Chair of the Future Accelerator of change - Deloitte
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Chair of the Future – South Africa 2021 | Accelerator of change Contents Foreword 03 Black swan events are increasing the pace of change and shifting priorities 04 The five dimensions of the Chair of the Future 14 Ten pieces of advice to the Chairs of the Future 20 Looking ahead 22 About this research 23 Endnotes 23 Contacts 24 1
Chair of the Future – South Africa 2021 | Accelerator of change Chair of the Future – South Africa 2021 | Accelerator of change Foreword Welcome to the first edition of the Chair of onto the next generation of leaders the Future – South Africa. This report forms to help them to build more resilient part of an international series of reports organisations and a just society. I was When we embarked on this journey and is based on interviews with Chairs and excited to hear strong commitments to non-executive directors (NEDs) of leading skills development and talent development late last year, I could have not imagined companies operating in South Africa. and enjoyed the frank conversations about diversity and social responsibility. These the support we would receive from When our colleagues in the United Kingdom (UK) released their first Chair of conversations made me confident that many organisations in South Africa are in so many leading Chairs and their the Future report in 2017, the world was a good hands. completely different place. By the time I was appointed Chair of the Deloitte Africa My goal for this project is to kickstart willingness to participate in this project. Board in 2020, the world was in the midst conversations about building and growing of a global pandemic. Navigating this the Chairs of the Future. We at Deloitte are I am very grateful to my fellow Chairs pandemic has probably been the greatest test of any leadership team and it has been committed to support Chairs in building a platform that will allow them to identify, Ruwayda Redfearn Chair of the Deloitte Africa Board who made the time to share their no different at Deloitte. grow, and empower the next generation of leaders, and in driving excellence in the experience and knowledge with us. The pandemic has shifted priorities. boardroom. It has made us reflect on the way we run companies, particularly on the When we embarked on this journey late We thank the contributing Chairs for responsibility we as corporate South last year, I could have not imagined the Africa have to society and our staff. It support we would receive from so many their commitment to mentoring and has shone the spotlight onto the many socio-economic challenges with which leading Chairs and their willingness to participate in this project. I am very supporting the Chairs of the Future. South Africa grapples, including high unemployment, and unacceptably high grateful to my fellow Chairs who made the time to share their experience levels of inequality and poverty. and knowledge with us. We thank the contributing Chairs for their commitment However, I am encouraged by the to mentoring and supporting the Chairs of conversations we have had with Chairs the Future. of leading companies. I sense that these Chairs have a strong willingness, in fact, I hope you find the Chair of the Future – a sense of passion and purpose, to South Africa useful and I look forward to contribute to our society and to ensure your feedback. that their skills and experience are passed 2 3
Chair of the Future – South Africa 2021 | Accelerator of change Chair of the Future – South Africa 2021 | Accelerator of change Black swan events are increasing the pace of change and shifting priorities Navigating uncertainty While the Covid-19 pandemic is hopefully World Uncertainty Index – 1990Q1 to 2020Q4 a once-in-a-lifetime event, it would be is a critical leadership “The pandemic has emphasised negligent and irresponsible for Chairs that the world has been ill- skill. While organisations to assume that this is the last global 60 000 prepared although we were pandemic or black swan event. Therefore, prepare for known and forewarned.” it is crucial that Chairs drive a culture of risk unknown risks, dealing sensing and actively encourage scenario 50 000 planning to increase the preparedness with so-called black swan A key element of a black swan event, of their organisations to deal with future events is the true test of such as the global COVID-19 pandemic, shocks and the impact of climate change. 40 000 is the increased level of uncertainty and leadership. According to ambiguity. As infection numbers have the World Uncertainty increased and governments across the world have introduced measures to deal “The Chair of the Future will 30 000 Index,1 global uncertainty with the pandemic, companies have had to need to manage two things: has been relatively high for continuously respond to this ever-changing firstly, ambiguity and secondly, operating environment, changing the about 10 years. However, demands on and the role of Chairs. uncertainty.” 20 000 COVID-19 has pushed While certain changes to the role of boards uncertainty to new levels. and Chairs had already started to emerge 10 000 prior to the pandemic, COVID-19 has acted as an accelerator of change. As much as COVID-19 has been devastating from a 0 social and economic point of view, it has 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 also acted as an accelerator, fast-tracking change, and having a major impact on Source: Ahir, H, N Bloom, and D Furceri (2018), January 2021 update board agendas, shifting priorities to areas previously regarded as “less important”. 4 5
Chair of the Future – South Africa 2021 | Accelerator of change Chair of the Future – South Africa 2021 | Accelerator of change Becoming increasingly hands-on More time-consuming and demanding Being more actively involved in the As a result of the increased demand As NEDs seem to be less likely to hold “What can go wrong with Chairs business is beneficial to Chairs as they feel “In the US, they want you to “I am available 24/7 to EXCO, on Chairs and NEDs in terms of time multiple NED roles at listed companies, the it provides them with more insights into allocation, it seems to have become less pool of future NEDs and especially future is that they may struggle to know have skin in the game. And King interact with the CEO regularly the state of the organisation and more common and attractive for NEDs to be on Chairs needs to be expanded. Many of where to stop and that they opportunities to offer better guidance and doesn’t want you to have skin in via phone, WhatsApp, etc. at any multiple boards or to chair more than one the Chairs report that they prefer to “grow get too involved in day-to-day expertise to the executive team on a more the game. These are concepts time. It’s the nature of the job.” board. Currently, less than one-third of their own timber” when it comes to filling business.” regular basis. This on-going engagement which have to be revisited. I Chairs of JSE Top40 companies sit on more leadership positions in their organisations. with various parts of the business also than two boards of listed companies and This poses the important question of what struggle with the idea that you The move towards being more hands- enhances the quality and depth of none of these Chairs sits on more than role Chairs will play in developing future Given increased uncertainty, the information on which the NEDs will have to are either NED and governance on and the need for more frequent four boards of listed companies. board talent. One potential solution to rapid advancement of disruptive base their decisions and guidance. is stronger, or you are executive engagement with the rest of the board expanding and developing future board and the executive team is reflected in the talent is to encourage executive and technologies and the growing complexity Chair and the governance is “Being an NED is not a quarterly of organisations and markets, many time Chairs allocate to fulfilling their role. senior management to seek out board weaker.” This does not necessarily mean that there engagement anymore, but you Chairs feel that they have had to become opportunities in non-competing industries “In South Africa you find politically are more frequent formal board meetings, more hands-on, to support their have to dedicate more time and, in so doing, gain experience as an organisations’ efforts to navigate these well-connected people as but rather that there is increased demand NED. However, this needs to be managed “I think a chair needs to be much to make sure you get into the new circumstances. Most Chairs feel that chairs. But this does not really for formal and informal communication carefully to avoid a shortage of executive more involved. You can’t be a between the Chair, the board, and the zone of the managed trusted leadership talent, as seen already with there is a fine line between being hands-on help. Going forward, this will as a Chair and being an executive and that faraway figure head. You need executive team. relationship. Making sure that the limited availability of black female cripple businesses. You want a they must tread carefully in this regard. to understand the business the Executives are not running leadership. Chairs need to remember the ultimate role businessperson to be a chair Several Chairs attend committee meetings, you are involved in. You are with some trying to attend all committee away with decisions without NEDs of an NED, which is to provide oversight, because they understand the not effective if you only know meetings. While Chairs believe that it is knowing about it.” “In the past you had five or more to challenge, and to guide the executives business world.” by leveraging their experience and skills. A how to run boards... You will beneficial for them to attend committee NED roles, but now I think three hands-on approach must not be confused meetings, this has also increased the time is enough or four maximum, be able to fulfil your role better they spend on preparing and attending with assuming an executive role and with Gone are the days when Chairs dropped especially if you chair a sub- because you know the nuances meetings. getting operationally involved. Hands-on in in for quarterly board meetings and of the operations, etc. It’s an all- committee. So, for the few the context of a Chair means maintaining a an annual strategy session and then current view of not only the business, but disappeared for the rest of the year. Going encompassing role.” people there are, their dance also the environment within it operates. forward, Chairs will continue to be hands- cards are full.” on as they will need to have their fingers on the pulse of the organisation not only to guide and advise the executive team, but “The next generation of Chairs Number of additional NED roles in listed companies of JSE Top40 Chairs also to better hold them accountable. The have to be knowledgeable and Chairs of the Future will need to have an in- 14 14 really know the business, not just depth understanding of the organisation, 9 [be] figure heads. In the past they combined with an agile mindset that allows them to effectively navigate unchartered 3 perhaps have been guilty of being and uncertain waters. figure heads.” 0 1 2 3 Source: Deloitte calculations based on Who Owns Whom 6 7
Chair of the Future – South Africa 2021 | Accelerator of change Chair of the Future – South Africa 2021 | Accelerator of change Creating diversity – the right thing to do While progress in terms of diversity of diversity has developed into a business range of perspectives and new ways of Gender of JSE Top40 Chairs boards has been made in recent years, “Quite simply, you won’t have a imperative and is regarded by many the thinking. Considering increasing complexity the JSE Top40 are yet to reflect the “right thing to do”. and heightened uncertainty, boards can successful company if you don’t demographics of South Africa. Only half of leverage different perspectives and ways of have a diverse board… We need thinking to increase the resilience of their the JSE Top40 companies are chaired by 20% to be bolder about bringing in “If you only have 30% females organisations. Black Chairs and only one-fifth are chaired on your board, you are missing by women. younger people who bring the diverse skills sets needed in the some big things and some Male “You need to start opening In recent years, the concept of diversity 80% boardroom.” potential firepower. So, it’s very and its definition have broadened. Chairs yourself for not just a culture Female important to have diversity on increasingly look beyond racial and gender fit. If he/she is not a fit, you the board, to bring the very best diversity in their boardrooms. Many Chairs Given South Africa’s history, diversity in the need to ask yourself, “Are you agree that experience, which often comes to the company.” workplace and on boards has been on the tolerant enough? Are you open with age, is a key part of being an effective agenda for many years. However, several for disruption? Are you open to NED and Chair. However, some Chairs Chairs observe that conversations about argue that young NEDs add a unique There is consensus among the Chairs someone who doesn’t look like, diversity have changed in recent years. In that having a diverse board that better perspective to the board, especially in the past, meeting diversity requirements doesn’t dress like you, doesn’t organisations where a large share of the Race of JSE Top40 Chairs reflects South Africa’s demographics is was often seen as a “cumbersome tick- beneficial for organisations. Diversity in speak like you?” customer base is the youth, or where box exercise”; however, in recent years, the boardroom tends to provide a wider the board lacks certain skills related to digitalisation, innovation, or sustainability. Going forward, effective boards will have a balance of skills, backgrounds, and 25 expertise. JSE Top40 Chairs by age group Black 47.5% 52.5% “I think there is a skills gap. White 9 On our board, I’m looking for 5 diversity and that’s across 1 gender, skill and colour.” >50 years 50-60 years 60-70 years 70+ years Source: Deloitte calculations based Source: Deloitte calculations based on Who Owns Whom on Who Owns Whom 8 9
Chair of the Future – South Africa 2021 | Accelerator of change Chair of the Future – South Africa 2021 | Accelerator of change Open lines of communication Responsibility to society Prior to the pandemic, many Chairs had remuneration of executives, not matters society. Hence, putting the social and “An ideal position between CEO already established open communication “The social and ethics committee related to ESG. This seems to contrast with ethics committee on a more equal channels with their executives. However, shareholder activism in other markets, footing with other committees will be and Chair is a close working used to be the runt of the pack the pandemic, and the associated business such as the UK or the United States (US), important. Looking at the discrepancy in relationship where you see and supply chain disruptions, remote and you see that evidenced in where shareholders scrutinise companies remuneration across committees, with yourselves as partners without work, changing government regulations, the remuneration.” for their environmental and social impact. Audit Committee chairs at some listed getting too close to not be able and customer implications have increased companies earning up to three times the frequency from monthly or weekly more than their counterparts on the social to challenge or disagree.” Many Chairs are aware of the important “If we as business leaders conversations to almost daily calls. Given and ethics committee, it is questionable the frequency of interactions with their role their companies play in society and don’t recognise the impact of whether the importance of the latter is chief executive officers (CEOs), most are seeking ways to balance financial climate change and put it on fully appreciated. Black Swan events and other shocks often Chairs highlight that building a strong and sustainability and the profitability of lead to heightened uncertainty. As much companies’ agendas, we will trust-based relationship with their CEO is a their businesses with their responsibility as COVID-19 has forced us to reduce not be sustainable. Chairs need “ESG has become so fundamental crucial role of the Chair. towards the communities they operate in-person interactions, effective, clear, in or service. The public is increasingly to understand these issues in and has shifted from companies and timely communication between the looking to the private sector for solutions order to be able to drive these being seen, to wanting to board and the executive team has played “During the course of last year, to major socio-economic issues, including and continues to play a fundamental role agendas.” demonstrate what their views the frequency of talking to CEOs inequality and poverty, access to education in responding to the pandemic and its and actions are.” of the company where I am and healthcare, and climate change. impact on business, the economy and society. As such, many Chairs confirm that Chair went to daily calls. It didn’t Given the high level of inequality in South Interestingly, there are divergent views the frequency of communication between about ESG, depending on the industry. matter who initiated it, and some Africa, balancing financial, environmental, In this context, the Chairs of the Future them, their boards and their executive In the extractive industries, for example, will be critical in empowering the social days it would be a WhatsApp social and governance (ESG) objectives the social and environmental impact of teams has increased substantially, and ethics committee to become the voice message, but there were is a pressing issue. Finding this balance especially at the onset of the pandemic resource companies has been under the company’s social and ethical conscience has become even more relevant during when new information became available daily interactions because it was the pandemic. While the impact of spotlight for some time now. and to steer companies towards a more almost daily. necessary.” just and equitable future. Part of this lockdown and the subsequent decline One of the reasons why companies empowerment process will be ensuring in economic activity has been severe, struggle with finding the balance between that the board contains the right mix of low-income earners have been hit the financial objectives and ESG objectives is skills and experience and that ESG matters hardest. According to the BankservAfrica the difficulty in measuring the latter. While are firmly on the board’s agenda. Elevating Take-home Pay Index (BTPI) published in measuring the financial performance the importance of these matters will November 2020,2 income earners taking of a company follows well-established embed ESG into the organisation’s strategy home less than R30 000 per month were processes, the measurement of social and and shared purpose and will support the the hardest hit by the economic slowdown environmental impact seems to be more emerging trend towards more holistic during the pandemic. complex. reporting that focuses beyond financials. In recent years, there has been a rise in In the past, social and ethics committees shareholder activism in South Africa, which focused on compliance with B-BEE is set to increase the focus on matters requirements. This is changing. Going related to sustainability, environmental forward, social and ethics committees and social matters further. However, some will play a critical role in bringing ESG Chairs question the “maturity” of these matters to the top of the agenda and, in activists and point out that at Annual this context, the committee can serve General Meetings (AGMs), the key focus as a catalyst driving the organisation’s is mostly on financial performance or social and environmental impact on 10 11
Chair of the Future – South Africa 2021 | Accelerator of change Chair of the Future – South Africa 2021 | Accelerator of change Technical skills are not good Moving wellbeing into the spotlight enough anymore Since the onset of the pandemic, the Chairs of the Future will require a blend of “Prior to the pandemic, you took focus on staff wellbeing has increased “Wisdom is an everlasting issue. It skills, combining strong technical expertise substantially, being discussed more with exceptional interpersonal and wellness of your people for doesn’t change with technology… regularly and deliberately in board leadership skills. Empathy and emotional granted. But with the pandemic meetings. An important lesson learned Human relationships don’t intelligence are already important skills for it came to the boardroom.” from the current pandemic is that staff change. Maturity, resilience, Chairs but are set to become even more wellbeing in all its facets should form an ethics, and wisdom are really important as complexity and uncertainty integral part of a healthy work culture. within organisations and the operating Most Chairs agree that the pandemic has important.” Creating a healthy work culture, that environment increase. reinforced the focus on people-related places people at its core will continue to matters. While staff wellbeing and play an important role in building resilient Given the need to respond to an ever- There is no doubt that the job of Chair is a mental health have always been items organisations that can navigate uncertainty changing business environment and often demanding one that requires a high level on corporate agendas, the pandemic and thrive post the pandemic. To this end, unpredictable external factors, Chairs of experience and strong technical skills. has served as an eye-opener for many new skills will be required on boards, while of the Future will need adopt a lifelong However, as the role of the Chair evolves, and brought the mental and physical existing skills related to human capital learning approach that is underpinned so will the skills required to be an effective wellbeing of staff, executive teams, and must be embraced and leveraged more by curiosity. Furthermore, Chairs need to Chair. This does not necessarily mean that the board into the spotlight. As much as effectively. continuously assess and sharpen their a Chair or board requires completely new boards and executive teams have focussed leadership skills to effectively fulfil their skills but need to prioritise and use certain on the financial sustainability of their increasingly complex role and lead their “People became a focal point... skills differently. organisations during the pandemic, there organisations into the future. is an increasing realisation that matters Essential services, frontline staff For example, a chartered accountant related to mental and physical wellbeing protection and issues related (CA) qualification and audit or accounting “You are looking for a person who cannot be taken for granted and need to to mental health were all new experience used to be one of the key has the knowledge, experience be taken a lot more seriously. agenda items.” pathways to becoming a Chair. At present, about one-quarter of Chairs of JSE Top40 and skills that are a given, but “The pandemic has taught us companies have a CA or audit background. you also need someone with However, several Chairs expect that the sound values and principles who that our job is about two things: past dominance of CAs will fall and a pool saving lives and preserving must conduct business in an of Chairs with a more diverse background lives. What is the duty of the will emerge. ethical matter.” business for tomorrow? It’s not shareholder value maximisation “If you become CEO of blue-chip A Chair of the Future’s skillset needs – it is to simply survive.” company, you should have all to be supplemented by sound values and principles. Considering heightened the technical skills, but you uncertainty and recent corporate need a 21st Century EQ… the governance failures, being guided by a Chair of Future will be a more steadfast moral compass will be crucial. approachable person with more social skills.” 12 13
Chair of the Future – South Africa 2021 | Accelerator of change Chair of the Future – South Africa 2021 | Accelerator of change The five dimensions of the Chair of the Future Company ambassador As identified in the UK Chair of the Future report,3 there are five dimensions of the The overwhelming feedback from Chairs One Chair highlighted that because of the One of the Chairs recalled how he and the was that the CEO should continue to be pandemic, CEOs themselves have been CEO mapped out the firm’s stakeholders Chair of the Future. While research reveals that these dimensions are also largely the face of the company. But there was forced to navigate increased complexity and decided who should be the face of the applicable to the South African context, there are distinct local nuances to them. also recognition that the stakeholder within the stakeholder landscape. This has business and which issues or messages landscape for Chairs is widening, far led the Chair to be more supportive and needed to be discussed with each of These dimensions cannot be viewed in isolation from each other, as they are beyond the shareholder register. This to offer to be the voice of the business these stakeholders. Such a thorough interlinked and interdependent. Given this interconnectedness of the five dimensions includes government, regulators, trade in some stakeholder conversations, “divide-and-conquer” approach is a trend unions, employees, customers, and particularly where the Chair could leverage that Deloitte sees globally. Chairs in the and the common touchpoints between them, Chairs of the Future will increasingly the broader communities in which the an existing relationship. UK have highlighted the need for Chairs to become accelerators of change that embrace diversity. business operates. “listen hard” and to convey the business’s Some offered an even bolder opinion that narrative on behalf of the organisation. It was a consistent view that Chairs should Chairs should play an increasingly more Furthermore, in the light of recent continue to make themselves available ambassadorial role, being an active voice governance failures, engagement with key to shareholders. However, in comparison on the issues which matter the most to the investors will continue to be important for to the US, UK and European markets, business, themselves and society, including Chairs, given that the board is ultimately it sems that relationships between the socio-economic and environmental issues. accountable to these investors. Chair and investors is immature in South Chairs are in the privileged position of Africa. In fact, even in moments of crisis, becoming accelerators of change. This approach requires deliberate planning Company ambassador the invitation to investors to engage and close alignment between the CEO and Represents the company in society and engages with shareholders and stakeholders, with the Chair has been disappointingly Chair to ensure a consistent narrative is including political and regulatory. Key messages include the need to adopt a narrative of undersubscribed in South Africa. “When it comes to shareholders, provided to all stakeholders. This level of responsible value creation for multiple stakeholders. the Chair has to play a much coordination typically stretches beyond more active role. We have large the role of the investor relations manager, “Our CEO is very good being and often requires the support of a strong Strategy provocateur shareholders, and some are the face of the firm, but if a communications director. Provoke and challenge the CEO and executive team to develop a longer term strategy with not easy. Our job is to protect appropriate horizon scanning to ensure longevity of the company. Apply periodic reviews of minister, for example, wants the the CEO. You need to pick your Given the importance of effective both strategic and tactical plans to respond to pace of change and new disrupters. Ensure Chair, the CEO knows that he battles. You need to know what shareholder engagement, aspiring Chairs, alignment between the board and executive. can call on me and I make myself especially those without prior experience each person is good at.” available. If he wants me in a key as executive directors, need to explore and meeting, I am happy to do it. It’s identify opportunities to build the required Culture and talent cultivator skills for such important engagements. Ensures the company is led by a strong CEO and executive team by providing support and not competition between the Irrespective of their views on who should take up the ambassadorial role, most challenge. Keeps a pulse on company culture across the workforce while providing deliberate two of us.” Chairs agree that there needs to be a clear support to leadership development and succession planning, beyond simply the CEO. “When we look at issues like understanding by the Chair and the CEO, who, under which circumstances and on sustainability and governance, Several Chairs indicate that AGMs are still treated as “tick box exercises “by some which occasions, plays this ambassadorial those are the issues where I, Guardian Guard stakeholder interests by protecting the company’s reputation, performance and of their peers. In the future, Chairs need role. as the Chair, want to be the shareholder value. Ensure a leadership culture that upholds a high standard of ethics and to be much better prepared to answer ambassador.” questions, debate with, and accept The extent to which a Chair takes on complies with good governance practices. challenges from stakeholders. an ambassadorial role is influenced by many aspects, including the company’s Board conductor circumstances, the preferences and Establishes the board composition with the right skills and experiences which are fit for the personality of the Chair and CEO, as well future. Sets the board agenda and facilitates effective board conversations by harnessing the as external factors, such as the countries talents and energy contributed by each of the individual directors. and sector in which the business operates. In heavily regulated sectors, Chairs often play an important ambassadorial role in engagements with the regulator and government departments. 14 15
Chair of the Future – South Africa 2021 | Accelerator of change Chair of the Future – South Africa 2021 | Accelerator of change Strategy provocateur Culture and talent cultivator It is important that the Chair balances the Concerns related to the organisation’s One approach to external appointments “Functions don’t make companies short-term objectives of the organisation “A lot of what I read a decade ago culture were raised by most Chairs when is the early identification of outside with a long-term strategy that will ensure reflecting on succession planning. To candidates who are then brought into the - ideas make companies. How was focused on the agenda, and the long-term sustainability and resilience preserve the culture of the organisation, organisation and placed into senior roles a do you challenge ideas while of the organisation. This balancing act how to run the annual strategy most Chairs prefer succession of few years prior to the planned departure working from home? How do can be difficult, given declining CEO sessions and didn’t give me the senior leadership roles from within the of the CEO or Chair. This approach allows boards challenge ideas of c-suite tenures. Instead, CEO tenure and strategy sense it was overwhelmingly organisation. In contrast to an external candidates to be tested and provides them consistency need to be seen as a journey appointment, an internal candidate knows with the opportunity to learn about the executives? You become too about people.” where the organisation has an overview of the organisation’s culture, its people, how business and culture. transactional when working from a strategy, infused with the experience of the organisation works, and hence poses home.” the board. The 2021 Deloitte Global Resilience Report4 less risk to the culture. Many Chairs suggest that, going forward, identified five key traits of resilience succession planning should not stop at the To be an effective strategy provocateur, that help organisations to thrive under top-tier leadership level, but needs to go Most Chairs agree that strategy the Chair of the Future needs to have solid “The fishing pond for Chairs is at least a level down. Given the consensus extreme conditions. Resilient companies development is the responsibility of the technical skills and interpersonal skills, very small – and we need to that leadership succession planning should are prepared, adaptable, collaborative, CEO and the executive team. However, combined with maturity and experience inspire young people to better also start much earlier in, for instance, trustworthy, and responsible. In this Chairs play a crucial role in strategy that allow him or her to challenge the CEO. the CEO’s tenure, it is very important that context, the culture of an organisation understand how the board development as they are the key sounding Having the backing and the support of the executive team and the NEDs start plays an increasingly important role in works so they can become good board for CEOs and leaders of the board a diverse board will increase the Chair’s identifying suitable talent at an early stage improving an organisation’s resilience that approves the strategy. In addition, the effectiveness in this regard. Chairs of the Future. We need and growing these potential future leaders during difficult times. Chair plays an important role in “selling the to start growing our own timber by exposing them to various parts of the strategy” to shareholders. business. “When you do board assessments The importance of organisational within the organisation.” culture was shared by many Chairs we As important as the development of a and skills assessments, you want Deliberate succession planning will interviewed. One Chair highlighted that sound strategy is, it is equally important to ensure a balanced board. This Internal succession planning requires a continue to be an important task for during the pandemic, the board specifically that the strategy is implemented properly. Chairs going forward. Chairs need to have includes financial and technology focussed on proper communication with deliberate effort to identify and grow the Many Chairs argue that the monitoring next generation of leaders. It requires conversations with their CEOs at an early skills so that when the strategy employees and keeping the culture intact of the strategy and the assessment of close coordination between the Human stage about this. However, they need to be as key measures to steer the organisation how the business is doing vis-à-vis the is produced you can interrogate, Resources team and the senior leadership careful not to create the impression that through the crisis and to prevent panic strategy are key items on their board’s debate and argue with it.” of the organisation. this conversation is about an immediate among employees. By setting the tone agenda which therefore needs to be replacement of the CEO, but rather part of within the organisation, the executive well-structured and focused on relevant While most Chairs say that the internal the long-term planning to ensure stability team and NEDs strongly influence the strategic questions. appointment of a CEO is the preferred of the organisation. These conversations organisation’s culture. option, many agree that, under certain require maturity and trust from both the Given the complexity of businesses and circumstances, an external appointment CEO and Chair. Many Chairs highlighted that the current the ongoing changes in the operating is appropriate, for example, when pandemic has revealed how fragile life environment, it is important that the there is a need to refresh or change can be. Therefore, succession planning “A general practice I have followed board has a diverse and balanced set of the organisation’s culture, to inject should never be taken lightly and should skills. Diversity and balance allow board new thinking and ideas, or when the over the years is: when I want never start only a few months prior to the members to better interrogate and business’s strategy needs to be revamped to change the culture of the departure of Chair or CEO. Without timely question the strategy. Chairs and NEDs and appropriate succession planning a or recalibrated. The internal candidate organisation, then bring in should be able to ask pointed questions pool might be inadequate, particularly lot of organisations can be thrown into someone in from outside. But if about the strategy. Unfortunately, working when technological or ESG skills are crisis at the sudden departure or loss remotely and conducting meetings virtually required. One Chair suggests that external you want to keep the culture, we of leadership. Being unprepared for may reduce the ability of the board to appointments may also increase in the pick from inside.” succession is a real risk in South Africa, as challenge the ideas of executives as the future, with the observation that the there has been a steady decline in CEO relationship may become too transactional. younger generation seems less likely to tenure and unexpected resignations of executives in recent years. stay with one firm for their entire career. 16 17
Chair of the Future – South Africa 2021 | Accelerator of change Chair of the Future – South Africa 2021 | Accelerator of change Guardian Board conductor Many Chairs experience a sense of To fulfil their oversight function effectively, To have a well-functioning and effective An effective way to ensure the harmonious heightened responsibility when they move the board needs to engage with the CEO board, Chairs need to focus on the board functioning of the board is to establish “The board agenda starts with from being an NED to being a Chair. While and executive team to understand the composition of the board, the setting of well-functioning committees with strong strategic initiatives. We need the success or failure of an organisation risks the organisation faces. While it is the agenda, and board decorum. Chairs. The committees need to have does not directly depend on Chairs, they important for Chairs to have a trust-based detailed discussions about their focus to be clear what the outcome do play a crucial role in the firm’s success relationship with the CEO, they need to be In this context, a Chair often plays the areas and report back to the board, the is of every board meeting, we by being the guardian and the head of the careful not to be too close to the CEO and role of a conductor. Like the conductor most relevant aspects of their discussions. don’t want to go down rabbit oversight body of the organisation, holding to maintain their independence. of an orchestra who ensures that strings, This helps to reduce the risk of getting lost woodwinds, brass and percussion play holes. Rabbit holes are done in CEOs accountable for their performance. in unnecessary detail and allows the board Chairs of the Future must put the interests in harmony, a Chair needs to ensure that to focus the agenda on key strategic and committees.” of the organisation ahead of personal the board is well balanced in terms of operational matters. In this context, the “While failure and success do not interests. They need to be prepared to take experience and skills and that he or she company secretary plays a very important depend on the chair directly, Chairs should not discount the value tough and, at times, unpopular decisions in brings out the best in each board member role in streamlining the agenda and being of board evaluations. Some Chairs and he/she can play a big role in the the interest of their organisations, even if and sub-committee. The Chair creates an effective sounding board to the Chair. NEDs might regard board evaluations this means that they will not be re-elected an enabling environment that allows the organisation’s success.” as a cumbersome exercise; however, or will be voted out of their positions. executive team to succeed. Above all, the Chair of the Future needs to “The Chair of the Future won’t it can assist Chairs with identifying be an older wise person, but the best board talent and weed out In recent years, South Africa and many be guided by a steadfast moral compass. “This ‘me, myself and I’ mentality underperforming NEDs. Several Chairs feel other markets have witnessed several a person with experience, as a Chair has ended. So, it is that if underperforming board members high-profile corporate failures both in the “Too often, you have examples of business acumen and mediation are not weeded out aggressively, Chairs public and private sectors. Several Chairs the move from self to about the over-charismatic CEOs pushing skills. Younger, mediator, not just miss the opportunity for meaningful point out that some of these corporate board and getting the ultimate change on their boards. failures are often the result of governance companies in wrong directions a successful businessman. He or output from the board.” failures, where dominant, over-charismatic because boards are not strong she has to be sympathetic and Chairs of the Future will increasingly take or rogue CEOs have pushed companies in enough – and don’t say “no” or empathetic to various things…to on the roles of moderator and facilitator, the wrong direction and taken advantage For it to be successful, a board needs to stand up to the charismatic CEO.” have emotional intelligence.” ensuring that the various views of the of weak boards. In most cases, the boards be harmonious. However, a harmonious board are considered. This also requires failed to discharge their oversight mandate board does not mean that NEDs need to the Chair to step into the background and appropriately. To avoid future failures, be yes-men; instead, each board member While mandating and empowering provide others with space to contribute. boards need to ask the right questions must feel comfortable contributing. It is committees to zoom in on their key focus and focus on holding the executive team the Chair’s responsibility to ensure a board areas is beneficial and contributes to accountable. environment in which everyone feels their the success of the board, it poses the voices are heard and considered. In this risk that information or knowledge is not context, some Chairs see the move to shared effectively. Similarly, information “Entering the field to be a virtual meetings as a big advantage, as it flow is impacted by the different levels of defender or midfielder is forces Chairs to get everyone’s inputs. exposure to various stakeholders. This completing different to being risk of discontinuity of knowledge is a key the goalkeeper. You realise as “I view it as a partnership of issue that Chairs need to be aware of and the goalkeeper that a mistake address. As the conductor of the board, equals, and I am the conductor the Chair needs to enable the appropriate becomes a goal. As chair, you and orchestrator for a period of flow of information between stakeholders are the goalkeeper. You’re a first time.” to ensure that all NEDs have access to amongst equals.” all relevant information when making decisions. This is of particular importance for newly appointed NEDs. 18 19
Chair of the Future – South Africa 2021 | Accelerator of change Chair of the Future – South Africa 2021 | Accelerator of change Ten pieces of advice to the Chairs of the Future 1 Invest the time in really 3 Seek feedback regularly (even as an 5 Create managed trust with the CEO 7 Embrace diversity understanding the business experienced Chair) Building the relationship with the CEO is one of the most South Africa is rich in diversity and there is richness in diversity. It is crucial for a Chair to really understand the business beyond Feedback is crucial for you to identify areas for improvement important aspects of your role as a Chair. The roles of the CEO To build a sustainable and resilient business, embrace diversity. a “superficial level”. Without in-depth knowledge of and insights and avoid repeating mistakes. Seeking feedback might be seen and the Chair can be lonely roles. As a Chair, your role is to make Your organisation, across all levels, should reflect all sectors into the organisation, its operations, people, and customers, as challenging because you make yourself vulnerable, but it is the CEO shine, not be an object of blame. Focus on creating a of your customer base. Avoid adopting a narrow definition a Chair will struggle to provide meaningful oversight and important for taking the organisation forward. managed trust relationship with the CEO through ongoing and of diversity or seeing it as a compliance issue: diversity guidance. When accepting a Chair role, be open to learning deep conversations. As a Chair, you need to dedicate a lot of is a business imperative which will create value and new everything you can about the business. Practical tips: time to make sure that you get into the zone of managed trust perspectives. It might be more comfortable for you to have • Find out from your board members what works and does not relationship with your CEO. Once you establish trust and mutual people around the table that look and talk like you, but the role Practical tips: work in board meetings. respect, you can work effectively together and reduce the risk of of the Chair is not meant to be comfortable. • Talk to your predecessor. • Conduct proper “post-mortems” to find out where you have corporate scandals. • Walk the shopfloors, visit various offices of the organisation, made mistakes and how you can avoid making them again. Practical tips: and speak to as many stakeholders as possible. Don’t just talk • Leverage board assessments to get in-depth feedback and, if Practical tips: • Perform a gap analysis on skills. to fellow NEDs or the executive team, but also talk to staff so necessary, don’t be afraid to remove non-performing board • Have open and honest conversations with the CEO. • Create a culture of inclusivity. that you get a sense of what working for the organisation is members. • Seek to understand and learn about the CEO’s personality. • Encourage and listen to dissenting voices. really like. • Understand that the company secretary is a key ally in the • Don’t let executives run away with their decisions without • Nothing stops you from asking for advice from the tea lady, • Consider creating platforms, such as a Millennial Board, to feedback process and, in fact, in the life of the Chair. NEDs knowing about it. the receptionist, or your driver. Get out of your boardroom engage and leverage your diverse workforce. • It is important to reflect on and try to implement feedback. • Remember, it’s not a competition between the CEO and the chair and sit at the reception area or lobby of your company and observe staff and clients. Chair: you play for the same team. 8 It’s not about you • Talk to your customers and investors, as they will appreciate 4 Empower your committees you taking the time to talk to them and, in return, you will learn 6 Keep the ‘non’ in non-executive The Chair plays a vital role in the organisation, but is not the a lot about your organisation. A board is only as effective as its committees. By empowering director organisation, nor its purpose. Being a Chair requires enough your committees and their Chairs, you will be able to declutter maturity to step back and let others run the organisation. A You are not the CEO. This may be a simple and obvious 2 Don’t take the job for the money the agenda and focus on the most relevant issues during the statement, but it is profound. Recognising the importance of Chair needs to have a deep passion for the business and the board meeting. desire to make the CEO and executive team succeed. You are separating these roles can be challenging for some first-time first amongst equals and should not assume you have all the The job of Chair often comes with status and great financial Practical tips: Chairs. Be respectful of the boundary between CEO and Chair answers. It is not the Chair’s job to make all the decisions, reward. However, this is not a good enough reason to accept and don’t overreach it. Be mindful when to act and when not to • Be very careful and deliberate in picking the right Chairs for instead to give the board the opportunity to give their inputs. the role. If you do, there is the risk that you take the wrong act. Sometimes a CEO wants to have a detailed and operational your committees. decisions. To be truly independent and put the wellbeing engagement with the Chair, but not always. • Make sure that you have the right skills on the committees. Practical tips: of your organisation before your own interests requires an understanding of your purpose as the Chair. Your committees are the part of the board where the Realise that you are the link between the board and the • Be humble and accept that you are going to make mistakes. “heavy-lifting” is happening. executive team, provide guidance and be a sounding board, but • Accept that you will have difficult board members. Practical tips: • Recognise and leverage the depth of experience on your do not interfere with executive functions. Your job is not to run • Accept that you don’t know everything. But remember that you • Don’t be afraid to take the right, but unpopular decisions, even board. Empower and encourage your NEDs to provide support the business, but to get the best out of your executive team and are capable of leading the board. if they cost you your job as Chair. and guidance to the executive team and the rest of the to hold them accountable. • Create an enabling environment that allows the executive business. • Be wary of NEDs that are dependent on their board fees, as team to thrive, by giving them space, providing support, and Practical tips: they might not speak their mind and only try to please you or sharing your experience. management rather than challenge the organisation. • Ensure that the boundaries between executives and non-executives are clear and well communicated. • As Chair, make yourself available to all stakeholders (e.g. staff, customers, unions, and communities) as you are seen as an independent person not siding with the executive. • Encourage NEDs to become avenues to which stakeholders can share their perspective. 20 21
Chair of the Future – South Africa 2021 | Accelerator of change Chair of the Future – South Africa 2021 | Accelerator of change Looking ahead About this research List of Chairs/NEDs interviewed • Harish Mehta 9 Do good While there is some light at the end of the COVID-19 tunnel thanks to the rollout of vaccines, the next shock, • Santie Botha • Bonang Mohale be it another pandemic, a financial crisis or a natural • Thevendrie Brewer • Khotso Mokhele South Africa faces many socio-economic challenges. Society disaster, is imminent and uncertainty is expected to is increasingly looking to the private sector to help solve these • Graham Dempster • Kgomotso Moroka remain heightened going forward. Given the prospect of challenges. Understand that investors, small or large, bought future shocks, it is important that organisations reflect • Kunseni Dlamini • Sipho Nkosi your organisation’s shares not just for financial, but also for on the lessons learned during the pandemic and use • Jannie Durand • Imtiaz Patel social returns. As the Chair, you are in a privileged position to them to build more resilient and agile organisations for • Geraldine Fraser-Moleketi • Nigel Payne make a meaningful impact on your company’s staff, suppliers, the future. • Mike Hankinson • Marilyn Ramplin and customers. Given the rapid and continuous change in the operating • Roger Jardine • Malcolm Rutherford Practical tips: environment and ongoing disruption from exponential • Suresh Kana • Khumo Shuenyane • Be aware of the role you and the company play in society. technologies, it remains critical for organisations to have • Alistair Knock • Desmond Smith • As the Chair, you can shape the conscience of your company. the right skills in their leadership teams. However, with • Phumzile Langeni • Peter Surgey increased complexity and rising demands on Chairs • Make sure that you hire the right skills and that you empower • Mike Leeming • Phillip Vallet and NEDs, there is a threat that these roles become less your social and ethics committee, to drive change in your attractive in the future. To mitigate this threat, companies • Sindi Mabaso-Koyana • Jeffrey van Rooyen organisation and in society. need to look at innovative ways to attract and retain • Jacko Maree • Louis van Zeuner board talent. In this context, deliberate and effective • Norman Mbazima • Gcina Zondi 10 Be yourself succession planning that embraces diversity will play a central role in ensuring an adequate talent pipeline for future boards. If you sat on the board before becoming the Chair, don’t try and emulate the previous Chair. Be your own person. It’s important Forward-looking organisations understand that as to remember that all boards are different. You will have to deal much as new skills are required to respond to the with different personalities, some of which will be aggressive changing business and technology landscape, emotional and dominant. intelligence and human relationships are of paramount importance to building successful and resilient Practical tips: organisation for the future. Endnotes • Focus on developing your interpersonal skills and EQ to deal with friction. As organisations evolve and adapt to an ever-changing 1 Ahir, H, N Bloom, and D Furceri (2018): World Uncertainty Index (January 2021 update), • Stand up to board members when necessary, but in a environment, the role of the Chair will continue to evolve, Stanford mimeo. Retrieved from: https://worlduncertaintyindex.com/data/ respectful manner, as you set the tone for the decorum of the too. Chairs will increasingly have to ask themselves: 2 BankservAfrica (2020): October 2020: A clearer picture of SA’s salaries and employment. board. Retrieved from: https://www.bankservafrica.com/api/public/ • What role will our organisation play in society? • Don’t be afraid to shake things up, it’s your board after all. blogblob/5fc7a1fb12787d0043370d20 • What skills will we need to play a meaningful role in • And lastly, don’t forget to have some fun. 3 Deloitte (2020): Chair of the Future – Supporting the next generation of business leaders. society? Retrieved from: https://www2.deloitte.com/uk/en/pages/about-deloitte-uk/articles/chair-of- • How will we ensure and maintain the quality of our the-future.html talent pipeline? 4 Deloitte (2021): Building the Resilient Organization - 2021 Deloitte Global Resilience • How are we going to measure our impact on society, Report. Retrieved from: https://www2.deloitte.com/content/dam/insights/articles/ environment, planet? US114083_Global-resilience-and-disruption/2021-Resilience-Report.pdf?icid=learn_more_ • How will we strengthen our transparency reporting? content_click 22 23
Contacts Ruwayda Redfearn Dr Johan Erasmus Chair of the Deloitte Africa Board Chief Ethics Officer Deloitte Africa Deloitte Africa Email: ruredfearn@deloitte.co.za Email: jerasmus@deloitte.co.za Nina le Riche Mark Victor Partner and Deloitte Africa Board Partner Member Centre of Corporate Governance Deloitte Africa Deloitte Africa Email: nleriche@deloitte.co.za Email: mvictor@deloitte.co.za Delise van der Byl Head of Clients Deloitte Africa Email: dvanderbyl@deloitte.co.za Authors Leisl van Zyl Simon Schaefer Board & Executive Programme Leader Senior Insights Manager Deloitte Africa Deloitte Africa Email: leivanzyl@deloitte.co.za Email: sischaefer@deloitte.co.za Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), its global network of member firms, and their related entities (collectively, the “Deloitte organization”). DTTL (also referred to as “Deloitte Global”) and each of its member firms and related entities are legally separate and independent entities, which cannot obligate or bind each other in respect of third parties. DTTL and each DTTL member firm and related entity is liable only for its own acts and omissions, and not those of each other. DTTL does not provide services to clients. Please see www.deloitte.com/about to learn more. Deloitte is a leading global provider of audit and assurance, consulting, financial advisory, risk advisory, tax and related services. Our global network of member firms and related entities in more than 150 countries and territories (collectively, the “Deloitte organization”) serves four out of five Fortune Global 500® companies. Learn how Deloitte’s approximately 330,000 people make an impact that matters at www.deloitte.com. This communication contains general information only, and none of Deloitte Touche Tohmatsu Limited (“DTTL”), its global network of member firms or their related entities (collectively, the “Deloitte organization”) is, by means of this communication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No representations, warranties or undertakings (express or implied) are given as to the accuracy or completeness of the information in this communication, and none of DTTL, its member firms, related entities, employees or agents shall be liable or responsible for any loss or damage whatsoever arising directly or indirectly in connection with any person relying on this communication. DTTL and each of its member firms, and their related entities, are legally separate and independent entities. © 2021. For information, contact Deloitte Touche Tohmatsu Limited. (SJH)
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