As Clicks boss emigrates, can SA keep its CEOs?

News that Clicks CEO Vikesh Ramsunder is leaving the country’s largest pharmacy group to join an Australian listed company has highlighted SA’s worrying brain drain.

Allen Shardelow, partner in charge at executive search and leadership advisory company Heidrick & Struggles SA, says it is increasingly difficult to find high-calibre talent.

"Ideally clients want to make a choice from a diverse pool of people with various experiences, expertise and diversity in the context of gender and race, and that pool of candidates we look for is shrinking," he says.

Shardelow has been in the headhunting business since 1996 and has seen waves of emigration that can broadly be linked to political and economic factors. Such a wave has been evident over the past three years.

Heidrick & Struggles, being global, can connect with South Africans all over the world, some of whom want to return to SA for various reasons — they might have completed an assignment, for example, or they might want to spend time with ageing parents or grandparents.

"A lot of people also see opportunity [here]. But I think there is a net loss at the moment," Shardelow says.

Whether the law of supply and demand will lead to more generous executive remuneration — a cost shareholders would have to bear — is another matter.

Shardelow does not think there is a direct link between a smaller talent pool and executive compensation. But he says in some cases, skill scarcity can drive up costs.

It could also be that the cost to shareholders will come later, if there is a dearth of capable, innovative, resourceful and experienced talent and companies have to settle for second best.

Local businesses tend to prefer appointing South Africans in leadership roles because of visa and work requirements, but Shardelow says he has seen a number of foreigners come to work in SA and fall in love with the lifestyle, then stay on. Briton Richard Brasher, for example, has no plans to leave SA despite having retired as Pick n Pay CEO. "But we have definitely noticed the candidate pools are smaller."

Executive talent is mobile, says Jean Pierre Verster, CEO of Protea Capital Management. "The skills are quite scarce and it is a global market." He also notes it’s not one-way traffic, citing Mitch Slape joining Massmart from the US, Pieter Boone from the Netherlands replacing Brasher at Pick n Pay and Joburg native Roy Bagattini returning from the US to head Woolworths. "But I think anecdotally it seems like there are more people leaving than coming in."

A recent announcement from ArcelorMittal SA that it had not been able to meet the deadline it gave itself to find a permanent replacement for outgoing CFO Desmond Maharaj is telling.

And last year Life Healthcare CEO Shrey Viranna quit and emigrated to Australia for "personal and family reasons".

Verster says Ramsunder has done a great job at Clicks and his departure is a loss for the company and SA. Still, he says, "we do have significant talent in the country and by making an internal appointment Clicks is signalling they have confidence in their talent pool".

Ramsunder has been appointed as CEO of a listed pharmaceutical wholesale and distribution business in Melbourne.

"I was not looking for a new job or planning to emigrate but I was approached with a very attractive opportunity," he tells the FM.

You could say that Ramsunder’s is the ultimate tale of upward mobility: he started with the Clicks group 28 years ago as a cashier.

"I am certainly leaving Clicks and SA with a heavy heart but am excited about the opportunities to live and work in a new country," he says.

Incoming Clicks CEO Bertina Engelbrecht isn’t well known to the analyst community or shareholders. Crucially, she has no direct experience in running a retail operation.

Says Verster: "Her portfolio included strategic stakeholder engagement, but this seems to refer to staff, regulators and unions." However, she has been given a broad range of responsibilities. "In that sense I think that’s good."

What gives Verster comfort is that Clicks has a very well-established CFO in Michael Fleming. "He’s a very experienced and excellent CFO. When a CEO with less operational experience comes into this role, you want to see the CEO partnering with a very strong CFO and I think this is happening here."

Clicks chair David Nurek says Ramsunder built a strong executive leadership team "and we are confident in their ability to maintain the current momentum in the business".

Engelbrecht, currently the group corporate affairs director, will take over as CEO from the beginning of next year.

Nurek says Engelbrecht is the first black woman to lead a listed retail group in SA and over the past 15 years has been integrally involved in the development of the group’s strategy and growth.

She joined the group in 2006 and was appointed an executive director in 2008. In 2020 her responsibilities were expanded to include strategic stakeholder engagement and she took on the role of group corporate affairs director. Before joining the group, she was general manager for Shell SA Energy and regional human resources manager for Shell Oil Products Africa. She has an LLM degree and has been admitted as an attorney.

Ramsunder will continue as a strategic adviser to the group until the end of August next year. Under his leadership, Clicks and United Pharmaceutical Distributors entrenched their market-leading position and in the three years he has been CEO Clicks’s share price has jumped 60%.

Its market capitalisation on the JSE has risen from R48bn to R75bn, making it the best-performing retailer on the SA bourse.

His stint has not been without challenges, however, the biggest of which was probably the outrage over the TRESemmé shampoo advert in September last year.

The advert — which contrasted a blonde woman’s "normal" hair with a black woman’s "frizzy and dull" hair — sparked heated protests and forced Clicks to issue an apology and take other remedial action.

As for SA’s emigration crisis, AfrAsia Bank’s 2021 Africa Wealth Report reckons that about 4,200 dollar millionaires have left SA since 2010 — equal to more than 10% of the 38,000 still in SA by June this year.

Most have gone to the UK, Australia and the US. Others have gone to Switzerland, Israel, Mauritius, New Zealand, the UAE, Canada, Portugal, Spain, Cyprus and Malta.

But Andrew Amoils of global research agency New World Wealth, which tracks the spending and behaviour of the wealthy, says SA is by no means alone in losing its wealthy residents. "All of the Brics [Brazil, Russia, India, China, SA] countries have lost large numbers of high net worth individuals to migration over the past 10 to 20 years. This is a trend that is gaining momentum and is a concern to most emerging markets."