers in our economy have been exposed to the Northern European and USA Business School management models. They view many overt manifestations of cultural traditions by employees, and politicians, as an assault on their business success philosophy. They don’t have sufficient insight to find compromise and solutions. The South African national political tapestry is a factor that also has to be taken into account. Because the groups that comprise the Tripartite Alliance are also strong protagonists of cultural tradition and practices, corporate managements tends to view cultural traditions as part of a socio-economic contest. They find themselves in between capitalism and socialism, resulting in resolution of the cultural practices issue itself being placed on a back burner and taking longer to find a workable solution than would otherwise be the case. Conclusion It appears that patience, tolerance, facilitated understanding and ultimate acceptance is the way to go. How long this may take is anyone’s guess – if it ever materialises at all. What is of certainty is that our beloved country has greater diversity between cultures than perceived at first glance, and a continued work in progress is necessary if South Africa is to move forward and play a constructive role in the African, and world, economies. C In Summary ZZ There is place in the workplace for cultural traditions, but within reason. ZZ Acceptance is key, and understanding is necessary for acceptance. ZZ There needs to be a move away from Euro-centric business practices. ZZ Ubuntu can be either positive or negative. ZZ Some practices can be unproductive. ZZ All employees need to be involved.
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Doing good versus doing good business James van den Heever
Two sides of the same coin or opposing aims to be carefully balanced? The IoDSA’s Sustainable Development Forum hosted a round table in this regard.
outh Africa shows all the signs of a society under enormous strain. The most obvious manifestations are the increasing number of protests by citizens and their escalating violence. At the time of writing, Gauteng’s Commission of Policy Mzwandile Petros was in the news to say that the Province had endured 560 protests between 1 April and 10 May 2013. A policing challenge with which, he said, the province simply could not cope. The disruptions caused by social protest provide a graphic demonstration of the business value of social stability. Against this backdrop, it is hard to imagine that there can be a South African CEO or board of directors that does not acknowledge this. It is, after all, a key tenet of King III (and other codes) that business is part of society and must, therefore, see its role as wider than just simple profit generation. Value should no longer
be measured purely by profit! It needs to be recognised that there are many other components to value. If the financial crisis of 2008 has taught us anything, it must be that short-term strategies can compromise long-term survival and thus can actually destroy value. Position paper So much for the theory. Putting it into practice is, as is usually the case, problematic. In an effort to help directors understand the dynamics of social sustainability and make it work for them, IoDSA’s Sustainable Development Forum recently launched a position paper entitled ‘Finding business value in social sustainability’, which was the subject of a recent round table. The paper describes social capital as one of the six types of capital a company needs to provide its goods and services.
Corporate social investment is pernicious because it gives companies an excuse to continue with business as usual.
(The others are financial, manufactured, natural, human and intellectual.) Social capital speaks to the resilience of the society on which a business depends. Building up this social capital means moving beyond conventional philanthropy which may leave a company and the beneficiaries of its largesse feeling good, but actually does not confer long-lasting benefits to either party. Social sustainability integration Speaking at the position paper launch, Christine Williams, a member of the Forum and a partner at Tyler Mangan Consulting, said that to build social capital companies had to integrate social sustainability into their corporate strategies. Business has to draw on what society offers, and when it does it depletes its social capital. This capital must be repaid or conflict results, said Paul Kapelus, a director of Synergy and also a member of the Forum. “Business needs ‘permission’ from society to operate, and it gets that permission from how much it contributes to building society.” There’s the rub… Sim Tshabalala, joint CEO of the Standard Bank Group and Chief Executive of Standard Bank of South Africa, said that he wrestled with how to create the right model for integrating social sustainability into the business model. A bank is an organ of society in that it helps people create and preserve wealth. By enhancing dignity through economic activity it could be said to be building up society in the normal course of its business. “Corporate social investment is pernicious because it gives companies an excuse to continue with business as usual,” he said. “The real challenge is to find ways for a company to fulfil its duty to society while doing its own business.” Tshabalala expanded his point by citing the example of the so-called ‘food corridor’ in Southern Tanzania. Corporate social investment could be used innovatively to get bankers to provide capital and other financial services to members of the agricultural value chain in the area. This type of approach, he believes, harnessed the real value of business to the building of social capitalrather than simply throwing money at the problem. Long-term needs ignored The fundamental premise of this rather iconoclastic view is that to deliver maximum value to society as a whole, business is
best advised to confine itself to what it knows. It’s a similar point to the one made by those who say that Bono and his ilk actually exercise a malign influence because they wield huge influence in areas outside of their core competence. Projects created using this model are typically prompted by the concerns of the celebrity or company official who initiates them, and do not take into account society’s long-term needs. This view was tacitly supported by Kapelus, who said that business was fundamentally not geared to do development that was something that should be left to governments and non-governmental organisations. Business could only make a real impact if they harnessed the power of the market. For example, the development of treatment for multi-drug-resistant tuberculosis was swift because there was a profit motive for pharmaceutical companies. “The empowerment charters have prevented business from acting intuitively,” he said. The implication is that by setting parameters, government actually inhibits companies from integrating social sustainability into their strategies rather than encouraging them simply to comply with the charter. Indeed, the possibility of companies coming up with new ways to create value through social sustainability initiatives is eliminated. The measurement dilemma When companies assess their efforts to build social capital they need to measure the impact they have had on society in terms of what they have taken from it and what they have put back. This is clearly more useful than simply computing how much money was spent. However, this type of qualitative measure is extremely hard to achieve: the various parties have different interpretations of what should be measured, and even the value scale differs. Clearly, a shared understanding of what should be measured, and how, needs to be created, although it is far from clear how this could be achieved. In absence of measurement, as one questioner from the floor implied, companies simply need to be both bold and ruthless, for example, ploughing money and effort into a functional school rather than wasting it on one that is already dysfunctional. These and other issues will take time to resolve to each company’s satisfaction. What is clear is that it will be effort well spent because the experience will help to attune the company better to the environment in which it exists, with positive spin-offs when it comes to mitigating risk, designing successful products and, even, attracting a higher calibre of employee. C
The integrated report: new international guidance Leigh Roberts, Project Director: Integrated and Sustainability Reporting, SAICA
he IIRC released its ‘Consultation Draft of the International Integrated Reporting Framework’ (the Draft Framework) on 16 April this year at launch events in 15 countries. Six of them were held at stock exchanges including NASDAQ and the JSE. The Draft Framework is open for public comment until 15 July, with the final Framework expected in December 2013. Thereafter, it will be periodically updated as integrated reporting evolves. The Draft Framework and online consultation questionnaire, along with a very useful ‘c-suite’ brochure ‘Business Leaders: What you need to know’, are available at www.theiirc.org. The slide presentations and documents from the South African launch, – jointly hosted by the IIRC, the Integrated Reporting Committee (IRC) of South Africa and the JSE– are available at www.sustainabilitysa.org.
The board is responsible for corporate reporting. This is accepted. Directors should be aware, however, of the special mention they garner in the latest integrated reporting guidance from the International Integrated Reporting Council (IIRC).
Throughout the Draft Framework there is reference to the role of the board in the preparation of the organisation’s integrated report. Oversight responsibility The Draft Framework requires that an integrated report disclose the ‘governance body’ with oversight responsibilities for integrated reporting. This is against the backdrop of the board’s ultimate responsibility for ‘how strategy, governance, performance and prospects lead to value creation over time’, and ‘ensuring there is effective leadership and decision-making regarding integrated reporting’. Disclosure of the responsible governance body in the integrated report is a requirement. In a bold departure from previous
The co-creation of value is an accepted reality.
iterations, the Draft Framework imposes a set of principlesbased requirements if an integrated report purports to have been prepared in accordance with the IIRC Framework. On the plus side, having a set of requirements can aid comparability, quality and, hopefully, the assurance of an integrated report. But critics may shout about the resulting risk of ‘tickbox compliance’ and the actual need for requirements when the Framework is about principles. There will certainly be hot debate about what a requirement is and what should be a requirement. One of the hot debates will, no doubt, be around a statement from the governance body in the integrated report – which is not a requirement but an option. However, should a governance body so desire, the Draft Framework readily serves up what such a statement could say: • An acknowledgement of its responsibility to ensure the integrity of the report. • That it has applied its collective mind to the preparation of the report and the information it contains. • Its opinion or conclusion as to whether the report is presented in accordance with the Framework. In the South African Discussion Paper released by the IRC in January 2011, a statement from the board was mandatory. Should a statement be a requirement in the Draft Framework given that directors are responsible for corporate reporting? Target audience There is sure to be a wildfire debate around the target audience of an integrated report. The Draft Framework states that the report should be ’prepared primarily for providers of financial capital in order to support their financial capital allocation assessments’. This is a requirement and, as such, could raise concern among organisations that follow the stakeholder inclusive approach per King III. The debate, however, is more complex than a first read implies. The requirement cannot be read in isolation; it needs to be understood in the context of the Draft Framework’s three intertwined fundamental concepts of capitals, business model and value. The concepts acknowledge that different forms of capital collectively contribute to an organisation’s ability to create value over time. There are six categories of capital – human; intellectual; manufactured; financial; natural and; social and relationship – that an organisation commonly uses and which affects (both positively and negatively) its business activities
and outputs. The co-creation of value is an accepted reality. It is acknowledged that while the providers of financial capital (investors) focus on value in the form of financial returns, these returns are ‘dependent on inter-relationships between various types of capital in which other stakeholders have an interest’. So, can one infer that what is important to one key stakeholder is likely to affect other stakeholders? And that if so the overall effect being that the material interests of all key stakeholders are considered by a company in telling its story of value creation? Is the target audience debate then just a case of asking the IIRC to mean what it says and say what it means? Material or not The investors versus multi-stakeholder tussle pops up again in the Draft Framework’s process of determining materiality. The definition of materiality is: ‘A matter is material if, in the view of senior management and those charged with governance, it is of such relevance and importance that it could substantively influence the assessments of the primary intended report users with regard to the organisation’s ability to create value over the short, medium and long term’. In other words, it is what is material to investors only. However, is completeness ensured through the circle of cocreation? Identifying the role of those charged with governance in the organisation’s materiality determination process is also a requirement. It is an important requirement as materiality is the filter through which matters, events, information and issues make it into the integrated report or not. And the board will surely want to play an active role in deciding on the content of a report that goes out in its name. Although it is not stated as a requirement, the board itself is tasked with ensuring that the identified material matters are ‘appropriately disclosed given the specific circumstances of the organisation’. Importantly, this includes the application of ‘generally accepted measurement and disclosure methods’. Another requirement regarding materiality is disclosure in the integrated report describing the process of determining materiality. This is crucial information as it enables report users to assess the completeness of the filtering process (and possibly whether the board is eyeing the right issues). The Draft Framework calls for the board, along with senior management, to exercise judgement in deciding whether information is sufficiently reliable to be included in the integrated report. (Specific disclosure is required when material
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information is omitted because of the unavailability of reliable data.) The need for judgement is also acknowledged when applying the Draft Framework’s guiding principles. Report content There are six guiding principles: strategic focus and future orientation; connectivity of information; stakeholder responsiveness; materiality and conciseness; reliability and completeness; and consistency and comparability. The definition of each principle is stated as a must-do requirement. The principles guide both the content of the integrated report and how the information is presented. The report content is structured around seven content elements (which can be freely ordered to suit the organisation): organisational overview and external environment; governance; opportunities and risks; strategy and resource allocation; business model; performance; and future outlook. Each content element is stated as a question that is to be answered in the report in a way that expresses the organisation’s unique value creation story (which is where the board’s judgement comes into play). Each of these questions is a requirement. Accountability The Draft Framework explains how an integrated report enhances transparency and accountability. Accountability is closely associated with stewardship and the responsibility of an organisation to care for and use responsibly the capitals that its activities and outputs effect. The integrated report shows, transparently, how the company is responding. It has been said that an integrated report –as a concise communication that is understandable – can assist with accessibility and hence, accountability. A board may want to consider what the Draft Framework says about integrated thinking, defined as: ‘The active consideration by an organisation of the relationships between its various operational and functional units and the capitals that the organisation uses and affects. Integrated thinking leads to integrated decision-making and actions that consider the creation of value over the short-, mediumand long-term’. Integrated reporting is very much based on the integrated thinking in an organisation. Of course, some integrated reports have been prepared without it (the report at least covers business model, external environment, risks and opportunities, and strategy but at the risk of being labelled a ‘combined’ report). However, a really good integrated report will be based on embedded integrated thinking in the organisation. The annual integrated report should be a seamless extension of internal reporting and a reflection of the organisation’s practice of integrated strategy and decision-making. In other words, an organisation equipped for the 21st century.C
Leigh Roberts is a member of the IIRC’s Technical Task Force and of the IRC’s Working Group.
If you’re driven to succeed, there’s only one designation to drive you forward Sizwe Nxasana CA(SA) Chief Executive Officer: FirstRand Limited, and avid car enthusiast
A CA(SA) puts you in the fast lane to business leadership.
“A CA(SA) designation gives you the torque and traction to perform in any business. It keeps you up to speed with the hard and fast rules of the corporate world, and hones your finer business skills. This enables you to become a catalyst for positive change. That’s why a CA(SA) will never lead in isolation, but instead have the unique ability to put those around them on the road to success.”
And that’s the difference a CA(SA) makes.
Corporate governance and ownership – A BRICS comparison Andrew Smith
Good corporate governance in countries around the world is increasing as businesses realise it is not merely a ‘nice to comply’, but rather a mandatory matter if they wish to continue business success. Differing models across BRICS shows that, while specifics vary, corporate governance as it pertains to ownership, is essential in businesses and the various economies. Directors wishing to do business within the ambit of the BRICS alliance should familiarise themselves with all the idiosyncrasies in each country’s governance models.
odels of corporate governance around the world differ according to the variety of capitalism in which they are embedded. BRICS member countries are not excluded. The main issues for corporate governance in emerging markets have been identified as: • The nature of legal protection for investors, particularly small minority investors where they exist. • The concentrated ownership of firms and the presence of large investors in firms that are the norm for developing country ownership structures and the consequences thereof. • The extent to which the state owns and participates in private companies.
while the Multistakeholder Model (co-ordinated model) associated with continental Europe and Japan recognises workers, managers, suppliers, customers and community. Internationally, though, an important theme of corporate governance is the nature and extent of accountability of people in the business. Since the high-profile collapses of a number of large corporations at the beginning of the 21st century, there has been a renewed interest in the corporate governance practices, especially in relation to accountability. Notwithstanding whether a shareholder primary or stakeholder inclusivity model is followed, the nature of ownership is one of the largest influences on the development of corporate governance.
Two models The Anglo American Model emphasises shareholders’ interests,
Ownership and emerging markets In emerging markets there is frequently concentrated ownership
and a dominant shareholder, be they an individual, family, institutional investor or a bank. The problem for closely held firms is cross shareholdings holding companies and pyramid mechanisms which dominant shareholders use to exercise control. Many of the BRICS countries, as with most emerging economies, are characterised by a high concentration of ownership and inside investors. With Brazil, Russia, India, China and South Africa having formed this alliance, it is a generally agreed upon assumption that inter-BRICS business will increase. Doing business with international counterparts could become difficult when, legislative issues aside, each has different governance models and different criteria to meet governance requirements. SOUTH AFRICA South Africa has a hybrid corporate governance system in place made up of non-mandatory codes (King III and CRISA [Code for Responsible Investing in South Africa]) as well as legislation – the Companies Act. The King reports are well known for the ground-breaking work that it has done by introducing concepts such as the triple-bottom line and integrating reporting. With its stakeholder-inclusivity approach it has moved away from the traditional Anglo-American model which is premised on shareholder primacy. CRISA, as its name implies, is targeted at institutional investors (pension funds and insurance companies as well as the owners of assets, and their service providers, including asset managers and consultants) and puts in place the checks and balances needed to make this voluntary governance framework successful. Institutional investors hold approximately onethird of the South African equity market. One of the prevailing themes is for institutional investors to look beyond short-term profit to incorporate environmental, social and governance considerations into investment analysis and investment activities, and to report thereon. Individuals indirectly own the wealth King III makes mention of the fact that the investors in the major JSE-listed companies mostly comprise financial institutions, both foreign and local. These institutions are the ‘trustees’ for the ultimate beneficiaries. The man on the street indirectly owns the wealth represented by the equity market through investment in retirement funds. Trustees of retirement funds owe a fiduciary duty to them to be responsible in the investment strategies and practices. This responsibility includes being cognisant of the long-term effect that investment decisions may have on socio-economic decisions and the environment – ESG (environmental, social and governance). Ownership in South Africa is geographically spread and diverse. Companies are categorised between those that
are privately held; those publically traded, and state-owned companies. State and private ownership are generally not combined. Of significance is the fact that our governance system is very mature – South Africa was one of the first countries to adopt a corporate governance code and it is important to note that we were second, after the United Kingdom, to issue an investors code. The JSE requires listed companies to apply the principles of King III or explain if they do not. Some of these principles have been made mandatory. BEE – an influence on ownership under corporate governance? Ownership of companies in South Africa has also been affected through BEE legislation put in place to achieve equilibrium across races in business. Guy Taylor of BEESA Group is of the opinion that it was envisaged that BEE would secure a significant number of black shareholders, thereby diversifying ownership which, in turn, would facilitate a downward cascade making businesses more representative of South Africa’s majority. This did not materialise. BEE stopped at board level. In addition, depending on the type of share agreement, shareholding does not necessarily mean BEE ownership affords a board position or voting power. CHINA There remains considerable state ownership of privately listed companies, and the state or its agents carry out shareholder functions. These would be performed by private owners in market economies. Chinese corporate governance codes do not conform to those of the West – there is CEO-Chairman duality with no independent chairman of boards or directors; directors on boards tend to be affiliated and not independent of management. Loan bias State-owned firms have a preferential access to finance from state-owned banks compared with private firms. There are severe restrictions to bank loans for certain types of businesses, especially privately owned and riskier enterprises. Some of the challenges facing China are: although there is a great number of listed companies, the state is the controlling shareholder; minority shareholders protection; insider trading and market manipulation, and the Supervisory Board has no independence, very little impact, and is composed of representatives elected by shareholders and employees. INDIA Distinctive ownership features include the prevalence of conglomerate business groups involving common ownership and management by family members, and firms are separate legal entities.
In emerging markets there is frequently concentrated ownership and a dominant shareholder.
A key factor influencing corporate governance is that many major companies are still family managed. Therefore, some of the debate centres on how to ensure good governance in family-managed businesses.It must be noted that a corporation in this country is a congregation of various stakeholders – customers, employees, investors, vendor partners, government and society. It should, therefore, be fair and transparent to stakeholders in all its transactions. Reforms to achieve corporate governance post-liberalisation were channelled through various paths with the Security and Exchange Board of India and the Ministry of Corporate Affairs playing important roles. Appropriate recommendations In order to reform Corporate Governance pertaining to ownership, two of the recommendations put forward by appointed committees include: a code called ‘Desirable Corporate Governance’ which criticised nominee directors and suggested dilution of government stake in companies, and revisions to the Companies Act, 1956, in 1999. The Act introduced the provision relating to nomination facilities for shareholders and share buybacks and for formation of investor education and protection fund. In addition, voluntary guidelines on Corporate Governance were issued by the Ministry of Corporate Affairs in December 2009. Among them affecting ownership is that the offices of the chairman of the board and CEO should be separate. The CEOs of approximately half of the top 50 listed companies double up as chairmen and, now, those who want to continue combining the roles need shareholder approval. It is expected that corporate governance norms will evolve because of: growth in Indian financial markets; an increase in public shareholding (25% of a company’s capital), and a proactive role by institutional shareholders in dealings with investee companies. BRAZIL In 2000 there was a legal reform initiative to counter negative consequences of poor governance. By 2007 there were demonstrable consequences of improved corporate governance.
Typically, the largest shareholder has more than 50% interest and direct shareholding, as opposed to shareholding through nominees, which exceeds 60%. Corporate governance is defined by provisions laid out in two laws (corporate law 6404/76, as amended in 2001; the bankruptcy law 11101 of 2005); the IBGC code of conduct; relevant CVM instructions, and the Novo Mercado listing requirements. (IBGC – InstitutoBrasileiro de GovernançaCorporativa[Brazilian Institute of Corporate Governance]; CVM – Brazilian Securities Commission.) RUSSIA Corporate governance usually refers to the comprehensive systems and specific responsibilities by which an enterprise is directed, controlled, and managed on a day-to-day basis. In western countries, or those practising business by western principles, day-to-day management by full-time executives is not covered as it is in Russia. One of Russia’s laws affecting corporate governance is the 1996 Law on the securities market to strengthen corporate governance. It includes the protection of minority shareholders as well as separate roles for CEO and chairman. Because of lax enforcement and failure to protect minority shareholder rights, among others, serious issues remain in practice. For some major companies, relationships with state authorities remain a key concern for investors. These relationships include both direct and indirect relationships through ownership, informal contacts and strategic importance. A huge challenge in ownership is that in state-owned companies the decision-making process is sometimes driven by political goals as opposed to economic feasibility. This is also the case for South African state-owned companies. Serving the masses The fundamental rationale for state ownership in a principally market-based economy is that the company will better serve the needs of a country’s population if it is state-owned and controlled rather than by private investors. With this rationale, the governance and management of state-owned companies should be focused on ensuring that
the companies fulfil their role to the maximum benefit of the country’s population. To achieve this aim, the role of the company and the reason for ownership by the state must be clearly and transparently defined, as should maximum benefit. These definitions should facilitate measurement of how well the company is achieving its purpose. The criteria are likely to be different for each company, although one factor in maximizing benefit for all companies must be using inputs to maximum sustainable efficiency in the creation of outputs. The concept of corporate governance is not exactly the same as we’ve come to know it in Western companies – where it’s focused on broad governance, risk management, and strategic planning. In fact, the Russian translation for governance is closer to ‘control’ and ‘management’ and experts often point out that corporate governance gets into the daily management of enterprises much more so than in the West. There is conflict between minority and majority shareholders, state participation in the corporate sector, and transparency in decision-making. …and lastly Companies wanting to do business in BRICS countries will do well to take these differences in corporate governance models into account when strategy is devised to collaboratively participate in the world economy. Failing to do so may result in unintentional non-compliance with any of these countries’ regulations, which would be unfavourable to the business responsible. C
Sources • Differences in Business Ownership and Governance around the world – Pankaj Ghemawat and Thomas M Hout. • Insights into corporate governance in South Africa – Ansie Ramalho, IoDSA Chief Executive • The Role of Informal Institutions in Corporate Governance: Brazil, Russia, India and China Compared; • National Voluntary Guidelines – India • Corporate Governance in India – a legal analysis • Corporate Governance in Brazil – A trade union perspective • Corporate Governance for non-listed companies in Brazil • Russia and the world – a comparison of corporate governance practices; • Corporate Governance in Russia vs. the world • Corporate Governance and Value in Brazil • ‘The Financial Times Lexicon’. The Financial Times. Retrieved 2011-07-20. • Eugene Fama and Michael JensenThe Separation of Ownership and Control, (1983, Journal of Law and Economics) • 1989 article by Kathleen Eisenhardt (“Agency theory: an assessment and review”, Academy of Management Review) • Crawford, Curtis J. (2007). The Reform of Corporate Governance: Major Trends in the U.S. Corporate Boardroom, 1977-1997. Doctoral dissertation, Capella University. • Steven N. Kaplan, Executive Compensation and Corporate Governance in the U.S.: Perceptions, Facts and Challenges, Chicago Booth Paper No. 12-42, Fama-Miller Center for Research in Finance, Chicago, July 2012 • The BEESA Group, South Africa
To BEE or not to EE; that is the question Jeremy Opperman
How BBBEE has compromised Employment Equity resulting in the marginalisation of Diversity’s most forgotten cousin - Disability.
an companies comply with both the EEA and BBBEE? Theoretically, one would imagine the answer would be yes! The Department of Labour has not rescinded the Employment Equity Act (EEA) nor has it slackened its pressure on companies to submit their EE reports. At the same time all companies and organisations need to, in some way, comply with and work toward populating their BBBEE scorecards if they wish to be competitive. However, the reality is that there is far greater incentive to oblige and comply with BBBEE criteria than EEA obligations. This is demonstrated by the fact that the Department of Labour is becoming increasingly threatening about non-reporting of the latter. Confusion reigns The problem is the frequent referencing of Employment Equity within BBBEE language. Companies are increasingly confused as to which to comply with, or there is an assumption made that by complying with BBBEE, given that it’s Codes clearly quotes ‘Employment Equity’, that it must therefore be compliant with the EEA and its reporting mechanisms.
Unfortunately, the hard fact is that they do not compare or work in concert at all. This article seeks to unpack this constantly overlooked compliance anomaly and, hopefully, will provide some insight and warning against a serious ongoing diversity crisis. Notwithstanding the terminology employed by Statement 300; ‘the general principles for measuring Employment Equity’, the insistence that BBBEE requirements are somehow compatible or work in conjunction with Employment Equity activity is simply incorrect and misleading and highly prejudicial to previous and current EEA obligations. Background Some background is required here. The 1990s were pivotal in Disability Rights History. Many countries began to pay overarching legislative attention to disability rights. These rights issues, of course, are not confined to the individual’s disability alone but highlights and attempts to address the societal barriers faced by people with disabilities, including welfare, housing, transport, health, education and, of course, employment.
At the same time, the United Nations was well on its way to establish what would become the UN Convention on the Rights and Dignity of Persons with Disabilities in 2007. South Africa took part in this global consciousness and made the precedent-setting move of incorporating disability into our first Democratic Constitution of 1996. In 1998 the Employment Equity Act no. 55 was promulgated, and notably incorporated ‘Disability’ as a designated affirmative action group along with black people and women. Importantly, no disaggregation was made in terms of the person’s race. The reason for this is simple; the Constitution and Employment Equity Act recognised that barriers to disability inclusion were not confined to apartheid alone but to historically entrench societal barriers common to most countries in the world. This is amply demonstrated by the fact that even today, white or black students with physical and sensory disabilities are excluded from almost all mainstream education facilities. People of any race with (particularly) physical disabilities are still unable to access the overwhelming majority of public transport and most other facilities and amenities in the public and private sectors. Finally, disabled persons of any race have the highest rate of under or unemployment in the country. ‘…the exclusion of black people with disabilities is a deliberate deviation from the current Interpretive Guide to the Codes of Good Practice 2007’. This extract from Code 300 highlights the deliberate exclusion of the measurement and reporting of levels of employment of (black) people with disabilities. Once again, this is in total opposition to principles and values of the EEA. It amounts to nothing more than an invitation to simply count heads and enter into the worst kind of numbers game. A serious oversight One of the most crucial elements of the Employment Equity Act is that it was identified at the beginning, that an affirmative action mechanism such as those employed by the EEA should never become a simple numbers game, with merely counting the affirmative action candidates. Therefore, careful attention was, and still is, paid to ensuring that levels of employment are taken into account in all EEA reporting. Disability is not excluded from these rules. The seriousness of this oversight cannot be overstated. Historically, people with disabilities have been seen as not being particularly productive in the world of work and, for the most part, have been excluded, resulting in very limited employment opportunity. For generations, this prevailing mindset has set the stage for widespread generalisation and stereotyping. The net result, with few exceptions, is that where the few employment opportunities exist they are invariably at a lower level, often regardless of the training or skill of the disabled individual. By removing the directive to pay attention to levels of employment for disability, companies, when populating their BBBEE scorecards, have no incentive to pay attention to or put effort into altering these stereotypes. Once again, this results in (black) people with disabilities being relegated to the lowest levels of employment, with little hope of change as long as there is a complex compliance mechanism - such as these codes - preventing it.
Compliance obligations opposed The stipulation in Code 200 was that 2% of the workforce must be made up of black people with disabilities. As has been stated above, this requirement works against original EEA compliance obligations in a number of ways. First, the EEA does not demand a specific target to be reached in terms of the employment of persons with disabilities and, if it did, it would have had to include white people within that target as they legitimately fell within the scope of the Act. Secondly, as has been noted above, with little direction or incentive to raise the levels of employment for (black) persons with disabilities, the additional pressure of targeting will simply perpetuate the stereotypic and menial disability employment trends, specifically for black people with disabilities. Finally, Government in 2000, notwithstanding that there were no formal targets or quotas, put out a national goal that, by 2005, 2% of Government’s workforce would be made up of persons with disabilities. It is important to note that white people were included in this goal. Sadly, by 2006 and indeed to the present, less than 1% of Government’s workforce was made up of people with disabilities, drawn from all racial sectors. What this illustrates is that with significantly compromised historically disadvantaged sectors such as disability, quotas and targets alone cannot achieve automatic and equitable inclusion into the world of work where generations of ignorance, prejudice and fear on the part of the employer, have retarded the ability to equitably enjoy the skill, training and right to work of persons with disabilities. Therefore, by fixating on BBBEE requirements in populating their scorecards, companies are forced to disregard good EEA practice of including both white people with disabilities as well as to consider their levels, while they scramble to somehow fill an impossible 2% target. No economic sense This can only result in an increasingly frustrated and discriminated sector. To further, and deliberately, drive a racial wedge into an already weak and compromised sector, which has constitutional and global support and attention, makes no political or economic sense. C
Jeremy Opperman is the founder of Jeremy Opperman & Associates, a disability-owned social enterprise which encourages a holistic and strategic approach to disability inclusion. Jeremy is a founder member of ADiPSA, is involved with several disability institutions, and also on the Board of directors of St Dunstans (SA), WUFSA and APD. He speaks, writes and consults widely on disability-related topics. Email: email@example.com.
8 years, over 80,000 lives changed 2004: we embarked on a journey ... to change the lives of previously disadvantaged South Africans in a meaningful way. Back then, 18% of our executive team was black. We had partnered with a single black-owned IT company. 300 learners either attended our Saturday School or received bursary grants. Our involvement with rural communities was sporadic and limited. Today: 67% of our executives are black. We support 120 small, black-owned IT companies. Many of the 32,000 learners who participate in our Saturday Schools, e-learning initiative and other educational programmes will go on to earn degrees and improve their lives. Thanks to our Community Development Trust, 45,000 people in rural areas have been uplifted through our partnership with 35 community projects across all nine provinces. Our journey continues ...
The ego has landed Samantha Du Chenne
As sure as every business has a boardroom, so it will have employees – and leaders – who are driven by their egos and personal agendas.
t takes a strong leader to steer an organisation through boardroom battles exacerbated by egos; a leader able to make the tough, yet necessary, decisions ultimately producing successful results. “I don’t see the point in boardroom battles unless the issues under debate are getting in the way of the organisation’s objectives,” insists Yvonne Johnston, former CEO of Brand South Africa, Marketer-at-Large and winner of the Business Icon of the Year: First for Women Feather Awards. “Remaining focused on the end game and ensuring the organisation is achieving what it should be is the most important objective of any leader.”
Understanding ego Johnston adds that the best way to deal with ego in the workplace is to understand that the essence of ego lies in both fear and the need for power. “It’s a game of tactics,” she says. “If the approach you’re using isn’t working with an egotistical individual, perhaps it’s time to change strategy. In some cases, the most effective tactic is to take the path of least resistance and allow the individual to have their power. Sometimes the best thing to do is pick your battles – decide which battles are strategically sound and worth fighting, and which aren’t. It is only when the organisation’s set objectives are being compromised that the need for confrontation arises.”
If the approach you’re using isn’t working with an egotistical individual, perhaps it’s time to change strategy.
Courage is key Indeed, the key to strong leadership in the face of ego and personal agenda lies in courage. A good leader is not always well liked, but will always be well respected for having the courage to make the tough decisions that others are too scared to make. South Africa, in particular, has bred a business climate where there is a lack of accountability. People are fearful of standing up for what they believe in, rather deferring to the collective. In this environment it takes a firm and decisive leader to create a shared vision, facilitate discussions and collaboration without losing sight of the bigger picture, while taking a stand against ego and personal agenda. For Johnston, it all comes back to courage. “It takes more courage to build people up than it does to tear them down,”
she comments, adding that anyone can be critical but it takes a brave person to recognise the best in others. “However, a leader who is driven by ego hires weaker people and emasculates them to become ‘yes-men’. Where a good leader will allow others to make decisions and be accountable, an egotistical leader ensures that he is the only person who holds the power to make decisions, ultimately weakening the organisation and leaving it without a pipeline of potential future leaders. Indeed, a leader who makes all the decisions only disempowers other members.” Solving the problem Ridding an organisation of egos is not always a simple task – and often it is easier to change one’s own responses. “It’s worth noting, however, that it’s impossible to force others to
27 follow your lead. Rather, one can only inspire people to share your vision by articulating it clearly and showing how it will ultimately benefit them,” Johnston believes. While it is often tempting to seek approval and acceptance, leaders with vision are aware that behaving with integrity while making difficult decisions is more important. This is particularly relevant in the South African business landscape where the country’s legacy has created an obligation to give everyone an opportunity to succeed. However, these opportunities must be contingent on the ability to deliver. It’s a climate where all too often incompetence is condoned in the workplace. There are leaders who hope problems will go away if they simply ignore them. There are others who are not willing to risk confrontation or do not have objective performance standards. “For me, it’s a case of lead, follow or get the hell out of the way,” Johnston laughs, adding that if you’re not up to the job, move over and allow someone more qualified to do it. Gaining others’ opinions Visionary leaders are able to listen to others’ opinions and ideas. While they know what they need to achieve, they are also able to admit when they are wrong and generally create an environment where people are empowered to speak out if they disagree. “It’s about walking the talk, presenting oneself confidently, yet not coming across as arrogant. Leaders with substance treat each individual at every level of the organisation with the same amount of dignity and respect.” In reality, every organisation will be plagued by egos and those who put their own aims ahead of the business. However, Johnston maintains that, with sound leadership,
such behaviour can be discouraged and eradicated. “People pleasers who try to make everyone happy are dangerous in any environment, while courage is contagious. All it takes is one brave leader to stand up for what they believe and to make the tough decisions. Others will follow suit,” she stresses. Embrace change Embracing change is another aspect of visionary leadership. Where an egotistical leader becomes stuck in the same way of doing things, those with more effective methods embrace learning and change. Inevitably they lead with passion and aim to make an impact on the people they work with. “Leaders with vision are always reading and learning, doing things to disrupt the current schools of thought so that their own thinking stays fresh and innovative. After all, just because something has been done a certain way for a long time does not mean it’s the right way to do it,” is Johnston’s opinion. She adds that in leadership positions held over the years, she has learnt that managing people and businesses effectively is about doing the right thing, which may not always make one popular. “In the past, people who found me difficult to work with were, generally, incompetent. Competent people found me to be firm, yet fair,” she recalls. Courage and integrity Unlike an egotistical leader, a strong leader understands that it is not a title or a position alone that makes a person powerful. It is the ability to lead with both courage and integrity, two qualities which are intrinsically linked. “Moreover, inspirational leaders understand that sometimes the right thing and the hard thing are the same thing,” Johnston concludes. C
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A View From
A view from... Lucky Phakeng
aving a lunchtime chat with the Executive Director of the Takeover Regulation Panel (TRP) was an enlightening experience. 47 year old Lucky, who completed his articles in 1995, began his career practicing in a partnership before being appointed as Legal Counsel of the Securities Regulation Panel, now the TRP, in April 2000. He was appointed as Acting Executive Director in 2010, a position made permanent in 2011. A few questions allow us to know a little more about ‘the man behind the takeover regulation industry’. AS: Do you have a particular leadership style? LP: I believe I am an enabler – I allow people to do what they can within limitations. Restricting people can retard an institution’s progress. I therefore feel people need the freedom they deserve. I enjoy guiding people and have a passion for sharing knowledge and experience. To this end, I’m rather a good teacher.
Executive Director of the Takeover Regulation Panel Lucky Phakeng is a warm, friendly and amicable person with a clear ringing laugh. However, he is also determined, hard, a go-getter and believes in accountability. He spoke to Directorship’s Andrew Smith.
AS: What were the formative influences on you as a young manager? LP: Believe it or not, one of the largest influences on my management style came from that of the nursing fraternity. In order to save enough to study law I began my career as a staff nurse at one of SA’s largest hospitals. It was from nursing staff management that I learnt simple but important management techniques, among them empathy as opposed to confrontation. I also learnt what true accountability meant and how to manage it. AS: Who did you most aspire to emulate in your early career? LP: I grew up in Pretoria and knew of the achievements of the Deputy Chief Justice Moseneke. He was one of the driving forces in me entering the legal profession. I humbly believe that he is one of the best jurists in our country to date, and will leave a great legacy in the jurisprudence.
29 AS: From a business perspective, was there a single moment, or challenge, that defined your career? LP: A regulator faces many challenges, as you can well imagine, and with regards to takeovers some of these challenges are escalated. I think my ‘career defining’ experience, the challenge I learnt the most from, is that of the Harmony’s hostile takeover of Gold Fields in mid-2005. The deal was extremely complicated involving vast sums of money. The following adjectives help describe my knowledge gained from that experience; and help me in my daily functions: careful; patient; calm; objective; and cautious. AS: What about regrets – is there anything you look back on, perhaps as a missed opportunity? LP: I am in a fortunate position to categorically state that I have absolutely no regrets or missed opportunities. I took what I had; devised a way to have something to work with; and set my eyes on achieving my goals. AS: How do you manage your Board of Directors – or does the Board manage you? LP: Our position is somewhat different to a company board. As a regulator the board is appointed by government. We have a ready-made group of men and women who understand their roles and work effetively together. That said, I believe face to face communication between directors and management an imperative and the line between who is responsible for what be clearly demarcated. AS: How could companies – yours included – use directors more effectively? LP: I believe that knowledge is foremost to good productivity. With this in mind a comprehensive induction programme will ensure that each director knows full well what their duties and responsibilities are, as well as all pertinent and arbitrary information pertaining to the company. In addition, an induction or awareness programme comprising older issues for new directors will contribute to them being effective in their roles. AS: Are you a family person and, if so, how do you balance the stresses of being a senior business leader with the pressures of family? LP: Managing a family life can be demanding with both my wife’s (Kgethi) and my careers both being extremely time consuming.
We have resolved this with Kgethi and I committing to a permanent Friday night date, even if this entails accompanying the other to a work-related function. I also believe that weekends are for family. AS: What do you do to relax? LP: It’s important to keep fit which lends to a healthy lifestyle. So it helps a great deal that both Kgethi and I enjoy hiking, which helps us relax. In fact, we have hiked numerous trails in the Drakensburg and in Mpumalanga. AS: What books are waiting to be read – either beside your bed or in your study? LP: I don’t have books lining up waiting to be read, as I jump at the opportunity to read. My love is really for financials and aside from books with this important information I never miss a copy of Finweek and Financial Mail. I also believe that a person in my position must be adept in communicating, and be able to direct debate. I therefore read as much about public speaking as possible and am currently riveted to a book by Dr Shel Leanne entitled Say it like Obama. AS: What about opportunities – for both the country and your company? LP: Yes, opportunities abound. Ongoing development of best practice is the way forward for business in South Africa. The new Companies Act is well-written and very clear. The Act, as a starting point, puts us in a position to ensure we have a progressive regulatory regime for takeovers and mergers in place which, when necessary, allows us to change the provisions of the Act to align them with best practice internationally. AS: Do you have a personal message to other directors in South Africa – a sort of ‘advice’ from one director to another? LP: Ask questions! As simple as that! The first and most important question should be: What can I offer to this company? If potential directorship candidates cannot answer this question or has doubts, I believe they should not accept the position. Other important questions directors should ask themselves are: What is this company doing; what are my responsibilities; what are the risks; what is expected of me; and what are the current issues facing the company? If you can answer these questions then you may be in a position to direct the company to its rightful destination.C
The Protection of Personal Information Bill â€“ what you need to know Dario Milo, Partner and Greg Palmer, Associate, Webber Wentzel
The impending Protection of Personal Information Bill will place significant demands on directors for disclosure of information. Directors will do well to take heed of the implications and remain compliant.
he enactment of the long-expected Protection of Personal Information Bill (POPI), now said to be the oldest Bill in parliament, is imminent. POPI will require a complete overhaul of the mechanisms for dealing with personal information. Directors are well advised to begin taking steps towards compliance. This is particularly the case with SMEs and larger companies, which process vast amounts of personal information on a daily basis. King III overlap The POPI requirements are additional to the King III IT Governance Principles, which directors may already have chosen to apply. There are areas of some overlap with King III, particularly with Principle 5.6 which requires the board to
ensure that there are systems in place for the management of information, that all personal information is identified, and that an Information Security Management System is developed and implemented. POPI requires directors to appoint an Information Officer to oversee compliance, and whose name must be forwarded to the Information Regulator (once it has been established by the Department of Justice and Constitutional Development). The Information Officer will be the point of contact for the Regulator on issues of compliance in the company with both POPI and the Promotion of Access to Information Act. Information officersâ€™ responsibilities With the mandate of the board, the Information Officer (and
If a company is alleged to have committed an offence, the Regulator may deliver an infringement notice.
designated Deputy Information Officers, where necessary) should conduct information audits, employee training, IT security reviews, and implement company-wide policies and procedures in dealing with personal information. POPI applies, with very limited exception, to all ‘processing’ (broadly defined to include accessing, storing, even deleting) of ‘personal information’ (broadly defined to include any information that identifies a natural or juristic person) within the company, including the company’s (past and present) employees and directors, suppliers and customers. Eight conditions There are eight conditions for lawful processing of personal information outlined in POPI. These conditions require, amongst others: the establishment of legitimate grounds on which personal information is being processed, such as express and informed consent of the person identified by the information; notification to the person identified of the type of information being processed; limited and defined purposes for which all types of personal information may be processed; procedures for constant updating and accuracy-checking of personal information, and security measures to protect the integrity of the personal information. Regulators role The Regulator will receive and handle complaints about alleged violations of these conditions. It may serve an information notice on a company, in terms of which the company must report to the Regulator on compliance. Where a complaint has been made alleging interference with personal information, the Regulator can involve an Enforcement Committee which, in turn, can recommend that action should be taken against a company or its Information Officer. If the Regulator is satisfied that a company has, indeed, interfered with the protection of the personal information, it may serve an enforcement notice. This notice requires the company to take certain specific steps or to stop processing types of personal information. Criminal offences created POPI creates certain criminal offences, including: a failure to comply with the terms of an enforcement notice; a serious or persistent failure to comply with the conditions for lawful
processing of personal information in the case of an account number; a failure to notify the Regulator of processing which is subject to prior authorisation; obstructing the execution of a search and seizure warrant; and a failure to comply with a summons served by the Regulator. If a company is alleged to have committed an offence, the Regulator may deliver an infringement notice. This notice contains particulars of the alleged offence and the amount of an administrative fine payable by the company (which may not exceed R10 million but is subject to increase). The notice informs the alleged infringer that it may pay the administrative fine, or elect to be tried in court on a charge of having committed the offence. Guilty parties may pay twice The Regulator or any person whose personal information has been mishandled may institute a civil action for damages against a company for interference with the protection of personal information. This civil action is independent of any action taken by the Regulator which may or may not have been prompted by a complaint. Therefore, it is conceivable that a company may be liable to pay both an administrative fine and civil damages for the same offence committed in terms of POPI. It is not necessary that the person who institutes the action establishes intent or negligence on the part of the company in order for a successful action for civil damages against the company to ensue. The court may award any amount that is just and equitable, including payment of damages as compensation (including aggravated damages), interest and costs of suit, and the outcome must be publicised. Search and seizure powers granted Finally, the Regulator is given broad search and seizure powers. A warrant may be granted to it where it establishes reasonable grounds for suspecting that a company is interfering with protection of personal information or has committed an offence in terms of POPI. Where the judge or magistrate is satisfied that there is reason for urgency, this warrant may even be granted without any notice to the company. It will be clear from the summary above, which only scratches the surface of the contents of POPI, that directors should begin giving this imminent legislation careful attention. C
Social media – what are directors’ responsibilities? Rosalind Davey, Partner, Bowman Gilfillan
There is no doubt that social media’s role in, and impact, upon corporate South Africa continues to grow. A question that arises from this trend is what leaders in the boardroom need to be cognisant of insofar as social media impacts upon their duties to the company.
s a director you owe a fiduciary duty to the company that you serve. This means that you have a duty to act with the utmost good faith in your dealings with, or on behalf of, the company and that you must conduct yourself with the highest standard of care at all times. Primary considerations There are two primary considerations that directors need to be aware of when engaging in social media, whether in your personal capacity or on behalf of the company: • As a director you need to take care that you do no harm to the company when participating in the social media realm. • You need to take reasonable steps to ensure that your employees do no harm to the company and/or co-workers
when using social media. The careless use of social media often results in brand damage to the company and may render the company vicariously liable for the conduct of employees. It is important to be aware of the legal risks and implications of social media use. Laws governing social media are currently in their infancy. However, laws of general application apply to social media. Thus, in determining possible risk and exposure to your company, you should be cognisant of Constitutional entitlements such as the rights to privacy, dignity and freedom of expression. You should also be well versed on the law of defamation. You also need to consider intellectual property and copyright laws. Once you have grasped these risks, you need to take appropriate steps to safeguard against or, at the very least, mitigate the risks.
Social media use is constantly evolving and so must a company’s policies and strategies.
Social media and possible repercussions People are often under the mistaken belief that the right to freedom of expression affords them carte blanche to say what they please, and that they are accordingly exempt from liability, particularly when communicating on social media platforms. This is not the case. Online conduct is generally governed by the same legislation, rules and policies that apply to offline conduct. An overstepping of the right to freedom of expression may render the author and, by association, the company liable for defamation. Thus, when using social media in your personal capacity or as a representative of the company, always be mindful of the fact that you are an ambassador for the company and that what you say and do on social media may have negative repercussions for the company. Thus, it is advisable to steer clear of negative, defamatory or controversial postings, salacious tweets and malicious statements regardless of whether or not you are using social media in your personal capacity. Remember that social media is ‘the written word’ and it is akin to a publication. A wrong tweet; a misguided comment; an incorrect fact, once posted, could go viral resulting in possible brand damage, a defamation suit or liability for ‘cyber-bullying’. This could have direct consequences for the company and affect its standing in the eyes of the corporate community. Such conduct may also constitute a breach of your fiduciary duties towards the company. Similarly, statements made by your employees on social media may have negative effects upon the company. The question that arises is: how these risks can be appropriately traversed? Policies and strategies An appropriately drafted social media policy, which establishes clear guidelines on how employees should conduct themselves on social media platforms, is a good place to start. However, before adopting a social media policy, it is a good idea to determine the company’s social media strategy. In doing so, the business environment in which the company operates should be the starting point. Also be mindful of the need to protect the company’s confidential information, such as contacts and
followers, and the particular laws pertaining to the industry in which the company operates. There are a number of cases in the United States where the courts have been called upon to determine who owns contacts and followers on social media. It is, therefore, important to establish the question of ownership upfront so as to avoid such disputes arising. Once the company’s social media policy has been developed, it should be implemented and made clearly accessible to existing and new employees. You should consider educating your employees and providing guidelines on the benefits and dangers of social media. This can be achieved by holding frequent social media workshops for all employees in order to keep up with this constantly evolving network. Training imperative Directors and managers should also receive regular updated training on the benefits, risks and trends in social media and how best to implement and enforce the company’s social media strategy. Social media misconduct by employees should also be appropriately addressed. It is important to understand that the regulation of social media in the workplace involves the same exercise that employers conduct on a daily basis, namely the balancing of the competing rights and expectations of a company, with the rights and expectations of its employees. In the present context, it is generally a company’s (limited) right to privacy and reputation that are balanced against an employee’s rights to privacy, dignity and freedom of expression, among others. Social media use is constantly evolving and so must a company’s policies and strategies. It will serve your company in the long run to monitor employee compliance and to identify social media use trends amongst your employees in order to pinpoint areas for improvement. A proactive approach, together with a sound social media strategy and policy, will help to mitigate the risks of social media use. Thus, while the medium may be new, the legal and practical considerations remain much the same, as does the scope and application of a director’s fiduciary duties. This will be so until such time as specific legislation is enacted to govern the use of and balance the competing rights pertaining to social media. C
From the Training Room
Integrated Reporting – Where to Start?
ing III described integrated reporting as “a holistic and integrated representation of a company’s performance in terms of both its finance and its sustainability.” The first article concluded that the sensible and sustainable approach to integrated reporting is to take time to develop a value adding internal integrated reporting process to the business. It also flagged that recent research on the implementation of King III indicated that almost 80% of respondents identified their companies’ value-drivers and dependencies through integrated reporting. Tackling the matter strategically will result in an authentic integrated report supported by internal business reporting processes. Thus, the company will indeed be reporting what it is doing and also doing what it is reporting. Understanding your target audience Both the new Companies Act, 73 of 2008 and King III clearly support the principle of a company being a corporate citizen. Although there might be a primary focus on shareholders when providing information, which is often mainly focused on financial performance and position, companies should also have a strong awareness of and therefore address the information needs of other stakeholders. The integrated report should therefore be communicating the company’s ability to create value over time to the provider of financial capital, as well as employees, customers, suppliers, business partners, the communities in which it operates, regulators and others. The integrated report is aimed at enhancing the company’s accountability and stewardship with respect to all its capitals and their inter-dependencies.
This article is the second in a series, by Linda de Beer, that deals with the practical implementation of integrated repor ting. The first article was entitled “Integrated Reporting – Facts and Fiction”.
Understanding the six capitals for better integrated reporting The recently released Consultation Draft of the International Integrated Reporting <IR> Framework, published by the International Integrated Reporting Council (IIRC), explains the concept of the six capitals. It states that these capitals are ‘stores of value’ that become inputs into the company’s business model. The capitals are increased, decreased or transformed through the company’s activities and outputs. The capitals are therefore enhanced, consumed, modified, destroyed or affected in another way. A company wants to create overall value. However, in so doing it might be diminishing or destructing the value stored in some capitals inadvertently reducing the company’s overall stock of capitals. These six capitals are: • Financial capital – The pool of funds available to the company for use in the production of its goods and services. This includes financing such as debt, equity and grants. • Manufactured capital – The manufactured physical objects. These are available for use in the production of goods and services such as buildings, equipment and infrastructure. Such manufactured capital might have been created by other entities. • Human capital – Peoples’ competencies, capabilities and experience as well as their motivation to innovate, support for the company, ability to understand, develop and implement the company’s strategy. • Natural capital ��� Renewable and non-renewable environmental resources and processes. These provide goods and services that support the company’s prosperity, such as air, water, land, minerals, forests and bio-diversity.
• Social and relationship capital –Institutions, including the communities and other groups of stakeholders, with whom the company has relationships, as well as networks and the company’s ability to share information to enhance individual and collective wellbeing. • Intellectual capital – The company’s knowledge-based intangibles such as patents, copyrights, software, licenses and rights. It could also include intangibles associated with the company’s brand or reputation. The integrated report starts with integrated thinking Integrated thinking is a stark contrast to traditional silo thinking! With the latter companies consider and report on the various capitals in silos – financial, environmental, stakeholder engagement and corporate social investment (CSI). Reports are then completely unrelated because each is driven by a different part of the business with different focus areas and objectives. These reports are often even published and distributed separately. Integrated thinking, on the other hand, considers the relationship between the company’s various operating and functional units and capitals. It takes cognisance of the connectivity and inter-dependencies between factors that have a material effect on the company’s ability to create value over time. It is clear that integrated thinking is not just to the benefit of the integrated reporting process, but to the overall strategy and management of the business too. Hence the strong indication from the research that implementing a proper integrated reporting process assisted companies in identifying their value drivers and dependencies. Integrated thinking would, therefore, lead to an integrated report that has combined emphases on the strategic focus and future of the company, and how it aims to combine the capitals in its business model to create value over the short-, medium- and long-term. What to cover in an integrated report The research previously referred to showed that more than 40% of respondents indicated insufficient guidance on integrated reporting. Considering that integrated is meant to be the natural outflow of an integrated thinking process, every company’s integrated report should be authentic and unique. However, there are some key areas that an integrated report should possibly cover. These are addressed in the Consultation Draft of the IIRC, previously referred to, and include the following: • Organisational overview and external environment in order to provide an overview of what the company does and the circumstances under which it operates. • The company’s governance structure which explains the ability of the company to create value in the short-, medium- and long-term. • Opportunities and risks, especially those that affect the company’s ability to create value over the short-, medium- and long-term. It must include how these opportunities and risks are dealt with by the company and its governance structures. • Strategy and resource allocation, explaining where the company wants to go and how it intends getting there. • The business model and indicating how resilient it is. • Performance of the company that explains the achievement of the company’s strategic objectives in terms of the effects on all the capitals, not just financial capital. • Future outlook, focusing on challenges and uncertainties the company is likely to face in pursuing its strategy, as well as implications thereof on its business model and future performance. Some have said that the integrated report is basically the company’s business plan, but with feedback of the company’s performance against it. In conclusion An integrated report is the company’s autobiography. It cannot be written before the company has lived! It can also not be a complete and full reflection of all aspects and activities of the company. It should, however, at least address all material matters in a reliable, consistent and concise manner. The overarching principle of integrated reporting is ’Report what you do and do what you report’! C Linda de Beer is an independent director on a number of JSE listed boards, a member of the King Committee and a regular facilitator for IoDSA training programmes for directors.
FAQs: Chartered Director (South Africa) designation Angela Oosthuizen, Chief Operating Officer, IoDSA
This article aims to answer some of the questions that might need to be addressed in relation to the Chartered Director Evaluation Programme being offered by the Institute of Directors.
What NQF Level is the CD(SA) on? A professional designation, such as the CD(SA) is not registered at a level on the National Qualifications Framework (NQF). However, a professional designation is usually attained once a specific qualification has been achieved (combined with other requirements, such as experience in the field). The underpinning qualification is registered at a specific NQF level. What qualification must I have to gain CD(SA) status? An individual wanting to participate in the CD(SA) evaluation programmes needs to hold an NQF-registered qualification at an NQF level 7 or higher, or be able to demonstrate substantial and appropriate experience of at least 10 years as a director.
Can I use the CD(SA) to access a Masters of PhD programme at a university? A professional designation, such as the CD(SA) cannot be used to access an academic programme on the NQF. Is the CD(SA) registered on the NQF? Yes. Professional designations are registered by the South African Qualifications Authority (SAQA) when a professional body is recognised under the NQF Act 67 of 2008. The Institute of Directors Southern Africa is recognised as a professional body and the CD(SA) is now registered by SAQA.
As a Fellow of the IoDSA do I automatically gain access to the CD(SA) programme? No. Your status as a member does not automatically qualify you for CD(SA) status. However, being a Fellow of the IoDSA puts you in good standing when applying to participate in the evaluation programme and is an essential part of the evidence that is submitted during the evaluation. I did the Accelerated Directorship Programme with the IoDSA. Isn’t this the same as the CD(SA)? No. The ADP is a training programme designed to equip directors with the knowledge, skills and competencies required to serve as a director. This is not the same as the recognition gained through the Chartered Director programme. However, the evidence collated during the ADP is an essential part of the evidence required to gain the CD(SA) designation. How do I enrol for the CD(SA)? The Chartered Director designation is offered through The Institute of Directors in Southern Africa. Once the candidate has read through the requirements for gaining CD(SA) status and feels that s/he satisfies these requirements, then the individual is able to apply to the IoDSA to register for the programme. More information can be obtained at www.iodsa.co.za. How long does it take to qualify as a CD(SA)? The CD(SA) evaluation programme comprises three different components, namely the application through a Portfolio of Qualifications and Experience, the Examination and the Peer Interview. Each part of the programme needs to be
attained before moving onto the next component. Because of the rigorous process the evaluation programme takes approximately four months unless remediation is required. What is the difference between the Chartered Director and the Chartered Accountant? The Chartered Accountant designation is awarded to practising accountants by the South African Institute of Chartered Accountants. The Chartered Director professional designation is awarded to executive and non-executive directors that have at least five years of experience as directors. The entrance criteria for the CD(SA) assessment requires that the applicant: • Has been a practising director of a company or has held an equivalent office in any other entity that is an incorporate body, for at least three years during the five years prior to application; • Be a member of the IoDSA; • Be at least 30 years old; • Hold an NQF-registered qualification at an NQF level 7 or higher or be able to demonstrate substantial and appropriate experience of at least 10 years as a director; and, • Be sponsored by two (2) individuals who are members of the IoDSA, acting as proposer and seconder respectively. C For further information and enquiries on the CD(SA) programme visit www.iodsa.co.za or email: firstname.lastname@example.org.
Institute of Directors launches Chartered Director (South Africa) designation
he Institute of Directors in Southern Africa (IoDSA) launched the Chartered Director (South Africa) designation at a function at its Sandton offices. At the function, the IoDSA Board conferred the CD(SA) designation on the members of the Governing Body, the body appointed by the IoDSA to govern the criteria and process for Chartered Director. In turn, the CD(SA) Governing Body conferred the designation on a select group of leading business luminaries, including the Governing Body members. Among the recipients were Roy Andersen, Tom Boardman, Michael Brown, Judy Dlamini, Thulani Gcabashe, Godfrey Gomwe, Reuel Khoza, Mervyn King, Mark Lamberti, Tito Mboweni, Imogen Mkhize, Mutle Mogase, Allen Morgan, Wiseman Nkuhlu, Sizwe Nxasana, Hixonia Nyasulu, Gloria Serobe, and Malcolm Wymann. “By accepting our invitation to become Chartered Directors on the basis of their achievements and standing, these men and women are acting as pioneers and role models for aspirant professional non-executive directors,” comments Ansie Ramalho, CEO of the IoDSA. “Aside from these by-invitation holders of the new designation, candidates will undergo a rigorous selection process. Similar designations for directors have already been established in Australia, Canada, New Zealand and the United Kingdom.” Speaking at the function, Richard Foster, Chairman of the IoDSA, said that the new designation had the potential to change the face of directorship as a profession in South Africa. The keynote speaker, Nicky Newton-King, CEO of the Johannesburg Stock Exchange, echoed this statement, saying that in today’s complex world, companies could no longer be passive bystanders and their directors needed a growing range of skills. Instead of attempting to regulate directors’ duties in minute detail, there should rather be an emphasis on ensuring competency. Newton-King emphasised the impact
that the new designation with its transparent criteria would have on transformation. “As we grow as a country, we will need a growing pool of directors—this designation will help increase the pipeline,” she said. “The role that non-executive directors play has become central to business success,” observes Roy Andersen, Chairman of the CD(SA) Governing Body. “In line with their expanded responsibilities, directors have also assumed greater liability for the consequences of their decisions. These developments have all contributed to the emergence of company directorship as a distinct profession requiring certain skills.” In fact, says Ramalho, the stereotype of the retired executive taking up directorships is gradually changing as younger people begin to see directorship as a career path in itself. The new CD(SA) designation will provide these emerging professionals with a way of demonstrating that they meet a certain standard of knowledge and experience, and that they are committed to continuing professional development to maintain that standard. Holders of the CD(SA) designation will also have to adhere to a code of professional conduct and submit to the organisation’s disciplinary procedures. To apply for admission as a CD(SA), candidates must first have their skills evaluated against the Director Competency Matrix created by the IoDSA. If they meet these criteria, they then write an examination and submit to a peer review as specified by the CD(SA) Governing Body. (Experience may exempt certain candidates from the need to sit the examination.) Annually, Chartered Directors need to affirm that they are practising as directors, renew their membership of the IoDSA, log at least 30 hours of continuing professional development, and reaffirm their subscription to the code of conduct. For more information on the Chartered Director (SA) designation, including admission criteria and code of conduct, please visit www.iodsa.co.za or email email@example.com C
IoDSA Director Lifestyle Programme The IoDSA has negotiated various discounts and value-added benefits for members which are part of the Director Lifestyle Programme. AA Offers IoDSA members preferential rates for members and your family. Avis Avis is in the business of making people feel special. Yes, Avis does provide top quality vehicles, but we believe in giving you so much more. We are proud to be associated with the IoDSA and are offering members of IoDSA best car rental rate of the day less 2%. Because if you are happy, we at Avis are ecstatic. After all, you are the reason we try harder. Carmargue Camargue is an underwriter of niche insurance products and a provider of risk management solutions to a broad spectrum of industries in Southern Africa. King III and the introduction of The Companies Act in 2008 has rendered Directors’ and Officers’ Liability Insurance (D&O) crucial for all companies regardless of size or incorporation. Directors and Officers now find themselves in a far more onerous position than ever before. Inquire with your broker about D&O insurance and how Camargue collaborates with the IoDSA providing both sponsored membership and training. Europcar Europcar has customised its value proposition exclusively for IoDSA members and offers exceptional and exclusive benefits to members, some of which include a single vehicle group upgrade, a dedicated IoDSA service desk and discounts on car rental and Chauffeur Service. Get Abstract GetAbstract delivers essential compressed knowledge at the point of need and at the speed of business so people can make
the right decisions, improve their professional success, better their company’s competitiveness and help economies thrive. We offer IoDSA members access to: the world’s largest summary library, more than 400 leading publishing partners, more than 9,000 text and 2,000 audio summaries and dedicated learning consultants. Legacy Lifestyle The IoDSA has negotiated a complimentary gold membership with Legacy Lifestyle on your behalf. Activate and receive rewards back at over 150 luxury Brand Partners. Mercedes-Benz The special customer group programme benefit is applicable to all current members of IoDSA, with a minimum recommended discount (excluding Smart/AMG and Limited Editions) on the New List Price and preferential service bookings to name only a few. Further to this, IoDSA members are privy to our exclusive quarterly offers. The Contemporary Gazette • IoDSA Direct Law: Every member receives, courtesy of the IoDSA, 22 newsletters a year that focus on new businessrelevant national legislation. • www.gazette.co.za: Every member receives, courtesy of the IoDSA, access to the database of continuously updated business-relevant Acts, regulations, bills and draft laws. • www.crmp.co.za: Only companies that employ members are 1. entitled to purchase compliance risk management plans. Tsogo Sun As an IoDSA member you can gain instant VIP status to the Tsogo Sun Frequent Guest Programme by enrolling at Director Tier 2. Status, usually Director Tier Status is achieved after staying 20 nights at participating hotels in a rolling 12-month period.
Standing on the Sun
The Conversation Manager
How the Explosion of Capitalism Abroad Will Change Business Everywhere
The Power of the Modern Consumer, the End of the Traditional Advertiser by Steven Van Belleghem Kogan Page, 2012
by Christopher Meyer and Julia Kirby Harvard Business Review Press, 2012
Economist Christopher Meyer and Harvard Business Review editor Julia Kirby adopt the artifice of ‘standing on the sun’ to gain a global perspective on how capitalism is changing. They foresee inevitable transformation and Internet-fuelled innovation, and predict that traditional profit-driven models of capitalism will evolve – in a Darwinian sense – to incorporate the social and environmental values that customers demand. The authors make a strong case that much of this innovation and adaptation will come from the developing world and that the West will have to adjust quickly to part-public, part-private, part-social hybrids of capitalism. The text roams worldwide to offer telling examples of altruistic firms making money. Despite some jargon and a certain academic nature, it is a valuable read. getAbstract finds its compelling content provides a valuable view on capitalism’s future.
Leading So People Will Follow
The Internet, social networks and mobile technology have changed consumer behaviour forever. People’s behaviour has evolved, but many advertisers’ behaviour has not. This failure, warns marketing professor and consultant Steven Van Belleghem, may render marketing activities obsolete. The traditional advertiser must evolve into a ‘Conversation Manager’ who listens and responds to consumers. Although the content is not revolutionary, getAbstract recommends this clear, considered approach as a useful addition to any marketer’s library.
Why Today’s Consumers Demand More and How Leaders Can Deliver
by Erika Andersen Jossey-Bass, 2012
Consultant and leadership development expert Erika Andersen draws on storytelling to illustrate six attributes you must master to become a great leader. Andersen explains that you need to become ‘farsighted, passionate, courageous, wise, generous’ and ‘trustworthy’ in order to lead. As you strive to become a leader, she advises seeking help from three kinds of people: wise ‘wizards,’ supportive ‘well-wishers’ and improbable ‘wild cards.’ Andersen includes a link to an online leadership assessment exercise and a bonus chapter on improving your listening and ‘self-talk’ skills. getAbstract recommends her chatty, informal guidebook, which draws archetypes from folktales and business to illustrate how to become a leader people want to follow.
by Dave Kerpen McGraw-Hill, 2013
Dave Kerpen, author of Likeable Social Media, lays out 11 steps to becoming a more likeable business leader. His advice is pure, welcome common sense, and the text is light-hearted, entertaining and easy to digest. Kerpen focuses on how to create a strong online presence for your business and explains how to improve your face-to-face interactions. getAbstract recommends this clear, insightful business manual to social media managers, marketing managers, CEOs, presidents, vice-presidents and other executives who wish to be more likeable in person and to create a stronger online persona.
The IoDSA partners with getAbstract getAbstract is a service that summarises the most influential business books published throughout the world and is included as part of the IoDSA membership.
Essential business reading brought to you by the IoDSA from getAbstract.
To access your account, follow these steps: Log on at: www.getabstract.com/re/iod Username: Please use your email address provided to the IoDSA Password: Please use your IoDSA membership number
THINKING OF INVESTING IN THE AFFORDABLE RENTAL HOUSING MARKET?
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Opportunity exists - To access GPF funding from a dedicated Rental Housing Fund that aims to assist rental housing developers with equity-type loans for the affordable housing rental market. The GPF equity enhances the bankability of projects to enable senior lenders to finance on favourable terms.
For more information or to apply for funding contact: Maki or Phetsile Tel: 011 685 6600 or Email: firstname.lastname@example.org & email@example.com www.gpf.org.za
Passion runs deep Chris Reilly
There’s no doubt that BMW’s new ActiveHybrid 3 is a female, and it’s her sophistication, finesse, and unpredictable, unbridled passion that stole, and eventually broke the heart, of test driver Chris Reilly.
hen she was dropped off at my office she looked pretty much like all the other macho BMW Threes we’ve had on test. The only difference was the enigmatic ‘ActiveHybrid 3’ badges on her shapely rump and sleek C-pillars, like discreet tattoos. She also wore a pair of elegant 18inch bespoke alloy rims on each of her axles. After work I took her home, driving along the slow, quiet back roads that bypassed rush hour traffic. I hadn’t had time to Google her name so I knew nothing about her except that her name was Bea – short for Beemer or something – and she was a hybrid of sorts. So I knew what to expect; her quiet electric moods in between the times when her engine fired up. I have been in a few – admittedly brief – relationships with other hybrids; Prius was prissy and unexciting, Auris plump and bland; Lexus GS far too flamboyant for my tastes, and Cayenne not necessarily overweight but nevertheless still large. I have nothing against large cars; I just would not own one. She kept silent as I explained these salient details, her rev counter steadfastly stuck on the ‘READY’ notch as I coasted down a gentle hill, the speedo showing 55km/h. A discreet scale on the dial told me she was feeding recovered kinetic energy to her lithium ion battery; the charge rate scaled higher as I braked for a stop sign – what a clever girl!
I pulled off with a gentle press of the accelerator and suddenly her rev counter flicked up, arcing to 1200… 1500… 1800 as she gathered light momentum. The needle settled at 1200rpm as we reached 60 km/h, nothing but torque propelling her and me along a flat stretch of quiet suburban road. We approached a section I knew had some interesting kinks and was generally deserted, and I decided to try goading her into some kind of reaction. Like a hard slap on the rump, I trampled her gas pedal to the floor; instantly she flinched, the rev counter sprang to 4000 with a low growl from her engine and she began accelerating; G-forces pushed me back into plush leather, 5000 and the growl became a roar, 6000 and she snicked up a gear with another growl. A gentle left hander drew nearer and I flicked the leather steering wheel. She carved around the apex, a roar rising again as she approached 6000 once more. A right-hander this time, and tighter than before – too fast! Much too fast! I dabbed the brakes and turned in, seat bolsters crushing my ribs. She held my line beautifully, but it was already too much for me. With trembling knees I trod on more brake and pulled her down to a more sensible speed, the rev counter’s charge rate on maximum as the revs dropped to 1200 again. As I coasted to the next stop sign, she fell silent again, the rev needle below zero rpm, resting on ‘READY’. Was she sulking or
merely contemplating what just happened? I could not know. The rest of the journey was uneventful. Occasionally she would murmur something as her engine fired up to push up a hill. I had nothing to say, but I felt myself easing back into my seat, getting comfortable, enjoying the embrace of her cabin, spacious without being roomy. Next morning I drove her carefully to the office; I knew what she was capable of. I typed ActiveHybrid3 into the Google search bar, and there she was. Well bred, cultured, long family history of racing champions, even a pedigree for goodness sake! I scrolled down to her vital statistics and then I understood where her fiery temperament came from. Under that delectable body thrummed a 3-litre, straight-six, 24-valve, direct injection petrol engine with a twin-scroll turbocharger and fully variable valve timing. Her sheer output was impressive and alarming; 225 kW at 5 800 rpm and 400 Nm from 1 200 to 5000 rpm. Her 8-speed Steptronic gearbox had an integral 40 kW electric motor/generator with a further 210 Nm on tap; total output equated to 250 kW and 450 Nm… Unbelievable! Further down the page I found her 0-100 km/h sprint time – a blistering 5,3 seconds, which I fully believed – and combined fuel consumption of 5,9-litres per 100 km, which I took with a pinch of scepticism. Nevertheless, it was clear she had a big pumping heart beneath her curvy metal skin. Through my office window I could see her sitting under the sparse shade of a shedding jacaranda tree, a light sprinkling of purple petals on her skin, and began to look forward to the drive home. The weekend couldn’t come fast enough, and we spent it together. I packed her shapely boot with full shopping bags on Saturday morning, took her to dinner with friends that evening, and then just the two of us went on a brisk drive into the countryside for Sunday lunch. I was growing accustomed to her modern, stylish fascia, the sensible placement of her controls and displays. I was reassured by her constant, unchanging beauty, her tantalising sounds and smells. She was the kind of car I could take anywhere, introduce to anyone, and do everything with. I had a growing sense of familiarity with her. In fact, I was content to have her around. I thought, OMG, could it be ‘The L Word’? At work on Monday morning I parked her under the Jacaranda where I could watch her through the window; every dozen minutes or so I’d cast a glance and study her; the shape of her nose, the curve of her hips. At 10am two young men sauntered into the office. “We’ve come for the Beemer. Did you enjoy it?” said one. “Yes, she was amazing,” I said as I handed over her keys. Through misty eyes I watched her drive away. C
BMW ActiveHybrid 3 - Specifications Length Width Height Wheelbase Fuel tank capacity Luggage capacity Engine Capacity Fuel Max Power Max Torque Electric motor System Power System Torque Wheels Tyres Transmission Performance Acceleration 0–100 km/h Top speed Top speed electric Top speed coasting Electric range Fuel Consumption Combined CO2 Emissions
4 624 mm 1 811 mm 1 429 mm 2 810 mm 57 litres 390 litres In-line-six cylinder, 16-valve, turbocharged 2 979 cc Petrol 225 kW@ 5 800-6 000 rpm 400 Nm @ 1 200-5 000 rpm 40 kW / 210 Nm 250 kW 450 Nm 7.5J x 17 alloy 225/50 R17 8-speed Steptronic auto 5.3 sec 250 km/h 75 km/h 160 km/h 3-4 km 5.9l/100 km 139 g/km
Travel - Four hours in Casablanca
Ramsey Qubein absorbs the maze-like souks, Moorish mosques and bustling beaches of Morocco’s largest city.
OLD MEDINA The west Moroccan por t city of Casablanca is a whirlwind of frenetic traffic, aromatic scents and seaside breezes that wind through the streets of the busy metropolis. French influences blend seamlessly with Arabic culture, providing a feast for the senses. The largest city in the country, Casablanca is known ultimately as a commercial hub, but there is plenty to explore during a short sightseeing excursion between meetings. Start your tour at the Old Medina in downtown. Within walking distance of the city’s major business hotels, and near Place des Nations Unies, this walled historic centre predates the French protectorate and now serves as a tourist attraction. It was partially destroyed by an earthquake in the 1700s but still showcases some of the city’s oldest structures. There are many things to see, including Sidi Kairouani’s shrine, the burial place of the first patron saint of the city, and the Dome of Sidi Belyout. A small market at the entrance of the ramparts houses several shops, where the amusing process of bargaining for hand-painted tagines (the ceramic vessels in which Moroccan stew is cooked), a rainbow of babouche slippers and robes, and leather goods of questionable authenticity takes place daily. The colonial clock tower on the medina wall provides the perfect backdrop for photos, as does the waterside historic battery of cannons, which once protected the city from centuries-past invaders.
HASSAN II MOSQUE With souvenirs in tow, hail another taxi to see the city’s main mosque, open to conservatively dressed tourists via guided tours several times a day, starting from 9 a.m. One of the biggest mosques in the world, it has a capacity of 25000 people inside and 80000 outside in the surrounding grounds. The Moorish-influenced structure sits on reclaimed land overlooking the sea, affording excellent views, and even has sections of glass floor that you can look through into the brine (the construction is related to a verse in the Quran that states ‘the throne of Allah was built on water’). The interior is ornamented in great detail with chiselled stone, carved and painted wood, and multicoloured tiles, while grandiose arched doorways add to the exotic feel. The mosque also has one of the tallest minarets in the world, at 210 metres, and from its pinnacle a laser beam directed towards Mecca can be seen for miles.
HABOUS QUARTER After an hour of leisurely strolling, it’s time for some serious shopping. Take one of the city’s inexpensive red ‘petit taxis’ (insist that the driver uses his meter) to the Habous Quarter, home to a souk where eager shopkeepers peddle their crafts, clothing, luggage, Berber carpets and souvenirs from line upon line of stalls. Haggling is accepted and encouraged. Beautifully arched doorways lead visitors into a maze of colourful shops with the odd ray of sunshine peeking through the roofs. The area is designed like a city, with stores filling in the spaces around a traditional mosque and old houses. While in the neighbourhood, be sure to take a glimpse at the Royal Palace, the Moorish 1920s exterior of which features bright hand-painted tiles and horseshoe arches.
AIN DIAB CORNICHE If people-watching is more your thing, head for the seaside Ain Diabcorniche. (It’s best to take a taxi from the Hassan II mosque, which is in the vicinity but a lengthy walk away.) Locals come to the seafront to relax, have a bite to eat at one of the many cafés and fast food outlets or visit the small shops. A new marina that’s under construction promises to bring even more modern conveniences to the area but, for now, the eclectic beachfront promenade is charming and authentic. Closer to the lighthouse, visitors can access the beach for a splash in the waves or take a dip in one of the many swimming pools on the strip – so bring your trunks or bikini if you think you’ll have time. In the evening, the area is popular with people out for a stroll after dusk or looking for a restaurant for dinner. And it really heats up after dark, when the nightclubs open their doors.
BASMANE RESTAURANT To wind up, head for Basmane restaurant along the corniche, on the corner of Boulevard de l’Océan Atlantique and Boulevard de la Corniche, for an authentic Moroccan meal. Steaming tagines filled with couscous, drizzled with succulent sauces, and topped with meats, vegetables and dried fruits are specialities that should not be missed. The lamb skewers with fresh vegetables are grilled to perfection, and the Moroccan pastries are excellent. Tel +212 2279 7070; www.basmane-restaurant.com. This article is printed with permission from Business Travel magazine.
The compliance advantages of a sandal-wearing CIO Jeremy Maggs
ockens Haasbroek despised two main things in life; his names – both of them, and his board of directors – all of them. He was convinced his farmer father had been down two bottles of wit-blitz when he filled out the birth registration forms. Either that or he just hated his new-born on sight. Throughout his school career Fockens had been the object of teasing and taunting and deep down he understood why. But it all made him a stronger man which is why his furniture chain empire Sofa King was such a resounding success both here and abroad. He took particular delight when his perpetually drunk, humourless, deeply conservative octogenarian father objected to his ribald in-store advertising which saw a pretty young thing draped over one of his leather products above the payoff line Sofa King – Good. Sweet revenge and also good for sales. But all of that was minor compared to his Board. Or the pansies, as he called them, were afraid to take risk, poor strategically and worst of all sticklers for the rules. As one said at a particularly heated board meeting, we bring a capital O to oversight. You’ll have gathered Fockens didn’t like rules very much and on the days he wasn’t counting his vast fortune, regretted his main board listing on two big bourses. He found accountability onerous, a waste of time and militated against rapid chancefilled decision making on which he thrived. He was plotting quietly when he had his revenge epiphany. His chief compliance officer (whatever that was) had just told him IT governance had now become mandatory and critical to operational success. Boards, he was informed, were responsible for IT governance
and should appoint a Chief Information Officer responsible for the management of IT. This person would serve as a bridge between the IT function and the business. Now Fockens had little idea and little use, for that matter, for computers. Most of his communication was done by shouting at his PA. Apple was a fruit to be eaten, and logging on and off was something lumberjacks did in Canada where, by the way, he’d just opened two stores in downtown Toronto. What few people knew was that he also had a son, the disappointment of his life. Instead of following his father into the business, he’d committed two cardinal sins – studied computer science and lived in Cape Town. The boy PHD had multiple facial piercings, tattoos like a pirate from the Caribbean, dreadlocks like a musician from the same region; smelt like a compost heap and spoke a language no one understood. The last time he’d spoken to his father he casually mentioned he was having trouble with an active matrix adapter in which the single node interface was unable to link to multiple memory storage. His father had put down the phone. A week later the boy wearing a tie-dyed kaftan and rubbertyre sandals took his place on board as the newly installed CIO. He immediately challenged his colleagues to provide him with a payload tracer-route audit in order to prevent Petaflops, pharming and phishing and to optimise memory module metadata. They immediately went into a collective panic and fled and Fockens was able to pursue a new offshore deal without the capital O.
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