Part 2: Thinking about Directorship – unpacking care, skill and diligence

Thinking about Directorship – unpacking care, skill and diligence – a challenge to the current mindset!

Included in the South African Companies Act (no 71 of 2008) (and most corporate legislation) are the codifies duties of directors – summed up in the words ‘to act with care, skill and diligence’).

Care, skill and diligence then imply caring, competence and consistency. Acting intently and skillfully is no longer enough – since skill only relates to what a director is required to do – caring implies a different level of engagement and intent – it focuses the director on why they actually fulfill the role they do. Caring is an inside out concept (something we will regularly revisit) – it is not something that can be imposed on individuals from the outside. No system of structure is by nature caring – it is only people who either are caring or are not caring – this will always remain an individual choice and characteristic.

Skill is the easiest of the leadership requirements to both see and to measure. Generally the evidence of a person’s skill is clear through both the qualifications they hold and the track record they have developed over time. However by being included in most legal frameworks the requirement of skill implies that should an individual hold a position of leadership in an organisation and need to defend themselves in the event of something going wrong ignorance (not knowing what was going on and not knowing how to fulfill the requirements of the position) would not stand as a defense. Skill would also be the factor that would differentiate the various members of a leadership team – since all would be required to show care and diligence.

Diligence is the factor that speaks to consistency. Consistency is key since there is a need as leaders to act pro-actively and not merely react to circumstances and situations as they arise. Too many leadership teams spend the vast bulk of their time responding to challenges in the organisations they administer. This results in the organisation lurching from one crisis to another. Diligence in leadership avoids this trap altogether since it tends to strike a balance between looking back and looking forward simply because a diligent leader consistently keeps the best interests of the organisation at the top of their awareness which leads to greater anticipation of what lies ahead. Diligence is often best evidenced in the record that proceeds from an organisations leadership meetings (board meetings and exco meetings) – do they look more backward than forward, what proportion of time is spent on things that were (the past) versus things that are (current issues) versus things that will be (the future)?

Leaders in organisations are saddled with a range of different titles and labels. Since this book seeks to address the challenge of leaders across the whole range of organisations it is useful to identify two of the most common titles used and unpack them to better understand their role within the organisation.

Let us start with the most common title for organisational leaders – the director.

Director refers to a rank in the management of organisations. A director is a person who leads, or supervises a certain area of an organisation, a programme or a project. The root of the word director means to “align, to set straight or guide” (dictionary.com). The use in the corporate sense of the word dates back to the 1630’s. Directors have a delegated role in controlling an organisation – delegated to them most often by the ‘owners’ of the organisation. These may be ‘owners’ in the sense of shareholders or in the sense of the state when referring to state owned organisations – but in both the role of directors is to control the affairs of the organisation in the best interests of the organisation itself. This is where the alignment and guidance elements are vital – without knowing the purpose of the organisation against which the organisation must be aligned or toward which the organisation should be guided the role of the director would be impossible to carry out. The title ‘Director’ implies purpose.

Another useful term closely related to that of director is that of a conductor, in the orchestral sense of the word. The role of a conductor is to create a harmony out of the various different musical instruments in the orchestra – the objective is beautiful music, the responsibility of the conductor is to generate this beautiful music and yet they do so by not actually making any music themselves. The skill of a conductor lies in their ability to get the very best out of each of the members in the orchestra, to combine the musical elements int he right way at just the right time and so harness the power of the entire group to produce the objective.

Together these terms broadly define directors as those that combine a whole range of elements or inputs (people, skills, assets, finance etc) to achieve an objective or goal that is determined (most often) by another party (the owners) while taking into account the interests of every other party impacted in the achievement of this objective (the stakeholders).

The second term used to describe people of authority in organisations is that of officer – not to be confused with the military of police position, yet similar in origin.

To hold an office typically means to be in a position of duty, trust, or authority, especially in the government, a corporation, a society or the like. The origin of the term clearly means to hold a post or employment to which certain duties are attached and underlines the importance of service, duty and function related to specific tasks or actions that need to be performed. Another sense of the term officer would imply a person who has authority within the boundaries of their position to act, to make and implement decisions and to compel others to act in the performance of the required tasks.

Again the terms officer and office in the organisational sense of the word emphasise not only the authority element but also the trust element. The sense of duty attached to an office is critical in also establishing a third part to whom this duty would be owed or fulfilled – again emphasising the fact that an officer is acting on behalf of and in the interests of this third party, or third parties.

The challenge for many leaders however is that they simultaneously wear a number of hats within the organisational structure.

Part 1: Thinking about Directorship – introducing the duties of directors

Part 2: Thinking about Directorship – unpacking care, skill and diligence (a challenge to the current mindset)

Part 3: Thinking about Directorship – beyond duties to the disciplines of directors

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