It’s been little over a year since the mandatory effective date of the IoDSA’s (Institute of Directors in Southern Africa) latest report – the King IV Report on Corporate Governance ™ – for all JSE listed companies.
Yet multiple smaller businesses and non-profits voluntarily implement the report into their company policy.
Why? Implementing the King Report is a pretty good way to ensure your company policy is up to standard in terms of your governing procedures.
If you’re not familiar with the King Reports: it’s a series of reports (each new report replacing the former) that translate international standards and big-time happenings on corporate governance into set of actionable principles relevant to South African companies.
I’ll be running you through the latest reports, the King IV™; how it will help you ensure the long-term sustainability of your business; and what voluntary implementation would mean for you.
What is exactly is the King IV™ Report and why should you care?
King IV™ is the fourth update of the IoDSA’s King Report on Corporate Governance and, unlike the former versions; it’s explicitly inclusive to smaller companies.
To help smaller businesses implement the report, King IV™ boiled King III™’s 75 vague ethical principles down to 17 simplified principles – each supplemented with recommended practices.
The aim of the report is to tackle modern-day governance issues, that might harm your company in the long run if left unnoticed, and limit them using company policy, management organisation and recommended practices.
Take Principle 14 for example on the Remuneration Governance. The King’s code advises that if only 25% of the company’s shareholders have an issue with the remuneration policy, they be given the right to pass non-binding advisory votes on the matter.
If Company A, implements the recommended practice, they ensure their remuneration is fair beyond reasonable doubt, their act as pro-active gatekeepers to creating just policies.
If Company B, does not implement the recommended practice, unfair remuneration might only come to light years later blowing it into a public indirection that threatens the credibility of your business.
In 2018, saying you didn’t know, isn’t a valid excuse anymore. You need to set systems in place that ensure the governing body keeps tabs on everything.
Most notably, King IV™ allows you to assign accountability and pinpoint mistakes or misconduct ASAP by requiring regular disclosures linked to each of the principles.
The 17 principles cover almost every modern-day governance subject – from fair and unbiased governance composition to the governance of technology and digital information. These disclosures make it increasingly difficult for involved parties to hide transgressions that can damage the company in the long run.
How to make King IV disclosures
Your governing body gets to choose where these King-related disclosures are made. You can do them in print or online; in your integrated report, in a sustainability report, an ethics committee report or split them among more than one – just avoid pure duplication.
The disclosures simply need to be formally approved, publically available and updated at least every year. The mantra of the report, and its recommended practices and disclosures, is “apply the principles and explain the practices”. There’s no need to methodically state whether the principles are being adhered to. It’s your job to explain what’s being done.
What King IV™ does quite differently from King III, is recommending the application of its principles within set timelines, reports and committees within it’s recommended practices.
How to get started on practical implementation of the King IV
It’s impossible to reduce the full King report down to a few steps in one-go.
To give you a feel for what implementation would mean for your business’s day-to-day running, I’ll run you a principle specifically related to your organisational structure and the required disclosures.
You can get the full King IV Report™ with all 17 principles, its recommended practices and its recommended disclosure on the IoDSA’s website.
Although the report is extensive, it’s an easy-read and clearly references applied recommended practices and disclosures for each of the 17 principles.
How to implement Principle 8: Committees of the Governing Body
In this principle, King IV™ advises that the governing body arrange delegation to ensure “independent judgement, assist with the balance of power, and to help the governing body to discharge its duties effectively”.
An example would be to set up a committee, consisting of lower management levels, with clearly identifiable responsibilities and then to measure their progress via reports.
One of the recommended practices include creation an Audit committee (which is statutory for some charger companies) both the head and all the members of that committee be “independent, non-executive members of the governing body”.
It’s recommended that the committee meet with both the internal and the external auditor once a year, in the absence of any members of the governing body.
If you implement the King IV™ recommendations you’ll have an upright and an independent committee that evaluates your company’s financial integrity and ensures no discrepancies go unnoticed by offering that’ll threaten the credibility of your company in the long run.
The recommended disclosure is a statement as to:
- The integrity of your financial statements;
- The quality of your internal audit;
- The effectiveness of your CFO and financial controls;
- The effectiveness of your company’s assurance;
- And whether the external auditor is believed to be independent and whether the audit is of high quality
If don’t follow the recommendations and you don’t appoint a Audit committee or create one using biased members, discrepancies might stay concealed and cause long-term damage that will eventually surface.
The report suggests other committees like a Nominations; Risk Governance; and Social and Ethics Committee.
King IV™ strongly propagates transparency, the delegation of responsibility and the implementation of accountability by putting pen to paper in term of officiated aims, bodies responsible for those aims and the provisions of consistent reports.
That way your governing body has a clear way to identify any issues – as it’s impossible to keep tabs on every area of your business yourself.
Essentially the King IV™ helps you create a measurable outline in your company policy that’ll ensure good corporate citizenship in present-day society and management that actions align with your company’s best interest and long-term sustainability.
In essence the King IV Report™ gives you a voluntary code of internationally and nationally relevant principles and practices.
We Need To Unite For A Better Entrepreneurial Future!
Here are my key entrepreneurial tips from The Passport Showcase.
In our modern world, where nationalists walk the street and xenophobic beliefs are on the rise, as a Zimbabwean serial entrepreneur and motivational speaker, I’ve identified that we need to bridge this division and unite us all through celebrating our diversity.
We need to come together not because it’s the right thing to do, but because united, we can work towards a profitable future. However, before this can happen, we need to change the global mindset. That’s why I transformed my book The Passport into a showcase in which performers from across the continent took part and showed off their talents.
While preparing for the show I noted some important lessons that I learnt along the way. Here are my key entrepreneurial tips from The Passport Showcase.
Success can’t happen in a vacuum!
Setting up The Passport Showcase took a lot of collaboration. As an entrepreneur and a believer in a united Africa, I’ve learned you can’t operate a successful business if you’re not willing to work and deliver services to everyone. It’s for this reason I invited fashion designers, artists, and dancers, to come together and educate us about the dangers of xenophobic beliefs through their art forms.
We need to be able to blend skills and overcome our preconceived notions, in business and the arts, so that we can achieve great things.
Education is the key to every problem
It’s a part of starting any business; educating the public about your company and quickly converting them into consumers. Arguably the same was true of the showcase, creating a truly unique experience to inform the public about celebrating diversity.
Helping individuals understand that acceptance is key for a better future is critical for business expansion. If any of us want to expand our businesses, we need to be able to engage with different markets – who won’t chase away the unknown.
Identifying a new opportunity is one of the fundamental building blocks for a new business. Finding unique solutions is a truth that echoes across corporate industries and the arts. But change can cause concern and adverse reactions.
On our continent, ideas that disrupt the norm are needed to catapult our brothers and sisters to a brighter future. But this can only be achieved when we celebrate our diversities and collaborate.
9 Ways To Elevate Your Small Business To The Next Level
The South African economy is strongly supported by the nation’s entrepreneurial spirit, which encourages a culture of growth and development in communities.
With the unemployment rate currently at 27.71%, people of all ages and backgrounds are looking for an opportunity to work.
Although many entrepreneurs have enjoyed great success on their small business journeys, choosing to start your own business comes with many risks. One of these risks is the financial burden it can bring. While there are various challenges faced by small businesses, it is possible to overcome these and jumpstart your business with these useful tips from FedEx Express, the world’s largest express transportation company.
1. Connect with customers
As a small business owner, it is important to know who your customers are, where they spend their time, what they are looking for and how your business can meet their needs. Times have changed and waiting for customers to come to you is no longer a feasible business strategy. In today’s evolving business environment, entrepreneurs need to be approaching their customers and building strong relationships with them to form a lasting impression. If your small business cannot grow its customer base, it cannot grow profits.
Attending networking events will allow you to find professionals and other small business owners who offer services your business may require. Many small business owners get this critical aspect of starting a new business wrong by networking purely to gain customers, not realising that networking with other business can assist you in acquiring the services you need to continue the growth of your business. Small businesses have a lot to gain through networking at the right time and at relevant events.
3. Use social media
There are a number of social media networks and social networking platforms that can drastically grow your business, however, it is important to understand your customers and identify the channels they prefer to communicate on. By implementing a comprehensive social media strategy, you can ensure social media works as a driver of new business that positively promotes your service offerings.
4. Build customer loyalty
Building customer loyalty begins with great customer service. Great customer service starts with a positive customer experience and first impressions are vital in this regard. If a customer has an enjoyable experience when using your services, it is likely they will return and use your services on an ongoing basis. By ensuring your business has a user friendly website and informative brand collateral, new business prospects will increase and those who have experienced quality customer service from your business are likely to refer you to friends and colleagues.
5. Ask for help
All small businesses face challenges, particularly in the early operational stage. This is why asking for help from your peers/mentor who may be more experienced than you is critical. Tapping into the mind of someone with more experience and a broader knowledge base will ensure you learn and acquire the skills needed to make a success of your business. The FedEx Small Business portal offers business owners useful advice that will assist you on your small business journey. Visit www.smallbusiness.fedex.com for tips and success stories that will inspire and help you to grow your small business.
6. Hire the right people
Each person that forms part of your business needs to share the same vision with you that will drive growth. Your workforce will be responsible for the success of your business therefore, ensuring your staff remains motivated is important. When hiring a new employee, implement a check list that includes traits that you feel are imperative to the culture of your business.
Asking out-of-the-box questions in the interview will also assist you in determining if the potential employee is a suitable candidate to fill the open position.
7. Manage cash flow well
Many small businesses close due to cash flow problems. Managing money spent versus money earned is critical as it provides you with a clear indication of whether your business is running at a loss or whether you are excelling. If your small business is losing money, you can implement a strategy to iron out the issues that are contributing to this and identify ways that will ensure your business generates profits.
8. Work to build success
Work to make a success out of your business with your employees by being involved in the everyday activities that are critical to your businesses success. Being involved will ensure employee morale remains high while allowing you to identify areas that need improvement.
9. Find inspiration
There will always be someone who has been in your current position, even if it is a different business to yours. Learning how they made a success of their business during hard times will provide you with the knowledge you need to succeed as a business owner. Starting your own business is a learning experience made easier by speaking to others who inspire you.
A business can safeguard its success if it continues to innovate. For example, e-commerce has changed the way the world conducts business, and the rise in technology has made it easier to interact with customers quickly and across borders. With economies becoming more interconnected, companies large and small are now able to access markets that were previously unattainable. E-commerce will assist small businesses in establishing their territory in the market and as a result, guarantee growth and longevity,” concludes Higley.
How Algorithmic Forecasting Can Improve Business Efficiency In Challenging Economic Times
Harnessing the power of predictive analytics, in-memory computing, and artificial intelligence to forecast risks will help entrepreneurs stay ahead.
The ability for businesses to accurately predict risk and develop insights has traditionally involved manual drudgery, spreadsheets, and been confined mainly to the finance department.
With the advent of new technologies such as predictive analytics, in-memory computing, and artificial intelligence (AI), smart Chief Finance Officers (CFOs) are harnessing their power to automate the process, free up human capacity, and get deeper, more accurate insights.
The success of any business, from small start-up to large enterprise, depends on how accurately they can predict future performance, as well as recognise and respond to warning signals.
Deloitte recently launched a report titled Forecasting in a digital world, the sixth in its Crunch Time series for CFOs, which delves into the advantages of algorithmic forecasting and why it will change and challenge the way businesses look at and consume data.
There is a shift away from having people gather, compile and manipulate data, to handing over the menial work to the machines – which employ data-fuelled, predictive algorithms to sift through historical data and use statistical models to describe what is likely to happen in the future.
It is a process that relies on warehouses of historical company and market data, statistical algorithms chosen by experienced data scientists, and modern computing capabilities that make collecting, storing, and analysing data fast and affordable.
Algorithmic forecasting is a well-oiled machine, with more than 80 percent of the work happening automatically. Every piece of financial data a decision maker could want is available on their device and all they need to do is ask—literally.
How it change the workforce
While it seems like the machines are taking over, humans are not left entirely out of the process. The success of algorithmic forecasting depends on collaboration with the machines and among people from different teams, including finance, data analytics, and business.
The business finance talent model should evolve to keep up with changes in how work gets done and that will likely require a different mix of people than what organisations have in place today.
However, once they hit their stride, these teams can move across the range of forecasting needs, embedding capabilities in the business and driving integration. These teams are integral to establishing an algorithmic solution that can work for the business, bring insights to life within the organisation, and support continued business ownership of the outcomes.
How it changes the workplace
The new teams required for algorithmic forecasting to succeed and the pulling of human resources from other departments will need the workplace to evolve into a more collaborative space, banishing outdated silos.
Forecasting is not limited to finance but all functions, from marketing to supply chain to human resources – basically all functions that need to predict the future to drive important decisions.
While CFOs may not lead function-specific forecasting, they should help shape these forecasting initiatives since finance will inevitably use the outputs they generate.
A shared forecasting infrastructure — even a physical Centre of Excellence (CoE)—can help improve collaboration and coordination while providing efficiencies in data storage, tool configuration, and knowledge sharing.
The beauty of algorithmic forecasting is that once the work is done to solve one specific problem, the same process and capability can be extended and applied in other areas.
Algorithmic forecasting doesn’t create anything out of thin air and it doesn’t deliver 100% precision. However, it is an effective way for getting more value from planning, budgeting, and forecasting efforts.
A commitment to algorithmic forecasting is both cultural and statistical. Making it happen involves people working with technology – neither is enough on its own. Every company will make its own unique journey from its current approach to planning and forecasting to an improved approach.
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