Time for CEOs to find their voice

Posted in: Financial Services Strategy, i-Blog on April 3, 2017

Client note by Stuart Theobald

The recall of the finance minister on Monday last week in the middle of a crucial international roadshow, and then the subsequent cabinet reshuffle announced early on Friday morning, triggered an unprecedented response from organised business. Business Leadership South Africa put out a statement describing Gordhan’s recall as “ill advised” on the same day it happened. Three days later, last Thursday, BLSA was even more strident, questioning whether the president was really putting the constitution first. Using words unprecedented for organised business it said, “The membership of BLSA urgently calls on the President to demonstrate that he acts in the national interest. His powers are not without responsibility.” And then when the cabinet reshuffle was announced on Friday, the wording was even more strident: “We strongly condemn the action. It is irrational, ill-timed and completely disregards the national interest.”

Other organisations were similarly strident. The Banking Association declared, “The actions of the President have put our country into turmoil, at a time the country is trying to come together to address the problems we face. We have no choice but to say this reshuffle is not in the best interests of the country. We are also left with little choice but to question the motives behind this action.”

The CEO intiative, which was set up to partner with Treasury and organised labour early last year to defend the credit rating, was similarly strident: “The CEO Initiative is gravely concerned and disappointed by the ill-timed and irrational dismissal of a trusted and well-respected Minister of Finance and Deputy Finance Minister. This decision, and the manner in which it was taken, is likely to cause severe damage to an economy that is in dire need of growth and jobs.” 

But just what should CEOs be saying publicly where their brands are exposed?

Speaking through organised business structures takes the attention off individual brands. This can be a “safe space” for business leaders to speak out because the words aren’t directly related to their businesses. In making political statements, the risk is always that it will affect your brand or else it could lead to conflict with politicians that would damage business done with government. We have examples of this from the past. In 2007, FirstRand prepared a major campaign to get the public to write to then-president Thabo Mbeki to do something about crime. It was cancelled at the last minute after politicians intervened with management to warn that it would damage the group’s relationship with government.

The stakes now, however, appear much higher. We still don’t know why president Zuma dismissed the finance minister and his deputy, but we do know that they were top performers, doing a valiant job on behalf of the country and economy. There is every reason to think their dismissal was motivated by illegitimate ambitions.

So far, however, few business leaders have spoken up on behalf of their companies. Standard Bank joint CEOs Sim Tshabalala and Ben Kruger published a statement praising minister Pravin Gordhan and deputy Mcebisi Jonas, saying they “deeply regret the President’s decision to relieve them of their offices. We do not dispute the absolute prerogative of the President to appoint and dismiss Ministers as he sees fit but, on the publicly available information, we do not believe this was a well-considered or constructive decision.”

More forceful comments have been made by business leaders speaking through organised business. AngloGold Ashanti chairman Sipho Pityana has been most vocal, founding the SaveSA campaign to directly lobby for Zuma to resign. On Friday at Church Square he described it as a “fight for the sovereignty of the nation.” He has already directly criticised the new finance minister, Malusi Gigaba, saying the crisis in state-owned enterprises begun under his watch.

Shell South Africa chairman Bonang Mohale, who is also deputy chairman of BLSA, has been more restrained but still criticised the decision for unsettling the markets, asking “why in God’s name would we break something that is just beginning to work” the day before the finance minister was fired. His platform, though, tends to be BLSA rather than Shell. 

The fears over the effect on company brands might well be overdone. In my discussions with institutional fund managers, they are increasingly enthusiastic about more CEO activism. Their portfolios depend on financial stability and long term economic growth, both of which are threatened by the poor political environment. Company leaders should be worried about the same thing. Most of our customers are also very worried. Appearing to take a stand, to speak out, and taking actions like allowing employees time off to join protests, could be rewarded with customer and shareholder loyalty. 

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