Vodacom CEO Alan Knott-Craig’s imminent retirement opens up one of the most sought after executive positions in the country. Speculation suggests that Vodafone wants to appoint a new CEO as a matter of urgency, fuelling the debate as to who will take the reigns at Vodacom.

Knott-Craig founded and led Vodacom from its launch in 1993. He has built up one of the most profitable companies in South Africa and most industry commentators agree that his vision and charisma will be difficult to duplicate.

The company is however in good hands according to Knott-Craig, and it will be business as usual when he hangs up his sword. The current CEO bases this statement on the fact that Vodacom has an excellent leadership team and well established structures to take the company forward.

The departures of Chief Financial Officer Leon Crouse and Chief Officer: Strategy Peter Matlare however weakened this team slightly and further management shake-ups will not be in the best interests of the company.

Telkom’s example
One does not have to look much further than Vodacom’s shareholder — Telkom — to see the negative effects that a change of leadership can have on a company.

When Papi Molotsane took over from Sizwe Nxasana as Telkom CEO in August 2005 the company lost three executives — Pinky Moholi, Belinda Williams and Oupa Magashula — in what seems to have been a rift in management.

A mere 18 months later Molotsane left Telkom, and the resignation of three senior employees shortly before Molotsane’s sudden departure fueled speculation that the company’s management was in crisis.

Telkom’s trading price on the JSE is ample evidence of the detrimental effect that management problems can have on a company. Trading at around R130 per share gives Telkom a market cap of R67.7 billion, significantly lower than the speculated R75 billion which its 50% shareholding in Vodacom is worth.

So how does Vodacom avoid the same pitfalls which have plagued Telkom over the last three years? The answer may be as simple as not tampering with the current successful management structure of the company.

Business as usual
Vodacom Chief Operating Officer (COO) Pieter Uys is seen by many as the logical successor to Knott-Craig. Over the last few years he has taken over the reigns of the company on many occasions and has an in depth knowledge of what needs to be done to ensure that the company flourishes.

The COO is widely seen as one of the strong visionaries and leaders in the company, giving him the edge over another strong internal candidate, Vodacom SA Managing Director Shameel Joosub, who is perceived to be more of a businessman at heart.

Like Knott-Craig, Uys has built a very strong team around him to ensure the company remains the cellular market leader in South Africa. This team not only includes executives like Joosub, but also less prominent people who fulfill key tasks in the company.

Vodacom’s team
On the technical side the expertise of Vodacom’s senior engineers like Andries Delport, Shane Hibbard, Johan Engelbrecht, Willie Ellis and Johann Pretorius are practically irreplaceable.

Media specialists Dot Field and Nicolene Visser are equally vital cogs in the wheel as their expertise with the press shines through with Vodacom’s strong media presence.

No less important are behind the scenes consultants like Americo da Silva, Jannie van Zyl, Barry Flok and Pieter Geldenhuys, who between them bring over 100 years of telecoms experience to the company.

A radical change in leadership could see Vodacom losing a key player like Pieter Uys, which in turn could trigger the departure of various key personnel who are loyal to Vodacom partly because of Knott-Craig and Uys.

Should Uys however be appointed as CEO the likelihood of a power struggle or management rift is unlikely and the company will continue to function and grow as Knott-Craig predicted.

While this argument has most likely been debated by the Vodacom board, recent speculation suggested that Transnet CEO Maria Ramos was in line for the top job at Vodacom, but that she turned down the offer. This is an indication that Vodacom may indeed be looking at an outsider to take over.

Knott-Craig’s words that he “often tell[s] the board that we need a black person at the helm of the company … I still think it’s important for our transformation that this company is not run by a white man” further hints of an appointment other than Uys.

An appointment like Ramos will be a risky move, especially for a company with a strong engineering management structure. While the company’s culture is slowly changing, Vodacom has retained a core group of engineers who set the tone and the new CEO will have to be able to hold his or her own in this environment.

The board would be well advised to err on the side of caution even though the local political atmosphere may favor a BEE candidate, or Vodafone may want their own man behind the helm.

If a candidate other than Uys is selected by the board it will be crucial for the newcomer to retain key personnel that may consider leaving due to this decision.

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This entry was posted on Thursday, May 22nd, 2008 at 9:16 am and is filed under Perspective. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.