Johannesburg - Senior management positions at state-owned enterprises are fast developing a reputation as a poisoned chalice. In just 10 days, two senior executives have resigned at both the beleaguered Eskom and South African Airways, with an economist saying both state entities are now a “right royal mess”.
In May Eskom chief executive officer Phakamani Hadebe tendered his resignation to the embattled power utility, while on Monday SAA chief executive officer Vuyani Jarana followed suit by tendering his resignation at the troubled national carrier.
George Glynos, economist and managing director at Econometrix Treasury Management (ETM) said that a lot of the failures could be linked to political interference and developmental agendas pursued by government.
“If you’re going to be a CEO leading a company then you want to be given the freedom with which to express your strategies and views and if that is going to be hindered due to political interference and developmental agendas then you’re probably going to have a pretty tough time in achieving your objectives,” Glynos said.
He said that the notion of running SOEs efficiently while pursuing a developmental agenda was not compatible because there of the mix of objectives which makes it difficult to manage.
“I think that it impacts suboptimally on the kind of strategy that you can deploy in such environments. All in all, you’ll end up getting a half baked strategy and a half baked solution with which you sort of meet your objectives, but never quite properly,” Glynos said.
He said that with corruption, maladministration and other nefarious activities added to that it made for a “right royal mess” which encapsulates what has happened at state owned enterprises in South Africa over the past decade.
“We didn’t get here by accident, we also didn’t get because we were unlucky. This was a case of mistakes being made repeatedly, disregard for basic principles of business and a lack of appreciation for the longer term consequences of their actions.
“The result is that we now have a crisis on our hands and I think the crisis necessitates people to now be given the freedom to express their strategies properly, but as we’ve quite clearly seen I don’t think that’s possible either at Eskom or at SAA.
He said that the net result of that is that no self respecting CEO would want to work under those conditions because their names, reputations and their careers ride on their ability to successfully implement a turnaround strategy.
“When they are not allowed to do it to the degree that they want many of them will not want that associated with their names because they are capable of much more but they’re just not allowed to do what they want to do,” Glynos said.