21 July THE CORPORATE GOVERNANCE FRAMEWORK® - AN ALTERNATIVE TO WHISTLEBLOWING (2023-07-21) July 21, 2023 Corporate Governance Framework®, General, Governance Framework, Praefectus™, Stakeholders, Whistleblowers Corporate Governance Framework®, governance framework, whistleblowing, whistleblowers, unethical, stakeholders By Jené Palmer (CGF Research Institute: Director) Whistleblowing can be a courageous act, but it is not always the best option for everyone due to potential risks and consequences. It is also true that by the time any whistleblowing mechanisms are used, the damage has already been done to the organisation and its stakeholders. This begs the question then: what is the alternative? The Corporate Governance Framework® (which can be deployed in any organisation) provides internal stakeholders with an instrument to measure and communicate the effectiveness of the organisation’s governance structures, policies and processes before a crisis hits. This additional layer of assurance requires evidence to support governance assessments across all critical business areas. As such, it encourages a more than superficial discussion amongst the board, its management and employees about organisational performance, optimisation and compliance. The improved transparency offered by the framework allows data to be viewed in context and enables issues requiring further investigation to be brought to light in a professional manner. Pre-emptive engagement on these issues puts the “broken window” theory into practice, ensuring that wrongdoings, fraud, corruption and other unethical practices are remediated in a timely manner so that potential harm to the organisation and its stakeholders is mitigated (or limited). Illustration 1. The Corporate Governance Framework® "Whistle-blowers have not had a great time in our country… I regret that in many instances we have not always treated them well…” President Cyril Ramaphosa (29 April 2021) Generally, whistleblowers are expected to function as the external watchdog, holding institutions accountable for their actions. This accountability helps to ensure that organisations adhere to laws, regulations as well as their own internal policies and values. Similarly, the disclosure of the outputs of the Corporate Governance Framework® in the annual integrated report, can strengthen the credibility and integrity of the organisation by candidly explaining those areas of governance which the board and executive management have recognised as requiring improvement. Performing the governance assessments as required by the Corporate Governance Framework® builds resilience and cements trust by sending a clear message that unethical behaviour will not be tolerated. In this way, it acts as a deterrent for misconduct. However, perhaps more importantly, the framework stimulates a positive organisational culture where employees feel heard, are empowered to contribute data to decision-making and can act in the organisation’s (and the public’s) interest. Whistleblowing can be a positive force for change, however, without adequate safeguards against retaliation, potential whistleblowers may be hesitant to come forward. Whilst citizens and employees should feel safe to speak out, and indeed be able to report malfeasance, local and global surveys including track records indicate that protected disclosure (whistleblowing) legislation and frameworks are generally not achieving their desired objectives. The recent Afrobarometer survey conducted in South Africa over the period between November-December 2022, indicated that as much as seventy-two percent (72%) of South Africans feared the likely consequences of retaliation, and or other negative consequences if they were to blow the whistle on malfeasance. Illustration 2. Perceptions of corruption in South Africa - Reporting (Afrobarometer) Source: New laws to tackle corruption and protect whistleblowers in South Africa (BusinessTech – 13 July 2023) Although only twenty-five (25%) of respondents indicated that they could report on corruption without fear, four percent (4%) of the respondents did not know if such reporting would be safe for them to do, or they simply refused to answer. Gauging from what appears to be insufficient protection afforded to whistleblowers, and this in spite of the new whistleblowing laws envisaged by the South African Department of Justice and Correctional Services to protect whistleblowers, it is imperative that organisations ensure that alternative channels for identifying and communicating any unethical behaviour and misconduct remain strong and effective in supporting transparency and accountability. ENDS Words: 576 For further information contact: Terrance M. Booysen (CGF: Chief Executive Officer) - Cell: +27 (0)82 373 2249 / E-mail: [email protected] Jené Palmer (CGF: Director) - Cell: +27 (0)82 903 6757 / E-mail: [email protected] CGF Research Institute (Pty) Ltd - Tel: +27 (0)11 476 8261 / Web: www.cgfresearch.co.za Follow CGF on Twitter: @CGFResearch Click below to read more... Attached Files the-corporate-governance-framework-r-an-alternative-to-whistleblowing-20230721.pdf 254.74 KB Related Articles TANGIBLE BENEFITS OF A CORPORATE GOVERNANCE FRAMEWORK® Article by Jene’ Palmer Forward-thinking organisations have realised that corporate governance does not merely fall into the portfolio of the Company Secretary. Indeed, the draft King IV Report on Corporate Governance for South Africa 2016 (‘King IV’), describes corporate governance as “the exercise of ethical and effective leadership by the governing body” of an organisation. Why then is corporate governance still viewed by many organisations as a process which increases bureaucracy and drives a ‘tick box’ exercise? Perhaps the explanation lies in not understanding and appreciating the value which can be unlocked by implementing a purpose-built Corporate Governance Framework® which is tailored to the organisation. Empirical research supports the fact that good corporate governance translates into tangible and sustainable benefits for the organisation. Some of these benefits are set out below. CORPORATE GOVERNANCE: STAGNATION, SCRUTINY AND THE URGENT NEED FOR DIGITISATION (2025-03-10) Another governance crisis waiting to happen In recent years, corporate governance has become a hot topic following scandals like Steinhoff, Tongaat Hulett and many others, but despite increased attention, significant and material progress in improving governance practices across organisations remains alarmingly scarce. Governance frameworks in most organisations continue to be outdated, underdeveloped, and often untested and this leads to recurrent corporate failures and directors being increasingly exposed to personal liability. Furthermore, the lack of scrutiny and digitised tools to assess governance maturity and performance means that there is no real accountability until it is too late and governance failures are, therefore, likely to persist. BOARDS THAT CREATE VALUE: CORPORATE GOVERNANCE FRAMEWORK® By Jene’ Palmer and reviewed by Terrance M. Booysen It has been painful to watch the likes of Lance Armstrong, Mike Tyson and Hansie Cronje sabotage their futures through poor decision-making. Similarly, many organisations and their boards have failed to demonstrate strong and responsible leadership qualities to motivate and drive their organisations to success. Awareness, decisiveness and accountability are some of the business leadership qualities required to achieve remarkable performances. The ‘buck’ stops with the board of directors and it is the board of directors who are ultimately held accountable for the success of the organisation. However, with the business landscape changing at an accelerating rate, risk management and decisive decision-making are becoming more challenging and business failures more prominent. A recent Harvard Business Review reports the failure rate for mergers and acquisitions to be between 70% and 90%. According to the United States Small Business Administration, only 44% of new businesses are still in existence after four years. Against this backdrop, how does a board create a sustainable organisation in what are clearly turbulent times? DO YOU REALLY NEED A CORPORATE GOVERNANCE FRAMEWORK®? By Jene’ Palmer and reviewed by Terrance M. Booysen We know that both local and international organisations are continuously having to adapt to operate in uncertain business environments. Locally, the release of the Preferential Procurement Regulations 2017, which places stronger emphasis on ‘radical transformation’, against the backdrop of persisting low economic growth rates are only some of the elements giving rise to further uncertainty. Internationally, the business and regulatory implications of the election of President Donald Trump and the vote in favour of Brexit and how these events will impact on local markets and businesses, is still unfolding. It therefore comes as no surprise that recent governance, risk and compliance (‘GRC’) surveys all indicate an increasing need to improve risk oversight and to balance opportunity management with risk management. The challenge lies in being able to achieve these objectives! USING THE CORPORATE GOVERNANCE FRAMEWORK® IN TIMES OF GREAT UNCERTAINTY (2021-11-17) Whilst most corporations across the world have had to make drastic changes to their business operations as a result of the Covid19 pandemic, many business leaders believe that the disruptions caused by the pandemic have inadvertently introduced more advantages than disadvantages. However, are the odds actually stacked against the organisation? DIRECTORS’ SENTIMENT INDEX™ REPORT: 5TH EDITION – CGF’S OBSERVATIONS FROM A GOVERNANCE PERSPECTIVE (2020-11-12) A review of the Institute of Directors in South Africa (‘IoDSA’)’s recently released report for 2020 raises some interesting observations from a governance perspective. It should be noted that the study was concluded prior to the nation-wide lockdown and national state of disaster due to the Corona virus (‘Covid-19’) pandemic. It is likely that the sentiments expressed by respondents may have been significantly more pessimistic had the study been concluded in the second half of 2020. Comments are closed.