Inspiring confidence: the role of corporate governance

2011-08-25 00:00

AS South African sports fans we expect greatness from our national sportsmen: we expect them to be well-prepared and to perform well, and we desire that warm, confident feeling before their performance; in other words, we expect them to instil in us a feeling of confidence in their abilities.

This certainly rings true in business. The stakeholders in an enterprise comprise the customers, suppliers and creditors, the workforce, as well as the shareholders and investors, and they all have very similar expectations of the enterprise in which they have a vested interest as we do of our sporting heroes.

Of late we are seeing much uncertainty and negative sentiment directed towards certain businesses and brand leaders. We are seeing news headlines drawing attention to stock market crashes and making reference to ‘the Great Recession’. This indicates that certain businesses and industries are not meeting stakeholder expectations.

Now it has to be said that South African sports fans are by no means fickle, and although sometimes critical, we stick by our teams through the lean coaching years and through the inevitable selector hiccups. The same cannot always be said for the stakeholders in an enterprise. The South African market operates in such a way that, generally speaking, if confidence in a certain brand is declining, customers can purchase substitute products, suppliers can stop supply, creditors can call in loans, workforce grumblings can lead to poor performance and possible strike action, and investors can withdraw their investments and look elsewhere.

Above all, business confidence is strengthened through solid corporate governance practices. Among other factors, transparent business dealings in the public and private sectors, honest, sensible use of funds and positive and decisive decision making all contribute to instilling and restoring the confidence as required by the stakeholders.

In the midst of these challenging times in the business world, as we look to gain confidence in the companies that supply our goods and services — very much to the benefit of all the role-players in our economy — we also look to, and expect, the ‘Green and Gold’ to inspire and achieve greatness.

For more information call KPMG at 033 347 7600.

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