KPMG in South Africa organised a successful panel discussion on the recently launched King IV™ Report on Corporate Governance for South Africa 2016. The breakfast discussion was hosted at the Wanooka KPMG offices with an esteemed panel of thought leaders, pioneers and progressive thinkers who shared their views on high performance boards and leadership.
Facilitated by Makgotso Letsitsi, KPMG Partner and Executive Director, the panel included the following leaders with experience across industries in both the public sector and private sector: Mark Barnes (CEO South African Post Office), Dr Kerry Jenkins (KPMG Lead Partner for Corporate Governance and Head of KPMG Regulatory and Compliance), Russel Loubser (Non-executive director FirstRand Ltd and Former CEO of JSE), and Hixonia Nyasulu (Former Chairman Sasol Ltd).
The King IV™ Code provides the 16 principles and 208 recommended practices that should assist the governing body and the organisation attain its ‘good corporate citizen’ status and good governance outcomes. And, while King IV™ is not law, the governance outcomes achieved and the practices adopted and implemented will likely become the criteria by which appropriate standards of conduct for all organisations and their members will be measured.
The King IV™ Code has moved from an ‘Apply or Explain’ to an ‘Apply And Explain’ regime where the applicability of the principles is assumed and where disclosure is required on the practices that have been implemented and how these achieve the associated governance principle/s. This subtle amendment gives credence to the major shift that the new Code is introducing, namely an ‘Outcomes’ based approach to governance.
Under this philosophy, accountability is placed on the governing body (e.g. the board of directors in a company) to attain the good governance outcomes of an ethical culture, good performance and effective control within the organisation and legitimacy with its stakeholders. It is on the basis of achieving these outcomes that an organisation should be evaluated as being well-governed.
“King IV™ is a good refinement for stakeholders. It is an aspirational code and we should be proud of this fourth code as South Africans,” says Russel Loubser.
The narrative from the panellists was clear that ethical standards of the organisation are determined by the behaviour of the board. As such, board members have a crucial role to play when it comes to corporate governance. Both a common purpose and understanding are essential for good governance.
Hixonia Nyasulu emphasised that it is not the role of the company board to put together a strategy. “Management develops the strategy and the Board interrogates the strategy. In addition, courage comes from how the board is composed. That’s why it’s important to have board members that are not beholden to anyone. These are the people who will help the organisation to conduct business ethically with its partners,” says Nyasulu.
Kerry Jenkins added that, “The fundamentals of ethics should play out during decision making, conduct and in relationships.”
“To maintain ethical behaviour, we need to have the courage to speak the truth. The present value spoken now is better than the deferred consequences of lying,” said Mark Barnes. He added that inequality is the biggest social economic risk – and that a coming together of state and private sector to develop a middle class by an intervention of state capital that creates a fusion and marriage between state and private sector is necessary in South Africa.
The panellists concluded that if boards understand their roles and responsibilities, have a proper structure including well-chosen members, exhibit appropriate behaviours, as well as know what is expected of them, it will be easier for them to navigate through the challenges and apply the King IV™ Code.
Makgotso Letsitsi, ended the morning session stating that, “All South African leaders, whether in business or government, have the responsibility for ensuring the future sustainability of the country and achievement of the good governance outcomes of ethical culture, good performance, effective control and legitimacy.”