Thursday, November 28, 2019

Leadership 101 - The Role and Responsibility of Directors – Part 12

Leadership 101 - The Role and Responsibility of Directors – Part 12

By Nikki Viljoen – Viljoen Consulting (Pty) Ltd

Please note that this pertains to South African Legislation, the King Requirements and Best Practice.

Based on what is coming out of the Zondo Commission of enquiry, it is of the utmost importance to ensure that Stakeholder relationships  are properly managed.

Clearly the topic for today is “Governing Stakeholder Relationships.”

Like any relationship, the relationship between the Company and the Stakeholders needs to be consistently monitored to ensure that it is mutually beneficial and that all parties are being morally and ethically compliant in their dealings.

As always, let’s have a look at the key questions that the Directors should be asking.

1. “Do we have a Stakeholder strategy and are the correct policies in place? If so are they adequate or do they need revamping?  If not, do we have the in-house knowledge to draft documents that will deliver value?

As  with most things in life, it is of the utmost importance to ensure that we understand exactly what the relationship is all about.  What is needed from that Stakeholder and what is given back to the Stakeholder?  What are the terms and conditions of the required service and how long is the relationship for?

The more clarity you have on what is required the easier it will be to monitor it.

2. “Have we identified our material stakeholders?” 

Again, clarity is required as well as communication, not only to the Stakeholders but also amongst the Board of Directors themselves as well as the various committees.

3. “Do we know and understand the issues, risks and opportunities associated with our various stakeholders?”

It would probably be of value to do an in-depth research around a) what the requirements are and then b) also who the best person/Company is to meet those requirements and of course the related costs. This clearly is not something that gets decided upon and at the drop of a hat.

4. “Are our current forms of Stakeholder communication effective?

Without adequate meaningful communication between Board and the Stakeholder, success is unlikely and the relationship could prove to be very costly.

5. “Do we have the necessary reliable information to make informed judgement calls when balancing the legitimate interests of the various Stakeholder groupings?”

Proper controls should be implemented and regular monitoring and measuring of the pressure points should be undertaken to ensure that requirements are met.

6. How do we actually engage with all our stakeholders in practice?”

A communications policy is needed to ensure that there is proper communication and feedback from and to the Board by, not only the Stakeholders but also all the various Committees. That this type of communication actually takes place should also be monitored and reported on.

As can be seen from the above, it is of the utmost importance to get everyone working and participating for the good of the Company.  Keeping vigil is of the utmost importance to ensure the smooth flow of information and to maximize output performance.

Next time we will have a look at specifically what the requirements are around Integrated reporting and disclosure.


Nikki is an Internal Auditor and Business Administration Specialist who can be contacted on 083 702 8849 or nikki@viljoenconsulting.co.za or http://www.viljoenconsulting.co.za

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