1 THE PROGRAMEXECUTIVE’S STRONG GOVERNANCE:CORPORATETHEBOARD
Learning
• Why corporate
• What good corporate governance
Purpose: To learn about governance, and why and how top executives build and use their boards. Objectives: Executives will be able to explain governance is important for success looks to set up and
like • How
PURPOSE AND LEARNING OBJECTIVES
manage a board, and use the board to achieve break-out results 2
AGENDA 1. Recap and orienteering 2. What:What is Corporate Governance? 3. Why:Why Does Governance Matter? 4. What:What Does Good Governance Look Like? 5. How: How to Strengthen Governance 6. Summary and next steps 3
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ASSIGNMENT
1. Use your calendar: Set your three I Musts for the week and map all your time to your calendar. Set one of the I Musts to work ON the business.
2. The ON the business I Musts: Set aside 3 hours to prepare or update your AMP.
3. For the next session: Be prepared to share at the next session.
Topic 1 Recap and Orienteering 5
RECAP: SESSION 1 THE 5 HABITS 6 Mindset Your morning routine Mindset Your morning routine Practice Learn do teach Practice Learn do teach Feedback Coaching Feedback Coaching Focus Your plan. Focus Your plan. Time Management Your calendar Time Management Your calendar
ORIENTEERING –disciplines habit.
• Session 3:Annual planning: the Focus habit. • Session 4: Corporate Governance and Boards: the Feedback habit. 7
become business
. • Session 2: Strategic planning: the Focus
• Session 1: The Personal Habits of top performing executives –Mindset, Practice, Feedback, Focus and Time Management
RECAP: SESSION 2 THE PLAN TOOL FRAMEWORK 8 Touchstone Consulting Group How to be “strategic” when planning. 1 2 3 4 5
20 StatementGuidingyears energizedgetmorningtostrategicinputonboarding,UsedmodelOperatingmodel,BusinessValues,Strategy,Mission,Vision,duringtotheplan,readinthetoyou 5 years Annual Quarterly Monthly Weekly Daily RECAP SESSION 2:THE PLANNING & EXECUTION SYSTEM 9 MeetingsTeam Strategic Plan PlanManagementAnnual&Budget BoardQuarterlyReport,OKRs MonthlyReportsMgt. TheLegendWeekly Daily Calendar PlanningAnnualMeeting AllMeetingHands QuarterlyBoardMeetings MonthlyMeetingsMgt. TheFridayLegendMonday&WIR Communications&Reporting
EXAMPLE OF A CASCADED GOAL
Annual Company-wide
Annual Objective: Grow the IAN and strengthen the IAN’s brand as the largest network of investors that are engaged and passionate about empowering entrepreneurs in Africa.
Annual Key Result (1 of 3): Increase IAN engagement in RENEW’s key activities as measured by participation on calls, trips, the International gathering and deals.
Q1 Investor Management Objective: Designing and implementing a new engagement strategy that creates connection between IAN members and their companies.
Week of Feb 4
Investor Management Activities: Send our IRs for all companies including new video walk-through format with 3 and measure open-rate.
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Q1 Investor Management Key Result:Test new IR format with video walk-throughs of companies.
Quarterly Team OKR Aligned
Week of Feb 4 Laura I Musts: 1) Work with Matt to prepare walk-through video, 2) Help Erin send our IRs and measure open rate. Send report to IC for feedback - check if we have baseline metric to see whether engagement improved. Weekly Legend
Week of Feb 4: Work on videos with Matt. 4-5pm on Monday. Purpose, outcomes and agenda in invite. Daily Calendar Check
09/02/2022 FOOTER GOES HERE 11 POWER OF PRACTICE Critical Success Habit Use a calendar to manage all of your Timetime. Management Habit
LAST SESSION Q&AS Questions & Answers Rapid Fire 12
Topic 2 What is governance? 13
WHAT IS CORPORATE GOVERNANCE? Definition: • Is the set of rules, controls, policies and resolutions put in place to dictate corporate behavior; • It provides the framework for attaining a company's objectives; and, • It encompasses practically every sphere of management, from action plans and internal controls to performance measurement and corporate disclosure. 14 Source: Investopedia DirectorShareholdersBoard(ordirectors)Managing/CEO(O=officers)ManagementTeam(otherofficers)Employees
Governance is about accountability
15 Source: Dreamcast Pinocchio
Topic 2 Why governance is so important for growth 16
BoardShareholdermemberExecutive
17 IF YOU BRING ON AN INVESTOR Owner
Get a better performing company: In Brazil, firms with above-average corporate governance had returns on equity that were 45% higher and net margins that were 76% higher than those with below-average governance practices. ABN AMRO study
Get a higher value for your company: Institutional investors said they would pay 30% premiums to own well-governed companies in Africa. 2002 McKinsey survey
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Source: World Bank Study “Better corporate governance: More value for everyone”
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WHY CARE ABOUT GOVERNANCE?
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WHY BOARD’S ARE IMPORTANT • Holds management accountable. • Advises the CEO on how to win! • Helps the CEO not feel alone. • Sets a natural rhythm for corporate governance (Board meetings) • Provides a legal forum and document (minutes) for decisions. • Pushes diverse and strategic thinking and discussions. • Replaces poor management and rewards top performers. 19
GOVERNANCE AGREEMENTS 20 Hierarchy SPECIFICGENERAL MOSTMOSTAUTHORITATIVEDEFERANTCommercial Code / Company’s Act Memorandum of Association Articles of ResolutionsAssociation
21 Memorandum
The main formation, operations and governance documents for a company Memorandum of Association (MoA): is the document governing the formation of the company (PLC) Initial shareholders – Company name, location and business purpose – Initial share capital, limited liability of shareholders, and initial management of the company These tend to leave a lot of matters to the shareholders/members/managers to decide later on (through the articles of association and various resolutions) of
GOVERNANCE AGREEMENTS
(CONT.) •
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Association
Powers and limitations on authority of the general manager Fiscal year of the company Policies on the distribution of profits
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Also, the MoA/AoA will set out particular actions which the shareholders must vote upon - that vote will be conducted via resolution of
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Specific voting thresholds for certain actions (transfers of shares, replacement of managers, etc.)
22 Articles
GOVERNANCE AGREEMENTS of Association (AoA): are an amendment to the MoA, and set forth in greater detail how the company will be run and managed. AoAs include details about:
Frequency of meetings of members –
Association
(CONT.) • Articles
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GOVERNANCE AGREEMENTS
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Resolutions: are written evidence of agreements made by the members of the company to cause the company to take or not take a specific action These are typically the more specific decisions that a company must take (and that cannot practically be specifically provided for in the MoA/AoA) for example: Removing a general manager of the company Approving the incurrence of a loan Approving a move from one office to another office Agreeing not to execute a particular plan until certain conditions are met
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(CONT.) •
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23 Resolutions
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RESPONSIBILITIES OF THE BOARD OF DIRECTORS
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• Holds management accountable. Establishes corporate values and governance structures for the company; Ensures that all legal and regulatory requirements are met and complied with fully and in a timely fashion; Establishes long-term strategic objectives for the company; Establishes clear lines of responsibility and a strong system of accountability and performance measurement; Hires the chief executive officer, determine the compensation package, and periodically evaluate the officer’s performance; Ensures that management has supplied the board with sufficient information for it to be fully informed and prepared to make the decisions that are its responsibility, and to be able to adequately monitor and oversee the company’s management; Meets regularly to perform its duties; Acquires adequate training.
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24 Copyright © 2013 CFA Institute
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Topic 4 What does good governance look like? 25
CORE ATTRIBUTES OF AN EFFECTIVE CORPORATE GOVERNANCE Clearly defined manager and directorresponsibilitiesgovernance Identifiable and accountabilitiesmeasureable Fairness and equitable treatment in dealings Transparency and accuracy in disclosures Delineation of rights of shareholders and stakeholdersother 26 Copyright © 2013 CFA Institute
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Subtle Signs
BAD GOVERNANCE
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Executive does not openly share information: They get defensive if challenged or questioned. Executive makes excuses about performance: They do not get something in on time, miss a meeting, do not come prepared. Always someone or something else's’ fault. They do not live by the expectations they set for their team and company.
Executive shows a lack of discipline: late for meetings, unorganized (not calendar), doesn’t know their numbers, doesn’t take notes during meetings, doesn’t follow up after the meeting, etc.
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Less Subtle Signs There are no plans for the company (Strategic plan,AMP, budget) that are created, sign-off on and regularly evaluated. There is no formal board or members’ meeting, that meets regularly to review management performance against the plans. There are no documented minutes showing discussions, voting and decisions. The company does not make available to shareholders, quarterly/monthly finance statements and management commentary. Statements contain errors.The company lacks financial controls. Staff do not know the company’s values. Staff are guarded and nervous when questioned.
BAD GOVERNANCE (CONT.)
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The company has a clear organizational structure
Board appoints an outside auditor to the company and the company has passes audit with an unqualified
GOOD GOVERNANCE (SCORECARD)
Board reviews bylaws (AoA, MoA, resolutions) no less than once a year
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A competent and diversified Board that meets no less than quarterly
Board minutes are sent out within 3 days of the meeting and signed at the next board meeting
Score 1-10
Financial(TvA) statements are prepared monthly with management commentary Management has clearly defined roles, responsibilities and KPIs for each unit and member
Board has a stated ethics and gender diversity policy that all directors and officers (executives) have Boardsigned approves an annual management plan and budget
Management compensation is set by Board and aligns management interest with shareholder Management meets regularly (no less than monthly) to evaluate implementation of the AMP and budget
Boardopinionmaterials are prepared and sent out 3 days before meetings
Criteria (simplified)
WHY HAVE A GENDER SMART BOARD 30
The Boardroom Africa promotes exceptional female talent to boards across the continent.
GENDER SMART GOVERNANCE SCORECARD • Example: SEAF Gender Equality Scorecard 31
GENDER SMART GOVERNANCE SCORECARD
Example: SEAF Gender Equality Scorecard - Calculating metrics 32
GENDER SMART GOVERNANCE SCORECARD
Example: SEAF Gender Equality Scorecard - Calculating metrics 33
34 Example: SEAF Gender Equality Scorecard - Calculating metrics
GENDER SMART GOVERNANCE SCORECARD
35 Example: SEAF Gender Equality Scorecard - Calculating metrics
GENDER SMART GOVERNANCE SCORECARD
GENDER SMART GOVERNANCE TOOLS Gender smart communication in all governance documents 36 Link to toolkit
THE AFRICA NETWORK
BOARDROOM
37 Video:
GENDER SMART INVESTORS SEEKING COMPANIES IN EAST AFRICA • The Gender-Smart Enterprise Assistance Research Coalition (G-SEARCh) comprises a group of 6 investors active in East Africa: 1. AlphaMundi 2. Acumen 3. SEAF 4. Root Capital 5. AHLVenture Partners 6. Shell Foundation 38
GENDER SMART INVESTORS SEEKING COMPANIES IN EAST AFRICA
Gender-Smart investment examples
39 •
Kentaste Products Limited (Kentaste) focuses on processing retail food products (oil, cream, and mil) from coconuts and sources its coconuts from brokers and smallholder farmers in Kenya. With support from G-SEARCh, Kentaste will co-develop a gender commitment statement and policy and increase women's participation in non-traditional workplace roles and leadership positions.
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Gender-Smart investment examples
GENDER SMART INVESTORS SEEKING COMPANIES IN EAST AFRICA
Twiga Foods is the largest distributor of fresh produce in Kenya, working to connect informal vendors with higher quality, fresh, and processed food from farmers and food manufacturers.The company leverages their technology enabled food distribution platform, SokoYetu, to source quality produce and efficiently and transparently deliver produce to local vendors.
• With support from G-SEARCh,Twiga will analyze market data for product development with a gender lens to further its gender commitment efforts.
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Gender-Smart investment examples
GENDER SMART INVESTORS SEEKING COMPANIES IN EAST AFRICA
• Apollo Agriculture provides small-scale farmers with customized packages of seed, fertilizer, farming advice, credit and insurance. They use satellite data and agronomic machine learning to enable better credit decisions and provide customized advice.
• These farmers work with Apollo's agrodealers, who are key touchpoint for women farmers.With support from GSEARCh, the company will assess women agrodealers' needs and provide them with tailored support.
For example: The European Investment Bank (EIB) has launched SheInvest, a new initiative to boost gender equality and female economic empowerment in Africa. The aim is to invest EUR 1 billion into gender-smart companies.
GENDER SMART INVESTORS SEEKING COMPANIES IN EAST AFRICA
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2X Challenge: 18 DFIs and MDBs investing directly into gender-smart companies and via local financial intermediaries (fund and financial institutions). They have collectively invested more than $ 4.5 billion in gender-smart businesses in only 2 years. East Africa is a key investment geography.
investee,
fund manager
GENDER SMART INVESTORS SEEKING COMPANIES IN EAST AFRICA
“A more gender-balanced leadership team makes better decisions and a more gender-balanced staff creates better products for its market.” Stefan Issler, head of direct investments at responsAbility Investments AG on PEGAfrica, an off-grid solar company in Ghana. “We decided we wanted to be a gender-equal company and that’s where we are today: 51% female and 49% male.”
Video:
PEG 2X investee, responsAbility fund manager
David Butler, managing director of Food Concepts PLC. Thanks to the Nigerian company’s gender-equality policy and 2X members support through the fund manager Development Partners International (DPI), women are able to increase their own opportunities.
Video: 2X DPI
Food Concepts
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GENDER SMART INVESTORS SEEKING COMPANIES IN EAST AFRICA
GENDER SMART INVESTORS SEEKING COMPANIES IN EAST AFRICA
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Topic 5 How to strengthen governance 46
6 STEPS TO BUILDING GOOD GOVERNANCE
2.
1. Read and understand your corporate agreements. Write down your plans, and use (Sessions 2, 3).
3. Organize a board or advisory group or peers you respect. Have an odd number. Reminder: Pay advisors. Board members invest. Begin holding quarterly or monthly meetings.Take them seriously. Prepare. Ask your board or advisors for feedback. Use their feedback. Start building your SOPs (later sessions)
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READING READ THIS Document: 4. Good GovernanceRunning Board Meetings 48
BREAKOUT GROUP ACTIVITY a 3 min update on how your AMP and planning discipline is going
IfYes, how will you strengthen it?
• Question
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• Question
governance? 49
Question 1: Do you have a board?
Did you do what you said you would do from last session?
• Provide
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If No, what advice do others have to help you organize a board? 2: How can you use your board to attract capital and increase the value of your business? 3 What do you commit to doing after this session to strengthen your
Write down your answer to question 3.
Summary
and Assignment 50
Topic 6
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• A diverse and strong board is an indicator of good corporate governance. -
SUMMARY: GOVERNANCE governance is tool of the feedback habit.
about accountability. Main
The board holds management accountable to executing the company’s plan.
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Top performing executives use and value their boards; like coaches. Do this!
- Regular board meetings are important. Investors look at the minutes when valuing a company.
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• Corporate
. • Know
Evidence shows companies with strong corporate governance are more successful and valuable and read your corporate governance documents
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The board is the group elected to represent shareholders and is the group the executive (or management) team reports to. -
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ASSIGNMENT
1. Use your calendar: Set your three I Musts for the week and map all your time to your calendar. Set one of the I Musts to work ON the business.
2. The ON the business I MUST: Take three hours to evaluate your company’s governance document (see slides) and produce three ideas to strengthen your corporate governance. Continue working on your Q2 2021 OKRs.
REFLECTION TIME • Please take 5 minutes to fill out your module questions: – What did you learn? – What will you immediately apply to your company? • Please take 5 minutes to complete the feedback form 53
54 Thank you! www.renewstrategies.com
2. On Sunday, the CEO or COO review the managers’ plans and outlines the company-wide goals, and puts those at the top of the Legend
4. Wednesday mid-week check in at 9am. Status update – standup meeting
How it’s Organized: Company wide goals at the top, Manager’s I Musts, Unit project plans that are being executed to accomplish the KRs
3. On Monday morning, each team member/manager sets their weekly 3 “I Musts” before 9am, and then shares those during the 9am Legend call
5. Friday, end of day Week In Review meeting.TvA on all company-wide goals, I Musts and project (go back to #1)
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How it’s used:
What is it:
1. On Friday, all managers meet with their teams to review their progress for the week, and set their goals for the coming week
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The company’s weekly project management tool.Activities are designed and executed each week that are aligned to the quarterly/monthly KRs
WEEKLY BATTLE RHYTHM:THE WEEKLY LEGEND
56 Legend Guiding Statements (20+ Years) Annual Objectives for YEAR Success for the Week Values: Vision: Mission: Strategy: Objective 1:AAAA 1.Department 1: 2.Department 2: 3. I Musts 1. CEO: 1) 2. COO: 1) 3. CFO: 1) Department 1 Q1 Objective: 1. KR 1 Activity 1 2. KR 2 Activity 2:
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EXAMPLE CALENDAR
OKR TIMELINE 58
Source: https://www.tanics.io/tanics-blog/okrs-101-the-basics
OKRsQ4OKRsQ1 OKRsQ2 OKRsQ3
59Source: John Doerr
