Retrenchments are only way out despite posturing

I t is significant how the pattern of disaster at state-owned entities is so often exactly the same. The political heads of the organisations, who very often have no real idea of their actual needs and requirements, are incapable of seeing the organisation from anything other than a political perspective. They therefore have an incentive to favour expansion, to increase salaries and to expand the organisation’s mandate.

The managers of the organisation are often willing to go along with this view, particularly since they can leverage their own salary packages upwards. Gradually, the salary budget starts eating into the operational budget, and the performance of the organisation begins to slide.

This continues until the organisation runs out of money, at which point there is a crisis and the finance minister is called in to wave his magic money wand. The finance minister tries to put in place measures to ensure the organisation remains within rational bounds, but in certain organisations that never works because some are so politically important that the minister is outvoted.

The SABC is one of those political footballs. Every now and then some brave person stands up and tries to right the ship. Mistake. Big mistake. In this case, the lucky person is new SABC CEO Madoda Mxakwe. Formerly a Nestlé executive, he decided there was nothing to do but launch a retrenchment process.

The extent of the process is dramatic — about 1,000 employees and 1,200 freelancers. But bear in mind that the average SABC staff member is paid about R600,000 a year, and the organisation is losing about R600m a year.

This is almost exactly what the retrenchment process would gain.

It seems to me that Mxakwe was just applying simple mathematics; he needed to save R600m a year, and he looked at his salary bill and made an estimate of what would be required to balance the books. Because it is the only real solution, I’m willing to bet Mxakwe is now astounded at what transpired.

The new communications minister, Stella NdabeniAbrahams, had a hissy fit and “broke off relations” with the board, whatever that means. The ANC also jumped in and pulled its nominees off the board, so now the board is not quorate. Some of the board members claim they have left because they disagree with the retrenchment process. Trust me, they know — or should know — that there is no real alternative other than stabbing the SA taxpayer in the pocket yet again.

The DA’s position on this is equally perplexing, since it also opposes the retrenchment process. Communications spokesperson Phumzile van Damme and the portfolio committee want to conduct an independent skills and salary audit before considering retrenchments.

This seems to me like kicking for touch. In any normal organisation a retrenchment process is a management prerogative. If an organisation loses traction in the market it really has no other choice. You absolutely don’t need to be secondguessed by outsiders whose incentive is to try to be Father Christmas to everyone.

YOU ABSOLUTELY DON’T NEED TO BE SECOND-GUESSED BY OUTSIDERS WHOSE INCENTIVE IS TO TRY TO BE FATHER CHRISTMAS TO EVERYONE

The legal position is also very complicated, because the communications ministry is the sole shareholder, but the constitution and Broadcasting Act designate the responsibility for policy and senior appointments to parliament. Ndabeni-Abrahams’s position is that as shareholder she “pleaded” with the board to suspend the section 189 notice to allow her an opportunity to familiarise herself with the turnaround strategy and the bail-out application. She also had a meeting with finance minister Tito Mboweni to “discuss the SABC’s financial position ”— in other words, beg for money.

The problem is that the SABC is legally a public broadcaster, and notionally relies on a public licence fee, not the fiscus. But the senior staff of the organisation have almost always been ANC lackeys and it has never been able to shake its “propaganda organ” reputation.

This has resulted in it losing huge chunks of its audience, including many ANC supporters.

SABC apologists always cite the structure of the organisation as an antidote to “corporate interests” in the media, but at least with “corporate interests” the consumer is king, not some nook of the political process.

Given that there is an election in 2019, prepare as a taxpayer to get stabbed in the pocket — yet again.