In the CEO succession stakes, spare a thought for the next in line. Whoever it is hardly ever looks as good or as suitable as the one departing. The board of directors has to manage what turns out to be a fraught process because there is rarely an ideal candidate. No matter how carefully the long-term succession plan has been put in place, and no matter how much is invested in the preparation of the next in line, the final result is, increasingly, a somewhat unsatisfactory compromise.
With the announcement of Jacko Maree stepping down from his position as CEO of Standard Bank this scenario has once again played itself out. Instead of one anointed successor taking over as everyone inside the business and in the market expects, the board has decided to give the job to two of its executives, who will be joint chief executives. The market has not responded favourably. The bank has defended the decision by referring to the complementary skills of Simpiwe “Sim” Tshabalala and Ben Kruger, and has pointed out that the joint chief executive structure is not without precedent. Critics have alluded to the potential for “two camps” and the possibility that such a decision could lead to a fractured leadership.
More important perhaps is the message the decision sends to the market, on the one hand, and to the two candidates on the other. To the market it is evident that, despite a well-crafted succession plan that has been running for some years now, the man targeted all along, Tshabalala, is still thought to be too lightweight and not quite up to it. Why not? He is 45 years old, the same age as Maree was when he became the chief executive, and has been at the top of the bank’s structure for some time now. If he is not ready now, when will he be?
Trying to manage the risk of appointing someone perceived to be too lightweight, but at the same time bowing to our country’s empowerment imperatives, the final decision is a somewhat disappointing compromise. It also implies, unfortunately, that Maree has failed in the most important task of a CEO: that of ensuring that a well-trained and wholly suitable successor is ready to take over when he leaves.
To the candidate, even if Tshabalala himself might acknowledge he is not yet ready, confirming this notion by appointing someone to work alongside deprives him of the vote of confidence that could have given him the final lift and established his own confidence.
There are many examples of the job making the man. If Tshabalala had been appointed without Kruger providing a measure of shareholder comfort alongside him, he may have had some difficulty living up to expectations and the sheer size of the challenge at first, but would most likely have risen to it once he found his stride. Other chief executives have been shaped and have grown through doing the job.
Referring to other examples of big corporates being managed by joint chief executives, or the German model of doing the same, somehow does not provide a satisfactory explanation. If a joint situation had been intended all along, the outcome may have been more acceptable. But this is clearly a compromise because the board couldn’t reach the ideal of a single suitable appointment.
Also disappointing to the stakeholder community observing the whole thing is that Standard Bank, which has had an exemplary track record of preparing a well-qualified black candidate to succeed to the CEO position, in the end also appoints a white joint chief executive to shore up the risk. If Standard bank couldn’t get it right what business could? Could a more satisfying decision have been to appoint Tshabalala as the chief executive and Kruger as the chief operating officer reporting to him? If, as they say, Tshabalala will be the head of South Africa and Kruger the head of the investment bank, why not make each the CEO of his own domain with full responsibility for that business instead of the “joint” title which somehow smacks of indecision? Pundits say Tshabalala will end up running the bank eventually and Kruger will stand back in due course, but it’s not an inspiring vision for the moment is it?
The “divine art of compromise” might well be a sound strategy in the circumstances and in the end the only practical solution, but it leaves everyone just a little disappointed. It robs the candidate of the full confidence of the board and the opportunity to grow into proper chief executive stature. It also deprives those shareholders who like to “back the jockey” of a focus for their faith in an investment.
Several other big leadership transitions are in play at present and compromise seems to be where most are heading. In Kenya Raila Odinga is challenging the outcome of the election in which Uhuru Kenyatta has won more votes. Both have big constituencies but the neat process of democracy does not appear to be working.
In Venezuela the untimely death of Hugo Chavez has sent the country and his ardent worshippers into a tailspin. His likely successor and the man now anointed as acting president, Nicolas Maduro says “the presidency belongs to our commandante”. Chavez’s body is to be embalmed and he is likely to live in the minds of his people as the ideal of a president with anyone else having to try and live up to a much inflated expectation. The next president will have the shadow of Chavez hovering over him for a long time to come.
A similar succession process is going on the Catholic Church. The cardinals are now in the conclave and there must be a great deal of debate about the attributes necessary to being the best leader for the world’s Catholics. The church is growing most rapidly in Africa and in Latin America. So, should a new pope be from either of these rising constituencies? If one and not the other, will this also lead to a compromise?
Two Harvard Business Review blog network posts are worth noting. Morra Aarons-Mele’s comment last month was “compromise is not a dirty word” and John Baldoni some time ago said “compromise can be an act of leadership”. In the piece he says: “Webster’s New World Dictionary defines compromise as primarily ‘a settlement in which each side gives up some demands or makes concessions.’ Unfortunately the word compromise has become a pejorative term, something akin to selling out.” DM
Johann Redelinghuys writes in his personal capacity, not as a representative of Heidrick & Struggles.
Johann Redelinghuys is a partner at Heidrick & Struggles the international leadership consulting business, which bought the firm Redelinghuys & Partners of which he was the founder. He has been deeply involved in career management and executive search all his life. He is the chairman of the South African company and now heads up its board practice working with chairmen and CEOs focussed on CEO succession, strategic leadership review and board evaluation.
"Take a chance, won't you? Knock down the fences which divide. Tear apart the walls that imprison you. Reach out. Freedom lies just on the other side." ~ Thurgood Marshall