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CGF Corporate Patron CGF Honorary Patrons Dr Mathews Phosa (2009-2011) | Prof Shirley Zinn (2009-2011) | Devi Sankaree Govender (2010-2012) | Michael Judin (2011-2013) | Tina Eboka (2011-2013) | Bernard Peter Agulhas (2011-2013) | Wendy Luhabe (2012-2014) | Prof Jonathan Jansen (2012-2014) | Amy Kleinhans-Curd (2013-2015) | Prof Steven Friedman (2014-2016) |
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TANGIBLE BENEFITS OF A CORPORATE GOVERNANCE FRAMEWORK®
Forward thinking organisations have realised that corporate governance does not merely fall into the portfolio of the Company Secretary. Indeed, the draft King IV Report on Corporate Governance for South Africa 2016 (‘King IV’), describes corporate governance as “the exercise of ethical and effective leadership by the governing body” of an organisation. Why then is corporate governance still viewed by many organisations as a process which increases bureaucracy and drives a ‘tick box’ exercise?
Perhaps the explanation lies in not understanding and appreciating the value which can be unlocked by implementing a purpose-built Corporate Governance Framework® which is tailored to the organisation. Empirical research supports the fact that good corporate governance translates into tangible and sustainable benefits for the organisation
Read more here : 07 June’16 Tangible benefits of a corporate governance framework
BOARDS THAT CREATE VALUE: CORPORATE GOVERNANCE FRAMEWORK®
It has been painful to watch the likes of Lance Armstrong, Mike Tyson and Hansie Cronje sabotage their futures through poor decision-making. Similarly, many organisations and their boards have failed to demonstrate strong and responsible leadership qualities to motivate and drive their organisations to success. Awareness, decisiveness and accountability are some of the business leadership qualities required to achieve remarkable performances.
The ‘buck’ stops with the board of directors and it is the board of directors who are ultimately held accountable for the success of the organisation. However, with the business landscape changing at an accelerating rate, risk management and decisive decision-making are becoming more challenging and business failures more prominent. A recent Harvard Business Review reports the failure rate for mergers and acquisitions to be between 70% and 90%. According to the United States Small Business Administration, only 44% of new businesses are still in existence after four years. Against this backdrop, how does a board create a sustainable organisation in what are clearly turbulent times?
Read More here : 18 January ’17_High performing boards
DO YOU REALLY NEED A CORPORATE GOVERNANCE FRAMEWORK®?
We know that both local and international organisations are continuously having to adapt to operate in uncertain business environments. Locally, the release of the Preferential Procurement Regulations 2017, which places stronger emphasis on ‘radical transformation’, against the backdrop of persisting low economic growth rates are only some of the elements giving rise to further uncertainty. Internationally, the business and regulatory implications of the election of President Donald Trump and the vote in favour of Brexit and how these events will impact on local markets and businesses, is still unfolding. It therefore comes as no surprise that recent governance, risk and compliance (‘GRC’) surveys all indicate an increasing need to improve risk oversight and to balance opportunity management with risk management. The challenge lies in being able to achieve these objectives! ……
Read more here : 28 Feb’17_Do you really need a Corporate Governance Framework
HIGH PERFORMING BOARDS
Board performance, or the lack thereof, has recently been quite prominent in the South African landscape. Unfortunately, the examples of mismanagement, poor oversight and lacklustre governance of our stateowned entities as well as some private sector businesses, abound. Poor and deteriorating financial results, high staff turnovers, lack of strategic direction and transparency as well as little to no stakeholder communication, are but some of the symptoms of a poorly performing board……….
articles 07 June’16 Tangible benefits of a corporate governance framework 15 July’15-Boards that create value 28 Feb’17_Do you really need a Corporate Governance Framework 18 January ’17_High performing boards
Are you too small for a CFO?
The title of this post is “Are you too small for a Chief Financial Officer (CFO)”. Maybe another way to look at the question is “Will you get much bigger without one ?” A large number of small to medium sized businesses (+- R40m to R200m turnover) that I have advised over the past few years have struggled with this question, with some employing a bookkeeper or appointing an external accounting firm in order to reduce costs and give them a sense of comfort that the CFO role is being addressed.
This model works quite well while the business is performing adequately, but will this model contribute to growth, improved cash flow or identify red flags which may impact on future sustainability?
What is your view of the CFO
The bookkeeping function is important to ensure that your financial transactions are accurately recorded and reconciled. The external accounting firm also plays a critical oversight role and in some cases can prepare standard management accounts for the business. However, in a fast changing world with increasing economic uncertainty, it is definitely becoming more risky to make executive decisions without involving your finance officers.
The historical role of the CFO has been to concentrate on risk management, financial controls and processes. Today this role is expanding to include that of strategy definition and performance management. Whilst the technical aspects of financial reporting, risk management and compliance have not been diluted, the modern CFO also plays a greater role in commercial leadership and assists in day-to-day management responsibilities. The board and other stakeholders are also increasingly expecting the CFO to work in partnership with the CEO to drive stakeholder values and provide feedback on financial as well as non-financial matters.
The strategic CFO needs to be able to look forward and should be actively involved in identifying future investments such as acquisitions, or new growth markets and products. A strategic CFO focusses on gaining a thorough understanding of the company and the environment in which it operates. This means understanding the target market, competitors and suppliers as well as changing economic, political and technology trends in order to evaluate and present strategic alternatives.
Your CFO can be your partner! Instead of costing you more money, the right CFO can help you to make more money!
Why do good boards fail?
There are many current examples of organisational failures – often with no consequences for the board of directors who are accountable to the organisation and its shareholders. Many of these failures can be attributed to organisations appointing directors with inappropriate skills and no sense of fiduciary responsibility. However, there are circumstances where organisations still fail despite the efforts and good intentions of its board. Why does this happen?
In my opinion, there is too little emphasis being placed on a structured approach to governing the organisation. The roles of the board and management are not clearly defined and as such gaps start occurring in managing the risks facing the organisation.
There needs to be a systematic process or framework in place to address risk management within the organisation. There are so many regulations and compliance challenges facing businesses today, that without such a framework it is very easy to overlook an area of the business which requires attention. A good governance framework embraces much more than just compliance. It also speaks to managing the operational and strategic risks facing the organisation.
This view is shared by the CGF Research Institute (Pty) Ltd who recently developed and published a Corporate Governance Framework® which clearly defines the areas of accountability of the board and differentiates these from those areas for which management will be held responsible. This framework presents the board with a structured approach to pro-actively managing risk within the organisation. It provides the board with a way to map and monitor those aspects of the business which require improved governance structures and processes.
Attached please find an interesting article which elaborates on this subject.
16 April’15-Sustainability depends on strong governance framework
Directors’ Silence
Board members’ actions or lack thereof, has been very topical lately. I found that the attached article released by the CGF Research Institute underlines the importance of appropriate dissent in the boardroom. It also emphasises the role a functional board plays in contributing to a successful and sustainable organisation.
Directors are required to act in the best interests of the organisation. This requires a director to have the appropriate inter-personal skills and the requisite knowledge and understanding of his obligations and responsibilities towards the organisation. In addition to being committed to performing his duties to the best of his abilities, a director must be prepared to question actions and decisions being taken by the board. He must also ensure that his differing views are properly minuted.
Constructive debate and dissent in the boardroom should be encouraged to ensure that business risks and proposals are properly explored and discussed so that appropriate governance and strategic guidelines can be communicated to management and the rest of the organisation.
Failure to voice and record your dissent as a director, may result in loss or damage to the organisation. This in turn could expose you to potential personal liability as your silence/inaction may have resulted in a breach of your fiduciary and statutory duties!
29 Sept’14_Director’s dissent_Where your undue silence will be used against you
Can Your Business Survive If Your Factory Burns Down?
The world as we know it has undergone a revolution! The introduction of the internet has forced us out of the Industrial Age and into the Networked Economy. We now have to deal with Facebook, Twitter, Emails, Skype etc. and the way in which these types of platforms and technologies have changed the way in which we do business.
In Seth Godin’s book “The Icarus Deception” he refers to the fact that the Industrial Age taught us that standardisation and mass production were the recipe to cost effectiveness and sustainability – and for a long time this was true! However, the new economy makes it possible for people to source bespoke solutions at a price which suits their pocket. The Networked Economy enables “endless choice and endless shelf space” – you can find anything or anyone you want anywhere in the world!
So how do you
differentiate yourself in a world where anything is possible? It is about building relationships that last! Consider the situation where your factory burns down. If over time you have built up a loyal customer base, your chances of recovering from this setback are good. However, if you lose your customers, having a factory is not going to make your business sustainable.
Think about the recent IT meltdowns at FNB and Standard Bank which resulted in errors in the processing of debit orders and temporarily inaccessible bank accounts. Despite a huge outcry from dissatisfied customers, particularly on social media, how many clients actually changed banks as a result of the problems that were experienced? I know that some would say that it is too difficult to try and change banks, but I would wager that the banks’ reactions to the problems as well as their ongoing customer engagement programs, made it easier for their clients to decide to keep their accounts with these banks.
In order to encourage someone to do business with you rather than with someone else, you need to get noticed and build a relationship of trust. You can no longer only supply the same standard products or provide the same standard service – you need to go above and beyond and your business strategy needs to take this into account! More and more the company’s value system is playing a role in differentiating it from its competitors. It is therefore important to define what the company stands for and how it does business. As we know, trust is earned and not given. As such, consistently excellent performance in all areas of the business becomes even more vital in building brand loyalty. A badly worded advertisement or the wrong delivery address could do irreparable harm to your reputation and your business if you have not built solid relationships with your customers.
In the new Networked Economy, you need to be able to “touch” customers in order to build brand loyalty. Your product/service, the way you make it, the way in which you advertise it, as well as the manner in which you deliver it needs to resonate with a potential customer in order to encourage him to make the decision to buy! Bear this in mind when designing your business strategy.
Strategic Alliance with CGF Research Institute
Palmer Business Concepts is pleased to announce that it has formed a strategic alliance with CGF Research Institute (Pty) Ltd. Jene’Palmer, Chief Executive Officer, will act as Lead Independent Consultant to CGF on matters pertaining to Business Rescue and Turnarounds.
CGF is a Proudly South African, Level 4 BBBEE compliant company that specialises in conducting desktop research on Governance, Risk and Compliance (GRC) related topics, amongst other related company secretariat, regulatory and compliance services.
The alliance with CGF enhances Palmer Business Concepts’s ability to serve its clients by expanding its knowledge base and enabling it to offer a broader range of services. CGF has developed numerous products that cover GRC reports designed to create high-level awareness and understanding of issues impacting a CEO through to all employees of the organisation.
Through CGF’s Lead Independent Consultants, the organisation’s capabilities include the aggregation of local and international best of breed governance reporting services and extend to strategic management consulting, business re-structuring, executive placements, executive coaching, board assessments and evaluation, out-sourced company secretarial functions, facilitation of Corporate Governance Awareness workshops, IT governance through to Enterprise Risk Management (ERM) consulting. These services cater for large corporates, small and medium sized businesses and state owned organisations.
To find out more about CGF, its Lead Independent Consultants and Patrons access www.cgf.co.za or www.corporate-governance.co.za.