CHAPTER 5

GENERAL
MANAGEMEN
T
• The General Manager
operates at TOP
Management level, the
Functional Managers are
known as MIDDLE
Management, while
supervisors operate at the Admin Superviso
manager r
LOWER-level management.
General Marketing Superviso
Manager manager r
Productio
Superviso
n
r
manager
ENTREPRENEURSHIP AND
INTRAPRENEURSHIP
• ENTREPRENEUR:
• The person who combines the three factors of
production in order to start a new business venture.
• The entrepreneur sees an opportunity in the market,
and he/she assumes the risk of starting a new business
by investing their capital to make a profit
• When the entrepreneur starts the business, they will
operate at top-management level.
• INTRAPRENEUR:
• An Intrapreneur is known as an “Inside entrepreneur”.
They work within the business and uses entrepreneurial
qualities combined with the business’ resources to
transform innovative ideas into profit.
• The Intrapreneur does not have to operate at Top
Management level, but will often implement a new
profitable idea within the department with the approval
of their manager.
ENTREPRENEURIAL QUALITIES,
CHARACTERISTICS AND SKILLS
• Identify an opportunity by scanning internal and external environments.
• Know who the customers (LSM) and their needs are.
• Opportunistic: anticipate market trends, identify positives and use to the advantage
of the business.
• Commitment and Perseverance.
• Creativity and Innovation.
• Preparing and Implementing plans and setting up contingency plans.
• Coordinate resources.
• Leadership qualities, Negotiation and Motivation.
• Evaluate achievements and implement corrective measures.
• Quick decision-making.
• Communicate clearly.
• Personally motivated and aware of their shortcomings.
LEADERSHIP vs. MANAGEMENT
• A Manager is appointed in a position of authority which
enables him to insist on people doing as he instructs.
• A Leader has the expertise to make people aware of
the advantages of pursuing a certain course of action,
thereby creating a desire in people to follow them to
achieve a common goal.
MANAGER LEADER
Maintains systems Develops new methods to do
things
Focuses on systems and Focusses on people
structure
Relies on control Inspires trust
Accepts the status quo Challenges the status quo
MANAGEMEN
T STYLES
DEMOCRATIC:
• The manager allows
subordinates to provide input
and participate in the decision-
making process.
• Participative leadership style
• The advantage of this style:
ensure buy-in and commitment
from people.
• The disadvantage of this style:
lead to slower decision-making
when the manager allows
participation from all.
AUTOCRATIC
• Seldom allows for input from
subordinates and makes all
decisions.
• May be the best approach if
there is a crisis, and quick
decision-making is required to
solve the problem or implement
a strategy that may not be
popular with all staff members.
• The disadvantage of this style:
employees often feel
undervalued by the manager.
LAISSEZ-FAIRE
• The manager believe they
should not interfere in the
process of carrying out a task.
• The manager will tell
employees what they expect
from them but will allow them
to do the task without
interference.
• This style may yield excellent
results, if there is a highly
skilled workforce, motivated to
perform optimally.
 TRANSACTIONAL
• Described as an approach of “give and
take”, with the manager motivating
employees to perform their tasks in return
for possible salary/bonus/other benefits.
• The problem with this approach is that as
soon as employees regard the reward as
insufficient, they will become
demotivated, which result in labour unrest.
• The previous factors, when combined with
the following: a workforce of many low-
skilled workers, the feasibility of always
considering their input, the use of
autocratic leadership; may help to explain
why SA has acquired the undesirable
reputation of “a nation that loves to strike”
 TRANSFORMATION
AL
• This leader is charismatic by choice. They
will motivate employees by helping them to
understand the meaning of their work.
• This type of leader places emphasis on
teamwork, they will make time to explain to
the group why they matter.
• This builds confidence and trust between
employees and management, consequently
the individual and group performance
improves in terms of creativity, problem-
solving and productivity.
• People are inspired and motivated to such a
degree that they surpass their own
expectations.
• This happens more often if the manager not
only leads his team, but also empowers
team members to achieve their full potential.
SITUATIONAL
• This style is a combination of all
the above
leadership/management styles.
• The manager will adapt the
management style to whatever
is required in the specific
situation.
• Disciplinary action: autocratic
leadership style
• If employees are artistic and do
not respond well to structure:
Laissez-faire style
MOTIVATIONAL FACTORS:
MONETARY AND NON-MONETARY
FACTORS:
• To assess employee motivation, two broad categories, namely monetary and
non-monetary factors will be considered.
• The advantages of a motivated workforce:
• Motivated employees are more likely to provide good customer service, which
will result in happy customers.
• Motivated employees are usually productive employees, which may lead to a
lower cost per unit and therefor, more opportunities for profit.
• Lower levels of absenteeism and lower staff turnover.
• Motivated workforce is less likely to embark on industrial action.
• Happy workers will say positive things about the business, and this may improve
the image of the business. More sales, easier to recruit top quality workers etc.
• Motivated workers may have a positive impact on other departments in terms of
boosting their morale as well.
MONETARY FACTORS TO MOTIVATE
EMPLOYEES:

A salary increase may temporarily raise motivation levels of some of the

workers.

A performance bonus, profit sharing or payment on a commission basis.

This option may work, as the employee knows if certain targets are met,
they will be rewarded. If performance is inadequate, monetary reward
will be withheld.

The same is valid for a paid holiday such as a trip to some exotic
destination. If a target is not met, all other fringe benefits such as
company cars, cell phone or shares in a company may be in jeopardy.
 Job enlargement: Refers to a
NON- situation where additional tasks are
added to the original job. This may
MONETAR motivate the employee if they feel
there is less repetition. It is important
Y to make sure the employee does not
become demotivated when they feel
FACTORS more work has to be done for the
same salary.
TO Jon enrichment: The employee gets
more responsibility and often more
MOTIVAT authority. The employee feels they are
E trustworthy, and on a personal level
they may believe it is possible to
EMPLOYE achieve their full potential. At times it
may be necessary to give additional
ES training to ensure skills levels match
the requirements of the task.
Empowerment and advancement of
the employee: If employees are given
opportunities to develop by learning new
skills and gaining wider knowledge to be
applied when they are offered new
challenges and responsibilities, they will
feel that it is a win-win situation as the
business gains from new competencies
and they can add to their CV’s.

Flexible hours: Life is fast and waits for

nobody. People experience strain from
demands on their time from family and
friends, hobbies etc. By allowing the
employee to decide which hours should
be allocated for work and various
activities; motivation levels in all
probability will increase to get work done
efficiently, speedily and to a high
standard.
Recognition should be done openly in front of
colleagues, while reprimanding should be done
in private. One form of recognition is employee
of the month programs.

Appreciation: This can be done through

recognition, but also allowing employees to be
part of a successful team, including them in
decision-making and by respecting their
opinions.
Precise instructions for tasks: This certainty
increases motivation levels and job performance.
Other employees may prefer to work
independently and not want constant supervision
or questions about their performance.
Wellness programs: Childcare facilities, time
off, assistance with household problems, free
parking or gym memberships.
MANAGEMENT
TASKS
PLANNING
• Every business needs to plan to ensure actions are geared towards
the desired outcome. The plan should be drawn up with the aim of
achieving goals and objectives of the business, but the plan should
be flexible and adaptable according to circumstances.
• STEPS TO BE TAKEN DURING THE PLANNING PROCESS:
• Understand and define the problem
• Get all the relevant information
• Analyze the information
• Consider possible eventualities
• Decide on a plan of action (consider contingency plans)
• Implement the plan and follow up to ensure the plan is successful, if not,
implement corrective action
• Planning in the business takes place on different
management levels:
• Top-management: Is responsible for the overall, strategic
business plan, including the vision, mission, objectives and
strategies for the overall business.
• Middle-management: Formulates tactical plans, which
involve the acquisition of resources needed by the
departments that they control namely, the Financial
department, Marketing department, etc. Middle management
is responsible for medium-term planning and has to ensure
that lower-levels of management are guided to align their
daily planning of Middle management.
• Lower management: Is in charge of planning work
schedules and programs on a daily basis.
• Principles to keep in mind when planning:
• All managers, who are in a position where they are responsible for development
and implementation of plans, will be held accountable for these two elements.
However, it is important that managers should receive support and guidance
from middle/top managers during the planning and implementation phases.
• Planning is aimed at the future. It has to be done in advance to give guidance to
employees to implement changes timeously, while still ensuring the plans are
within the budget.
• Clear communication is crucial to inform employees of desired goals. It is always
a good idea to communicate plans in writing in case someone needs to refer to
the plan to confirm the original goal.
• The KISS-principal: Keep it straight and simple so that the plan is easy to
understand and implement.
• Planning is a management tool and should be used to guide employees towards
the end goal. Planning is the crucial first step, but no plan will yield results
without being implemented.
ORGANISATION
• When the manager organizes, it means they arrange activities in a way that all
the factors of production contribute towards a systematic and successful business.
• These factors of production include: employees, working capital needed to run the
business, raw materials needed to produce the product, obtain the inventory to sell to
customers.
• There are different managers in charge of each of the functions, but the General
Manager/CEO has to ensure all these managers realize that their tasks are interdependent,
and they must work together to achieve the overall goals of the business.
• Organisation also refers to reporting structures within the business. There is no
correct or incorrect organisational structure that fits all businesses. Regardless of
the organisational structure chosen for the business, the important thing is that
the reporting lines are clear to avoid confusion and blame shifting.
• EXAMPLES OF STRUCTURES IN TEXT BOOK PG 71-72
LEADING
• In order to implement plans and reach the desired outcome, the manager
has to ensure guidance and support is given to employees, i.e., that they
are guided to achieve the goals of the business.
• A good leader will strive to maintain a balance between being risk
orientated (getting the job done) and people oriented (to focus on the
needs of the employees).
• Good leadership characteristics:
• Workers should be helped to understand what goals are to be achieved.
• A good leader will allow subordinates to provide input and voice opinions.
• Employee morale improves if employees know that management respects them
and will support them where possible.
• Good work should be recognized openly, while criticizing should be done in private.
• Explain to employees why there are changes or why certain procedures are to be
followed, to ensure acceptance and cooperation.
CONTROL
• It is essential that management always uses control as the last step in any
process. Control will provide the manager with feedback to determine how
problems can be addressed in order to improve the performance of employees
and the overall business.
• A good control system includes the following:
• Step 1: Set standards so that the Company’s expectations are clear to every employee.
These standards and expectations are used as a benchmark to compare with actual
performance. The standards must indicate to employees what will be evaluated and how
it will be evaluated.
• Step 2: The actual performance is measured against the predetermined standards in
step 1.
• Step 3: If there are any deviations from the projections when compared to actual
performance, these deviations must be corrected by trained people or at the very least
discussed to establish the cause of the deviations to prevent repetition of sub-standard
work.
COORDINATION
• Coordination ensures there is cooperation between
different departments in the business and that
everybody works towards a common goal.
• The key to coordination and cooperation is clear
communication to ensure everybody understands the
expectations required. Regular meetings will help to
ensure this is achieved.
• The ultimate goal of coordination is to create synergy
between individual efforts, teams and departments.
COMMUNICATION
• Communication refers to the transfer and receiving of ideas and attitudes
between management and workers, but also between the business and
external groups such as media, suppliers, customers and the government.
Without good, clear communication, it is not possible to build relationships
with these different stakeholders.
• Communication ensures coordination of activities within the business by
letting workers know exactly what is expected from them.
• On the other hand, clear communication channels enable workers to
inform management about problems and ideas.
• Proper communication may help to improve the overall performance of
the business, because the relevant people are informed about certain
facts if and when they need the information.
DELEGATION
• Delegation is necessary in order to reduce the workload of senior
employees and to achieve a more meaningful distribution of tasks and
responsibilities.
• The manager will delegate duties, authority and responsibility to
subordinates.
• The person to whom the tasks were delegated must be able to perform
the new tasks and may need additional training to empower them. It is
also important to remember that when responsibility is delegated, the
worker should also be authorized to handle situations that arise from the
added responsibility.
• Both the employee and the manager who delegated the responsibility will
be held accountable for the quality of the work done.
DECISION MAKING
• In order to make a responsible decision, all relevant
facts must be considered.
• A choice is made between regarding what will be the
best in a particular situation.
• Business decisions should be objective, with no personal
prejudice influencing the decisions.
• It is important to assess the decision by considering its
feasibility and viability.
DISCIPLINE
• The purpose of discipline is to improve future behavior in the business. In order to
achieve this, it is imperative that everybody knows what is regarded as misconduct,
but also what the consequences will be if rules are broken, or performance
standards are not met.
• It is crucial when disciplinary measures are implemented, that it is done
consistently.
• There is a misconception that the business has to issue three warnings before an
employee may be dismissed.
• A minor offence will result in a verbal warning or even more than one verbal warning.
• If the employee continues to act in a manner that led to the verbal warnings, a written
warning may be issued and perhaps a second or final written warning may follow.
• However, if it is a serious offence, immediate suspension of the employee may occur until the
disciplinary hearing is held. No verbal or written warnings are required if the offence is
serious.
• The business “code of conduct” will specify what the disciplinary action should be for
different offences.
MOTIVATION
• Monetary and Non-Monetary motivators
MANAGEMENT
COMPETENCIE
S
GLOBAL AWARENESS
• Global awareness is much more than merely trying to
understand political, language or cultural differences
between countries to avoid making general assumptions
about other people.
• The manager must understand that even if the business
does not trade directly with other countries, he must know
the world is interrelated and interconnected and suppliers
may originate from a range of countries.
• An awareness of the entire supply chain is crucial.
Consider for example: child labour etc.
ORGANISATIONAL AWARENESS
• INTERNAL:
• The manager should understand the capabilities and constraints of the
business.
• In order for management to be successful, it is important for them to have an
understanding of what happens in the entire business, because the actions
of the different functions or departments have an impact on each other.
• The manager should also have empathy and consider the pressures that
different departments experience and should aim to accommodate people
where possible in order to ensure the entire business is successful.
• Management must also understand the organizational culture of the
business. If there is something within the culture that is not desirable, a
proactive plan has to be implemented to change the culture into something
that is in line with the vision and mission of the business. This is in order to
enhance the overall functioning of the business.
• EXTERNAL:
• Management should demonstrate an understanding of
the opportunities and threats that the business may
face when viewed in the context of the external
environment.
• National and International trends may have an impact
on the business, but that the business could also affect
events in the external environment by taking a stand for
or against something.
ANALYSIS
• In order to develop both a global and organizational awareness, the
manager should be able to identify important sources of information,
gather the relevant information, interpret the influence that different
events may have on one another and compare alternative plans of
action. This is the ability to analyze and draw conclusions.
• When information is analyzed, potential problems should be
identified, and solutions pre-empted in order to make sure risks are
managed.
• Management needs to understand that analysis is a difficult task and
where possible, decisions should not be made impulsively, but only
after consideration of all relevant facts.
STRATEGIC THINKING LEADING TO
STRATEGIC ACTION
• Strategic thinking entails the manager’s ability to look at the business’ current
position in relation to the rest of the market and to then decide where the business
should be in a few months or years. This is called strategic planning and requires a
vision, mission, long- and short- term objectives to be formulated and to develop a
strategy to make these goals a reality.
• This can only be done if the manager understands that industry and market trends
will affect the business’ competitive position. Thus, it is important to look at
strengths, weaknesses, opportunities and threats before strategies are developed
and implemented.
• Reviewing current trends are not good enough. The manager must be able to
anticipate and forecast what will happen in the future and then be proactive when
implementing plans to manage the situation.
• The outcomes of the situations should also be evaluated to implement corrective
behavior if needed.
TEAMWORK
• A good manager will be aware of other people’s feelings and fears and
anticipate how these will affect team members. The manager should ensure
that teams are designed so that members will complement each other’s
strengths and weaknesses.
• As the team leader, the manager has to ensure that team members listen to
each other, express disagreement in a constructive manner and find a way to
work cooperatively with one another.
• The manager will encourage all team members to work together but will
prudently intervene to resolve conflict.
• It is important that the team members have a clear understanding of the
goals and that all team members are empowered with the necessary skills to
achieve these goals. If the skills are lacking, team members must be trained
and then be held accountable for their performance.
EMPOWERMENT AND TALENT
DEVELOPMENT
• The manager has to understand that empowerment and talent
development is important, because it means the business is investing
time and resources to assist with employee’s development to achieve the
goals and objectives of a business.
• When employees are empowered, they have benefited from the
development process, this is conducive to better morale and higher levels
of motivation.
• Empowerment and talent development can be done in a number of ways:
• Giving the employee new skills through training.
• Giving the employee new responsibilities and authority to perform a challenging
new task, requiring them to think more broadly than before.
• By giving the employee the freedom to choose how to do a task, provided certain
pre-determined standards are met.
• By monitoring performance and then giving constructive feedback.
INITIATIVE
• Showing initiative means the manager is not waiting for
other people to think of new ways to improve their
department or the overall business.
• By demonstrating initiative, the manager will not only
question the conventional methodology, but also
encourage subordinates to think of new ideas and
innovations before the situation demands it.
• Initiative means being proactive and pre-empting issues
before they arise in order t create a competitive
advantage.
JUDGEMENT/ DECISION- MAKING
• The manager continuously has to make judgement calls in
different situations. This can only be done once the relevant
facts have been evaluated in an objective manner.
• It is not always possible to first evaluate decisions before
taking actions. Sometimes immediate decision is required to
capitalize on an opportunity; one of the most crucial skills a
manager needs is logical reasoning.
• It is important for the manager to employ integrity when
making judgement calls. This demonstrates leadership and a
willingness to acknowledge accountability for their decisions.
NEGOTIATION
• A successful negotiator can convey their opinions in a clear and
accurate manner to the audience, and then use these skills to
persuade the audience to understand their point of view.
• It is important the people understand all the relevant opinions.
A manager who is a skilled negotiator will try to facilitate a win-
win situation, using compromise to resolve problems.
• It is important to obtain buy-in from the most influential role
players- especially in sensitive or high-pressure situations,
because these informal leaders may influence others in the
negotiation process.
CUSTOMER SERVICE ORIENTATION
• In a successful business, customers and their needs are
the primary focus areas and should be considered in all
business decisions.
• It is crucial that the manager listens and responds to a
customer’s questions, problems and feedback, as it is an
important way for the business to give the customer what
they expect and requires from the business.
• A productive customer relationship based on trust and
credibility will ensure that existing customers keep coming
back to buy from the business.
 CORPORATE
GOVERNANCE AND
THE FOUNDING
PRINCIPLES OF THE
KING REPORTS
• Corporate Governance can be
defined as the set of rules and the
processes that are used by Top
management to direct and control
the business.
• Corporate Governance provides a
framework and control measures to
look after the bottom line of the
business, but also to consider the
interests of all stakeholders in the
business.
• Stakeholders include:
• Management
• Shareholders
• Customers
• The environment
 • Standards of conduct for companies listed
on the JSE, as well as state-owned
enterprises regarding their responsibilities
towards citizens in the societies in which
they function.
• Triple Bottom Line reporting (Integrated
THE KING reporting) is a requirement for
I REPORT management.
• It expected managers to not only focus on
(1994) shareholders (profit) as an interest group,
but that all stakeholders should be
considered when strategies are
formulated or implemented, and
consideration should be given to the
consequences of decisions for society
(people) and the environment (planet).
• It is important to note that above the King Reports
indicating that looking after the planet is the right
thing to do, the South African Constitution also
states the current generations have the
responsibility to protect and conserve the
environment for future generations. Government
will impose penalties on businesses for pollution
and damage to the environment.
• Almost no undertaking can conduct business
without using some natural resources. The
emphasis should be on sustainable and
responsible utilization of resources. Both
individuals and businesses have a Social
Responsibility to reduce their carbon footprints.
• Doing the above mentioned will also have a
positive impact on Human health, because South
African has a right to live in an environment that is
not harmful to their health.
 • 1. TRANSPARENCY:
• Refers to decisions being taken in accordance with a set
of rules and with which everybody is familiar and that
these rules are understood by everybody.
• 2. ACCOUNTABILITY:
• Refers to a person taking responsibility for their actions.
KING II In a business where Corporate Governance is accepted
as the norm, accountability increases level of

(2002) confidence that stakeholders have in the business

decision taken. Integrity or honesty or truthfulness will
be part of decision making if the person or organization
7 knows they will be held accountable for decisions taken.
• 3. INDEPENDENCE:
Principles: • There is no conflict of interest and there are no unfair
influences from any stakeholder that result in a biased
unethical decision being taken in favor of a particular
person. Although networking is a critical component in
success, it may reduce the independence of decisions
taken in a business if the decision maker feels they
have an obligation towards someone they have
networked with.
• Discipline: When one looks at
discipline, the starting point is always
self-discipline. In a business
environment, this relates to the
integrity shown by management,
when important decisions are taken.
• If the business does not make
responsible decisions, the market will
punish them (Market discipline).
• Regulatory discipline can only be
imposed once the damage has already
been done. No amount of regulating
will force someone to act with integrity
if he/she is the type of person who
justifies unethical behavior.
• Social Responsibility: A business that follows
a process of good governance, will be publicly
accountable, because they will act responsibly
when it comes to social issues such as
exploitation of natural resources, child labour,
paying fair salaries that will enable employees
to maintain a decent standard of living, support
of employees suffering from diseases.
• Fairness: It implies that the business will be
considerate when evaluating all relevant
parties’ interests when decisions are taken.
Sometimes it is necessary to make a trade off
between benefitting one group over another.
Management decisions should always aim to
serve the best interests of the business and
employees and not because there is a lure of a
kick back when a particular decision is taken.
• Responsibility (of directors): The
King reports promote responsible
management and King III elaborates
further on this issue when reference
is made to the duties and
responsibility of directors:
• Directors are the performance driver
of the success of the company. The
directors represent the shareholders
and as such, shareholders hold high
expectations of those directors to do
the right thing as they are in a
position of trust.
• Some responsibilities of directors can be summarized as
follow:
• Directors must act with skill and care when formulating guidelines,
policies and procedures. When these are implemented, it should be
ensured that there is compliance with laws and good standards.
• They must act in good faith and honesty (fiduciary duty) in terms of
what they believe would be in the best interest of the business and
relevant stakeholders. They may not abuse power given to them
but have to use the power to enhance the interest of the business.
• They must try to pre-empt risks and put proper risk management
procedures in place.
• Ethical leadership is non-negotiable.
• Audit committees should be established and used to monitor
finances, as well as other aspects such as the responsible use of
technology.
• Ensuring Integrated Reporting (Triple Bottom Line Reporting) and
the disclosure of relevant information is important. This is done
when a holistic view is given on the company’s financial
performance within the context of social and environmental
development.
 • The following are covered by the King III report:
• King III applies to all businesses, regardless of whether it is public,
private or non- profit businesses.
• The directors may be liable in the case of misrepresentation.
• The focus is on Apply and explain where the Board of directors have
to motivate why they are not implementing the King report’s
recommendations.
• King III requires companies to list on the JSE to report on
KING III sustainability in accordance with the Global Reporting Initiative. The
business’ Audit Committee has to ensure that they obtain an
external opinion to verify the degree of sustainability indicated in the
(SEPTEMB integrated report. This will have an impact on the task of the external
auditor if they comment on the issue.

ER 2009) • There is a bigger emphasis on Independent directors and the Board

should investigate and assess to ensure the Independent directors
are really independent.
• King III requires an Independent Audit Committee apart from the
Board of directors and it is stipulated that where there is conflict
between the decisions of the Board and the Independent Audit
Committee, the IAC’s decisions will stand, because they will be held
accountable by law for the specific issue that is decided upon.
• A very important stipulation of King III is that the company should be
a responsible Corporate citizen. This means the company should
maintain an ethical relationship with the society it operates in.
 • King IV states that the Board of a
Company is Accountable to make
sure there are four broad outcomes
that are achieved:
KING IV •
•
Ethical culture
Good performance
2016 • Trust and good reputation
• Effective control
• King IV has 17 principles of Good
Corporate Governance that covers
the four broad outcomes
ETHICAL CULTURE
• The Governing body should
lead ethically and effectively.
• The business has to be
managed in a way that
ensures an ethical culture is
created.
• All actions have to be
generated towards ensuring
that the organization is seen
to be a responsible corporate
citizen.
GOOD
PERFORMANCE
• The Governing Body should
ensure that the core business
purpose, the business strategy
and all risks and opportunities
taken, are geared towards
sustainable value creation.
• The governing body should
ensure that reports issued by the
organization help stakeholders to
make informed assessments of
value creation over the short-,
medium-, and long-term.
 • The Governing body has to initiate, manage and look after all
corporate governance principles in the organization.
• There should be a balance of knowledge, skills, experience, diversity
and independence within the Governing body for it to carry out its
roles and responsibilities objectively and effectively.
• The Governing body should ensure that it delegates power and
responsibilities to sub-committees of the governing body. But the
financial accountability will remain with the governing body.

ADEQUATE • It is the task of the governing body to ensure a competent executive

management team is appointed that will act with authority and

AND
responsibility.
• The Governing body should ensure performance evaluations for the
members of the Governing body, the members of the sub-

EFFECTIVE committees and the CEO that all their actions are aimed at improving
performance and better effectiveness.
• The Governing body should ensure all risks and opportunities taken

CONTROL are aligned with achieving strategic objectives.

• The Governing body should govern technology and information in a
way that supports the organization to achieve its strategic objectives.
• The Governing body should comply with applicable laws, rules and
standards in a way that it supports the organization being ethical and
a good corporate citizen.
• The Governing Body should ensure that the organization should
ensure that the organization remunerates fairly, responsibly and
transparently to promote strategic objectives and sustainability.
• The Governing Body should ensure that there is effective and
sufficient controls so that it can be trusted that the integrity of the
reports will lead to a better decision-making.
 TRUST AND GOOD
REPUTATION
• In the execution of its governance roles and
responsibilities, the governing body should
adopt a stakeholder-inclusive approach that
balances the needs, interests and
expectations of stakeholders and the best
interests of the organization over time.
• The 17th principle refers to Institutional
investors. An Institutional investor is a
business where money is pooled to buy
securities, real estate or other assets with the
aim to invest money in the pool. Institutional
investors include banks, insurance companies
and pension funds. The Governing Body of an
Institutional Investor should ensure that all
parties’ interest relating to the securities of
the business, is protected and expectations
are met.
• King III had a focus of Apply or Explain, but King IV, the focus is
Apply AND Explain.
• This means it is now assumed that the principles of Corporate
Governance are implemented. The Board of Directors have to
explain how these Corporate Governance principles were
implemented. Apply AND Explain is very important, because:
• It will create more trust with investors, which will reduce the cost of
obtaining capital.
• It ensures there is sustainability in the business, which is good for the
business, the economy and society.
• King IV also provides guidelines to help organizations such as
Municipalities, non-profit organizations, SME (small and medium
enterprises) and SOE (state owned entities) to understand how
they should also implement the King principles.