1、Board MonitorSouth Africa 2022Our analysis of incoming directors at JSE Top 40 listed companies shows a preference for CEO experience as well as an increase in gender diversity.CEO&Board PracticeThanks to the following Heidrick&Struggles colleague for their contributions to this report:Veronique Par

2、kinSouth AfricaAbout the reportThis report is part of Heidrick&Struggles longstanding study of trends in board composition in countries around the world.Produced by our CEO&Board Practice,these reports track and analyze trends in nonexecutive director appointments to the boards of the largest compan

3、ies in Australia(ASX 200),Belgium(BEL 20),Brazil(BOVESPA),Canada(TSX 60),Denmark(OMX Copenhagen 25),Finland(OMX Helsinki 25),France(CAC 40),Germany(DAX and MDAX),Hong Kong(Hang Seng),Ireland(ISEQ),Italy(FTSE MIB),Mexico(BMV IPC),the Netherlands(AEX),New Zealand(NZX 10),Norway(OBX),Portugal(PSI 20),S

4、audi Arabia(Tadawul),Singapore(STI 30),South Africa(JSE Top 40),Spain(IBEX 35),Sweden(OMX 30),Switzerland(SMI Expanded),the United Arab Emirates(ADX and DFM),the United Kingdom(FTSE 350),and the United States(Fortune 500).Information about executives is gathered from publicly available sources,Board

5、Ex,and a Heidrick&Struggles proprietary database.Introduction4How are boards stepping up to meet the moment and prepare for an uncertain,and more demanding,future?9Looking ahead 15The terms of engagement between companies and the community-at-large have changed 7Snapshot of 2021 findings6Welcome to

6、Board Monitor South Africa 2022HEIDRICK&STRUGGLES3 IntroductionOver the past few years,the world has experienced an unprecedented series of events,from the COVID-19 pandemic to racial and social justice movements,increased polarization,the sharpened focus on climate change,and geopolitical events su

7、ch as the war in Ukraine,that have fundamentally changed both our communities and our organizations.One outcome of these experiences has been a greater focus on purpose,both individual and organizational.It is undeniable that all these events,taken together,have changed the very nature of a companys

8、 license to operatethat is,the fundamental contract between organizations and the communities within which they do business.This sits at the center of the King IVReport on Corporate Governance for South Africa,consisting of a set of voluntary principles and leading practices with an“apply and explai

9、n”disclosure regime,which requires boards to set the tone by leading by example and behaving in an ethical and effective manner.The report further tasks boards with overseeing the implementation of ethical standards and disclosure processes in a bid to increase corporate transparency and build trust

10、 with their communities.Boards now have a strong mandate to improve succession planning at both board and executive committee team level.This trend addresses the need to realign board competencies with the shift toward people and purposeBOARD MONITOR SOUTH AFRICA 20224 So,have boards moved the dial

11、when it comes to changing their composition in order to tackle these new expectations and mitigate the risk of losing their license to operate?In South Africa,Indeed,there has been progress on broadening the spectrum of experience around boardroom tables in JSE Top 40 companies.That said,each compan

12、y needs to make sure it is not only prepared for todays challenges but is anticipating what type of directors it needs to appoint to future-proof its organization.622021The number of new board appointments to JSE Top 40 company boards increased in 2021 compared to the previous year,from 49 to 62.492

13、020Key findingsThere was a significant increase in the share of seats allocated to women:61%compared to 43%.There was a larger share of seats going to directors who were active rather than retired:50%compared to 41%.50%There was a larger share of seats going to directors with CEO experience:47%compa

14、red to 39%.HEIDRICK&STRUGGLES5 New seats filled62Snapshot of 2021 findingsAverage age56.8Current or former CFO experienceCurrent or former CEO experience47%18%Financial risk/complianceInternational experienceSustainabilitySocial media/digitalCybersecurityDE&IOther previous experience(%)483210550Expe

15、rience(%)First time board member:Previous board experience:2773C-level previous experience(%)CEOCFOCOODeputy CEOOther C-level experience(overall combined)184761032Distribution of industry experience,by board industry(%)Note:Numbers may not sum to 100%,because of rounding.ConsumerIndustrialBusiness s

16、ervicesFinancial servicesOtherConsumerFinancial servicesHealthcare&life sciencesIndustrialTechnology&telecoms8816123620Technology&telecoms9525252233112211Ethnicity breakdown(%)National:Non-natioanl:6139Active vs.retired executives(%)Gender balance(%)50395061RetiredWomenActiveMe

17、n2963 53 Ethnicity,South African directors only(%)WhiteBlackIndian ColouredBOARD MONITOR SOUTH AFRICA 20226 Nice-to-haves are becoming mission critical for corporate governance(and leadership)There is a new license to operate,and a new concept of the corporation is developing as a result.How compani

18、es are approaching topics such as sustainability,diversity,equity and inclusion(DE&I),wellness,and ethics used to be peripheral issues that in time became nice-to-haves built to create competitive advantages.Today,they have evolved into table stakes thanks to increased pressure from a wide spectrum

19、of stakeholders and increasing regulatory demands.ESG,for example,is becoming a core business pillar and increasingly instrumental in corporate access to capital.Sustainability and climate change considerations are becoming increasingly regulated around the globe.In June 2022,the JSE published its“S

20、ustainability and Climate Disclosure Guidance”to help companies report on sustainability,climate,and ESG;it offers best practice examples to emulate or build upon.1 The quest for equity,meanwhile,is putting pressure on executive compensation and employee rights.Another important trend is that employ

21、ee wellness and mental health are becoming considerations in how companies act.The terms of engagement between companies and the community-at-large have changed ESG and sustainability in particular are becoming a core business pillar and increasingly instrumental in corporate access to capital.HEIDR

22、ICK&STRUGGLES7 1“JSE Unveils Guidance Framework to Aid Progress in Disclosure and Governance,”JSE,June 14,2022,jse.co.zaThese new expectations come with new risks and higher stakes Through all this,there is an increased accountability for leaders:some countries have set regulations about the liabili

23、ty of senior leaders(including boards),more CEOs and other leaders are being fired for non-performance related reasons(such as ethics and morals),and shareholders and investors are demanding more transparency.In South Africa,the King IV Report sets the scene for companies to shift their approach to

24、governance from a box-ticking exercise to one of value creation,able to set the direction for the organization.There has been a shift in risks derived from the new stakeholders expectations,starting with the dynamics triggered by new ways of working,which in places have become a tension between lead

25、ers and the workforce.There are increasingly large and obvious discrepancies between what leadership teams want and what many employees are looking for,policies such as remote working,increased flexibility,or more equitable parental leave.One result of this in many countries has been the“Great Resig

26、nation,”with many people opting to seek jobs that accommodate a healthier worklife balance.There has been a definite change in the relationship between leaders and employees,with employees gaining a stronger voice.There is more pressure on corporate leadership to walk the talk.DE&I is a continuous w

27、ork in progress and has been proven to be a key factor in employee satisfaction.In South Africa,this focus is particularly important in continuing to address the imbalances of the past and the current socioeconomic gap between the rich and the poor,which is the largest in the world.2 Similar to coun

28、tries such as Australia,Canada,the United Kingdom,and the United States,the DE&I focus is on racial and ethnic diversity as much as gender.In South Africa,boards are particularly looking for African Black women.Of the 24 new Black South African directors appointed in 2021,17(71%)were women.There has

29、 been a definite change in the dynamics of the relationship between leaders and employees,with employees gaining a stronger voice.BOARD MONITOR SOUTH AFRICA 20228 2“Wealth inequality by country,”World Population Review,accessed September 2022.They are infusing new perspectives The number of appointm

30、ents to JSE Top 40 company boards increased in 2021 from 49 in 2020 to 62 in 2021.We also saw a significant shift toward directors who are active in executive roles rather than retired,from 41%to 50%.This follows a similar trend in the United Kingdom and the United States,where the percentage of boa

31、rd seats going to active rather than retired directors is increasing.How are boards stepping up to meet the moment and prepare for an uncertain,and more demanding,future?Number of seats filled,2020 vs.20221Percent active executives,2020 vs.20250HEIDRICK&STRUGGLES9 The share of

32、directors on JSE Top 40 boards with previous public board experience has increased to 73%,up from 63%in 2020.The first-time company directors bring less CEO experience than those with previous public-company board experience but have more financial and compliance,international,social media and digit

33、al,and cybersecurity experience.Just over half of seats going to first-time directors(53%)went to women,which is lower than the 64%of seats going to experienced board members.Whats different between first-time directorsand their more experienced peers(%)Experienced public board directorsFirst-time p

34、ublic board directorsShare of seats ExperienceCEODeputy CEOCFO Other C-level Financial/compliance InternationalSocial media/digital Sustainability Cybersecurity DiversityWomen Non-national Average age 735329653125354.5BOARD MONITOR SOUTH AFRICA 202210 CEO and CFO tre

35、nds,by gender,2020 vs.2021(%)Professional experience We saw an increase in the share of seats going to directors with CEO experience compared to 2020,particularly among women directors.The reverse is true for CFO experience for both men and women.CEO experienceCFO experience20202025413422

36、21Other experience trends,2020 vs.2021(%)Financial risk/complianceOverallDigitalMen855548SustainabilityCybersecurityWomen554010Looking at other professional experience,an increasing share of director seats went to executives with sustainability and cybersecurity acumen,while the share goi

37、ng to directors with digital and financial risk and compliance experience decreased.22HEIDRICK&STRUGGLES11 Same-industry and cross-industry experience,2021 vs.2020(%)OverallConsumer Financial servicesIndustrialTechnology&telecoms566350205055645620202021Same-industry experience,by board industry8081T

38、he share of seats going to directors with same-sector experience has decreased compared to 2020.20202021Gender trends,2020 vs.2021(%)4361Gender balance There was a significant increase in the share of seats allocated to women:61%in 2021 compared to 43%the year before.However,there are large variatio

39、ns across sectors in the share of seats going to women.BOARD MONITOR SOUTH AFRICA 202212 Gender,by industry,2021(%)OverallConsumerFinancial servicesHealthcare&life sciencesIndustrialTechnology&telecoms32683961MenWomen1003942Women less often have CEO or deputy CEO experience,and more often

40、 have backgrounds as CFOs or other C-level roles.Women have more international and sustainability experience.How the profiles of men and women compare(%)MenWomenShare of seats Active ExperienceCEO CFO Deputy CEOOther C-level Financial risk/compliance Social media/digital Sustainability International

41、 Previous public board39585485823476HEIDRICK&STRUGGLES13 Nationality,2020 vs.2021(%)South African nationals,by ethnicity,2020 vs.2021(%)Non-nationalsSouth African nationals20202021Age diversityThe average age of newly appointed directors in JSE top 40 companies has held steady

42、at 57.Sixty-five percent of all new directors appointed in 2021 were over 55,and only 6%under 45.Ethnic diversity Of the South African directors appointed in 2021(61%of the total versus 63%in 2020)63%were Black South Africans compared to 52%the previous year;5%were Indian compared to none the previo

43、us year;and one new South African Coloured director was appointed,the same as the prior year.Age distribution,2021(%)Under 454549.95054.95559.96064.96569.970 or older63937636120202021ColouredIndianBlack30523563BOARD MONITOR SOUTH AFRICA 202214 Looking ahead As the contract between compani

44、es and society is changing,it is necessary for boards to be fit for purpose today and to be able to manage future unexpected yet inevitable crises.Companies require a newer,bolder type of leadership that is focused on organizational purpose,takes into account new workforce demands,and has“doing good

45、 while doing well”as a mantra.Boards need to build agility to deal with unexpected events and achieve a certain level of foresight,and to integrate fresh perspectives into their leadership in order to complement the experience of more seasoned business leaders who have seen different economic cycles

46、 and crises unfolding.In addition,leadership capabilities such as purpose,empathy,and inclusion have become as important as hard skills.So,what are best-in-class boards doing?They are:Actively seeking new directors whose backgrounds combine a mix of traditional expertise,(such as CEO or CFO)with kno

47、wledge that is newer on boards skills matrix,such as digital,sustainability,cybersecurity,or experience in different industries.Bolstering their sustainability acumen.The lack of progress in bringing more sustainability experience to boards is particularly concerning in a context where there is an i

48、ncreasing sense of urgency in addressing sustainability in general and climate change in particular,and where there is a clear need to increase the level of fluency boards have on the topic:a survey Heidrick&Struggles conducted in collaboration with INSEAD found that that 85%of board members believe

49、 that the level of overall climate knowledge on their boards needs to increase.3 Yet current board succession processes dont call for progress on this front,the survey shows:69%of board members said that climate change knowledge is not included in their boards competency matrix.The small increase in

50、 the share of seats going to directors with this expertise on JSE Top 40 boards is a promising sign.HEIDRICK&STRUGGLES15 3 Changing the Climate in the Boardroom,Heidrick&Struggles and the INSEAD Corporate Governance Centre,.That said,there is no single prescription for board composition.Each company

51、 is in a different stage of maturity,in different industries and locations,and pursuing unique strategies,and while some have weathered the past couple of years successfully,others have more to rebuild.Each board should ensure its refreshment strategy reflects the organizational purpose and goals fo

52、r the long term and prioritize efforts to add fresh perspectives where they will make the most difference.Staying tightly focused on diversity.Best-in-class boards are building their networks and improving their outreach to potential directors from diverse ethnic backgrounds.This is illustrated by t

53、he progress,albeit incremental,of directors of Black,Indian,and Colored backgrounds in 2021,and even more so the progress in appointing Black South African women to boards.Bringing younger directors onto boards.The median age of directors appointed over the past few years has been remarkably stable,

54、and the average age of directors overall has increased slightly.Best-in-class boards understand the advantages of perspectives brought in by executives who are in earlier stages of their careers and are,in many cases,closer to the intricacies and consequences of some of the newer issues boards need

55、to address,such as climate change.Seeking new members who have the ability to take on a leadership role,either that of a chair,senior independent director,or committee leader.The chair is central to determining what skills,backgrounds,and expertise are needed on a board,as well as to shaping a board

56、 culture that ensures all directors,old and new,can contribute effectively.And,for all board leadership roles,nontraditional leadership capabilities come to the fore:boards should seek people who are good listeners and relationship builders,people who can lead through influence and connect with the

57、organizational purpose.4 This matters more than ever because its crucial,especially now,for chairs and directors to be able to collaborate across cultural or political differences as well as differences in expertise and backgroundnot by ignoring those differences but by using them as assets to solve

58、 problems.Thinking of succession planning as an ongoing exercise rather than an exercise undertaken in reaction to an annual deadline.A significant part of this process is proactively cultivating potential board members who can meet anticipated needs across different time horizons and strategic scen

59、arios.This reduces risk and builds confidence that the organization will be led well whatever happens.Another important element is regularly assessing the performance of boards and board members to make sure that the company has the most effective team around the table.Creating a space for temporary

60、 seats at the table or bringing in voices from outside as a sounding board when voices beyond those in the boardroom need to be heard.These range from ad hoc committees to observers,advisors,or shadow boards.BOARD MONITOR SOUTH AFRICA 202216 4 Alice Breeden and Bonnie W.Gwin,“The chair imperative:A

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