MBA & MM Theses

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    Critical Success Factors for a Board of Directors in South Africa
    (2011-03-31) Coovadia, Zaheer
    The purpose of the research was to determine the critical success factors that are needed to ensure the optimal functioning of an organisation’s board of directors. In the process, attributes of effective boards have been identified with the view of improving their abilities to make corporate governance and their organisations a success. A literature review was completed in order to apply existing theory to the research problem. From the literature review, it was found that the following critical success factors exist: understanding the roles and functions of the board, the role of the CEO and chairperson (duality versus role separation); the composition of the board (proportion of executive, non-executive and independent directors); the size of the board; relationship dynamics amongst board members and board “process”; structured and effective board meetings, management development, board diversity (educational, functional and industry background, race and gender, length of service on the board) and compensation. The methodology for the research is then described. Qualitative research was used with the research instrument being in-depth interviews. Twenty four interviews were completed with top management and board members of major South African companies within the communications, banking, auditing, consulting, retail, IT, financial, technology and educational sectors. Interviews were transcribed and content analysis performed on them to extract recurring themes related to the questions asked. The results of the interviews are then presented and interpreted. Of the propositions formulated (which formed the basis of the research), the following were proved:- · Successful boards understand what their key roles and functions are. ii · Boards where the roles of CEO and Chairman are split function more effectively. · A majority of non-executive and independent directors on the board ensures that the board functions more effectively. · Smaller boards function more effectively. · Constructive conflict amongst board members improves the effectiveness of the board. · Staging structured board meetings improves board effectiveness. · In order for a board to be successful, a good relationship between the board and management is needed. · The degree of diversity (in terms of race, gender, functional experience, industry experience, director experience and education) on the board is positively associated with their successful functioning. The research found no definitive link between the two propositions listed below and board effectiveness:- · Boards where members have served together for long periods of time are less effective. · High levels of incentives in compensation are an effective means of ensuring superior board member performance. The research also identified board appraisals as crucial to creating and maintaining an effective board. The modest contribution of the research has added to the existing knowledge of critical success factors for corporate boards.
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    The trade-off between compliance and value in
    (2011-03-30) Coetzee, Irma
    This study examines the role of the board of directors of companies in various industries in South Africa with regard to the future strategy of the organisation. Specifically in the backdrop of an environment where there is increased focus on the internal controls within organisations due to the guidelines around effective corporate governance, the goal was to ascertain whether the board still focuses on the future value of the organisation. One of the propositions tested as part of this research states that the board is in fact only focused on internal controls and does not provide sufficient input to the strategic thinking process about the future direction of the organisation. Semi-structured interviews were conducted with directors of companies in order to establish the role that the board fulfils in that company and whether there is a balance between creating value on the one hand and mere compliance on the other. Content analysis was performed on the transcribed interviews. Due to the fact that convenience sampling method was used, there were more executive directors on the list than non-executive directors. The findings were interesting and shed light on the actual role that the boards are playing in large public companies in South Africa. An interesting finding was the fact that there was such a large difference in the involvement of executive directors as opposed to non-executive directors and that the executive directors generally seemed to discount the value that the nonexecutive directors contribute to board decisions, providing a topic for interesting further research. It was generally found that the propositions that formed the basis of this research held true in the cases that were reviewed. In South Africa the executive directors tend to act autonomously in the directing and controlling of the companies in which they operate, with mere ratification from the full board of directors and insufficient involvement from the non-executives in the strategic thinking process. The strategic scorecard that was developed by CIMA is a useful tool that should be used by companies’ boards in order to ensure that they spend sufficient time focusing on the strategy and the future direction of the organisation. The scorecard covers all aspects of strategy at the appropriate level of involvement that is required from the board to ensure that they monitor and oversee the strategy development and implementation processes effectively.