Covet not thy CEO’s position

2011-08-13 10:13

A troubling new trend in corporate governance needs to be cauterised quickly: board members who decide they want to be chief executives.

Chief executives and boards are supposed to showcase the very best in business leadership but they often lose their way.

Parastatals, or state-owned enterprises, have shown that when the board is weak or divided the organisation suffers great harm. In the worst cases chief executives have been ejected from their positions amid claims that one or more board members want the plum post.

The private sector has had its fair share of drama but it is the state companies that have hogged the limelight.

Cases have emerged in which chief executive disciplinary processes often reflected a breakdown in the relationship between the chief executive and the board.

A few weeks ago the Black Management Forum abandoned its relationship with Business Unity SA (Busa).

One of the reasons was that a Busa board member had set his sights on replacing departed chief executive Jerry Vilakazi.

One of the difficulties this situation alerted us to was that the board member had been part of the selection process.

Now he was switching sides, creating several ethical and governance difficulties for the organisation.

Mthunzi Mdwaba may well have made an excellent chief executive for the organisation but his intended move from the board to the chief executive chair only highlighted the bitter divisions between these rival organisations.

In the end an outsider, Nomaxabiso Majokwane, was hired and this was the correct thing to do.

Busa is not alone in facing this tricky situation. Solly Mokoetle’s short-lived return to the SABC as its chief executive was marred by an unhappy relationship with the board.

It turned out that two of the board members who had given him a particularly tough time had also submitted their CVs for the position.

Mokoetle’s dream job quickly turned into a nightmare as it became clear that individual board members wanted to stifle his tenure.

The tragedy of the SABC situation is that it was virtually a case of recent history repeating itself, as the previous chief executive, Dali Mpofu, had found himself at odds with a chairperson who increasingly ignored the non-executive nature of her position.

This blurring of roles between the chief executive and the board highlights not only a breakdown in governance but also shows the danger of board members who become too operational.

When the organisation is in crisis some board members can’t resist the urge to take the driver’s seat, which is not their job.

The list of state-owned enterprises that have experienced turmoil at the top include the SABC, Eskom, Armscor, the Land Bank and Transnet.

The result is that the image and reputation of these organisations has been severely tarnished, to the point where great managers would not even consider joining them.

Succession planning often seems to be an alien concept if you look at how poorly the transition from one chief executive to another is handled at some parastatals.

Transnet is one of the country’s crown jewels but it was led by an acting chief executive for two years.

This was a lapse of responsibility by both the shareholder and the board, which failed to grasp the damage such a vacuum would cause to South Africa’s most important transport and logistics utility. We pay the price.

South Africa needs strong state-owned enterprises and the boardroom squabbles distract from the delivery of important services, including the infrastructure drive that could ensure we escape the double-dip recession.

Board appointments must feature individuals who are not looking to nab the chief executive’s position for themselves but who know their role is only to support him.

This way leaders will lead instead of getting stuck in unnecessary boardroom brawls.

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