Insights into Directorships and the Boardroom
Despite the positive economic growth and development in Ghana and selected countries in Africa, director accountability and governance continue to be a topical issue on the continent.
Never before in the post-independence era has executive and non-executive directors face several accusations and challenges in relation to their fiduciary accountability and governance duties in their respective organisation and in broader society.
Being accountable means taking responsibility for actions in relation to your rules of engagement. To be precise, accountability refers to the obligation to transparently take full responsibility for actions taken or not taken. Various forms of accountability exist. They include group accountability, personal accountability, professional accountability, public accountability, to name but a few.
Accountability, according to the experts including amongst others Sinclair, Hood C King, Cadbury and various reports from the World Bank, IOD-UK, IOD-SA and IMF, is made up of a variety of constituents which include responsibility (duty), answerability (account for actions), trustworthiness (worthy of trust), liability (consequences), transparency (openness) and reflection (introspection).
Both accountability and governance matters go back centuries when business owners and management were separated and there was the need to hold management responsible through some official mechanism. The concept of the board of directors to help hold functional custodians accountable then emerged. Today, directorship is no longer the gentleman’s club. Rather it is a group of qualified and experienced professionals tasked with delivering value to shareholders and wider society through accountability and governance.
According to the institute of Directors, UK, Southern Africa, Ghana and the Business roundtable-USA, a non-executive director is equally accountable for the performance of management on behalf of the shareholder.
In Ghana, the way and manner in which directors take accountability for their governance roles is clearly defined in the Companies Act 992. Today, flagrant neglection of non-executive directorship duties can result in a sanction, a fine and possibly a jail sentence.
As Meryn King, one of the world’s thought leaders on corporate governance summed it up, being accountable means that you are able to take responsibility for what you ‘did’ and what you ‘did not’ do.
In order to support developmental agendas on the continent, directors are increasingly being challenged to work towards becoming accountability-driven individuals. To leading experts such as Shultz Susan, Charan Ram, Rock Robert, Kristie James, Carey Denis, Buffet Warren, Useen Michael, individuals tasked with managing an organization must (a) be solutions driven, (b) seek out opportunities for improvements and (c) be prepared to take responsibility for their actions.
In addition, they have to be (a) optimistic, (b) confident, (c) bold, (d) responsive, (e) self-reflective and (g) open minded. They must also be willing to listen and learn, accept their own limitations and be proactive in their approach to ensuring accountability in their activities.
In Africa, many directors instead of being accountability-driven, seem to adopt a victim-based attitude and are not willing to accept responsibility for their actions. These individuals generally tend to be (a) pessimistic, (b) self-involved, (c)are known to make personal excuses and (d) look to others to take responsibility for their actions.
Directly connected to the concept of accountability is governance.
Governance is related to policies and procedures aimed at ensuring the people in decision-making positions are held to account for transparently discharging their duties for the common good, be it for shareholders, employees or society in general.
It is simply about having the right procedural systems in place to police actions of people with decision-making powers within government, public and private sector organizations. When it comes to company effectiveness, governance plays an important role in influencing the activities and decisions relating to finance, strategy, operations and procurement within an organization through various legislative, executive and judicial processes.
According to the United Nations, in order for governance to be seen as “good governance” it should include the following eight major characteristics: (1) be participatory, (2) consensus oriented, (3) accountable, (4) transparent, (5) responsive, (6) effective and efficient, (7) equitable and inclusive and should follow (8) the rule of law.
Good governance helps to ensure that corruption and self-driven interests are minimized. Accountability and governance at many public and private sector organisations now include their non-executive directors
According to the King (South Africa, Cadbury (UK) and Sarbanes Oxley (US) good Governance ensures that both organizational and societal needs are consistently met.
There are various attributes connected to the practice of good governance. Some of these attributes according to amongst others King, and Cadbury and the Institute of Directors (UK and Southern Africa) include: (a) people development; (b) risk mitigation; (c) directional and strategic; (d) simple framework; including a strategic plan; (e) developing tactical and operational implementation guidelines; (f) common standards and respect for the rule of law; (g) inclusiveness, equitable and participatory; (h) workable performance metrics; (i) open, (j) transparent, adaptive and responsive; consensus and (k) developmental driven etc.
Former United Nations Secretary-General Kofi Annan noted that “Good governance is perhaps the single most important factor in eradicating poverty and promoting development.”
This sentiment is supported by the African Union’s Agenda 2063 aspirations which refer specifically to role of governance in the realization of the continents developmental agenda. In fact, Agenda 2063 calls for an “Africa of good governance, democracy, respect for human rights, justice and the rule of law.”
Incorporating accountability and good governance as key components of any public and private sector related activity is essential for minimizing waste and corruptive practices within public and private sector organizations. Indeed, as rightly pointed out by Meryn King, accountability and governance are the driving forces behind sustained economic development and organizational growth.
In conclusion, accountability is about taking responsibility for actions taken or not taken and governance is about adhering to prescribed rules and regulations so that the right thing is done for business and society.
For Ghana and the rest of Africa, it is essential that politicians, policy makers and business leaders look to entrenching mechanisms that support and promote accountability and good governance for their respective long-term business goals and national developmental objectives.
>>>the writer is an international chartered director and Africa’s first-ever appointed Professor Extraordinaire for Industrialisation and Supply Chain Governance. Independently recognised as one of the vertical specific global strategic thinkers on industrialization, supply and value chain governance and development, he continues to play leading academic and industrial roles in sectorial reforms both in Africa, and around the world. He is the CEO of PanAvest International and the founding non-executive chairman of MY-future YOUR-Future and OUR-Future (MYO) and the highly popular daily Nyansa Kasa series. For more information on COVID-19 updates and Nyansakasa visit www.myoglobal.org.