Board nomination process flagged as concern by public-sector board members
26 May 2014
Directors of public-sector
companies have flagged the process for appointing board members as a concern.
This is the finding of the Institute of Directors in Southern Africa (IoDSA) based on the most recent benchmarking study for all board
appraisals conducted by the Institute to date. The IoDSA believes that this
problem could be exacerbated by the post-election cabinet reshuffle, which
could see new ministers replacing board members—or even entire boards—to
support new agendas.
The IoDSA has
conducted 118 board appraisals of both public- and private-sector boards since
2009, and its annual benchmark study highlights trends.
appointed boards that lose experienced members lack institutional knowledge and
waste months trying to come to grips with the entity” says Parmi Natesan, senior
governance specialist at the IoDSA. "During this period, the board cannot
provide the strong direction needed to help the entity achieve its goals.”
To manage this
risk, King III recommends staggered rotation so as to enable the board to
achieve the balance between retaining valuable skills, maintaining continuity
of knowledge and experience on the one hand, and introducing people with new
ideas and expertise on the other.
Follow a proper nomination process
concern for the boards of public-sector entities, the IoDSA’s benchmarking
survey reveals, is the nomination of board members. According to King III*,
shareholders – government in this case – are responsible for ensuring that
boards are properly constituted, taking into account skills and representivity.
In the public
sector, the Minister plays a major role in appointing the board, and sometimes
even the CEO, but such practice is not recommended without thorough
consultation with the organisation and its existing board.
important for the ministers to consult with the existing boards to determine
the skills and experience needed before making any appointments. Without such
consultation, these changes to boards run the risk of being ineffective and perceived
as political appointments,” she says.
King III recommends the appointment of an independent nominations
committee that will compile a shortlist of potential candidates, having
assessed the board’s skills requirement.
"Although the minister is under no obligation to follow the
recommendation made by the nomination committee, it would serve the entity well
if a board is appointed that meets the needs of the organisation, and whose
directors are not suspected to be purely political appointees.”
Natesan, some public sector boards think that the decision is out of their
hands. "But the truth is that it isn’t,” she says.
must realise it is up to them to look after the organisation’s best interests. There
is nothing stopping them from engaging with the minister on this critical
* To assist boards and shareholders, the IoDSA has produced a practice
note containing useful practical guidance on the selection, nomination and
voting for non-executive directors. For more information, please visit