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BarnOwl

Good corporate governance starts with you

27 September 2016

I’ve had several interactions with people in the Governance, Risk, Compliance (GRC) and Internal Audit space who comment on a growing sense of excessive legislation. The overarching attitude is that this leads to an exceedingly complicated burden on an organization and its employees to function in accordance with sometimes conflicting laws, acts, regulations, standards, policies, procedures, best practices, statutes, guidelines and rules from a multitude of bodies, chambers, courts, institutes, foundations, bureaus, agencies, societies and other groupings. If you thought that was a mouthful, perhaps it is a flickering endorsement of the true state of affairs. Industry and society is over legislated, and disproportionately controlled.

I do acknowledge that some (and my personal experiences count them in the vast minority) tend to argue for an increase in legislation, believing that only by ensuring each and every variable is tightly controlled, regulated and inspected through administrative controls and restraints, can we maintain a state of order and an even playing field for all. Personally I couldn’t agree less. As a closet anarchist, I don’t hate bureaucracy, I just intensely dislike the fact that it exists, and feel that this level of control simply results in submissive, rule-based human beings and companies, drowning in the ineptitude and boredom created by a lack of freedom, and caught up in a constant sea of red tape and restrictive boundaries. This environment makes it incredibly difficult for the individual or organisation to act or discern on their own, which results in obvious limitations especially if decisions and results are required immediately.

Of course a world without rules and regulations is incredibly difficult to imagine. By way of an example, every country globally has some sort of Occupational Health and Safety legislation, which aims to prevent injury, death and damage to property through a set of carefully considered rules and standards which all companies are expected to comply with. There are still accidents, but the regularity and severity of these accidents has been substantially mitigated over the years, from the introduction of the Factory Act in 1802, to the current levels of vigorous guidelines and parameters (from OHASA through to ISO standards). A great topic of interest in South Africa at the moment is the introduction of the King IV Report on Corporate Governance for South Africa 2016. As the draft edition states, one of the objectives of the report is:

“(To) promote good corporate governance as integral to running a business or enterprise and delivering benefits such as (i) an ethical culture; (ii) enhancing performance and value-creation by the organization; (iii) enabling the governing body to exercise adequate and effective control and (iv) building and protecting trust in the organization, and its reputation and legitimacy.” *

But I believe the last objective listed in the report is by far the most powerful, the achievement of which would have a massive bearing on not just the state of industry and trade, but fundamentally improve and enrich the world as we know it.

“(To) present good corporate governance as concerned with not only structure and process but also an ethical consciousness and behaviour.” *

* Institute of Directors Southern Africa Draft King IV Report on Corporate Governance for South Africa 2016

And the key to ethical behaviour is honesty, fairness and justness with an appreciation shown for the dignity, diversity and rights of all elements of creation. Voltaire spoke about every action having an opposite and equal reaction. Teachings from the bible relate the hypothesis that as you sow, so shall you reap. Eastern religions put forward the concept of karma where the actions a person takes will affect him or her at some time in the future, not just in the context of deeds, but through thoughts and words as well. All medical students are educated on the term “Primum non nocere”, in essence meaning first do no harm, reminding the healthcare professional to primarily consider the possible harm that an intervention might do, in the face of a less certain chance of benefit. And Aristotle weighed in on the subject saying “We are what we repeatedly do. Excellence is not an act, but a habit”.

If these are the keys to ethical behaviour, then the petrol that drives the motor is an often misunderstood and undervalued force – love. Now I know this sounds like an over-simplification, but I truly believe that love, starting with an elementary love for oneself, can accelerate humanity to a point where vital balance is restored to our realm. We are all gifted in unique and important ways, and recognizing, acknowledging and celebrating these gifts within ourselves allows us to amplify the effect we can have on the people around us. By allowing the world to be the mirror that we reflect our image upon, we are able to keep sight of the actions we take, and the impact they have on our immediate and wider spheres of influence.

As risk managers, compliance officers, company secretaries and auditors we have a responsibility to not just maintain good governance within our own organizations, but also to assist in directing the impact that the business has on communities, shareholders, employees, suppliers, customers and the environment we transact in. We simply need to ask ourselves the question, are our actions causing harm? There should never be a situation where damage to another party is par for the course, or acceptable behaviour in the pursuit of profit. If only 20% of organisations, whether in the private or public sector took cognisance of and implemented this simple guideline, the momentum gained would quickly sweep through every corner of society, raising the consciousness of large swathes of individuals and groups, and bringing humanity closer to the goals of peace, prosperity and equality for all. This attitude needs to extend beyond just our social responsibility programs, to the point where it infiltrates every business objective and process, from production line to end product and beyond. And with this single guiding principle in place, corporate governance legislation like the King IV report is unnecessary. Good corporate governance would be an effortless consequence of the actions of balanced, consciously aware individuals determined to have a positive impact on the world they live in.

Don’t discount the difference our individual efforts can make in establishing a society based on respect, honour, trust and integrity. As the philosopher Lao Tzu said “The journey of a thousand miles begins with one step”. Be the change you wish to see in the world.

“People killing, people dying,

Children hurt and you hear them crying.

Can you practice what you preach,

And can you turn the other cheek?

Father, father, father help us,

Send some guidance from above

‘Cause people got me got me questioning

Where is the love?”

Black Eyed Peas – Where is the love?

Author – Paul van der Struys

September 2016

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