The Role of Human Resources in King IV™ by Elizabeth Dhlamini-Kumalo. 28 July 2016 - 4th Annual SABPP HR Standards Conference.

1. The Role of Human Resources
in King IV™
28 July 2016
4th Annual SABPP HR Standards Conference
ELIZABETH DHLAMINI-KUMALO

2. Agenda
1. HR Governance
2. King Codes: From I-IV
3. New definition of Corporate Governance
4. Responsibilities of the Governing Body
5. Structure of King IV
6. Role of HR in King IV
7. HR Implications
8. Conclusion

3. HR Governance History
Confluence of legal, political and economic ideas.
Question had been whether an organisation can manage itself without regulation – and if not,
who should do the regulating?
2002 United States, responded by passing the Sarbanes Oxley Act.
Sarbanes-Oxley HR implications include but not limited to personal, legal accountability for the
reporting and decision making for benefits plans and programmes. A big emphasis on
compliance bordering on being dangerous.

4. King Codes
In South Africa the response was a non-legislative, principle and practice based code:
1994 King I
2002 King II
2009 King III
2016 Draft King IV
The philosophy of the code consists of the three key elements of:
leadership, sustainability and good corporate citizenship.
Since inception there has always been a myriad of HR implications; today we will discuss a few.

5. Definition of Corporate Governance
Corporate Governance is about the exercise of ethical
and effective leadership by the governing body.
King IV™ (IODSA, 2016)

6. Responsibilities of Governing Body
1. Providing strategic direction
2. Approving policy to put strategy into effect
3. Providing oversight of the implementation of performance
4. Disclosing
(IOD 2016)

7. CHAPTER AND CONTENT GOVERNANCE OUTCOME
Chapter 1: LEADERSHIP, ETHICS AND CORPORATE
CITIZENSHIP
Ethical leadership; Organisational values, ethics and cultures,
Responsible corporate citizenship
ETHICAL CULTURE
Chapter 2: PERFORMANCE AND REPORTING
Strategy, implementation, performance, Report and disclosure
PERFORMANCE AND VALUE CREATION
CHAPTER 3: GOVERNANCE BODY STRUCTURES AND
DELEGATION
Role of the governing body, composition of the governing body,
committees of the governing body, delegation to management and
performance evaluations
ADEQUATE AND EFFECTIVE CONTROL
CHAPTER 4: GOVERNANCE FUNCTIONAL AREAS
Risk and opportunity governance, technology and information
governance, compliance governance, remuneration governance and
assurance
ADEQUATE AND EFFECTIVE CONTROL
CHAPTER 5: STAKEHOLDER RELATIONSHIPS
Stakeholders (Responsibilities of shareholders)
TRUST, GOOD REPUTATION AND LEGITIMACY
STRUCTURE OF KING IV
IOD (2016)

8. Human Resource Governance:
A Definition and Key Elements
HR governance is the act of leading the HR function and managing related investments to:
Optimise performance
Fulfil fiduciary and financial responsibilities
Mitigate enterprise HR risk
Align the function’s priorities with those of the business and
Enable HR executive decision making.
Mercer Inc. defines five core elements in an HR function’s system of governance as:
Structure and accountability
Effective Councils
Philosophy and operating principles
Core Management activities
Performance Monitoring

9. Having reviewed this what is the role of
Human Resource Leadership and Practice
including all the previous codes from 1994?
We had “appointments to the boards and guidance….., and Affirmative Action Programmes” in King I
We had “Risk Management and Integrated Sustainability Reporting” in King II
We had “Non-executive Directors’ Remuneration and Evaluation of Board and Directors’ Performance” in King III
Honestly, how have we fared?

10. The Role of HR in King IV
As a Professional Body we embrace the draft, and believe it affirms South Africa as a world
leader in Corporate Governance.
There are many HR opportunities and responsibilities.
The HR Standards provide us with a solid foundation for HR Governance and practice.
We need to fulfil our role as members of Excos, sub-committees and the Board.
Developing proper HR governance framework.
Managing HR Risks.
Ensuring HR controls in place.
Assurance of HR practices (non-financial reporting).
Auditing the HR function.

11. HR Implications
Role of Leadership in broader society – skills shortages & social issues (transformation).
Supporting and driving goals of the NDP.
Skills and talent development.
Ubuntu (from King II to King IV) – the real spirit of Ubuntu?
Concepts of fairness, innovation and collaboration.
Training of employees may diminish human capital over short-term, but it increases the human
capital of the organisation.
Human rights abuses constitute poor citizenship behaviour and it depletes human capital in the
supply chain of the organisation, and it could affect reputation.
King IV requires reporting on value chain processes. HR to provide the human capital value chain.

12. HR Implications
HR issues to feature in integrated annual reports.
Shift from “financial capitalism” to “inclusive capitalism” taking into account employment,
transformation and provision of all sources of capitals is positive.
Shift from short-term thinking to long-term thinking will assist in enabling the creation of long
term human capital development in organisations.
The social responsible aspects of remuneration should be considered. Increased disclosure of
remuneration policy and actual remuneration will require HR work.
Performance management to include business, social & environmental performance.
HR should play a more proactive role in supporting a digital business strategy in leveraging
information and technology. Boards should consider the impact of digital business on the
organisation, employees and broader society.

13. HR Implications
HR contributing to combined assurance – HR to provide inputs regarding the HR control
environment, including framework, policies, processes, systems and controls (audits).
HR Managers should keep up to date on the fiduciary duties of shareholders regarding
investments in pension funds. Consider any factor which may materially affect the sustainable
long-term performance of a fund’s assets, including environmental, social and economic
performance.
Clear role for HR and ER Managers in dealing with dispute resolution together with management
and unions. Need to resolve disputes quicker, efficiently and effectively.
Boards required to oversee that recruitment processes, promotion criteria & performance
evaluations of employees recognise adherence to ethics norms as set out in codes of ethics &
conduct that sanctions are in place for the contravention thereof. HR policy is key.
HR to play a stronger role in prevention of fraud & corruption – ethical culture.

14. HR Implications
Organisation as corporate citizen: Sustainable development, human rights, impact on
communities, fair labour practices, remuneration, employee well-being, employee development,
employment equity & compliance to legislation.
Succession planning is a key priority – HR to provide professional service.
Proper policy and procedures for Nominations committees, Remco, Social & ethics committees.
HR Directors to raise concerns of undue influence/manipulation regarding
remuneration/nominations committees.
Work with CRO or Chair of Risk & Opportunity Committee to determine if human capital risks
included in risks register.
Training of governance professional/company secretary

15. HR Implications
HR Director advice in performance evaluations of governing body, its structures and the
company secretary where relevant.
The capacity of HR Director to contribute optimally at board and board committee level should
be improved.
HR Directors training in corporate governance and King IV.

16. Next steps:
1. HR Governance Framework
2. King IV Implementation
3. Integrated Reporting
4. King V Planning

17. Conclusion
King IV provides many opportunities for HR to step up in
playing the HR Governance role. We need to apply our
corporate governance role as HR Practitioners. We also
need to develop an HR Governance Framework to
strengthen the HR value chain and all HR practices in
support of good corporate governance in the organisation.
The SABPP HR Governance Steering Group will lead these
efforts.