DO THE RIGHT THING

Thabo Dloti’s res­ig­na­tion from Lib­erty shows his in­tegrity as a good leader, writes Dudu Msomi

CityPress - - Business -

ACEO should have an opin­ion on the strat­egy of the or­gan­i­sa­tion and the re­spon­si­bil­ity for ex­e­cut­ing it. One that has the profit-and-loss re­spon­si­bil­ity is bound to have a per­for­mance con­tract that makes them vul­ner­a­ble to be­ing ousted when per­for­mance does not meet set tar­gets. CEO with such re­spon­si­bil­i­ties is a bona fide CEO and not just a to­ken. The very fact that Thabo Dloti was in the po­si­tion of hav­ing dif­fer­ing opin­ions on the im­me­di­ate fo­cus and strat­egy with the board of Lib­erty is proof that he truly had the reins and the kahu­nas to put his ca­reer on the line for his be­liefs. As Mal­colm X said: “If you don’t stand for some­thing, you will fall for any­thing.”

Dloti’s de­ci­sion to re­sign is a mark of a coura­geous leader, one who is will­ing to do the right thing and make the right de­ci­sion even if it is dif­fi­cult and seem­ingly detri­men­tal to their per­son.

Strat­egy is about choos­ing how to and how not to de­ploy the lim­ited re­sources within a fi­nite time in the or­gan­i­sa­tion to achieve the goals agreed to. Some­times your de­ci­sions pay off and some­times they don’t.

I am very proud of Dloti. His­tory will place him at the tip­ping point of the tran­si­tion of black lead­ers from fig­ure­heads with the right ti­tle, but no au­thor­ity in the eyes of peo­ple within their com­pa­nies and with no gen­uine re­spon­si­bil­ity for profit-and-loss de­ci­sions for the en­ti­ties they sup­pos­edly lead.

These are un­com­fort­able truths that don’t make the head­lines when we shower praises be­cause of ti­tles.

Their roles are re­ally to open doors in the pub­lic sec­tor, im­prove em­ploy­ment eq­uity num­bers at man­age­ment and con­trol lev­els, and to sym­bol­ise trans­for­ma­tion.

Peo­ple within that busi­ness mostly “by­pass” these CEOs when it comes to core busi­ness is­sues. Oc­ca­sion­ally, de­serv­ing black tal­ent would be ap­peased by let­ting them lead sub­sidiary com­pa­nies that are known not to pro­vide the bulk of the earn­ings in the group, but re­spectably con­trib­ute to the in­come state­ment.

Cor­po­rate South Africa has many tricks. Let’s not pre­tend that we are not aware of them.

As un­for­tu­nate as it is that Dloti’s ten­ure as Lib­erty CEO was fairly short, I am proud of his in­tegrity and the po­si­tion he took to re­sign.

Profit-and-loss re­spon­si­bil­ity is one of the most sig­nif­i­cant re­spon­si­bil­i­ties of any ex­ec­u­tive po­si­tion. You have the di­rect in­flu­ence and power on how com­pany re­sources are de­ployed.

Dur­ing eco­nomic down­turns, re­turn on in­vest­ment comes un­der im­mense pres­sure and the CEO’s per­for­mance comes un­der even greater scru­tiny from boards and share­hold­ers, re­gard­less of the CEO’s race.

The buck re­ally stops with the CEO who ac­cepts the ac­co­lades and is heaped with glory dur­ing boom times and should take the fall in chal­leng­ing times by ac­cept­ing per­sonal re­spon­si­bil­ity for the com­pany’s lack­lus­tre per­for­mance, espe­cially when com­peti­tors show bet­ter re­sults de­spite op­er­at­ing in the same en­vi­ron­ment.

Trea­sury is not called to bail out pub­licly listed com­pa­nies, a plea­sure that the CEOs of state-owned com­pa­nies en­joy.

As in­ter­ested and pa­tri­otic cit­i­zens who want trans­for­ma­tion in the lead­er­ship of cor­po­rate South Africa, we must not lose sight of the fact that black CEOs must be held to the same stan­dards as any CEO in this global econ­omy.

As much as we de­serve re­spect and to com­pete with other busi­ness lead­ers, not just other black lead­ers, we should be pre­pared not to get spe­cial treat­ment be­cause we are still a mi­nor­ity in C-suites.

Heads of CEOs roll ev­ery­where in the world due to strate­gic dis­agree­ments with boards and for poor per­for­mances.

Steve Jobs is the most fa­mous ex­am­ple for hav­ing been fired from his own com­pany in the 1980s, but later came back to take Ap­ple to dizzy­ing heights. Mar­ius Klop­pers re­signed from BHP Bil­li­ton in 2013 af­ter a 58% fall in half-year prof­its. Dif­fer­ences in lead­er­ship styles and strate­gic di­rec­tion can cause CEOs to be vul­ner­a­ble to be­ing fired or choos­ing to re­sign be­cause the board is ac­count­able for de­ter­min­ing the or­gan­i­sa­tion’s strate­gic di­rec­tion and there­fore its ul­ti­mate per­for­mance.

The board re­quires man­age­ment to ex­e­cute strate­gic de­ci­sions ef­fec­tively. It is a fine line that boards of listed com­pa­nies walk be­tween be­ing un­der­stand­ing of poor per­for­mance, espe­cially dur­ing eco­nomic slumps such as what is be­ing ex­pe­ri­enced glob­ally, not just in South Africa, and giv­ing CEOs enough rope. Share prices can plum­met more when there is a per­cep­tion in the mar­ket that the board is ne­glect­ing its duty of mon­i­tor­ing the CEO’s per­for­mance.

Short-ter­mism might be blamed for lack of pa­tience with Dloti’s pre­ferred strate­gic pri­or­i­ties. The re­al­ity is that listed com­pa­nies have dif­fer­ent mar­ket forces that bear upon them from those of pri­vate or pub­lic sec­tor com­pa­nies which de­mand cer­tain share­holder re­turns and are thus un­der pres­sure to take swifter ac­tion for be­low-par per­for­mance.

To have a dif­fer­ent value sys­tem in­fuse listed com­pa­nies, peo­ple should be­come share­holder ac­tivists like Theo Botha who at­tends an­nual gen­eral meet­ings and re­lent­lessly en­sures that good cor­po­rate gov­er­nance is ad­hered to.

This is how you change the world, by do­ing, not just talk­ing. Ku­dos to you Thabo Dloti!

Msomi is CEO of Busara Lead­er­ship Part­ners.

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