Given the choice, I would almost always favour a decentralised management model over a centralised empire. Pick n Pay is a well-run business but it can’t replicate the owner-managed local Spar. When we lived in Norwood, Joburg, the Spar could find specialist imported products for us. Don’t even try at Pick n Pay these days, though you might have had some luck when Raymond Ackerman ran a chain of a dozen stores.
Bureaucracy seems the inevitable outcome of centralised management. The argument has got more complex, as there is often a clear case for the centralisation of back-office functions, especially in financial services, and so they should be. But the client experience needs to be up close and personal.
There is a breed that would fundamentally disagree with me, known as the professional manager. For some time the then Barlow Rand group would shuffle staff, particularly the CFOs, between the cement, motor dealerships, metal tubing and maize meal industries. It seemed to work until, as they say, it didn’t. Barlows traded on such a high discount to NAV, and its executives were so far removed from the customer, that it had to unbundle into specialist units in 1993.
And it is difficult to understand the customer without specialist industry knowledge, even in related industries such as banking and life insurance. Since Standard Bank took effective control of Liberty in 2003, it has assumed that a good banker can be good at running an insurance company. It is widely known that nobody at Liberty was invited to even submit their CVs for the CEO position when Standard’s deputy CEO, Myles Ruck, was appointed after Roy Andersen quit in 2003.
The same governance breach was committed in 2006 when Bruce Hemphill was appointed — not even deputy CEO Ian Kirk was given the chance to make his case to the board. And again when Thabo Dloti left in 2018 in highly mysterious circumstances, David Munro was appointed without any competition.
Admittedly, changing industries can work — for example, Jan van der Horst, who was brought up as a marketer at Imperial Cold Storage, was a highly successful chair of Old Mutual, but then, he left the technical work to his MD, Mike Levett, a brilliant actuary. Levett was highly effective when the business was still a mutual, even though his foray into overseas markets once Mutual was listed proved to be a disaster.
An effective CEO doesn’t need to be involved in the nitty-gritty of the operations. It was Donald Gordon’s team at Liberty, led by Alan Romanis and Dorian Wharton-Hood, who drove the product development and built up the distribution. Gordon’s passion was mergers & acquisitions, until the life insurer itself was just part of a massive investment trust. And there was his property empire, Liberty International. He was lucky not to live to witness the demise of Intu, the shopping centre arm of that group.
Sim Tshabalala is a true banker’s banker. He can tell you when the first loan in history was drawn up, in Babylonian times.
I think it is time that Absa bit the bullet and appointed its best executive, Arrie Rautenbach, as CEO — after a proper search, of course.
The bank took a couple of shining stars from the public service, Maria Ramos and Daniel Mminele, to run it, yet its brand value and market share have continued to slip. As an Absa personal client, I can assure you Rautenbach has built a high-energy retail bank, and must bring that pace into the group as a whole.
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