Sloppy board governance: Failing South Africa’s critical executive leadership
- Johann Redelinghuys
- 11 Nov 2013 (South Africa)
The high CEO turnover and suspension rate may of course be due to matters not related to performance, but influenced by political affiliations. Is it that party alliances and political in-fighting are jeopardising the careers of too many executives?
A suspension is a radical action that has a major impact on the suspended executive and is often accompanied by rumours, speculation and media gossip. One has to ask if there is not a better way and a more constructive course of action when a board has failed in its duty to provide stable leadership and a competent CEO for the organisation. Using a possible suspension as a back door to the decisions of a board if an executive is not performing as expected, is a poor way of exercising the governance of the enterprise. These days suspension becomes the final cover-up of the wrong appointment decision.
In the recent past we have seen the suspension of the CEO of the Government Employees Pension Fund John Oliphant for reasons that are inviting all kinds of speculation and don’t seem at all clear. The CFO of Telkom has been suspended and while no reason is given as yet, there appears to have been significant ‘interference’ from Telkom’s major shareholder, the government. Among a number of other notable suspensions, there have been Vuyisile Kona, acting CEO of SAA; Sipho Thomo, CEO of Armscor; Nocks Seabi, CEO of Limpopo Tourism; James Oswago, CEO, and three of his senior executives of the Electoral Commission; CEO of the National Student Financial Aid Scheme, Ashley Seymore; Group Lotus CEO Danny Bahar; and a year ago, Jerome Smith, CEO of Cipla Medpro; to name just a few.
Let’s not even think about the various cabinet ministers and others fingered by the Public Protector Thuli Madonsela, who in her own right is now being questioned about her Nkandla judgement. Who knows how long it will be before she is targeted and hung out to dry? The vultures are forever circling overhead.
The suspension of Richard Mdluli deserves special attention. He was appointed in 2009 as the head of Police Crime Intelligence, having been interviewed by an august group including Minister of Police Nathi Mthethwa, State Security Minister Siyabonga Cwele, and deputy ministers at the time, Susan Shabangu and Malusi Gigaba. A mere two years later he was charged with the murder of Oupa Ramogibe, and various other crimes including kidnapping, assault, intent to do grievous bodily harm, attempted murder and conspiracy to commit murder.
Was there no background check or reference from his previous life that would have pointed to criminal intent and his apparently fragile integrity? Has he always been trusted as a man of substance and personal discipline, suitable for such high office? And even if he were set up for this list of devastating accusations, could we not go back to those who appointed him to account for their actions?
Now suddenly, out of nowhere, Mdluli’s suspension is being challenged and he is applying to return to his job. Does this mean that he was not guilty, or is it that the accusations were trumped up and cannot be substantiated, so it is business as usual?
The time has come that we start to hold to account those people in positions of governance who have made flawed appointment decisions. It should not only be the candidate who was appointed who should face the music.
The board has an additional responsibility. If an operating senior executive is being manipulated or undermined by political in-fighting, the board, and particularly its chairman, must be responsible to provide protection. The CEO or whoever is in the line of fire should be able to rely on his board to provide ‘air cover’ and to ensure that the business and its executive leadership do not suffer.
If people are being taken out of their jobs for poor performance, such action must be applauded. But we would then ask why they performed poorly. Did the board do its duty in checking references and being conscientious about the due diligence process before making the appointments?
If the cause of this spate of suspensions is political in-fighting and removing people because they are not allied to the ‘right’ power groups the charge is much more serious. In each case the board whose job it is to provide independent care and governance has to step in.
The other trouble with a suspension is that it leads to uncertainty. It smacks of indecisiveness. Suspending someone indefinitely, and that on full pay, is a course of action particularly favoured, it seems, by government and state–owned enterprises. Forget for a moment about the cost to the taxpayer and the effect on the morale of the business. Face the next concern, which must be that of trusting the process of re-instating the person and whether a proper independent evaluation has taken place.
In the private sector, it tends to be more clean-cut. Instead of suspending the one whose performance is in question, a sensible severance is negotiated and a sanitised announcement referring to the candidate “pursuing his own interests” is made.
In a time when we are forever bemoaning the shortage of competent leadership in government as well as business it would profit the country if executive appointments were made with an unquestionably rigorous process and with due consideration. Once appointed, there has to be more protective care and guidance. Suspension should not become the increasingly frequent fall-back. DM