Abstract:
Neither the King IV Report on Corporate Governance for South
Africa (Institute of Directors South Africa, 2016), nor the
Institute of Directors South Africa (IoDSA) have, as yet, made
recommendations about the number of directorships deemed
acceptable for non-executive directors. Nevertheless, around the
world, the impact of “busy directors” on business performance
and their effectiveness in fulfilling their fiduciary responsibilities
is a subject of academic and business debate.
Adding to a global focus on board effectiveness, South Africa
faces the challenge of having a relatively small pool of competent
non-executive directors (Natesan & Du Plessis, 2018a). Moreover,
the influence of Broad-Based Black Economic Empowerment
(B-BBEE) legislation creates additional demand for directors
from historically disadvantaged groups, thereby further limiting
the pool of qualified professionals.
A research project conducted by Mpho McNamee as part of
her MBA studies found that, in the South African context, the
importance of experience – and by extension, networks – in
the board selection process was highly regarded by the experts
interviewed. However, companies may be overlooking the
critical importance of capacity that, when compromised, has the
potential to negatively impact the performance and functioning
of boards and organisations. The issue of board culture was also
identified as a critical factor.
While limitations on “busy directors” have been imposed in
regions such as Europe and North America, this whitepaper
highlights how the particularities of the South African context
may make similar restrictions unwarranted – at least for the
time being – owing to the relative scarcity of certain skillsets and
experiences within the current pool of potential directors. This
whitepaper outlines a Director and Board Effectiveness Model
framework to help sensitise directors, boards and companies to
the considerations around “busy directors” in order to better
understand the complex dynamics at play.
