This presentation was delivered in 2017 as part of a board effectiveness assessment

2. BPOPF
Keynote

3. Richard
Winfield

4. Keynote
Provide context
Revise knowledge
Challenge thinking

5. Richard Winfield
“The Independent Authority on
Director Development”
• International trainer and facilitator
• Executive Coach
• Corporate Governance
• The Directors Academy

6. 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

7. Richard Winfield
Wealth Dynamics
‘Mechanic’
DISC
‘Investigating’

8. International experience

9. Purpose

10. 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."

11. Content
Corporate governance
King III
The annual review and director appraisal
Director behaviours
Director types

12. Governance

13. Things to
consider

14. How relevant is corporate
governance to BPOPF?

15. How successfully do we apply
governance standards?

16. Does good governance feature
in your investment strategy?

17. 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

18. Corporate Governance
Corporate governance is the system by which companies are
directed and controlled.

19. Corporate Governance
Corporate governance is about what the board of the company
does and how it sets the values of the company.

20. Corporate Governance
It is to be distinguished from the day-to-day operational
management of the company by full-time executives.

21. 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.

22. Corporate Governance
Good governance is not just about compliance with
formal rules and regulations.

23. 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.

24. 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”.

25. Reasons for corporate governance
Good corporate governance plays a vital role in
underpinning the integrity and efficiency of financial
markets.

26. 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.

27. 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.

28. 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.

29. 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.

30. 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 . . .

31. 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.

32. JCPenney CSR Report 2017
Corporate Social Responsibility focus:
Diverse workforce
Community relations
Responsible and ethical sourcing
Energy conservation
Responsible recycling

33. Corporate Governance
Corporate governance can be considered from two
viewpoints: –

34. 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;

35. Corporate Governance
Adopting best practice as defined by respected
external parties.

36. Corporate Governance
According to the OECD, a corporate governance
framework should consist of three main elements:

37. Corporate Governance
A set of relationships between the company’s
management, its board, its shareholders and other
stakeholders

38. 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

39. Corporate Governance
Proper incentives for the board and management to
pursue objectives that are in the interests of the
company and its shareholders

40. Corporate Governance Codes
Corporate governance codes are not generally a rigid
set of rules. They consist of principles and provisions.

41. Corporate Governance Codes
Companies are required to apply the main principles
and report to shareholders on how they have done so.

42. 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.

43. 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.

44. 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.

45. Comply or explain
This approach rejects the view that one size fits all, and
creates a ‘market sanction’, rather than a legal one.

46. 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’.

47. Apply and explain
In King IV™ the committee changed their approach to
‘apply’ and ‘explain’.

48. UK governance principles
Leadership
Effectiveness
Accountability
Remuneration
Relations with shareholders
There are 18 main principles and many more
supporting principles defining best practice

49. King Reports

50. Things to
consider

51. How does King III apply to
BPOPF?

52. Is it a guide or a standard?

53. What will be the impact
of King IV?

54. 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

55. 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.

56. 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.

57. 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.

58. King III
The philosophy of King III is focused around:
Leadership – good governance is essentially
about leadership

59. 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

60. King III
Corporate citizenship – flows from the fact that
the company is a person and should operate in a
sustainable way

61. 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

62. Principles
1. Ethical leadership and corporate citizenship

63. Principles
2. Boards and directors

64. Principles
3. Audit committees

65. Principles
4. The governance of risk

66. Principles
5. The governance of information technology

67. Principles
6. Compliance with laws, rules, codes and standards

68. Principles
7. Internal audit

69. Principles
8. Governing stakeholder relationships

70. Principles
9. Integrated reporting and disclosure

71. King IV Principles
King IV moved to “apply and explain” and increased
to 17 principles, including:

72. 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.

73. Governance outcomes
Ethical culture
Good performance
Effective control
Legitimacy

74. Annual reviews

75. Things to
consider

76. What is the purpose of reviewing
board performance?

77. Is it an historical analysis to
satisfy the NBFIRA?

78. Or the basis for development
and improvement?

79. What should be the practical
outcomes of this year’s review?

80. Annual review
Good governance requires that the performance of the
board be evaluated once a year.

81. Annual review
Boards should undertake a formal and rigorous annual
evaluation of their own performance and that of their
committees and individual directors.

82. 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.

83. Purpose
A well conducted evaluation helps the board,
committees and individual directors perform to their
maximum capabilities:

84. Purpose
Assess the balance and currency of skills within the
board

85. Purpose
Identify attributes required for any new appointments

86. Purpose
Review practice and process to improve efficiency
and effectiveness

87. Purpose
Consider the effectiveness of the board’s decision-
making processes

88. Purpose
Recognise the board’s outputs and achievements

89. Benefits
A performance evaluation can play a key role in helping
give the board:

90. Benefits
Clarity of purpose that can be communicated
throughout the organisation.

91. Benefits
More productive board meetings that look forwards
and outwards rather than inwards and backwards

92. Benefits
Faster and more effective decision-making

93. Benefits
Better personal relationships and appreciation of
individual roles, leading to a more collaborative
approach

94. Benefits
Better succession planning, recruitment, induction
and appraisal of directors

95. Benefits
Increased personal satisfaction with less stress

96. Context for BPOPF
Here are some extracts that directly relate to BPOPF
and the annual review.

97. BPOPF Board Charter
12. Performance Evaluations
The board should state in the Annual Trustee Report
that the performance of the board has been evaluated.

98. 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.

99. 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.

100. 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.

101. Behaviours

102. Things to
consider

103. How effective is this board?

104. What processes and behaviours
could we improve?

105. Harvard Business Review survey
90% of companies fail to execute strategy

106. Harvard Business Review survey
85% of executives spend less than one hour a
month discussing strategy

107. Harvard Business Review survey
60% of companies do not link budgets to strategy

108. Harvard Business Review survey
Only 25% of managers have incentives linked to
strategy

109. Harvard Business Review survey
Less than 5% of the workforce understand the
strategy

110. 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?

111. 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

112. 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

113. Strong boards
Strong boards are well led:
Chairs know how to execute
Chairs lead with confidence, skill and clarity

114. Strong boards
Strong boards possess proven skills and competency:
High-level risk management
Strategic planning
Performance management

115. Strong boards
Strong boards lead a governance structure:
Attention to risk
Comprehensive corporate strategy
Accountability/performance management

116. Strong boards
Key factors:
Independence
Board leadership
Strategy expertise
Focus on risk/solid controls
Culture/incentives

117. Strong boards
All these factors are more important than the
composition of the board

118. Critical director behaviours
Proper preparation
Asking naïve questions
Assertiveness – being prepared to challenge
Decision making

119. Hazards
Group think
Willful ignorance
Status

121. Thank you

122. Richard Winfield
rwinfield@brefigroup.co.uk

123. Director typesSource: Jim McHugh, CEO of McHugh & Company, an executive coach

124. How many of these
do you know?

125. How would you
deal with them?

126. 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.

127. 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.”

128. Which board member are you?
The Pontificator: The Pontificator is the smartest guy in the
room. Not! The Pontificator loves to . . . pontificate.

129. 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.

130. Which board member are you?
The Figurehead: The Figurehead knows everyone and can open
doors! Wow! Just wait until the Figurehead gets going!

131. Which board member are you?
The Rock Star: The Rock Star is a Figurehead under age 40.

132. 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.

133. 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?

134. 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.

135. 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.

136. Which board member are you?
The Empty Seats are cut some slack because they are most
likely to be another category, such as:

137. 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?”

138. 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!

139. 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.

140. 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.

141. Thank you

142. Richard Winfield
rwinfield@brefigroup.co.uk
www.BrefiGroup.co.uk

143. The Directors Academy
Distance Learning Resources for Director Development
www.TheDirectorsAcademy.com