THAT a chief executive or managing director has resigned to pursue personal interests has become a template for company secretaries tasked with crafting notices in
various newspapers in Zimbabwe.
Report by Ndamu Sandu
Interestingly, those who throw in the towel amid a crisis and high-flyers, are often glorified alike. Sadly for the media, the term “fired” or “sacked” whenever executives leave companies has been relegated to the rumour mill.
As companies reposition to meet the new challenges, so are leadership positions, as part of succession planning. This year, a handful of executives have left their organisations while another high-profile executive is leaving at the end of the month.
Washington Matsaira left Standard Chartered Bank and is now CEO of Tobacco Sales Limited. Sibusisiwe Ndlovu left Afre this year after new shareholders came in. Chipo Mtasa resigned from Rainbow Tourism Group in the first quarter of 2012 to pursue personal business interests.
Last month, RioZim MD, Josphat Sachikonye, became the latest corporate executive to throw in the towel at a time the mining giant was on the brink of facing a going concern crisis.
At CBZ Holdings, Nyasha Makuvise resigned at the end of March and was replaced by John Mangudya who has been his alternate in the board. Joe Mutizwa is leaving the beverages manufacturer at the end of the month after a career spanning nearly 30 years at Delta.
He will be replaced by Pearson Gowero who has been his understudy since he was posted back as chief operating officer last year, after being seconded to the SABMiller group.
The private sector is taking the lead in leadership regeneration unlike in parastatals, where the top posts are “jobs for the boys” and the tenures run as long as the responsible minister wishes.
It is business as usual as CEOs cling onto their posts, notwithstanding that service delivery is at its worst in most state-owned enterprises. Analysts proffer different reasons for the resignation of CEOs.
Management consultant, Brett Chulu, said the pursuit of personal business interests appears to be the chief reason, judging from the career paths most of them take after tendering their resignations.
“One trend that is emerging is that some CEOs are moving into strategic positions to take advantage of the opportunities presented by indigenisation. Some of the CEOs belong to consortia that are vying for stakes in companies that are off-loading shareholding as per the indigenisation imperative,” he said.
Human resources expert, Memory Nguwi, said while CEOs in other jurisdictions, get fired, in Zimbabwe they resigned to pursue “personal interest”, which is a polite way of saying “you have failed”, adding that very few organisations in Zimbabwe have formal succession plans.
“Whoever is leading does not want to leave and this tends to chase away bright and talented individuals who may be aspiring to take the top position. When people get to the top, they create barriers to prevent an aspiring candidate from taking over,” Nguwi said.
CBZ Holdings board chairman, Luxon Zembe told analysts in March that while the group regrets the resignation of Makuvise, leadership is a relay where “you do your part, get to a certain point and pass on the baton.”
“He (Makuvise) has worked well, we are proud and in fact, regret that a very good runner (is leaving) but in relay, you are allowed to run up to a certain point and handover,” Zembe said.
Should CEOs be asked to resign? Aren’t there mechanisms in place which ensure that one resigns after serving for a specific period? Chulu told Standardbusiness that boards should insist on performance-based contracts when appointing CEOs.
This means, the board can then measure the successes or shortcomings of that particular CEO. “It should be performance expectations within a well-defined employment contract that determines whether a CEO should be retained or not, at the end of the performance period,” he said.
He said performance-related contracts should be applied even to CEOs who are also managers, but was quick to point out that such a move may face hurdles for those in unlisted companies.
“The binding corporate governance provisions, perhaps strengthened by the law, can mitigate some of the challenges of CEO-cum-shareholders, such as excessive power and undue influence on the board and other executive structures,” he said.
Zembe, who is also a renowned management consultant, said any CEO who does not groom a successor is a failure. “In business, they say there is no success for any leader without a successor. If you have no good successor, you are not a successful leader,” he said.
Nguwi attributed the non-performance of most Zimbabwean organisations to weak shareholder activism and boards staffed by members sympathetic with the CEO.
“With such an arrangement we can blame the environment, the banks and government but even if you give these individuals lots of money, they will still fail,” he said.
Firms must sack non-perfoming CEOs: Nguwi
Nguwi said businesses had to learn from soccer, where coaches are fired after a string of poor results regardless of experience and track record.
“Strategies and business models change and you can’t tell me these same individuals have the capacity to move from one generation to another and still be brilliant.
“In soccer, the average tenure of a coach is three seasons, in cases where the coach is doing a brilliant job,” Nguwi said.
Nguwi said there was a disturbing trend in Zimbabwe where a CEO could go for at least 10 years with no tangible results to show for.
As a result, their continued hold onto power has crowded out a new generation of leaders with new ideas.
“There is a new generation of MBA (Masters in Business Administration) graduates who are very innovative, who can take over and turn around the fortunes of most ailing local companies. This crop of managers must be given a chance,” Nguwi said.