By Engineer Jacob Kudzayi Mutisi
Dairibord, former Dairy Marketing Board (DMB) was once one of the largest food producers in southern Africa, was founded in 1951 and listed on the Zimbabwe Stock Exchange (ZSE) in 1997.
Dairibord is the owner of Lyons Zimbabwe, a food company manufacturing beverages, ice creams, cordials, condiments, sauces and spreads and the biscuit and baking company M.E. Charhons, and has a majority stake in Dairibord Malawi jointly owned with the Malawian Government.
In 1997, when Anthony Mandiwanza took over as CEO he gained knowledge and experience, and launched initiatives that helped to boost the bottom line.
Fast-forward, after 24 years the same executive is risk-averse and slow to adapt to change and the company’s performance is on the decline. The pattern is so common that many refer to the “seasons” of a CEO’s tenure, analogous to the seasons of the year.
Research indicates that the longer a CEO serves, the more the firm-employee dynamic improves. The facts point that an extended term strengthens customer ties only for a time, after which the relationship weakens and the company’s performance diminishes, no matter how united and committed the workforce is.
There was a study of 356 United States companies from 2000 to 2010. They measured CEOs tenure and calculated the strength of the firm-employee relationship each year (by assessing such things as retirement benefits and layoffs) and the strength of the firm-customer relationship (by assessing such things as product quality and safety). There was a measure of magnitude and volatility of stock returns. The results show that the optimal tenure length of a CEO is 4.8 years.
Mr Mandiwanza has more than 32 years at Dairibord, 24 of which you have been CEO. Laws of diminishing returns will surely be set in judging how much the company has severely shrunk. The underlying reasons for the pattern, we believe, have to do with how CEOs learn.
Previous research has shown that different learning styles prevail at different stages of the CEO life cycle. Early on, when new executives are getting up to speed, they seek information in diverse ways, turning to both external and internal company sources. This deepens their relationships with customers and employees alike.
Board members should be watchful for changes in the firm executive, management and customer relationship. They should be aware that long-tenured CEOs may be skilled at employee relations but less adept at responding to the marketplace. CEOs that serve for a longtime are great motivators but weak strategists, unifying workers around a failing course of action.
Dairibord has to start working on a succession plan to prevent, “Mugabe Syndrome.” The CEO succession planning is one of the most important responsibilities of the company’s board, and must be part of the key strategic issues as it addresses sustainable corporate governance requirements and needs.
In the case of Dairibord, a Zimbabwe’s listed company, it is the duty of the directors to work thoughtfully to anticipate the future of the company, develop potential successor candidates over the years, and to ultimately have one of them step into the top spot when the need arises.
Mr Anthony Mandiwanza, 24 years as a CEO is a very long-time and makes you the only longest serving CEO in Zimbabwe. It is time for a new CEO to take over the helm of our much loved Dairibord.
Engineer Jacob Kudzayi Mutisi