One big problem state-owned companies can’t seem to shake

·24 Oct 2015

Annual losses continue to mount at many State-owned enterprises (SOEs) while service delivery flounders; however, these difficulties are compounded by the fact that so many state agencies are run by acting CEOs.

This is according to Mosima Selekisho, director at executive search group, Talent Africa, who says that the lack of correct skills is a crisis facing many SOEs.

While companies in the private sector typically have succession plans in order – or are not shy to look for the right talents outside of the company – SOEs tend to hesitate on the process, despite hiring consultants on many other issues.

This results in the appointment of interim or acting CEOs, which often lack the specialised skills or capacity to do the job.

“Interim CEOs rarely have time to drive material change,” Selekisho said.

“An appointee with limited time for preparation and perhaps little leadership experience has a tough job turning any business around, though simply stemming some losses would be a good start,” the executive said.

According to Selekisho, the moment a CEO starts a job, the clock starts ticking, and a properly selected incoming CEO must hit the ground running.

They need at least a year to understand the business, develop a strategy and build a team – and another year (at least) is necessary to implement strategy, harvest ‘low-hanging fruit’ and create momentum. A further year (minimum) is then needed to achieve results, she said.

One reason for the lack of proper executives to lead SOEs may be the belief that executives outside the public domain are unwilling to take a state job, Selekisho said.

However, she believes this is an incorrect assumption, adding that “many highly competent corporate performers are willing to make this move”, as the remuneration gap between the private and public sectors has narrowed considerably.

“Proper succession planning should also be instituted…but for now, simply breaking the acting-CEO stalemate will be a huge step forward,” she said.