Governance failures go a long way in eroding trust in both institutions and the processes they deploy. South Africa is fraught with examples of this with the most recent, publicised one being the withdrawal of 20 Sector Education and Training Authority (SETA) board appointments by Higher Education and Training Minister, Dr Nobuhle Nkabane. A withdrawal prompted by backlash towards the appointments’ perceived political connections and their selection by an advisory panel previously undisclosed by the minister. The SETA scandal has left a bad taste in the mouths of policymakers, industry bodies, and citizens. It reflects the negative consequences of bad governance and a failure to adhere to due diligence and proper procedure. 

Ethical leadership, accountability, and fairness are the foundational pillars upon which organisations, especially in the public sector, are built, and how they enshrine governance in everything they do and set out to accomplish. Central to that are not just administrative processes, but also company roles and the people that occupy them. The results are not just better decision-making, but also a retention of trust, confidence, and integrity. 

What a good board appointment process looks like 
When it comes to establishing a new board or appointing individuals to existing ones, there are numerous dynamics to consider. Not only do the board’s overall purpose and objectives need to be clear, but appointees have to be clear on organisational guidelines and responsibilities that come with that purpose. There is also an ongoing push for greater diversity, for boards to reflect a variety of backgrounds, opinions, ages, genders and ethnicities which can lead to enhanced decision-making and representation at executive and non-executive levels.  

But above all that, public companies need to ensure their board appointments are open, fair, and well-documented. Companies need to stipulate clear criteria and undertake in-depth candidate vetting, all while keeping communication between parties transparent and honest. Appointment processes need to account for all variables, ranging from potential conflicts of interest to reputational risks, culminating in a process that is consistent, resilient, and upholds the values of the organisation itself. 

Failing that, companies run the risk of perceived bias or mismanagement, leading to an erosion of trust among stakeholders and, in the case of public sector organisations, the general public. Faith in the system is critical, and failure to adhere to a transparent process, as was the case with SETA, can outright threaten that. 

Taking notes: The role and impact of company secretaries 
Corporate governance is not a responsibility that companies can just dump on some low-level employee or be treated as an afterthought. It’s something that public sector organisations legally cannot do. As per the Companies Act 71 of 2008, all public and state-owned companies are required to have a company secretary, serving as the repository of governance knowledge and advice and ensuring sound corporate governance practice. 

Company secretaries do much more than take meeting minutes. They report to company boards and support them in staying informed of their duties and responsibilities, as well as keeping them up to date on current policies, procedures, and relevant legislation. They certify annual financial statements and carry out all functions as stipulated by the Companies Act. Critically, company secretaries are also the mechanism by which issues with board appointments are resolved. They ask questions, flag conflicts of interest, and check that due process is followed in all board activities and decision-making. Company secretaries need to adopt a proactive stance to board appointments, thus ensuring no issues surface further down the road and have further-reaching consequences for both the organisation and its reputation. 

Ethics is good business. Period. 
Incidents like with SETA and Minister Nkabane go a long way in exemplifying the importance of board appointments and how a failure in governance ultimately damages both the individual organisation and the public sector as a whole. Boards of directors and their chair are responsible for guiding the organisation to a set goal and according to a set vision. That damage will also be felt by how organisations can spend public money, or be perceived to be spending public money, and so the prioritisation of a governance agenda is key to optimising organisational performance. 

Looking more broadly, public administration in South Africa suffers from unethical and corrupt practices manifesting among officer bearers, impeding the effective and efficient delivery of public services and resulting from a failure to adhere to sound ethical conduct in the execution of public duties. The ultimate consequence of this is a failure of trust in government and an inability to progress with nationwide, socioeconomic growth and development. 

Reinforcing the ability to elect leaders, and in this case, leadership bodies such as company boards is the first and most important step in taking charge and inviting change. With the help of trained, qualified professionals and the upholding of sound, governance practices, South Africa’s public sector can set an example of resilient decision-making and become a bastion of public trust. 

Issued by the Chartered Governance Institute of Southern Africa