CASE IN POINT // Neotel
by Ilse Ferreira
Company governance a key concept
Governance is much more than a mere word. Speaking to Neotel’s company secretary Calvin Theko, one deduces that it is his passion. And his passion is as clear as the objectives of the governance function itself.
He explains: “At Neotel the governance function actually encompasses more than the administration and maintenance of company and meeting logistic management. That is not the full scope of what we are doing here. Since only one of our eight directors are in South Africa, it means that part of our job is to raise their awareness of the governance environment they may encounter, since theirs may not necessarily be the same as in South Africa. A critical part of our time is spent on supporting the directors to continuously be congnisant of the local requirements, rules and regulations.
“Secondly, we have to ensure that whatever decisions are taken by the board must be in line with our strategy and within the limitations imposed by the company constitution and any applicable laws and regulations. We have to ensure all those requirements are met.”
Theko also, apart from the usual governance functions, has the internal audit, risk management and revenue assurance functions under his wing as well.
“Technically we have a combined assurance and compliance model and the synergies we have there is that all these functions are intended to ensure that the company runs in compliance with applicable laws, rules and regulations, not just at board level but also on the operational level, within the risk matrix approved by the board and in line with the set objectives.
“Lastly we have to make sure all decisions made by the board are followed through and reported back to the board,” he says.
Why is governance such a hot topic?
“There is a host of reasons why we tend to focus on corporate failures - both locally and abroad - which are blamed on poor corporate governance. But that is no longer the only reason why governance is receiving such a lot of attention. More and more companies are no longer just about financial returns, as in the case of Neotel, we are about our reputation, about sustainability and about stakeholder engagement.
The focus on ethical leadership amongst others has contributed to a change in the governance landscape, governance is no longer about tick box compliance, it is about effective, felt and visible leadership, wherein the right tone is set at the top”, Theko says.
“In the South African context the advent of the 2008 Companies Act and the King III report in 2009, has put further impetus of governance for day-to-day business operations. This has meant that companies can no longer do the bare minimum to comply, and what they do need to be both transparent, ethical and sustainable.”
Theko explains that IT is as much part of governance as the other aspects, “In fact, since so many functions within companies are reliant on automation of both systems and process, thus making IT a crucial part of governance.”
Theko emphatically believes that strategy and support should form part of governance.
“Business today is being transacted in an ever evolving environment. A change in technology or the exchange rate affects you whether you trade internationally or not, the needs of consumers are ever changing, price sensitivity and competitive buying - all these factors play a role on a daily basis. That is why a strategy should evolve with the marketplace, and should form part of a company’s governance plan.
Theko points to the fact that the governance concept does not have universal buy-in yet. “Some directors find it difficult to accept that they can no longer make decisions based only on what they deem right. Governance demands that it should comply with company statutes, industry regulations and applicable laws… and if they don’t the decision cannot be upheld. There really are people who see governance as an unnecessary intrusion designed to stifle commerce.. And sometimes the topic leads to emotive responses.
“Yet we have already seen that well governed companies tend to be successful and the opposite is true. It makes business common sense.
"He describes four elements in the governance plan. Firstly, the company administration and maintenance of systems and processes used every day. This is augmented by support being rendered to the board, stakeholder engagement with your customers, your own employees and the communities in which the company operates, and lastly issues around IT and IT planning.Theko says the concept of governance is still in the embryonic stage. “It is evolving and developing and is not yet being fully embraced by all. This acceptance factor will most certainly change as the full effects of companies adhering to good governance will become felt throughout our economy.
“Governance is becoming an integral part of business operations and factored into all company planning. As one of the countries that have taken the lead with this, South Africa cannot become complacent but should consolidate our lead,” he concludes.