On Tuesday, the day Peter Matlare was named CEO of Tiger Brands, the company's share price dropped 4,3% to a 16-year low.
It wasn't Matlare's fault. His appointment was announced the same day as SA's largest food company said its drugs unit was being investigated for price-fixing of hospital supplies.
The news, just two months after authorities fined Tiger R98m for colluding with rivals to raise the price of bread, no doubt sounded like a bad joke to Matlare, who is due to take over on April 1.
“What timing, eh?” chuckles Eddie Funde, former SABC chairman and Matlare's boss for half of his four-year stint as CEO of the national broadcaster.
Matlare is used to tough positions, but whether he will be able to manage Tiger Brands' redemption, and restore staff morale and investor confidence, is unclear.
His relations with the board strained, Matlare cut short his tenure at the SABC to become Vodacom's chief strategy and business development officer in 2005. He now has to root out what seems to be an endemic problem at a company with about 16000 employees, more than five times the number at the SABC.
Matlare did not comment for this article. Friends, however, say Matlare, who had been manager of public policy at the Chamber of Mines before joining Primedia, was the company's chief operating officer for entertainment and information when he left for the SABC.
He has business skills. Funde credits him with turning the finances of the SABC around.
In September 2001 the broadcaster reported a R3m profit compared with a R28m deficit the year before. Profit rose to R7m in 2001-02.
“On the business side, he did very well,” Funde says. “They (Matlare and chief financial officer Robin Nicholson) made a good foundation for financial management of the corporation.”
He'll need all of his skills. Tiger last year announced plans to sell off its Adcock Ingram pharmaceutical unit, which provided just less than 10% of the company's total revenue last year. On Tuesday the chairman, a “devastated” Lex van Vught, announced an immediate investigation, extending to all middle and senior managers, for further evidence of anti-competitive behaviour.
Matlare is unlikely to have known, when he accepted the Tiger Brands position, that it would be such a turnaround job. It will no doubt be a relief that by the time he takes up his appointment in April, the probe will be over.
“By the time he comes in that will all be done and dusted,” says Rob Forsyth, a portfolio manager at Investec Asset Management in Cape Town.
What Matlare will have to do, however, is take on a stressed organisation — the share price on Friday touched a new low of R130,01, later recovering to R131,40 — and fulfil its stated ambition to be “the world's most admired branded food and healthcare company in selected markets”, according to its website.
“We'd like to know if that is still a strategic imperative and if they're going to be expanding on that role or not,” Forsyth says.
“They want to be a larger player in emerging markets and haven't made any developments in that regard in the last couple years.”
No one doubts Matlare's honesty or morals. Kirsh calls him an “extremely scrupulous person”. Funde says he is close to his family. But he has not yet headed a JSE listed company, and remains an unknown quantity in that respect.
Kirsh says it doesn't matter that his experience is in media and technology, though Tiger is a food company. “In my opinion it's a non-event.” He cites the example of Lou Gerstner, who went from food and tobacco company RJR Nabisco to save and turn around computer-maker IBM. “What's the commonality between the two? Nothing. Good leaders will do well in any industry.”
Matlare's past experiences, however, indicate gaps. Funde says he lacked the necessary political nous to steer an organisation such as the SABC effectively.
“You need a good bit of political nous. It's a state-owned entity and you need to have good relations with the shareholder. That was definitely not his strongest area.”
Funde, who says Matlare can “definitely make some improvements on the human resources or human relations side”, describes him as a CEO who at times gets involved deeper than is necessary.
“When you have a problem with management you're supposed to make them accountable … he tended to deal with the weaknesses of management by taking things on himself, which is not the best thing to do.”
This could prove a problem. Forsyth says that after Nick Dennis's resignation as CEO, Tiger Brands would benefit from someone who gives the staff more leeway to act. “(The employees) will be looking for slightly more autonomy in running large chunks of the Tiger Brands businesses.
“Nick Dennis was perceived as a fairly hands-on manager. It's more about giving people freedom to run parts of the business and holding them responsible.”
Questioned on what sort of leadership a company in crisis needs, Kirsh hesitates. “There are so many wiser people than me… In difficult times what's so important is people need hope for a better future and clarity of purpose. Leadership's not around one individual. No business is a good business if it revolves around one person. The team is very important.”
Source: Business Day
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