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

Thinking about Directorship – beyond duties to the disciplines of directors.

Having unpacked the Legal Duties of Directors I believe it is important to delve deeper and unpack the foundations of these duties – I call these the Disciplines of Directors. These disciplines also apply to all organizational leaders – based on the legal expansion of liability beyond directors to prescribed offices, and the definitions of prescribed officers. Leadership in organizations should encompass all people involved who carry a significant level of decision making. The defining aspect of leadership is probably decision-making. It is certainly one of the primary skills of leaders – and one that is not often nurtured or training or practiced.

Referring to the ‘duties of directors’ implies ‘have to’ as opposed to ‘want to’. Referring to the ‘disciplines of directors’ implies things that they must ‘embrace and practice and do’. Directors need to do things, not because they have to but because they recognise that part of their role, in fact all of their role, is built upon a set of core practices that they need to embrace as their own, practice to become better and better at and actual do int he fulfilling of their role.

Looking deeper the law generally does two things to directors. Firstly, the law puts directors in a specific position that is, in essence defined as a relationship. The term used for this is fiduciary (as unpacked when talking about the duties of directors). A fiduciary is someone who is put in a position of or holds a legal or ethical relationship of trust with one or more people. A fiduciary duty is the highest level or duty of care in law. The specific relationship of the director is a relationship to the company of which the person is appointed (placed in a position) as director. A director is a fiduciary of the company. Directors are therefore required, in terms of this fiduciary relationship – which is non-negotiable and cannot be waived in any manner or form – to maintain utmost good faith towards the company at all times and in everything they do. In this relationship they are always acting on behalf of the company – not themselves or anyone else.

The second thing the law does, in the light of the relationship it places them in, is require and expect directors to ACT with care skill and diligence. The evidence of the care, skill and diligence is manifested in the DOING. The law is, in a sense, assuming that a fiduciary relationship must be evidenced by a particular way of ACTING. In order to ACT in this particular way when and as required it is essential to understand what each of these characteristics looks like. What does care look like at director level? What skills does a director need to develop and display? How can a director prove that they were diligent as they fulfilled/acted in their role? In addition the relationship as fiduciary constrains or positions how these actions need to be directed, and shown to be directed. The actions that are to be characterised by care, skill and diligence must be directed to the best interests of the company. So the law prescribes both characteristics and direction (or directedness) of the actions that are expected of directors – what they must be and towards whom they must be directed. So duties of directors are specific actions that must be taken to benefit a third party – the company of which they are a director. Directors duties as actions cannot simply be performed in a vacuum, they do not simply happen – they need to be defined and understood, developed and honed and put into practice as and when necessary.

So at a foundational level, fulfilling the duties of directors is not just a matter of doing certain things. Fulfilling the duties of directors starts by embracing the fiduciary relationship and flows from the identifying and defining, developing and honing a set of practices that can be performed consistently and effectively in the role of a fiduciary. It is a matter first of being then a matter of doing. A relationship is something that exists, in the case of a director it is created by the law on appointment as a director. Directors need to first embrace what it means to BE a fiduciary since it is this BEING that determines the practices that they need to practice to ACT as a fiduciary. These practices are developed by embarking on a set of disciplines that will inculcate the characteristics of care, skill and diligence.

There are three fields of disciplines that need to be cultivated in order to develop the care skill and diligence necessary to both BE a fiduciary and ACT as a fiduciary.

  1. The Primary field of disciplines to be cultivated are the disciplines of the Heart
  2. The Secondary field of disciplines to be cultivated are the disciplines of the Head
  3. The Tertiary field of disciplines to be cultivated are the disciplines of the Hands

The fields of heart, head and hands have been identified as primary, secondary and tertiary since each builds on the other. If you do not develop/cultivate the disciplines of the heart then the disciplines of the head will be misapplied and vacuous if you do not cultivate the disciplines of the head and build the disciplines of the hands upon the disciplines of the head, which are in turn cultivated upon the disciplines of the heart then the activity of the hands will amount to little more than ‘box-ticking’ and conformance.

I plan to write more about the Disciplines of Directors into the future as that becomes a greater and greater focus.

To find out more about Cultivating the Disciplines of the Heart, the Head and the Hands please contact me or visit www.flourishing.co.za

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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