08 June 2020

Reputational risk requires making CEOs accountable

Submitted by: Marilize Jacobs
Reputational risk requires making CEOs accountable

Several recent high-profile corporate scandals have shown the extent to which South African companies have been led astray by CEOs who are accountable to nobody but themselves. Weak board oversight and corporate governance have given autocratic leaders too much leeway to not only destroy company reputations but to jeopardise jobs and livelihoods. 

According to reputation analysis and research institute Reputation House, the problem for listed companies is that the reputation of their CEOs can have a significant impact on the reputation of the company, as a mirror image reflection of what the company stands for. If a CEO is seen to behave in a less-than-ethical manner or does not champion good governance and corporate citizenship, there are potential consequences for the entire company and all associated stakeholders. 

The answer is to ensure that leadership and decision-making is democratic and that an executive team works towards a common vision rather than being tied to the goals and ambitions of a single person.  Jeff van der Watt, CEO of customer engagement solution provider InsideData Group, says he is a firm believer in employing talent with knowledge and skills he doesn’t possess so that they can individually and collectively provide solutions for clients. “I think the key to addressing tensions between team empowerment and leadership responsibility is to have a democratic leadership style. I believe in allowing the members of our executive and senior management teams to make decisions in their respective areas of responsibility under the delegation of authority granted to them,” says van der Watt. 

“However, that doesn’t mean I would walk away from maintaining overall accountability for the group. I stand by my team and rely on them to make decisions in the best interests of all our stakeholders. These team members have expertise that neither I nor anyone else has.” 

The onset of the Covid-19 pandemic and lockdown has created a great deal of vulnerability in the country which will require good leadership and accountability. Recent reports of food parcel fraud illustrate that now, more than ever, is the time for leaders to walk the walk to avoid reputational damage. 

“Primarily, the Covid-19 epidemic and subsequent lockdown has highlighted the importance of using the appropriate means of communication to our various stakeholders.  Given the restrictions on face-to-face meetings, I have had to rely on technology to a large extent to keep communicating to fellow shareholders, employees, clients and suppliers.  Since we provide communication capabilities to the banking, insurance, telecommunications, stock broking and retail industries, we are deemed to be part of essential services too.  I am, therefore, permitted to travel between my home and our factory in Selby, where we have a dedicated team of company volunteers who are stationed there. 

“They have nobly taken on the task of running the operational aspects of our business, including the printing, packaging and delivery of essential artefacts. We also have a core of dedicated staff members who work from our factories in Cape Town and Durban as and when the need arises to print, package and deliver essential artefacts. It is important for me to be physically present at our Selby factory on a regular basis to assess motivation levels and to show that I care. Unfortunately, I am not allowed to travel to Cape Town and Durban and have to rely on regular telephone calls and other means of communication, like TEAMS and Skype meetings,” van der Watt says. 

Constant communication with all stakeholders is key to both identifying and dealing with any stakeholders concerns that arise, particularly in crisis situations such as Covid-19. In the midst of a geographical expansion to other African territories, van der Watt says the pandemic has caught everyone off guard and the onus is on him and his executive team to adapt and act in the best interests of everyone connected with the company. “We may have business goals and objectives to achieve, but nobody could have foreseen the impact the epidemic is having on our lives. We now have the duty to make a contribution wherever we can in an incredibly tough environment. While we need to continue providing products and services, we also have to look after our staff members and society at large. In this vein, I must mention my respect for President Ramaphosa, which increases daily, because this situation is unprecedented and demands a highly ethical approach from which we can all learn,” he says. 

www.insidedata.co.za