Strategic Human Resource

Development
HRD 4801
Corporate Governance
• Why corporate governance?
• What is Corporate Governance?
• Good governance versus poor governance
• Difference between King III and IV Reports
Lesson 001 – Corporate Governance
• What is Corporate governance?
• It refers to creating an environment that promotes and supports ethics (morals,
values and standards)
• Concerned with creating a balance between the economic and social goals of an
organisation…through
• Efficient use of resources and the accountability of the organisation to various stakeholders
• Regarding how re sources were used
• This is achieved through the collective effort by stakeholders
• Government
• Public
• Service Providers
• Organisations
Principles of Corporate Governance
• Corporate Governance in SA is guided by the King Reports
• The King reports inform the corporate culture
• It encourages organisations to integrate good governance practices into the
organisational culture
• To hold them accountable for how they use their power and facilitate their application of
transparency
• This is achieved through the introduction and application of the principles of Corporate
Governance (see page 8 and 9):
Elements of Corporate Governance
• King IV Report has 17 principles, while King III Report has fewer
principles (referred to as elements and will be discussed thoroughly in Lesson 2)
• Why do we apply these elements:
• Promote organisation’s reputation
• Consideration of all stakeholder’s needs
• Provide guidance in the decision-making process
• Create an ethical organisation to enhance sustainability of the triple bottom-line
• To ensure that its impact on the organisation is enhanced
• Ultimately you want:
• Satisfied employees (People)
• To make a profit (Profit)
• Protect the environment (Planet)
Good Corporate Governance leads to:
• Effective leadership
• Creating an ethical organisation that enhances the sustainability of
the triple bottom line (People, Profit & Planet)
• Considering the needs of the stakeholder’s needs
• Innovation
• Guide the decision-making process
Poor Corporate Governance leads to:
• Depreciation of an organisation’s potential
• Financial difficulties
• Fraud by employees who are in decision-making positions.
• What happened at ESKOM?
• What happened to the financials of the organisation?
Difference between the King III Report and
King IV Report
• King III Report
- Based on leadership, sustainability and corporate citizenship
- Expect organisations to apply or explain
• King IV Report
• Encourages transparency and meaningful reporting to the stakeholders. It
presents corporate governance with an ethical culture, good performance
and effective control.
• Requires the organisations to explain how the principles are applied. Thus,
apply and explain.