When Jabu Mabuza announced his resignation as Eskom board chair, President Ramaphosa’s spokesperson, Khusela Diko, said government would “soon announce a reconfigured Eskom board with the appropriate mix of electricity industry, engineering and corporate governance experience”
Commenting on this statement, Parmi Natesan, CEO of the Institute of Directors in South Africa (IoDSA) said that this opportunity must not be wasted. “The IoDSA has repeatedly warned that government must ensure that state-owned entities have boards with the right mix of skills to fulfil their mandates,” she explains. “One of the critical factors in the performance of our SOEs is the appointment of board members who have the necessary director competencies.”
“At the same time, it’s important to ensure some continuity so that institutional memory is not lost.”
It is thus critical that the board-nominations process is sound and transparent, and that there is good succession planning.
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In a recent paper on the “Challenges facing Public Sector Boards”, the IoDSA tackles this and other issues. The IoDSA argues that government should adhere to governance best practice in appointing board members even if it is not obliged to do so. Best practice as outlined in King IV is for board members to be chosen through a rigorous nominations process that takes into account the skills and competencies the board requires.
“Even if it is not compelled to follow best practice, the IoDSA is adamant that it makes good sense for government to work closely with the board and specialist professionals to ensure that the individuals appointed have the skills that the board needs.
“These would include people skills, governance skills and sector-specific skills,” she says. “Government should resist the temptation to select the new board members on its own—proper consultation with informed people will help ensure the right people are chosen and begin rebuilding public trust in the organisation.”
Dr Simo Lushaba is a Chartered Director and facilitator at the Institute of Directors in South Africa (IoDSA) and a co-author of the IoDSA’s paper. He says that proper due diligence of new directors is absolutely vital, and should ideally be conducted by a third party.
He argues that this and other best practices are to the advantage of both the organisation, which will get the leadership it needs to prosper and government, which will benefit from the organisation being able to fulfil its mandate.
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The IoDSA has been driving a successful programme to provide professional certification for directors. It is Chartered Director South Africa (CD (SA)) and Certified Director designations provide vetting that an individual has a certain level of competence in directorial skills—and that these skills will be continually refreshed. Holders of these certifications are also bound by a Code of Conduct and CPD requirements enforced by the IoDSA.
“Eskom is a lynchpin of the economy, and we will not reignite economic growth unless we can return it to health. A board that has the right mix of skills is the essential first step,” he concludes. “The same principle holds true of all our SOEs.”