The past couple of weeks have told a tale of two contrasting corporate leadership transitions, at Anglo American and at Absa.
Anglo announced that CEO Mark Cutifani will step down in April to be replaced by experienced insider Duncan Wanblad. No-one was in the least surprised. Cutifani signalled some time ago that he would step down after a nine-year term: he was brought in to turn the group around when Anglo’s Minas Rio iron ore project in Brazil was one of the big disasters he had to fix; he wanted to time his departure to coincide with the commissioning of its big new Quellaveco copper mine in Peru, a project that is key to taking the group into the future.
The board opted for Wanblad following a global search. He is by all accounts a popular choice internally and his appointment has been welcomed externally. It’s expected to be a smooth transition, one that ticks all the governance and succession planning boxes.
Absa could hardly be more different. There, lead independent director Sipho Pityana has taken the banking group and its regulator to court after he wasn’t appointed chair to replace Wendy Lucas-Bull, who steps down in March as required by rules that limit her term on the board to nine years. Pityana’s court challenge is the latest and most florid episode in a long-running leadership soap opera at Absa, which over just three years has seen the sudden departure of two well-regarded CEOs and the installation, for lengthy periods, of two interim CEOs.
Something is very wrong with that Absa board. Nor is it the only large listed company to have troubled transitions, to be polite. Sasol and AngloGold Ashanti come to mind, as does Old Mutual. Market players can list more, though there are also many examples of good, textbook successions — the ones that don’t make screaming headlines.
In theory, CEOs should start identifying and growing talent and helping to ensure the board has a succession plan almost as soon as they take office. In practice, it’s not so easy for leaders to volunteer to leave when they believe their time is up. Those who have occupied those seats emphasise how much confidence it takes to do what Cutifani has done, and how much maturity it takes on the part of both CEO and board to let a successful leader leave, in a way that recognises his or her contribution fully — but also provides the space for his or her successor to make their mark.
The best leaders love the companies they work for. It’s often hard to relinquish the trappings of power and fame. But for many, their identities and lives become bound up with the companies they lead. Good public company CEOs are not the type who easily retire and lounge about — they’re used to all-consuming, challenging, meaningful 24-hour-a-day jobs.
Fatigue is one reason they might decide to move on. Another is they might feel they’ve simply run out of road personally, and can’t add much more value to the company: “I decided to step down when I realised I wasn’t on the learning curve any more,” says a former CEO who led more than one JSE-listed company, leaving with smooth transitions to inside successors each time.
A third and compelling reason is the company may be embarking on the next phase of its strategic life cycle. The CEO may feel it’s time for someone else to take it forward. And he or she needs to time the transition in a way that makes it possible for the new person to shape the strategy — rather than being constrained because all the key decisions have already been made. That, too, requires maturity.
The new phase in Anglo’s life cycle was clearly part of Cutifani’s decision. It is also what’s shaped the choice of an insider this time rather than the outsider Cutifani was when he joined Anglo American from AngloGold Ashanti in 2013. The board of a company that is in a mess might well need an outsider to come in and sort it out — insiders often have too much baggage invested in the mess, as it were. But though any board should do a global search to check what’s out there and how the internal candidates measure up, a company that is stable and on the right track should be looking to an insider, especially one who has been part of getting the company on the right track operationally and strategically, as Wanblad has.
He will have the task of taking Anglo into the next phase of its growth, and he already has what Cutifani called an “aggressive agenda” to sustain the strong shareholder returns that over the next decade could see Anglo overtake its larger global mining rivals. Cutifani bows out at a perfect time, in a way, with the commodities boom having added to his turnaround efforts to ensure rich rewards for Anglo. Wanblad may not be as lucky with the commodities cycle.
But a good transition process should ensure a good start. And the contrast between messy melodrama at the likes of Absa and smooth succession at Anglo should focus boards and CEOs on the need for mature handling of a process that is arguably the most important in the life of any company — and potentially the most damaging and divisive when it’s done badly.
• Joffe is editor at large.
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