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Similar a Keynote presentation to the board of trustees - Botswana Public Officers Pension Fund(20)




Keynote presentation to the board of trustees - Botswana Public Officers Pension Fund

  1. BPOPF Keynote
  2. Richard Winfield
  3. Keynote Provide context Revise knowledge Challenge thinking
  4. Richard Winfield “The Independent Authority on Director Development” • International trainer and facilitator • Executive Coach • Corporate Governance • The Directors Academy
  5. Richard Winfield Founder of Brefi Group - 1983 Systems – structure & clarity BSc, MSc, MSc Transportation planner Founded Brefi Group 1982 Newspaper publisher Automotive industry International trainer/facilitator Corporate Governance Coach training programs Masterclass e-books
  6. Richard Winfield Wealth Dynamics ‘Mechanic’ DISC ‘Investigating’
  7. International experience
  8. Purpose
  9. Richard Winfield ”I help directors and boards become more effective by clarifying goals, improving communications and applying good corporate governance. "I can help identify core issues and make complex ideas simple …. holding the space for you to create your own solutions."
  10. Content Corporate governance King III The annual review and director appraisal Director behaviours Director types
  11. Governance
  12. Things to consider
  13. How relevant is corporate governance to BPOPF?
  14. How successfully do we apply governance standards?
  15. Does good governance feature in your investment strategy?
  16. Corporate Governance “Corporate governance is the system by which business corporations are directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporations such as the board, managers, shareholders and other stakeholders, and spells out the rules and procedures for making decisions on corporate affairs.” OECD definition
  17. Corporate Governance Corporate governance is the system by which companies are directed and controlled.
  18. Corporate Governance Corporate governance is about what the board of the company does and how it sets the values of the company.
  19. Corporate Governance It is to be distinguished from the day-to-day operational management of the company by full-time executives.
  20. Corporate Governance The purpose of Corporate Governance is to facilitate effective entrepreneurial and prudent management that can deliver the long term success of the company.
  21. Corporate Governance Good governance is not just about compliance with formal rules and regulations.
  22. Corporate Governance It is about establishing internal processes and attitudes that add value, enhance the reputation of the business, make it more attractive to external investors and lenders and ensure its long-term success.
  23. Corporate Governance “Good governance is essentially about effective leadership. Leaders should rise to the challenges of modern governance. Such leadership is characterised by the ethical values of responsibility, accountability, fairness and transparency and based on moral duties that find expression in the concept of Ubuntu. Responsible leaders direct company strategies and operations with a view to achieving sustainable economic, social and environmental performance.” King III Report Ubuntu is a Nguni Bantu term roughly translating as “human kindness”.
  24. Reasons for corporate governance Good corporate governance plays a vital role in underpinning the integrity and efficiency of financial markets.
  25. Reasons for corporate governance Good governance can be seen in the quality of decisions; It helps mitigate or reduce risk and avoid scandals, fraud, and criminal liability of the company.
  26. Reasons for corporate governance If companies are well governed, they will usually outperform other companies and will be able to attract investors whose support can help to finance further growth.
  27. Reasons for corporate governance Poor corporate governance weakens the company’s potential and at worst can pave the way for financial difficulties and even fraud.
  28. Reasons for corporate governance It is now accepted that sound governance results in better performing companies to deliver total economic value within its broader meaning and corporate governance is now established in many countries across the world.
  29. In Qatar this week Rashid bin Ali Al Mansoori, CEO of QSE, while addressing the opening session of the Corporate Governance Conference pointed out that the strong interest in corporate governance has emerged as a result of . . .
  30. In Qatar this week . . . the increasing complexity of the legal and international environment, increased investor participation in market development, growing awareness among investors and companies about the risks of not practicing good governance, and the importance of corporate responsibility to their local communities.
  31. JCPenney CSR Report 2017 Corporate Social Responsibility focus: Diverse workforce Community relations Responsible and ethical sourcing Energy conservation Responsible recycling
  32. Corporate Governance Corporate governance can be considered from two viewpoints: –
  33. Corporate Governance Determining the organisation’s vision, mission and values; developing and implementing strategy; and then reviewing performance in the context of the organisation’s vision, mission and values, or;
  34. Corporate Governance Adopting best practice as defined by respected external parties.
  35. Corporate Governance According to the OECD, a corporate governance framework should consist of three main elements:
  36. Corporate Governance A set of relationships between the company’s management, its board, its shareholders and other stakeholders
  37. Corporate Governance A structure through which the objectives of the company are set and the means by which obtaining those objectives and monitoring performance are determined
  38. Corporate Governance Proper incentives for the board and management to pursue objectives that are in the interests of the company and its shareholders
  39. Corporate Governance Codes Corporate governance codes are not generally a rigid set of rules. They consist of principles and provisions.
  40. Corporate Governance Codes Companies are required to apply the main principles and report to shareholders on how they have done so.
  41. Comply or explain The ‘comply or explain’ approach was introduced in the Cadbury report in 1992. It is strongly supported by both companies and shareholders and has been widely admired and imitated internationally.
  42. Corporate Governance Codes If a company decides that good governance can be achieved by other means, they may adopt these but must explain their reasons.
  43. Comply or explain The purpose of ‘comply or explain’ is to let the market decide whether a set of standards is appropriate for individual companies.
  44. Comply or explain This approach rejects the view that one size fits all, and creates a ‘market sanction’, rather than a legal one.
  45. Apply or explain In the Netherlands and South Africa they decided that it is often not a case of whether to comply or not, but rather to consider how the principles and recommendations can be applied – thus the proper approach was to ‘apply’ instead of ‘comply’.
  46. Apply and explain In King IV™ the committee changed their approach to ‘apply’ and ‘explain’.
  47. UK governance principles Leadership Effectiveness Accountability Remuneration Relations with shareholders There are 18 main principles and many more supporting principles defining best practice
  48. King Reports
  49. Things to consider
  50. How does King III apply to BPOPF?
  51. Is it a guide or a standard?
  52. What will be the impact of King IV?
  53. South Africa and the King Reports King Committee Report, 1994 King II, 2002 Companies Act, 2008 King III, 2009 Code for Responsible Investing in South Africa (CRISA), 2011 King IV™, 2016
  54. King III in Botswana King III was benchmarked against the Botswana Code and the UK Corporate Governance Code and found to be much more encompassing.
  55. King III in Botswana In April 2017 it was adopted by the Botswana Accountancy Oversight Authority (BAOA) as the recommended best practice corporate governance model for Botswana.
  56. King III in Botswana The board of the BAOA has approved a Corporate Governance Procedures Manual based on King III to provide guidance regarding the corporate governance standards and codes that Public Interest Entities (PIEs) regulated by the Authority are expected to use.
  57. King III The philosophy of King III is focused around: Leadership – good governance is essentially about leadership
  58. King III Sustainability – the primary moral and economic imperative of the 21st century; nature, society and business are interconnected in complex ways that should be understood by decision- makers
  59. King III Corporate citizenship – flows from the fact that the company is a person and should operate in a sustainable way
  60. King III King III comprises nine principles, each of equal importance and together forming a holistic approach to governance The nine principles are supported by 315 recommended practices
  61. Principles 1. Ethical leadership and corporate citizenship
  62. Principles 2. Boards and directors
  63. Principles 3. Audit committees
  64. Principles 4. The governance of risk
  65. Principles 5. The governance of information technology
  66. Principles 6. Compliance with laws, rules, codes and standards
  67. Principles 7. Internal audit
  68. Principles 8. Governing stakeholder relationships
  69. Principles 9. Integrated reporting and disclosure
  70. King IV Principles King IV moved to “apply and explain” and increased to 17 principles, including:
  71. King IV Principles Principle 17: The governing body of an institutional investor organisation should ensure that responsible investment is practised by the organisation to promote good governance and the creation of value by the companies in which it invests.
  72. Governance outcomes Ethical culture Good performance Effective control Legitimacy
  73. Annual reviews
  74. Things to consider
  75. What is the purpose of reviewing board performance?
  76. Is it an historical analysis to satisfy the NBFIRA?
  77. Or the basis for development and improvement?
  78. What should be the practical outcomes of this year’s review?
  79. Annual review Good governance requires that the performance of the board be evaluated once a year.
  80. Annual review Boards should undertake a formal and rigorous annual evaluation of their own performance and that of their committees and individual directors.
  81. Annual review The evaluation process is a mechanism to improve board effectiveness, maximise strengths and tackle weaknesses, leading to an immediate improvement of performance throughout the organisation.
  82. Purpose A well conducted evaluation helps the board, committees and individual directors perform to their maximum capabilities:
  83. Purpose Assess the balance and currency of skills within the board
  84. Purpose Identify attributes required for any new appointments
  85. Purpose Review practice and process to improve efficiency and effectiveness
  86. Purpose Consider the effectiveness of the board’s decision- making processes
  87. Purpose Recognise the board’s outputs and achievements
  88. Benefits A performance evaluation can play a key role in helping give the board:
  89. Benefits Clarity of purpose that can be communicated throughout the organisation.
  90. Benefits More productive board meetings that look forwards and outwards rather than inwards and backwards
  91. Benefits Faster and more effective decision-making
  92. Benefits Better personal relationships and appreciation of individual roles, leading to a more collaborative approach
  93. Benefits Better succession planning, recruitment, induction and appraisal of directors
  94. Benefits Increased personal satisfaction with less stress
  95. Context for BPOPF Here are some extracts that directly relate to BPOPF and the annual review.
  96. BPOPF Board Charter 12. Performance Evaluations The board should state in the Annual Trustee Report that the performance of the board has been evaluated.
  97. NBFIRA – PFR10 Section 2.5 Performance Assessment of, and by, the Board 12. At least once a year the board shall assess their performance, as well as their processes and procedures. This assessment is not intended to be punitive but rather to be a tool to enable the board members to track their progress and assess their development needs.
  98. NBFIRA – PFR10 Section 2.5 Performance Assessment of, and by, the Board 14. This assessment should be performed individually by each board member and then consolidated for the board as a whole.
  99. Retirement Funds Act 2014 Section 14 (2) A board shall in pursuing its objects:- (c) Assess its performance at least once a year, using the criteria consistent with that prescribed by the Regulatory Authority.
  100. Behaviours
  101. Things to consider
  102. How effective is this board?
  103. What processes and behaviours could we improve?
  104. Harvard Business Review survey 90% of companies fail to execute strategy
  105. Harvard Business Review survey 85% of executives spend less than one hour a month discussing strategy
  106. Harvard Business Review survey 60% of companies do not link budgets to strategy
  107. Harvard Business Review survey Only 25% of managers have incentives linked to strategy
  108. Harvard Business Review survey Less than 5% of the workforce understand the strategy
  109. Failed boards From Enron to Volkswagen, boards full of smart people have failed at their governance role. So what separates good boards from failed boards? Is it having the right directors?
  110. Great boards According to research by Jim Crocker of Boardroom Metrics: Great boards have strong directors But board composition is not what separates great boards from failed boards
  111. Strong boards Strong boards are truly independent; they do not simply rely on management: They do their own research They use their own advisers They are prepared to confront management They are prepared to take strong decisions
  112. Strong boards Strong boards are well led: Chairs know how to execute Chairs lead with confidence, skill and clarity
  113. Strong boards Strong boards possess proven skills and competency: High-level risk management Strategic planning Performance management
  114. Strong boards Strong boards lead a governance structure: Attention to risk Comprehensive corporate strategy Accountability/performance management
  115. Strong boards Key factors: Independence Board leadership Strategy expertise Focus on risk/solid controls Culture/incentives
  116. Strong boards All these factors are more important than the composition of the board
  117. Critical director behaviours Proper preparation Asking naïve questions Assertiveness – being prepared to challenge Decision making
  118. Hazards Group think Willful ignorance Status
  119. Thank you
  120. Richard Winfield
  121. Director typesSource: Jim McHugh, CEO of McHugh & Company, an executive coach
  122. How many of these do you know?
  123. How would you deal with them?
  124. Which board member are you? The Medler – ultra hands on. The Medler is usually a significant investor who has a lot of money at stake and is hyperventilating and worrying during the week and especially during board meetings. Meddlers get overly meddly when the company’s performance is suffering.
  125. Which board member are you? The Rubber Stamp: The Rubber Stamp is like a weather forecaster. They understand the barometric pressure prior to the start of the meeting. “Tell me how to vote – I am here for you.”
  126. Which board member are you? The Pontificator: The Pontificator is the smartest guy in the room. Not! The Pontificator loves to . . . pontificate.
  127. Which board member are you? The Kid: If the company is a family-owned business, chances are one of the family owners will at some point say, “I want my son/daughter on the board.” This is especially a given if one or other family branches has already been successful in getting their son/daughter on the board. Tit fot tat.
  128. Which board member are you? The Figurehead: The Figurehead knows everyone and can open doors! Wow! Just wait until the Figurehead gets going!
  129. Which board member are you? The Rock Star: The Rock Star is a Figurehead under age 40.
  130. Which board member are you? The Mediator: The Mediator loves being in the middle and never taking a stand. Once the Mediator is done mediating, the board is covered in a spider web and no one can move.
  131. Which board member are you? The Advisor: Does the word ‘Independent’ ring a bell? If so, then putting one of your regular professional services advisors on the board negates that a bit, doesn’t it?
  132. Which board member are you? The (not present) Empty Seat: The Empty Seat could be a bonafide, meaningful contributor if they a) ever show up for a meeting and b) come prepared.
  133. Which board member are you? The (present) Empty Seat: Flossing teeth and snoring after lunch are possible board room activities for the (present) Empty Seat. They also regularly check vacation schedules or investment portfolios on their iPad while the CEO is discussing the update to the company’s strategic plan.
  134. Which board member are you? The Empty Seats are cut some slack because they are most likely to be another category, such as:
  135. Which board member are you? The Sacred Cow: The Sacred Cow is a board member for life. No term limits. People start to whisper when you ask, “Why is SC on the board?”
  136. Which board member are you? The Randomiser: The Randomiser loves to ask lots of questions, just not ones that are applicable to the topic being discussed at the time . . . Could be an item that was covered a year ago!
  137. Which board member are you? The Representative: If you have outside investors, chances are they will insist that one of their ‘representatives’ will have a board seat to ‘represent their interests’. The Representative is generally a person with excellent spreadsheet skills and asks good questions about the aged accounts receivable.
  138. Which board member are you? The Mad Scientist: The Mad Scientist is a technical whiz and may have a PhD in Computer Science or Organic Chemistry. While the Mad Scientist knows about chemical reactions, colliding particles or how to prevent a cyber attack, the linkages among the balance sheet, income statement and cash flow are a mystery to him.
  139. Thank you
  140. Richard Winfield
  141. The Directors Academy Distance Learning Resources for Director Development