Paul Harris: Accepting mediocre leadership sends all the wrong signals

Speaking at the opening of the executive training programme created by Bain and Company, Paul Harris highlighted the importance of solid leadership as mediocrity casts a wide shadow that affects the batch of emerging leaders. Harris is one of the original founders of Rand Merchant Bank along with Laurie Dippenaar and GT Ferreira. This is an edited version of Harris’s remarks.

By Paul Harris

left to right - GT Ferreira, Paul Harris, Laurie Dippenaar
Founders of RMB – left to right – GT Ferreira, Paul Harris, Laurie Dippenaar

As an entrepreneur and business leader, I believe there is nothing more important for our future success than developing high-quality African leadership. Good leadership can meet most of the challenges we face, both as a country and as a continent. As such, the development of the country’s young business talent, through initiatives like the Bain Academy, is critical.

In the late ’80s and early ’90s, Rand Merchant Bank (RMB) was growing at breakneck speed. These were the early days of the emerging sophistication of the South African financial services industry and, without being too immodest, we were at the forefront of many of these markets.

While this was happening, we were continually short of quality staff; our recruiting and training processes were haphazard. Generally we ended up with good people, mostly because we had a competitive and empowering culture that enabled people to develop, but we were not fishing in the best pool of talent.

To meet our recruitment challenges I came up with the idea of creating a graduate trainee programme. The “Class of” programme aimed to create excess capacity and a management pipeline. With no specific job for two years, these talented youngsters rotated through the company learning the business.

Our standards were high. A non-negotiable was that prospective recruits had to fit into the culture. We wanted people with the highest professional qualifications but not necessarily in the financial field. They had to have been top students but we also wanted the mavericks. As co-founders of RMB, GT Ferreira, Laurie Dippenaar and I joked that our standards were so high that we would not have cracked an interview ourselves.

Inundated with applications from CAs, MBAs, engineers, lawyers, physicists, mathematicians and even a musician and a medical doctor, the top echelon of management held exhaustive interviews. I personally sat in on the last two interviews for each candidate. After all, what could be more important than the future leadership of the company?

The programme has proven a great success, with graduates holding senior positions across the organisation and in our clients who share a philosophy on how to do business. So what were the secrets of the programme’s success?

Firstly, we recognised that there are talented people from all walks of life in South Africa who, given the opportunity and empowering environment, could develop into leaders. We had to find them and then create an environment that was aspirational and attracted the best talent.

Secondly, in selecting the candidates we went for the best. We insisted on people who had demonstrated that they had applied themselves and worked hard to excel academically and in any other challenge they had tackled.

Thirdly, we set out to create an environment where they could take the initiative to learn themselves. We sensitised the whole organisation about creating this environment with all levels of the organisation encouraged to be accessible to the Class ofs.

Lastly, the program was “owned” by top management. I personally spent about 20% of my time with Class ofs. In my opinion, the importance of leaders mentoring emerging talent cannot be over-emphasised.

My journey in business has been an unusual one. Together with my co-founders, we started a small company, four people, in 1978. We were fortunate to be in a market that was developing and in a sense, we were pioneers.  Some people say that those days are over and you cannot do it today, but I disagree! I have never seen an environment with more opportunity to create substantial companies. One only needs to take a look at what has happened in telcos, asset management, property and the internet. In my opinion, the ingredients required for success remain the same:

Do things properly

From the very first day, we managed our company as if it were a listed company. Even though we owned the company, we saw ourselves as employees who respected our employer. We were obsessive about corporate governance and our reputation.

Be an absolute expert in your niche

To be the best you have to know your business and your industry better than anyone else. This requires hard work, an enquiring mind and curiosity about your business.

Create a culture in the organisation that is empowering and attracts the best talent

Early on we realised that we could not do everything ourselves and therefore had to attract like-minded people. Looking back at the secrets of our success, I would put our obsession with our corporate culture at the very top. We managed it as an asset of the company. We spent hours discussing and articulating it. We didn’t force it down people’s throats but sought to persuade and invite people to contribute to its evolvement. People embraced it with enthusiasm and became disciples.

One catch phrase captures the essence of our culture: “You must conduct yourself as if you were working for your own company.” Given this philosophy, how then do we define the role of leadership?

I believe the role of a leader is not to make good decisions but rather to facilitate good decision-making. Our managers find this liberating because they realise that they are not expected to come up with all the smart ideas: a leader’s job is to harness the collective wisdom of their team. When they do this the tremendous diversity of people in our organisation becomes a huge asset. For example, there is no more potent combination than grey hair and the exuberance of youth.

Autocratic managers do not survive in our culture. We don’t care about titles. I always say that I judge people not on the number of people that they control and have reporting to them, but rather on the number of people they liberate. To be a successful leader in our group you cannot take yourself too seriously or have a big ego.

Key to our philosophy is that the only criteria in decisions is the business case. It prevails over emotion and corporate politics. We have no tolerance for management that needs hierarchy and titles to get their way. Only rational reasoning counts.

However, I feel I must note that leadership, mentoring and creating the right culture become very difficult in organisations experiencing continuing disruption and poor management.

Having committed myself to leadership development over the course of my career, my mind boggles when I see how senior people in some parastatals and some municipalities are employed. People who are ill equipped to fill the positions they hold, the results are predictable. The number of CEOs on suspension, fighting for reinstatement or in an acting capacity would be laughable if it were not so tragic. But the real tragedy is the impact it has on our emerging young leaders.

An acting or suspended CEO or one who is fighting for reinstatement is hardly the right person to mentor young talent. Mediocrity casts a shadow and too many emerging leaders find themselves in this shadow or worse. We must find other ways to provide rewards for political affiliation rather than saddle the country with dysfunctional institutions where our young talent withers on the vine. At the same time, corporates must continue their efforts to contribute to the development of the future business leaders this country needs.

I hope that these reflections about leadership and culture illustrate what it is possible to achieve. These are lessons from one organisation’s success that I believe can be applied anywhere. I therefore remain optimistic about the potential for organisations, even those currently struggling, to transform themselves with good leadership and the right culture.