Page 24 - The Corporate Report Pack

in Europe and the United States, while the average Australian director sits on 13 boards
I do, however, want to sound a word of caution against applying a one-size- ts-all approach to how many directorships any given individual should hold Individual directors have di erent capacities and abilities, and not all board roles are equally demanding, nor are all companies or industries King III suggests taking each case on its merits and suggests:
In view of the time and dedication required to ful ll the above duties properly, it is important that non-executive directors do not hold any more directorships than is reasonable for them to exercise due care, skill and diligence. ey should, therefore, honestly apply their minds to their workloads and abilities to discharge their duties. e board should examine the number of signi cant directorships held by an individual as part of the due diligence process. is should be balanced against the advantages obtained from an individual serving on more than one board or on more than one committee of a board or both.2
based on the view that too many of the same types of people serve on the boards of our corporates and parastatals In other words, boards – like other organisations – tend to reproduce themselves Existing board members tend to recommend candidates to ll vacancies and, human nature being what it is, people tend to know and trust people like themselves
is point is substantiated by the nding that the number of active non-executive directors on JSE-listed company boards has declined, as noted above is suggests that, given the historical lack of diversity, we are not doing enough to attract new people – especially new types of people – into the sector One must also accept that perception a ects the legitimacy of any organisation, and it is therefore worthwhile to take steps to ensure that unfavourable perceptions are corrected
Clearly, then, I think nominations committees will have to start casting their nets rather wider than in the past, making a conscious attempt to nd di erent types of individuals who can add value to the board Some of the key characteristics they should be looking for are summarised in the box below As has o en been observed, board diversity helps companies to
Existing board members tend to recommend candidates to ll vacancies and ... people tend to know and trust people like themselves.
e nal point is well made – many companies actively encourage their board members to sit on more than one board in order to gain varied experience, on the assumption that they will be better directors I o en think that an overemphasis on independence can mean that directors may lack the industry knowledge and experience to add value to the business and, most important, challenge the executives from a position of strength
Perception is everything
I would like to return to the perception that South African boards rely on the same directors too frequently As noted above, gures don’t quite bear this out but I think the perception could really be
make the right decisions for long-term sustainability as it helps prevent groupthink
As we all know, such an approach is logical but it has its challengesMany people looking to begin building careers as non-executive directors complain of the familiar catch-22: experience is a prerequisite for the job, but how do they get the experience?
e Institute of Directors in Southern Africa (IoDSA) is very conscious of this challenge, and also of the need to strengthen boards by making a larger pool of directors available for companies to choose from We have introduced an associate membership category so that the directors of tomorrow can start to build up
2 Institute of Directors in Southern Africa ‘King Report on Governance’ (King III) (September 2009), Chapter 2, Principle 219, Recommendation 84
32 The Corporate Report
How many is too much?