Ringing the changes
Three of the largest listed companies have either replaced, or will soon replace, their CEOs. Others have seen key strategic executives moving on to other opportunities in the now rapidly liberalising Information and Communication Technology (ICT) sector.
Telkom will soon appoint a new CEO – the third in just two years – while both Business Connexion and GijimaAst recently abandoned the old guard, making way for new, young and highly regarded black talent.
But Telkom has had more to worry about than just finding a new boss: it's had to cope with numerous senior level resignations, plus losing some board members.
Acting Telkom CEO Reuben September says that while the numerous resignations had necessitated a new talent management strategy aimed at retaining key staff members, the company was also proud to have been able to supply some of the talent to a reshaping industry demanding good skills.
However, September wants to assure investors that Telkom felt confident it would address the push factors preventing it from keeping key people.
Whereas a few years back there were few places for highly skilled people in the telecoms sector to move to, now there are alternatives as the market opens up and telcos broaden their horizons while traditional technology companies move more aggressively into the telco space.
If as a competitor you'd been lucky enough to attract someone of the calibre of Telkom's former chief marketing and sales executive Wally Beelders – as Vodacom did for its new Internet Service Provider (ISP) division – you'd be getting 30 years of telecoms experience.
Former Telkom chief technical officer Thami Msimango – also snaffled by Vodacom – has 23 years' experience. Former managing executive of retail marketing Steven Hayward had been with Telkom for 12 years.
From the sheer number of recent resignations from Telkom, you might be forgiven for assuming the company is in a shambles. However, put in context it's probably less of a crisis than something of an issue that can be addressed.
Resignations by senior operational officers have included Beelders, Msimango and Hayward but also that of chief corporate affairs officer Mandla Ngcobo and former CEO Papi Molotsane before him.
The resignations happened for a host of reasons.
It is widely acknowledged that it would be better to run a telco with industry experience. So Molotsane's departure could prove to have been for the best. Provided, of course, Telkom appoints the right candidate to succeed him.
Trevor Woodburn, CEO of leadership consultants Woodburn Mann and a qualified electronics and telecoms engineer, says the higher you climb the leadership rungs, the less important it is to be a technical specialist. Having good leadership qualities and business acumen are more important at the most senior levels.
Woodburn's company, which hasn't been retained for this appointment but has placed other senior executives in the industry, conducted a study of leadership in global telecoms companies and found that the majority of CEOs were aged between 40 and 50 years. The most prevalent qualification was an MBA, followed by a Bachelors or higher-level degree in electrical, electronic or telecoms engineering. But Woodburn says that a sensitivity to the rapidly changing telecoms environment – and a vision of where the sector was headed – were more important than having a degree.
Beelders and Msimango joined Telkom's 50% mobile subsidiary Vodacom in its new ISP division. The division pulls together Vodacom's efforts in the ISP, VPN (virtual private network) WiMax space and pits it against the likes of its parent and MTN Network Solutions in attracting corporate business.
CEO Alan Knott-Craig says Vodacom wanted to buy an existing ISP, hopefully in the next two to three months, to build its corporate capacity quickly.
Meanwhile, Ngcobo has been redeployed to Telkom Media (a 66% subsidiary), so his experience won't be lost to the group.
Telkom also put its people into its two recent African acquisitions: Multi-Links in Nigeria and multi-country ISP, Africa Online.
September says it was comfortable with being able to redeploy talent within the group.
In other cases it was able to import talent. Telkom Media's chief technical officer Setumo Mohapi is a case in point. Formerly with Internet Solutions and Transtel, Mohapi was one of Neotel's key employees.
You might think defections would be the other way around – from Telkom to Neotel. However, September says although there had been approaches made to Telkom people by Neotel, it was mostly down the layers and not to the extent that it had left huge gaps. But he did acknowledge that poaching by Neotel was a factor in succession planning.
Highly respected non-executive director Lazarus Zim also resigned from Telkom relatively recently – but for good reasons. He cited commitments to his company, Afripalm, after it bought a 31% stake in Tokyo Sexwale's Mvela Resources late last year.
However, the appointment of a heavyweight independent like Mark Lamberti must go some way towards restoring confidence in a Telkom board dominated by Government representatives.
Telkom's human resources department was assessing its top and emerging talent with regard to how best to attract, retain and motivate them, September says.
An engineer with 30 years' experience at Telkom, September is himself just one of those jewels the company will be doing its best to keep. Unlike his predecessor in the hot seat (albeit September's currently just in an acting capacity) he understands the business and the sector extremely well. And by his confident, jovial presentation of Telkom's results, it seems he'd slot quite easily into the top spot.
However, Telkom gives no clues as to how the process of appointing a new CEO is progressing and deferred any questions to its chair, Shirley Lue Arnold, who declined to give an interview.
Presumably – given the uncertainty – Telkom will act quickly to finalise the appointment.
Woodburn says from a global telecoms sector study it had conducted, 63% of CEOs were appointed from outside, compared to 37% from within. That differs from the figures often quoted for top executive search positions, which indicate that 70% to 80% of top executive placements come from within.
Telkom reckons 60% of its senior management appointments are made from within.
It could be traumatic for any company to get a new CEO, Woodburn says, because the person could bring a different leadership style to bear. That would depend to some extent on the person's relationship with the chairman and the board and how well aligned their strategies were, making it difficult to generalise. "Companies need to choose their leaders very carefully."
Having had three different CEOs in two years – as has been the case at Telkom – whoever is appointed to replace Molotsane will affect the staff morale and result in a lack of continuity and fragmentation of leadership, Woodburn says.
Telkom isn't the only company in the telecoms sector that will get a new CEO. Knott-Craig will himself move on. He suffered a heart attack less than a year ago and although he's recovered, he was noticeably more weary than normal at Vodacom's recent results presentation and conceded that he was almost ready to step aside.
Knott-Craig says he wasn't tired of running the company – it delivered yet another sterling performance in the latest financial year – but of the associated stress involved in managing regulatory issues and other peripheral challenges.
But Knott-Craig says that Vodacom has a robust succession plan in place at all levels. Assuming the new CEO would be appointed internally, highly capable senior executives that could possibly step into Knott-Craig's shoes include current COO Pieter Uys or Vodacom Ltd (SA) MD Shameel Joosub.
Knott-Craig says in Vodacom's latest annual report that, contrary to what other companies experienced, Vodacom didn't have a lack of skills in SA. "Excellent skills are available to those companies prepared to compensate brilliance.
"I'm very excited about the new wave of young talent entering the market. They are more flexible, integrate easier and have tremendous energy to take SA into its new phase of growth."
Globally, the lines between fixed line telcos, mobile operators and IT service providers have become blurred. It's also happening in SA, as evidenced by Telkom's attempt to buy Business Connexion and, indeed, Vodacom's latest announcements that it plans to self provide some backbone infrastructure.
This evolution means every-one in the sector will have to continue spending money on training and retraining people to ensure the appropriate mix of skills.
September says Telkom's skills mix was changing as it moved towards a greater reliance on data revenues as a source of growth and as it rolled out its next generation network – also requiring a different skills mix. It had training programmes in place in order to meet such demands, September says.
Meanwhile, in the broader ICT industry two of SA's biggest listed companies have recently appointed new CEOs: Benjamin Mophatlane to Business Connexion and Jonas Bogoshi to GijimaAst. In both cases the appointments mark the end of an era, as both Peter Watt (Business Connexion) and John Miller (GijimaAst) had many years of experience and each is nearing retirement.
Sector rival Bytes is one major JSE-listed company that retains its long-serving CEO – Dave Redshaw – who has said many times that he's still having fun and was years away from retirement.
Mophatlane's appointment got a mixed reception, partly because at 34 he's still very young but also because the market's still waiting to see whether he'll head Business Connexion (the listed company) or Business Connexion (the Telkom subsidiary). His task will be more challenging if the transaction fails.
Incidentally, September says Telkom had a second and third option that it would put into play relatively quickly if the Business Connexion deal didn't pan out.
He declined to provide any clues as to which companies could be targeted. The Competition Tribunal's decision is imminent.
Business Connexion has suffered because of the uncertainty created by the protracted merger. It would be Mophatlane's task to build the business back up, instilling confidence in both staff and clients.
That Business Connexion has lost some key talent is evidenced by the departure of former strategy and telecommunications executive Willem van Rensburg, who was recently appointed as the new CEO of Storm Telecom, a fast growing alternative telco operator.
Storm bills Van Rensburg as someone who'd help take the company from "upstart to major contender in the SA telecoms landscape".
Van Rensburg says he'd been looking for a company where he could make a difference and not be consumed by the corporate environment. He also wanted to be somewhere that had good momentum for growth and have a share in that. "The telecoms sector is busy exploding."
Bogoshi joins GijimaAst from Sita, the State IT Agency. The 41-year-old was precluded from discussing his new role before leaving Sita but Miller called him an "accomplished executive" who had garnered the unanimous support of the board in the appointment process.
Another loss to Sita that should be the industry's gain is that of former CEO Mavuso Msimang, the new director-general at the Home Affairs Department. Msimang's department is SA's biggest spender on technology. It's hoped that he will help expedite IT spending decisions.
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