Upon assuming the chairmanship of an underperforming board, the initial crucial steps involve a comprehensive skills audit of each director to assess their competencies, reputation, and most importantly, their capacity to effectively serve the company. It’s not enough for directors to be competent; they must also have the time and dedication to fulfil their duties properly. Simultaneously, the chairman must examine the company’s Memorandum of Incorporation (MOI), or Articles of Association as they were previously known, to confirm the board’s power to appoint and dismiss directors, subject to necessary resolutions. Additionally, the MOI should be reviewed for existing dispute resolution mechanisms, with a preference for conciliation, which involves an knowledgeable third party suggesting solutions, as opposed to mere mediation.

The Frame Textile Group, facing a substantial loss (450 million rand then, equivalent to 4.5 billion rand today) due to manufacturing into unsold stock, underwent a radical restructuring. The newly appointed chairman first conducted a skills audit of the board and then, crucially, addressed the issue of incompetent directors who were effectively appointed for life by the major shareholder. This required litigation to remove them. An off-site board meeting was then held to establish a clear, unwavering long-term objective: to centralise manufacturing in Durban with modern, computer-aided machinery and significantly reduce the workforce from 32,000 to 4,200, focusing on producing yarn and fabric to sell rather than into stock. This objective was consistently prioritised and achieved, leading to profitability and debt repayment.

A primary key risk indicator during the Frame Textile Group’s reorganisation was the mass retrenchment of employees. To mitigate this, an organisation called Zenzalini was created to provide retrenched individuals with sewing machines and training to make simple garments, supplying them with knitted fabric at cost to help them establish new livelihoods. This initiative aimed to “soften the blow of retrenchment.” The core value drivers identified for the company were “timeless delivery” and “quality.” Given the complexities of textile manufacturing, especially with natural fibres and dyes, ensuring consistent quality was paramount. Timely delivery was also critical, as the company’s customers (e.g., dress manufacturers) relied on their supply to meet their own production deadlines.

The Frame Textile Group’s business model was developed through the “three prisms of the economy, society, and the environment,” even 35 years ago, demonstrating an early awareness of sustainable development. For instance, new machinery was designed to significantly reduce water consumption in fabric production. The governance framework adopted was “outcomes-based,” moving away from rules-based, tick-box compliance towards a mindful application of principles to achieve specific results. This included instilling “ethical and effective leadership,” where each director was expected to act as a “guardian” of the company, making decisions in its long-term best interests, much like a guardian would care for a parentless child’s inheritance.

To counteract the tendency for “yes people” and superficial agreement, the chairman employed a direct and challenging approach. After board discussions, he would often single out a director and ask them to explain in detail why they voted a certain way. This tactic, repeated a few times, ensured directors thoroughly understood management reports and actively engaged in discussions, improving their “homework.” The chairman also insisted that all reports from management be “clear, concise, and understandable” in “everyday English,” avoiding jargon, and striking the right balance between management-level and governance information. This fostered genuine understanding and accountability, as a director who doesn’t understand the business is effectively committing fraud.

Integrated thinking acknowledges that a company’s resources and relationships are interconnected and operate 24/7, making a holistic view essential. It moves beyond separate “silo reports” for finance and sustainability, recognising that these aspects are intrinsically linked and should be reported together in an “integrated report.” This approach shifts the focus from the “primacy of the shareholder” to considering all stakeholders and the broader impact of the company. Integrated thinking should permeate the entire organisation, from the board’s strategic decisions to operational management, leading to more efficient resource allocation, reduced expenditure, and improved overall performance. It starts from the top, with the board reviewing the business model on an integrated basis.

Conflicts between management and the board, or within the board itself, are inevitable due to differing functions (thinking vs. doing). The chairman plays a critical role in mediating these. Directors, especially executive directors, must understand that their statutory duty as a director to act in the best long-term interest of the company outweighs their role as an employee reporting to a superior. Regarding dominance, particularly from a chief executive or a lead independent director, the chairman must actively curb it to ensure all directors contribute and the board functions as a collective mind. A director’s most important quality is courage – the bravery to confront issues head-on and make decisions that serve the company’s long-term health, even if unpopular. Abstaining from votes on risky decisions is considered a “corporate sin” because it prioritises self-protection over the company’s need for a decisive collective mind.

Board voting should always be “open,” not secretive, to foster trust. The chairman should “strive like crazy” for “unanimity” in board decisions, even if it requires tweaking short-term strategies. A 51% majority vote is considered “uncomfortable” because it indicates a lack of collective drive and a dysfunctional board with “gaps and dents.” Unanimity ensures that the board operates as a cohesive unit, and its decisions are carried out with full commitment throughout the organisation and into management. Historically, highly successful companies rarely show dissenting votes in their minute books, highlighting the importance of achieving consensus for effective governance and performance.