Why would anyone want to be the CEO of Eskom? This is the question that Johan Redelinghuys poses in this interview about succession planning at Eskom, and it’s quite tricky to think of a good answer. After all, why would anyone want to be CEO of Eskom? The entire country is being paralysed by repeated rolling blackouts, we’re several years away from any meaningful new supply coming online, a heavy rainfall seems capable of knocking out Eskom’s fuel supply – it’s a giant mess, and it does seem crazy to think that any self-respecting, competent person would want to take on the job. Of course, that leaves South Africa in the unfortunate position of having to hope that an acting CEO in the form of Colin Matjila will get it done, despite some rather unsavory rumours of bad behaviour. Not a great position to be in. – FD
ALEC HOGG: Poor succession planning of a board is not the only reason for disappointingly frequent appointments of Chief Executives in an acting capacity. Acting CEO’s inevitably end up getting the job – sometimes by default. We have Johan Redelinghuys with us in the studio. He is an Executive Search Consultant who is speaking his mind, and mostly speaking his mind today about Eskom. The last time you were here, you were having a full go at Sasol. I’m sure they’ve cancelled all their contracts.
JOHAN REDELINGHUYS: Exactly.
ALEC HOGG: Today it’s Eskom. Is anybody going to be left after this, Johan?
JOHAN REDELINGHUYS: I wonder about that. I wonder. Alec, it is a very serious issue, this succession planning. When we do evaluation of the board performance, we often find that succession planning – important as it is – is somewhat neglected. They don’t get it right. People find it difficult to talk about succession in front of somebody who’s doing the job right now. It’s almost as though you’re wishing the person away, but it has to be done. Eskom is a good example of ‘it has just not been done’.
ALEC HOGG: Brian Dames resigned ages ago.
JOHAN REDELINGHUYS: He did.
ALEC HOGG: Now, we have an acting CEO. Who knows when the next CEO will come?
JOHAN REDELINGHUYS: Do you remember that when Brian Dames resigned in December the Chairman said ‘the process to recruit his successor is in hand and it will be done timeously’. Well, it hasn’t happened, and now you have the acting person there.
ALEC HOGG: How long should it take?
JOHAN REDELINGHUYS: Well ideally, it should be one/two, or three months maybe, but very often, these things – especially at very big jobs such as Eskom – can take six months or a year. It’s not what one would want, but that happens because an offer is made to somebody and maybe the person falls away or there’s a counteroffer etcetera. The situation in Eskom is a disappointment, I think.
GUGULETHU MFUPHI: Is there a suitable candidate out there? I recall once there were rumours that Trevor Manuel was probably the best guy for the job.
JOHAN REDELINGHUYS: Well, that would be very good. I doubt if Trevor Manuel would accept something so poisoned, as a job. I think Trevor Manuel has some very interesting international options open to him now. It has been rumoured that he’s going to something like the World Bank or something like that, in Washington. Forget about whether he’s going there or not. The fact is that if Trevor Manuel did accept the job, it would still be a government appointment. The point we’re making and the piece that I’ve been commenting on, is ‘wouldn’t it be better for Eskom to acknowledge their difficulty in finding the right people to lead the business and for it to work as it ought to, and to give it up to the private sector to go for listing’. It would raise a pile of cash, which could be employed very profitably in future power generations.
ALEC HOGG: We’d probably get cheaper power. It’s an interesting point. We were talking about Warren Buffett a little bit earlier. They run a huge company called Mid-American, and Mid-American has not increases its tariffs for ten years. They don’t have to because as the demand goes up, they can make their money that way.
JOHAN REDELINGHUYS: Exactly.
ALEC HOGG: Marius Heyns from Basil Reid was here a little while ago and he was saying… He’s only 54 and he’s retired, or left the company. He was saying that they struggled to get a replacement. In fact, they had to go to an ex-employee who had already retired, and pull him back in. He said the reason for that was that the construction industry is under scrutiny and it doesn’t have a great reputation. Could this be a similar thing at Eskom?
JOHAN REDELINGHUYS: It’s a very similar thing, in that they are caught with inadequate succession planning. With an adequate plan, the counter of this is… This is what Brian Joffe did in Adcock Ingram. The moment Jonathan Louw left, he announced somebody to come into the job – a credible successor. In the big organisations such as Basil Reid and Eskom of course, which is much bigger, it is difficult because there are no outstanding leaders out there waiting for the thing. They’re just not there.
ALEC HOGG: But internally…you would have thought over the years, they’re such huge organisation and they’re so well paid there, that you would be growing new CEO’s all the time.
JOHAN REDELINGHUYS: Did you ask Mr Heyns about that? Why did he not provide an intern?
ALEC HOGG: Mr Heyns maintains (poetic) that the problem has to do with reputation. The problem is that perhaps internally and externally, there’s no one who wants to take that poisoned chalice, which is much smaller than the poisoned chalice at Eskom. Trevor Manuel, as Gugu spoke and you said earlier, seems to be everybody’s favourite in the same way Cyril Ramaphosa seems to be our favourite to take over as President, but will he get the chance?
JOHAN REDELINGHUYS: But why would he do it? Why would he take it?
ALEC HOGG: For National Service, somebody needs to run the place.
GUGULETHU MFUPHI: That raises the question: who would want to?
JOHAN REDELINGHUYS: Who would want to?
GUGULETHU MFUPHI: Would you want a job at Eskom?
JOHAN REDELINGHUYS: Which able person would want to? Let’s go back to Eskom for a minute. Eskom’s job is almost undoable – almost undoable, because in its present shape it is a complex monolith of an organisation, which ought to have been broken up a long time ago. I advocate a listing for the generation part of the business. It has the transmission and the distribution as well. Eskom could raise a fortune. It could raise a lot of money if it went for a listing. Why is the government still holding on to it – why?
ALEC HOGG: Well, we have a ‘command and control’ approach towards things, not necessarily an efficiency approach.
JOHAN REDELINGHUYS: Well sure, but we’ve all suffered in the last day or two, hearing about Nigeria now beating us in terms of size and vitality of the economy. However, Nigeria got this thing together long ago. They have ten new power stations, which owned and operated independently. It’s not the government. It’s not anything. They’re working. Why can Nigeria do it?
ALEC HOGG: All they’ve done is simply, made it possible. By the same token, if you made it possible in South Africa, watch the energy being unleashed.
JOHAN REDELINGHUYS: Yes, exactly.
GUGULETHU MFUPHI: Colin Matjila’s appointment: are you expecting anything radical from him?
JOHAN REDELINGHUYS: Well remember, he’s appointed as an acting CEO. Have you seen what NUMSA has said and have you seen what the background is to all that? I think Eskom would have to think very carefully before allowing that man to continue in a position of leadership. R80bn sitting there now under the management and preserve of a man who is accused of wrongdoing, but he was at [Capano? 7:08]. Come on.
ALEC HOGG: It is strange, but sometimes – as you wrote in your piece today – the acting becomes permanent.
JOHAN REDELINGHUYS: Yes, and as I said it’s by default because you look, and you’re looking for some type of perfect person, and that person just isn’t there. Your suggestion of course, is that companies ought to provide from within. Sometimes, a person from within is, in the end, better – even if they’re not perfect – than going outside because there’s an element of risk to it. I’m sure that if Eskom looks carefully, they might have somebody inside who would be not as controversial as the gentleman who’s acting.
