King III Opinion Paper

In February 2009, the Draft King III Report was released.

The report contains several matters affecting the governance of South African organisations. In particular, the King III Report contains several references to governance matters affecting HR, either directly or indirectly. While certain HR issues were addressed very explicitly, such as performance management, employment equity, and succession planning, there are many other areas outlined in this opinion paper that should be considered by HR directors and their staff.

It is suggested that HR directors take full ownership of the HR governance implications outlined in this opinion paper, and develop HR governance frameworks to strengthen the governance of South African companies. As Deloitte (2008) asserted: “Governance, risk and compliance provide a perfect opportunity for Chief HR Officers and HR organisations to move beyond their traditional administrative role and earn a seat at the strategy table – providing HR with a level of credibility and respect that’s long overdue.

”The purpose of this SABPP opinion paper is to critically review the King III Code in order to identify possible opportunities in current and future HR practice, with specific reference to the role of HR directors, managers, and practitioners in ensuring sound governance in South African organisations by utilising proactive strategies, not only to ensure compliance to the code, but also to leverage and optimise the people contribution to the triple bottom line.

• Background about King III
• HR’s role in King
• Outline of the King chapters and elements of governance
• HR implications and possible actions

Recommendations for HRA new era of HR governance has arrived.  Progressive HR directors and managers will become HR governors – true high-level professionals who connect HR with the board. HR professionals have a unique opportunity to elevate the HR function to board level by actively implementing the King III Code, and thereby ensuring that HR contributes directly to sustainability and the sound governance of companies.

The true test of a successful HR function operating from an HR governance perspective will be the quality and quantity of HR inputs into the company’s annual report. Only then will HR be able to claim that they deserve to have a meaningful impact at board level.

Thus, if HR strives to function at board level, there is only one prerequisite and that is to be able to deal with board issues, and not everyday operational and administrative HR matters. In essence, the SABPP opinion paper outlines the way forward for HR – moving away from a mere focus on compliance to become a professional champion of people issues at board level within a framework of creating sustainable people value for organisations.