It is a fact; since the collapse of so many iconic organisations across the world, the subject of corporate governance has intensified.  But have boards and their directors taken the issue of practicing good governance seriously enough, or have they merely paid lip service to this critical area of business and placed a veneer over their usual business practices?

In South Africa the topic of corporate governance appears to have lost a lot of traction, notwithstanding the sterling efforts and recommendations found in the Corporate Governance Codes documented in King III, and indeed what may be expected in King IV which will be published in draft later this year.  Almost every day South Africa is bombarded with examples where poor governance practices are exposed in government departments, private and listed companies, universities, schools, sport fields and even churches – in fact in all areas of our beleaguered society.  South Africa’s moral compass has lost direction, and our leadership across most sectors has degenerated to such an extent that it is becoming increasingly difficult to see the light at the end of the tunnel.

Expectedly, most leaders claim their allegiance to moral behaviour and good governance practices; but few are willing to have these claims publically tested.  Moreover, it is  disappointing that so many leaders lack the political will — or desire — to make the changes required to reverse South Africa’s current and downward trend, evidenced for example in the continual and adverse findings received from the Public Protector’s office, including the qualified audits from the Auditor General of many government departments.

But public entities are not the only culprit of poor governance; many corporates fail to provide a true reflection of their own daily malpractices, mismanagement and greed.  By examining the annual Integrated Reports provided by many South African companies, which are so often presented in a glowing light and portraying the good side of the company, in reality the ‘dark’ facts are not covered.  This may be evidenced by companies setting inadequate compliance controls, inappropriate operational plans against deliverable targets, lowering the bar and standards, awarding excessive remuneration packages to undeserving directors, a continual practice of environmental polluting, anti-competitive behaviour, unfair labour practices and even inaccurate annual reporting are just a few examples.

Another area for major concern is the level of directors’ experience — particularly in government owned companies — which is inadequate or completely lacking.  This has become a major problem in South Africa and the financial losses against the director’s incompetency is costing taxpayers billions of Rands.  This trend does not appear to be getting any better any time soon, and it is seriously eroding the sustainability of many organisations and indeed the capabilities of our country.  Unfortunately, many directors still treat corporate governance merely as a ‘tick-box’ exercise, and they don’t subscribe to the true value good governance can bring to an organisation.  This is clearly evident when a board undergoes its annual evaluation and the process is conducted making use of a one-page question sheet that lists the same basic self-evaluation questions each year.  Of course a director who self-assesses himself will come out all shiny.  But in all truth, approaching a board evaluation on this basis has little meaning and it adds no value to the intended outcome of improving the skills and knowledge of the directors, not least also for the ultimate sustainability of the organisation.   Simply put, not only is this type of evaluation a complete waste of time to appease a select few, it also provides a false impression of the board’s true ability to lead the organisation with superficial governance.  Given these type of circumstance, directors are not being put through their paces, nor are they being challenged to show their true value to the board and the organisation which they are supposed to be serving.  Boards who follow this menial process show little regard for proper governance, neither are they genuinely willing to learn from the findings, and change themselves for the better.  This lack of seriousness and lack of diligence to ‘stretch’ the director for the benefit of the organisation further exacerbates the leadership crisis in South Africa, not least it also suggests that these directors are in breach of their fiduciary duties owed to the organisation.  As with most things in life, one rotten — or self-serving director — begets another, and eventually the organisation will slump into complacency, mediocrity and dysfunction.