by Gregory Simpson

The road to success is paved with trust

The personal and social competencies of directors are just as critical as their functional and technical abilities


The personal and social competencies of directors are just as critical as their functional and technical abilities, says the Institute of Directors in Southern Africa’s (IoDSA) incoming CEO, Parmi Natesan, who takes over the reins at one of South Africa’s premier leadership institutes

Natesan is a sought-after corporate governance specialist who worked her way up the ranks at the IoDSA after qualifying as Chartered Accountant with a BCom (cum laude).

She grew up as a self-confessed small-town girl in the slow-paced Port Elizabeth, where everything is smaller. After her first degree, she moved to the bustling Johannesburg with her husband to do her articles and climb the corporate ladder.

The no-nonsense dynamo starts off by unpacking the symbiotic relationship between the IoDSA and the King Committee.

“The King Committee is not a formalised body nor an official body; it’s really just a committee of individuals that get together. The IoDSA runs the Secretariat for the King Committee and we own all of the thought leadership that the King Committee produces. When King IV was being produced, we funded the development thereof, and we own the copyright to the work thereafter. I work very closely with the Chair—the Chair used to be Mervyn King, it’s now Suresh Kana. Our ownership of the King Reports is a core asset for the institute, and it is part of why we’re known, so it’s a very important link,” she explains.

Mervyn King’s contribution

Mervyn King’s immense contribution to corporate governance is well known, with the committee’s recommendations holding water on the international stage, with many countries adopting their recommended best practice for corporate governance and ethical reporting. With King retiring, the experienced Suresh Kana, who was featured in Leadership recently, will be filling those big shoes.

“It goes without saying that Mervyn has made a tremendous contribution to governance in this country, more than any other individual can claim to have done, and the King Committee really achieved a lot under his leadership. Yes, it’s sad to see him go but it’s also great that he’s stepping aside to now let somebody else take the limelight and take the committee forward,” says Natesan.

“In terms of Suresh, we’ve worked with him for many years as a member of the King Committee and also as a member of the institute as a Chartered Director. We’re very supportive of him taking the role and we look forward to working with him to make the King Committee and the institute even bigger names than they are now,” she adds.

CEO succession

This ties in with CEO succession, which is essential to any healthy organisation, and the Committee is a prime example of that happening. All too often, with head-strong leadership, there is little or no grooming process for potential replacements.

“Even at the IoDSA, the succession in terms of me replacing Angela (Cherrington-Oosthuizen) has shown that we’ve really thought this through, it wasn’t just ‘let’s advertise for a CEO and bring in someone brand new’, this has been planned and thought through,” Natesan says.

Feedback from the King IV Report

The King IV Report has been circulating globally over the last 24 months, with a gradual change from the old tick-box in approach the initial King I Report in the mid-90s, to a more stakeholder-driven process of late. Natesan gives some feedback from the industry on the latest version.

“It’s been very positive, I recently hosted a lunch with the sponsors of King IV and it happened to be the two-year anniversary since the launch. Many companies have now implemented it (King IV) and they found that the outcomes-based approach has helped them in terms of not just seeing it as a compliance exercise where they’re ticking boxes, but helping them to think about the benefits and the outcomes and what they, as a company, are going to get out of governance.

“The other point that is also worthwhile noting was the influence within Africa, because the International Finance Corporation (IFC) ran a project where they were going to certain African countries and introducing them to some of the concepts in King IV. The interest has been really phenomenal and I believe a couple of the countries are also looking at revising their codes to align with some of the approaches in King IV,” she says.

The lessons of King continue to be exported all over the world, as many countries grapple with poor corporate governance, especially in Africa; which suffers from an unhealthy appetite for corruption, both in the private and public sectors.

Natesan says, “From a governance perspective, Mervyn will tell you we’re exporting it to the rest of the world because he says, when he’s in a different country, people are asking about King IV and about some of its unique concepts—the outcomes-based approach—and he explains the applicability to all sectors, so it has a global influence.”

The right person for the job

You could argue that South Africa needs to apply some of those principles to the public sector to get the right person for the job in key positions that require a high level of expertise at a senior level. In more recent times, President Rhamphosa has helped in this regard by appointing specialists in key positions.

“King IV is supposed to apply to all organisations. In terms of having the right skills in the government, it goes back to my point of competencies. Generally, in the private sector, there’s a nominations committee that rates candidates and shortlists them, and assesses whether they’re suitable for the position etc. In the government, the challenge is that, usually, there’s just one person—the minister—who is responsible for that area and who was making the appointments, and I don’t know if director competencies are always taken into account when these appointments are made,” Natesan explains.

Boardroom equality

In terms of women in positions of leadership, we are seeing more female directors and CEOs taking their place in various industries, and Natesan is happy with the rate of gender transformation but sees an ironic double standard from other female leaders at times.

“I certainly am seeing an upswing and we’re just going to see that increase in the years to come. There’s going to be more and more opportunities for women. Everyone wants to be a director, it’s a popular thing and there are so many people who say, ‘I want to sit on a board’. My response is always, “You can be a really good lawyer and you can be a really good accountant but it doesn’t mean you’re going to be a really good director. My advice to them is to do the training now, get your designations now, so that when those opportunities do arise in two years time, you are ahead of the pack,” she says.

Are women leaders not supporting equality?

She goes on to raise a telling point, which is that most of her success and promotion has been through the encouragement and support of men, and not women who are already in leadership positions. Why would women not want other women to be promoted?

“One interesting observation I thought of was the success I’ve had in recent years in terms of both non-executive director positions and also now with my promotion to CEO—all have been as a result of men supporting me, not women, interestingly enough.

“All the opportunities I can think of that have come my way in the past couple of years have been as a result of a man putting my name forward or a man encouraging me to apply for something, or a man supporting me when it comes down to a vote or a decision,” she muses.

The value of a good reputation

The value of a good reputation in a company’s overall performance is critical for long-term sustainability, with established companies going out of business overnight due to a thoughtless tweet or a shady offshore business dealing, for example, that can turn off the more conscious consumers of today.

Natesan says, “It’s critical, a company can be here today and be gone tomorrow if they don’t look after their reputation. As part of stakeholder inclusivity, companies can’t be focused on just the bottom line anymore—they simply cannot do it, they will not exist and can’t be sustainable. You need to be taking into account the interest of your stakeholders, and we’ve seen what’s happening with certain brands in the country at the moment where there are reputational issues.”

The term ‘from shareholders to stakeholders’ appears to be the catchphrase of 2018, with forward-thinking companies looking at more than just their shareholders’ interests.“Yes, and not only your clients’ interests but the community’s, the environment’s—all sorts of aspects must be taken into consideration. Gone are the days where we try to make money for shareholders only. Yes, we need to be a sustainable business and make money but we need to do it responsibly, we need to be looking after all the stakeholders,” she says.

The evolution of conduct

The codes of conduct for business have changed over the years, with a more collaborative approach being needed to encourage companies to report effectively and, ultimately, run optimal operations.

“The biggest shift for me is from codes of conduct, which are very much rules-based, towards codes of ethics, where it’s more values-based, where it says, ‘You will act with honesty and integrity etc.’. Codes of ethics are more difficult to measure, probably, but they also yield better results because the minute you have rules, you find ways of bending them, or moving outside of the rules, whereas the move towards ethics and values is more meaningful,” she insists.

Parastatals often grab the headlines for the wrong reasons, with only a handful of them making a long-term profit, while a number are a burden on overstretched taxpayers, like South African Airways, for example. Natesan believes the board of directors should be held accountable for poor results and not rest on their laurels.

“Ultimately, the board is responsible for the organisation performing and the boards must be held accountable, whichever boards they are. It’s particularly in the public sector, when they don’t do well and they get bailed out, those bailouts are coming from taxpayers’ money. It’s not so easy to get those bailouts in the private sector. People need to be held accountable, there’s a feeling of a lack of consequences: someone serves on a board, that company does really badly and that person is removed from that board because of it, but then a year later, you see that person on another board somewhere else,” she explains.

A refreshing approach

In terms of fresh leadership styles, with the President of New Zealand, Jacinda Ardern, bringing her baby to one of the UN meetings recently, could that be something we’re going to see more of in the future?

“That’s a very interesting question. The world is moving towards accommodating different types of people with different priorities. At the institute, I’ve always worked flexible working hours, and I’m a mother of two children as well as being an Executive. If my child has a soccer match or a swimming gala and I wish to go and watch them, I go.

“What you will find is, when you accommodate people with families, you actually get more loyalty from the individual and they probably put in more than the time they’ve taken off at another point in time.

“We’re moving into a world where people can literally work from anywhere at any time. Just because someone’s sitting at the office from eight to five, it doesn’t necessarily mean they’ve accomplished anything and, at the same time, if I’m not at the office from eight to five, it doesn’t mean I’ve done nothing. I definitely see that that’s where the world is moving to, especially in this digital age where you can do anything from anywhere,” Natesan concludes. 

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