10 + 1 LESSONS ON EFFECTIVE BOARD LEADERSHIP

The fanfare surrounding the SABC enquiry has now come to an end and has resulted in heads-rolling, chopped boards and bruised egos. The purpose of the investigation was to “inquire on the fitness of the SABC board to discharge its duties”, the board had already jumped, save for the then Chairperson, before the enquiry began. The Chairperson’s steadfastness reminded me of the orchestra band in the movie the Titanic, which kept playing until the ship sank. The famous last words by the band leader, before sinking, were: “Gentlemen, it has been a privilege playing with you tonight”. Notwithstanding the drama and the outcomes, it was indeed a privilege to “play” with the SABC’s corporate governance collapse as we now have lessons to learn therefrom.

Scope of the investigation

The terms of reference were wide enough and covered areas such as: financial status and viability, Sabc’s response to the Public Protectors (PP) report, Sabc’s response to court judgements, banning of coverage of violent protests, adherence to the Broadcasting Charter, Boards ability to carry out its duties, governance structures and decision-making processes of the board etcetera. The findings in a nutshell depicts a complete collapse of corporate governance at the broadcaster as well as a culture of impunity towards governance, compliance and ethics. These are challenges faced by SOC’s in general since there is a constant contestation of power between executives and boards of companies. The SABC is unique in that on many occasions, the board appears to have been colluding with the executives in aggravating the situation. At the bottom of this pile, are the demoralised employees who are caught in the cross-fire of maladministration and terror.

 Lessons for Board members

Based on the recommendations of the investigation, the highlights for any board member in any part of the world should be:

1. Knowledge, know your legislation , find out what the legislative framework for your company is? In the public sector its normally called founding legislation e.g. the Broadcasting Act (and all applicable legislation PFMA etc.). Unfortunately, in law, “ignorance is no excuse”.
3. Learn, insist on further education to sharpen your knowledge on your Fiduciary duties (e.g. Companies Act, King IV Code, Memorandum of Incorporation etc.). The SABC board, for example, approved an MOI to remove their powers without understanding the consequences of such a move. Most importantly, sharpen your financial knowledge even if you don’t have a financial background. Most organization soar or fall by their financial performance.
5. Advice, seek independent advice when in doubt, actually insist on it! Make it a rule to not support any agenda item unless you can explain that decision to a two-year-old, trust me it will save you.
7. Processes, understand protocols, processes and delegations this means you must read your Board Charter, Board Committees’ Terms of Reference etc. Find out which process works for which scenario and why e.g. CEO, COO and other executive appointments. Approval of salaries etc.
9. Ubuntu, being a board member should not make you a God. Your duty is to serve your role in the best interest of the company, to contribute towards its success and to serve your stakeholders in an inclusive and humane manner (by the way employees are key stakeholders who make the company work). Arrogance has never achieved anything progressive or worthwhile.
11. Collective, ensure that your executives and senior staff (where possible the whole company) has some form of corporate governance induction (perhaps a corporate governance manual) to ensure everyone understands what it entails. Make it part of their performance indicators (senior management only). It is a mistake to assume that your executives are schooled in the field of corporate governance as history has taught us at most SOC’s unfortunately.
13. Systems, ensure that proper information systems are in place to track all information within the company. Contract Management appears to be in a critical state in most companies, put systems in place. You also have a right to access all company information (as board member) that will assist you in making correct decisions.
15. Preparation, read your Board pack, make time to familiarise yourself with its contents before a meeting. Ask questions, seek clarity, do some research, seek independent advice. See point 3 above again regarding voting.
17. Ethics, keep your integrity intact by providing ethical leadership and avoiding conflicts of interest. There must be a company-wide ethics policy championed by the board. In the event that adverse findings are made against the board (there will be such instances, even judges have judges to correct them via Appeal Courts etc., you are only human after all). Unlike former SABC board chair, take action to correct findings against you or your colleagues. Don’t just ignore it, it does not go away.
19. Integrity, protect your integrity by ensuring that all your discomfort with board decisions and/ or resolutions are specifically noted in the minutes. This applies to instances where you do not agree with an agenda item or board resolution. Don’t be coaxed into the “unanimous resolution” trap. You have a right to have your own view.,
21. Plus 1: Indemnity, get cover! Make sure the board has proper Professional Indemnity (PI) insurance in place to protect you in instances of any legal mishap. The last thing you want is to be served with summons whilst playing with your grand-children 20 years down the line.

I hope these lessons will assist old and new board members alike in executing their duties diligently and without fear or favour.

Ronny Mkhwanazi is a Corporate Attorney based in Johannesburg, South Africa, specializing in corporate law, corporate governance and international trade law.