OPINION: Why King IV matters

PUBLISHED: Tue, 22 Nov 2016 14:00:29 GMT

Gone are the days when corporate governance was confined to companies and their boards. 

In a changing world where information is literally at the fingertips of society at large, ethical governance is not just expected but is demanded of everybody who fulfils a leadership position.  It matters not whether a governing body is in charge of a small enterprise, a large listed company, a state owned company or even a government body.

To quote Vince Lombardi, “leaders are made, they are not born”.  How our leaders are made, and what informs their decisions directly impacts on how organisations are governed, and the community in which they operate is impacted.  This is especially true in light of the fact that organisations do not function as islands, but rather as integrated ecosystems – each relying on the other (and other stakeholders such as employees) for their longevity.

In this regard, the King IV Report on Corporate Governance is an invaluable guide to leaders on how to govern ethically.  In our current political, economic and social climate this report is to be embraced unconditionally and encouraged completely.

King IV sets out 16 principles which essentially embody universal ideals which all organisations should, and dare I say can, achieve.  These principals are fundamental to good corporate governance, and are accompanied by a set of recommended practices.  

For instance, the first of these principles requires that the governing body should set the tone and lead ethically and effectively, and King IV then recommends, amongst other practices, that the governing body take all legitimate stakeholders (for example employees and the community) into account when making decisions in the best interest of the organisation.  Ultimately, however, the manner in which these principles are achieved in practice is entirely up to the organisation.   

King IV is, however, merely a set of voluntary principles and practices of corporate governance.  It therefore requires the “buy-in” of all organisations in order to make a noticeable impact on South African lives.  However, organisations only change tact when pressure is placed on them by their consumers and when their bottom line is affected.  

If consumers, vote with their feet, they will encourage private organisations to lead ethically, then these organisations will in turn require public organisations to lead ethically as well.  This is how we change South Africa’s future.

And that is why King IV matters.

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