Governance headaches
We rather smugly assume that we have world-class corporate governance. But is that still true? For example, nobody complained when Steve Jobs was both CEO and chair of the board at Apple, and until recently Warren Buffett held both positions at Berkshire Hathaway.
SA forbids this, however, as it somewhat slavishly follows the British governance model. Yet many of SA’s most successful businessmen, such as Pick n Pay’s Raymond Ackerman and Anglovaal’s Basil Hersov, have held both roles. I am surprised that SA has not adopted the German model of a supervisory and a management board. This gives power and responsibility to the unions and helps explain the relatively harmonious relationship between workers and management in Europe’s largest economy. Far better than in the UK.
The first King commission examined this but ruled it too ponderous and bureaucratic — as if that doesn’t describe the current governance regime of most companies anyway.
An overly interfering Absa board was evidently a factor in Daniel Mminele’s premature departure. It can’t be easy if your chair — Wendy LucasBull — believes she can run a commercial bank better than you.
She probably has a point, as she was always a useful cog in the Rand Merchant Bank/FirstRand machine. LucasBull was nearly the head of FNB before Michael Jordaan beat her to it, back in 2003.
And she would have considered herself the keeper of the Absa strategy, ensuring the integrity of its implementation. But it did not leave much leeway for Mminele as the incoming CEO.
A far more important factor, however, was his relationship with
Absa senior management.
Mminele’s predecessor, Maria Ramos, had devolved power so that the retail and business bank, the corporate and investment bank and the Africa regional operations were given, in her words “end-to-end accountability.” Sounds a lot like the independence Thomas Jefferson wrote about so eloquently.
Just before the hard lockdown I met with Arrie Rautenbach, head of the retail and business bank, who is responsible for almost two-thirds of Absa’s bottom line. I asked him: after “full accountability”, what is there left for the group CEO to do? He said there would be plenty on their plate. They would be needed to manage relations with the regulator, the board and the media. All the stuff that Rautenbach isn’t interested in, in other words.
But Mminele clearly wasn’t interested in being a kind of postman for executives. And while Absa was obviously trying to replicate the FirstRand decentralised model, you need the right personalities to do this.
FirstRand CEO Alan Pullinger is happy to stay in the background and leave the bombast to the noisier Jacques Celliers at FNB. Mminele was happy to be the face of Absa, but only as long as he could also be responsible for the actual direction of the bank.
Perhaps Absa should be honest and appoint Rautenbach as a more traditional CEO and tear up Ramos’s decentralised blueprint.
After all, Standard Bank has been run very successfully on a centralised command and control model, though with hiccups over the past decade. Mminele would have loved the handson job Sim Tshabalala plays as Standard Bank’s CEO and you rarely hear any comments from Standard’s chair.
Nobody complained when Steve Jobs was chair and CEO of Apple