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Thabo Dloti did the right thing when he resigned

Jun 11 2017 06:00
Dudu Msomi

A CEO 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.

A 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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liberty  |  thabo dloti  |  opinion  |  transformation

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