IODSA

Ms Parmi Natesan, Chief Executive, Institute of Directors South Africa Ethical and Effective Leaders Growing in Influence

by Valdi Pereira

There is little doubt that during the past few years, the environment in which companies operate has become increasingly complex. The rapid rise of technology, globalisation, shifting work patterns and stakeholder activism are creating unprecedented demands on business leaders.

In response to these changes governments across the world have increasingly focused on putting regulatory frameworks in place, bringing new operational and compliance challenges to the fore, for company executives. “Compliance with relevant legislation, regulations and codes that are applicable to a particular business, is just one of the many considerations facing directors,” says Institute of Directors, in South Africa (IoDSA), Chief Executive, Ms Parmi Natesan. “In order to contribute to the growth of a business, directors not only needs to be armed with a blend of experience, skills and knowledge, which compliments the business and its objectives. They also need to be custodians of corporate governance, a role which many of our members can fulfil.”

Professional Approach

It’s widely acknowledged that every profession has its own pathway to full acceptance and recognition within an industry. New entrants typically obtain a degree, complete a formal internship or articles and are thereafter examined by a competent authority, to test their theoretical and practical understanding, before they may make use of the professional designation in their field.

“Directorship has never benefitted from such an formalised approach. Anyone can become a director, irrespective of the qualifications they may possess,” explains Natesan. The IoDSA is working at changing this state of affairs, suggesting that directorship is a profession like any other and encouraging companies to appoint individuals on their boards who are in possession of the Institute’s designations.

The Chartered Director SA designation, tests mastery of directorship and to successfully obtain this is an extremely rigorous process. A Certified Director is one level below and tests knowledge of governance – signalling to the market that these individuals have the knowledge and are only awaiting an opportunity to gain experience, in order to apply for Chartered Directorship.

Natesan notes that for her the Institute’s vision statement: Better directors. Better boards. Better business, is a rallying call to not only deliver value to the business community, but to the entire South Africa through good governance and effective leadership.

“The real power of these designations lies in the influence it affords our members to make a positive impact not only to the business they are serving, but to our society in general.”

Buoyant Demand

The value of the IoDSA’s offerings have clearly not been overlooked by the market and it is coming off a year that has seen a record number of individuals achieve Certified Director status. Its flagship series, ‘Being a Director’ which is a five part programme, is growing in popularity and Natesan ascribes this to the fact that the Institute’s training is not just about transferring technical knowledge.

It is in actual fact, ‘Training for Directors by Directors’ as it has practising directors who are providing the training. These are individuals with boardroom experience that understand the realities of the challenges a prospective board member will face – adding immense depth to its training, when compared to other institutes.

The IoDSA also undertakes regular reviews of its training topics to ensure that both the content and focus on its offerings are in line with the contemporary business environment and remain impactful. The strong focus it has on thought leadership is a vital aid in ensuring that it has a finger on the pulse of developing fault lines in the delivery of good governance.

While demand for IoDSA certification is strong on an individual level, the need for companies to maintain the investment they have made in developing and maintaining sound governance structures is equally important. This becomes particularly relevant considering the number of corporate governance failures that have been witnessed in South Africa in recent years.

“Obtaining governance advisory assistance, providing board training and doing board evaluations are all part of the service we provide,” explains Natesan. “Even though the economic conditions have become challenging, we encourage companies to continue investing in this space, to make sure they are getting their governance right, because as a country, we cannot afford to see a repeat of past failures, not only from an impact perspective, but also from a reputational viewpoint.”

Good Prospects

In recent years environmental, social and governance criteria have emerged as a critical set of standards for a company’s operations, which socially conscious investors use to weigh potential investments or disinvestment, from companies.

This has re-affirmed corporate governance’s position at the pinnacle of organisations and underlines its value as a key enabler of good company performance.

According to Natesan, companies are realising that they need to signal to the market, their commitment to ethical and effective leadership, via good governance.

“Better decisions at board level, set the stage for financial performance and the link between these two has been proven in numerous studies over the years.”

With its membership passing the 9000 mark and a changing demographic with over 40% female membership and some 60% of all members, comprised of previously disadvantaged groups, the growing appreciation for the value that good governance brings is improving. There is also good representation from younger age groups - all of which bodes well for the future of the business leadership in South Africa.

“We are often asked about the benefits of joining the IoDSA and there are many member benefits, like learning, discounted offers, events and lifestyle benefits. These are important, but in many ways it is ancillary to the network of corporate governance professionals that we provide members access to – many are exemplary business leaders and to have access to their thinking is invaluable.

“I therefore always encourage those individuals who want to be ethical and effective leaders to join us, not only because of what we can offer, but more importantly to add their voice to the message of good governance,” concludes Natesan.

Automation’s transformative power will change banking

The banking industry on a global scale is currently leveraging off the concept of automation to drive growth and cost efficiencies. While it has been met with a mixture of scepticism and hope, ultimately the concept of automation, when done right, has a transformative power.

Andrea Tucker, Research and Development Head at e4, a fintech software specialist, says that while the future of banking in South Africa is partially driven by international trends and technologies, the disruption of new entrants has had a bigger influence: “Selling themselves as digital, modern disruptors who are technology-led and have non-traditional operating models, these start-ups claim to scale quicker. This is possible as they are not hampered by legacy systems, and in customer-speak, can promise to deliver a seamless and remote online client onboarding experience. Some of these new entrants are selling a value proposition of technology-driven efficiencies, essentially putting banking in the literal hands of their consumers. Others sell their value proposition as a cost-effective digital banking option, using technology to deliver the service cheaper.”

Automation lies at the heart of these new approaches, and as the technologies used mature, the application of robotics and artificial intelligence for bank processes will assist banks, both new and incumbent to transform. Tucker says that local banks have met the challenge head on and have invested heavily in digital strategies and new technologies, all in the interest of becoming more competitive. With rising costs to service customers and the increased competition and growing base of new entrants, banks need to evolve, and automation is key to the success of this evolution.

“Automation should not be seen in a negative light, it plays a vital role, making it easier for a customer to bank digitally, ultimately improving engagements and ensuring the bank’s service is more efficient. This needs to be coupled with a strategic initiative to educate customers and encourage them to make use of these more efficient digital options and to continue to use them,” says Tucker.

According to Tucker, a strategic approach to transformation will impact the overall success. While there are case studies sharing successes and improvements, there are banks that have not achieved what was initially intended. Tucker believes that the difference will lie in the strategic intent and roll out of the transformation project.

Supporting Tucker’s point of view, McKinsey predicts a second wave of automation and AI emerging in the next few years. Here machines will do between 10 to 25 percent of work across bank functions, increasing capacity and freeing employees to focus on higher-value tasks and projects. To capture this opportunity, McKinsey also says that banks must take a strategic, rather than tactical, approach. In some cases, they will need to design new processes that are optimised for automated/AI work, rather than for people, and couple specialised domain expertise from vendors with in-house capabilities to automate and bolt in a new way of working.