The Leadership of the CEO in the Turnaround of South Africa’s State-owned Enterprises
Date
2023
Authors
Journal Title
Journal ISSN
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Publisher
University of the Witwatersrand, Johannesburg
Abstract
This qualitative research analyses the leadership of the CEO in the turnaround of South Africa’s State-owned enterprises (SOEs). Numerous SA SOEs have embarked on turnaround strategies without any success, thus having a negative impact on economic growth. The research was conducted within 10 of the 21 SOEs classified as Schedule 2 (major public institutions) in the Public Finance Management Act (PFMA) that have previously embarked on turnaround strategies. The study comprised 24 semi-structured interviews with CEOs, CFOs, COOs, board members, union representatives, regulators and shareholders as the main role players during a turnaround of the SOE. This research makes use of pseudonyms for the organisations and participants for anonymity purposes. Thematic analysis was used to analyse the qualitative data collected through the interviews.
This thesis is amongst the first to narrate the experiences of the Captains of the Industry within the SOEs in SA in an attempt to turn around the SOEs. This research identified the challenges that the CEOs of SOEs face in executing turnaround strategies and affirms that turnaround implementation should be free from political interference in order to be successful. Political landscape and power struggles, leadership practices and inefficient operations were found to be the overarching reasons for failure of turnarounds in the SOEs. This research is consistent with public choice, agency, and resource dependence theories. The findings of this research suggest that not any general CEO can turn around an SOE by specifying a job profile (capabilities, attributes, and values) of a CEO of turnaround. The profile will guide the SOEs’ boards, shareholders, and recruiters with the traits to consider when recruiting the CEO to turn around SOEs. The research suggests however, that the identified traits which were found to be more aligned to transformational, servant and situational leadership theories may not have any
influence towards the outcome of a turnaround strategy in an SOE in South Africa. SOEs are characterised by de facto and de jure power. Legally, the CEO should influence turnaround as a key driver of a turnaround. However, due to the political landscape of an SOE in SA, there are multiple stakeholders that are influential towards turnaround, thus reducing the level of influence to three (moderate influence) instead of five (high influence) and therefore limiting the CEO’s authority on turnaround. Non-supportive SOE culture is also a reason for the CEO’s low influence on turnaround thus concluding that a combination of the CEO leadership and
organisational characteristics influence turnaround. This empirical research therefore does not largely support upper echelons theory on the premise that CEOs of SOEs in SA are constrained in the actions they take. Future studies are recommended to test the proposed profile of a CEO of a turnaround
Description
Thesis submitted to the Faculty of Commerce, Law and Management University of the Witwatersrand in fulfillment of the requirements for the degree of
Doctor of Philosophy in Management Johannesburg, 2023
Keywords
State-owned Enterprises, South Africa, Turnaround, UCTD