AW: Why is it important for leaders to understand and apply good governance?
DP: The board and its directors are responsible for corporate governance in an organisation in order to ensure the business achieves and maintains an ethical culture, good performance, effective control and legitimacy.
The board must set the tone at and from the top and ensure governance is embedded throughout the organisation. Getting this right will enable organisations to benefit from the competitive advantage of corporate governance and thrive in a sustainable manner.
AW: What can be done to prevent a culture of poor governance? (Adoption of King IV principles, professionalism, measuring competence, professional development, for example.)
DP: A large number of directors have not had the necessary governance training and thus lack a proper understanding of the duties, responsibilities and accountabilities of a director. One way of preparing oneself for a directorship role is via the Certified or Chartered Director designations, offered by the Institute of Directors.
ALSO READ: IoD appoints new chairman
These designations are specifically designed to enhance directorship as a profession and improve the competence of directors. Having the right people as board members, with the necessary knowledge, skills and experience, together with a balance of independence and diversity, will go a long way to improving governance.
AW: What is the biggest challenge for governing bodies from a best practice point of view?
DP: The conformance responsibilities of boards have increased significantly in recent years as a result of a demanding political and economic landscape and onerous new requirements from legislation, regulations and codes.
These factors are often marginalising critical aspects of their role, such as performance, strategy and sustainable value creation. Where this is the case, steps need to be taken to improve efficiency and focus more time on performance.