A tale of two corporate transitions
Nico Holdings Limited and Press Corporation Limited (PCL) are two of Malawi’s conglomerates listed on the Malawi Stock Exchange (MSE). PCL is also listed on the London Stock Exchange as a global depository receipt.
Nico Holdings Limited is mostly involved in financial services and information technology sectors in Malawi, Zambia, Tanzania and Uganda. The group also has some interests in Zimbabwe (general insurance) and Mozambique (mining).
PCL, on the other hand, is engaged in a wide range of sectors, including banking, telecommunications, fisheries and agriculture. PCL holds stakes in National Bank of Malawi, TNM plc, Malawi Telecommunications Limited (MTL), Limbe Leaf Tobacco Company Limited, Maldeco Fisheries, People’s Trading Centre (PTC), Press Properties Limited, Ethanol Company of Malawi and PressCane, among others.
From early 2000s, PCL has been headed by Matthews Chikaonda (PhD) as group chief executive officer (GCEO) whereas chartered insurer Felix Mlusu has been steering Nico Holdings Limited as managing director (MD).
Both men are retiring come December 31 2016.
But my attention has been drawn to the manner in which the two listed corporations have managed their leadership transition.
In its announcement late last year about Mlusu’s impending departure after 41 years of service, Nico Holdings Limited said Vizenge Kumwenda, a chartered insurer and chartered accountant, hitherto deputy MD, would take over from Mlusu. From January 1 this year, Mlusu is handing over to Kumwenda till December 31 when he takes the bow.
In contrast, PCL, despite its stature, seem to have had no time to groom a successor as it is inviting applications from suitable candidates to fill Chikaonda’s shoes from January 1 2017.
Technically, Nico Holdings Limited now has two MDs. However, the model taken sends a message of stability and continuity to stakeholders, including shareholders and business partners. That is a big plus for a business empire of its size.
However, whereas the PCL arrangement of opening the top job in the group to all and sundry is equally good, it exposes a lack of planning in a big corporation. PCL used to have a management development programme where several were drilled and groomed for such top jobs. Sadly, some of them retired or died along the way.
Elsewhere, the path taken by PCL would affect the share price, business confidence and performance in general as it smacks of lack of stability. However, in Malawi, we say let us wait and see.
Whoever takes the PCL mantle faces the daunting task of revitalising a conglomerate that in recent years has resorted to burying “sick babies” such as Press Bakeries, Malawi Pharmacies Limited, Tambala Food Products instead of developing turn-around strategies.
Going forward, PCL should have greater focus in some of its divisions or strategies such as PTC which recently closed some of its Peoples supermarkets. PTC should undertake market surveys and find out in which shop to stock what.
PCL should learn from the approach of the eagle in its corporate logo. Fish eagles exploit the situation to their advantage. In a storm, the eagle tends to be at its best to overcome.
Experiences elsewhere have shown that whereas boards of directors hired external CEOs, most of the boards also did not retain the same business executives at the end of their contracts. Here William Peres of Nike and Revlon’s Jeff Nugent come to mind.
Insiders know the organisational culture and the people, but tend to develop cold feet to implement radical changes. On the other hand, “outsiders” may bring with them new ideas, but are sometimes also limited by their lack of understanding of the particular industry, company or its culture.
Transition paths taken by Nico Holdings and PCL should provide lessons to business management students and businesses in general. Either have advantages and disadvantages. n
