The early resignations of CEOs that were generally regarded as competent in the persons of Vuyani Jarana and Phakamani Hadebe have brought a welcome spotlight on governance in state-owned companies (SOCs) and state-owned enterprises (SOEs). These are not the first resignations that should have caused the public to be interested in governance, the red flags have been there for some time in this sector. What has been lacking is a concern and workable, effective solutions. After all, the shareholders of these entities have very big pockets and have been bailing them out without requiring them to correct course as a condition of the bailouts.
From the pushing out of people with a proven track record to the #GuptaLeaks, to the Hollywood style of management through acting and interim positions, to the parachuting in of people from outside, we are awash with warnings. They are just not heeded.
It is not possible to diagnose the malware in the system in a short piece, what I hope to do is raise one of the things that are missed in many a stated attempt to change the fortunes of SOCs and SOEs.
When Shrek arrived at the factory of the Fairy Godmother he asked the workers there a very important question: “Working hard or hardly working?” This is the wordplay that has caused the challenges that are faced by our SOEs. There are those who are working hard and those who are hardly working. Among those who are hardly working, is another delineation of the downright lazy and that is those who are working against the entity.
One of the biggest myths about changing the fortunes of SOEs has to be the perception that SOEs are incapable of growing their own timber – put differently, it is the notion that a troubled SOE does not, within it, have people that are capable of turning its fortunes around. This is borne out by the failure to recognise that the reason that the troubled SOE has not imploded has to be because it has women and men who are working tirelessly to keep it from imploding.
These are not the loudmouths that claim easy victories even when such victories are not attributable to them. These are hard-working women and men of principle who understand that leadership is not because of a title that one holds and is not a popularity contest. They are modest, to the point of being self-effacing, but they are immovable from principle. They know the business of the entity, they know the other dependable hard-working people in the entity and they know what are the three to five things that the entity needs to do to turn its fortunes around.
They are known and loved by those who love the entity and they are loathed by those who are constantly working against the entity or those who are hardly working. They don’t suck up, they don’t worship the ground that the board and the minister walk on, they have no need to because they are working for the entity, not for narrow interests of some board members and not for the narrow interests of the shareholder representative for the time being. They are the quintessential diamond in the rough. They are the real deal.
This myth is sometimes a result of people with a jaundiced eye who see more of the rough than it sees the diamond or just plain mischief of preferring someone that is malleable to further the nest of the one deciding on leadership. Either way, it is not in the interests of the entity.
Most private companies prefer proper succession planning from their own ranks so that the person at the helm does not have to be taken through induction into the business while they are expected to lead it. It is only in instances where a company has decided to make a fundamental change to its core business or image that they will opt for fresh blood to lead the change in course or to change the face of the company.
The blame for this has to be placed at the door of the board. The duty of the board is to act in the best interests of the unconscious quadriplegic that is the entity. The Board does not have to act in the individualistic interests of the shareholder or the narrow interests of employees or the creditors, etc. Its considerations are an entire melting pot of interests of all stakeholders and only to the extent that such interests are aligned with those of the entity.
SOE boards sometimes act in the interests of unions even when these are against the interests of the entity. In some instances, they act in the interests of the minister, the executive authority who, for the time being, hires and fires them. This is when the board fees and the board position is more important than the entity.
When the eyes of the board are open, it will be able to see the diamonds in the rough, pluck them out of the rough, remove the rough, shield them from individualistic short-sighted stakeholders and support them in supporting the entity to success.
It can be done.
Diamonds can be found, even in the rough. DM
In other news...
The South African economy is choking harder than the Proteas. Although to be choking you have to actually be eating and the Proteas seem to be on some sort of juice cleanse-like fast…*
Back to the economy: In the first quarter the GDP dive-bombed by a whopping 3.2%. The sense of futility can paralyse us into inaction and moaning. But it’s times like these that call for effort and action, no matter how small. Yes, South Africa is hurting. Yes the ravaged economy is evident everywhere you look. But you can make a difference, in your own personal way and by supporting independent media like Daily Maverick. We’ve pledged to continue the fight through producing incisive and impactful investigations and analysis, the same way we have done every day for the last decade.
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*Proteas, you know we love you. We’d just love you more if you won occasionally...
"Man is by nature a political animal" ~ Aristotle