Days without news about some or other governance failure or board scandal are becoming preciously scarce. Lately the SABC, with Hlaudi Motsoeneng at the centre, has become a symbol of how governance can go wrong.
We currently seem to be caught in a web of corruption, deception, power play and poor performance that permeates all sectors of our nation. It will be naïve to single out any particular sector, organisation or person as the source of this problem, especially when it has become as endemic as it currently is. There remains little sense in finger-pointing at a corporate executive, a board chair, a minister, or even a president, when the structures of leadership and decision making that they are part of do not take accountability for overall organisational integrity and performance.
What is so difficult about governing with integrity? Isn’t it logical that when cabinet functions well, we gain in pride and productivity as a nation? When the national airline is well governed, precious money can be spent on other priorities. When the national broadcaster is run transparently, we can trust the news we get. When education access is fair to all, campuses can continue to grow tomorrow’s leaders. If the contrary occurs, we find ourselves with the exact ‘burning platforms’ we see at the moment.
Good governance can be a complex task, but the principles are easy to understand. South Africa’s globally respected King code of corporate governance refers to good governance as effective and responsible leadership that is at the same time accountable, fair and transparent. Good governance has two facets: determine the strategic direction of the organisation (or even the nation) and control it well in pursuing the fulfilment thereof. This is not to be done with the mere critical minimum of legal or regulatory compliance in mind, but with an elevated aspiration of being ethical in conduct and in culture. Good governance builds institutions with integrity, making them places in which internal and external stakeholders can put their trust, places where people do not feel compelled to break the gates of power down in order to be noticed and heard.
Bob Garratt, one of the world’s corporate governance thought leaders, speaks about corporate governance as a national leadership asset. He says that our organisations are the cement that holds modern societies together, but then they need to be governed by people who do so with care, skill and diligence, people committed and competent to fulfil their legal and fiduciary duties. This task also goes beyond individual organisations and should involve and influence the whole nation as boards, owners, regulators and legislators work together for the same common good.
Recently I asked a group of directors in training to recall directors by whom they were inspired. Sharing their stories, they came up with examples of trustworthiness and integrity. They spoke about people who can take a principled position and a courageous stance, but remain humble, supportive and accessible at the same time. Furthermore they admired the way in which their ‘hero’ directors were professional, knowledgeable, always well prepared and sober-minded. They also added that such directors lead a company to becoming a good corporate citizen, in the interest of society, and with a view towards increasing morality, reputation, confidence, accountability and transparency. Such directors, they said, govern for sustainable growth and good returns and they make the cost of business cheaper.
So what is to be done about the Hlaudis of this world? Where governance and leadership fail, our knee-jerk reaction is often to call out the proverbial bad apples and demand their removal. But what do we do when we realise that the contamination does not come from the apple but from the barrel, or even the warehouse, in which it is kept? Beyond the individual, there is still the board and beyond the board there are still the ultimate owners of the institution. Logic tells us that replacing parts does not heal the whole; even the healthiest of apples cannot decontaminate bad barrels and warehouses.
Where governance has failed, restoring integrity is a big task. It requires wisdom and courage from those entrusted with the task. It is not easy, but, if we keep to the principles, it becomes achievable.
If you enjoyed this article you are invited to join in the conversation between Professor Mervyn King and Advocate Thuli Madonsela, as well as various aspects related to the application of King IV in the work of boards and directors, at the Business Ethics Network of Africa (BEN-Africa) conference
taking place on 9 and 10 November 2016, in Stellenbosch, proudly sponsored by USB-ED.