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CEOs Acting For Too Long Isn’t a Cool Thing

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The corporate scene in Kenyan’s public and private commercial sectors is constantly dotted with acting CEOs whose fate remains unknown until the eleventh-hour surprises. Some hold the position for over a year with no affirmative decision except for intense rumours on prospective CEO candidates.

The appointing authorities sleepover indecision until they are woken up by uproar from within and without the organization. Nobody bothers to provide reasons for inaction on such an important appointment which leaves everyone guessing.

Boards without power

The Acting CEO continues to execute his or her function with short-terms plans which are frequently reviewed depending on headwinds. Employees are at a loss on whom to pledge loyalty to in case the status quo remains or a new person arrives.

Here are the issues to be addressed to resolve the Acting CEO stalemate that bogs down even established organizations.

Membership appointments to corporate boards are governed by many factors some of which are sectarian. Yet they cannot be challenged for lack of strong governance structures. Boards are expected to serve the interests of various stakeholders to whom they may not be directly accountable.

Hence, the power of boards can be clipped by the appointing authority without any room for making appeals that would threaten their duration of service. It is not surprising, therefore, that some boards take time on filling the CEO’s vacant position.

In the meantime, the board appoints an Acting CEO in a non-competitive process from among the senior managers in the organization. The appointed person may hope to be confirmed to the position depending on his or her performance in the competitive interviews.

Some Acting CEOs who do not pass the interviews face unspoken future challenges in case a fellow senior manager is elevated to the position.

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Acting CEOs delude themselves in assuming that they are the most suitable candidate for the substantive position. Those that are not confirmed are better off eating humble pie and resuming duties in their former positions. If the position no longer exists, hanging in while waiting for re-deployment is advisable compared to resigning to appease one’s ego.

Some new CEOs are known to look for flimsy reasons to sack the former acting CEO for fear of the unknown in managing the old-timers in the organization. The sacked person has a right to seek unfair dismissal remedies in the courts of law if they find reasons for dismissal unfair.

Time Limitation

When constitutional offices become vacant, there is a legal time limitation on appointments to those positions. Since such limitations do not exist for CEOs of organizations, boards can take advantage of the loophole. They take inordinately long in the CEO recruitment and selection process. 

It defeats shareholders’ expectations for a firm listed on the Nairobi Stock Exchange to continue operating with an acting CEO for over three months. Shareholders become anxious on whether their investments are being put at risk.

However, they cannot individually have a forum to table the issue unless the same board holds an Extraordinary General Meeting. There is need for the concerned regulatory authorities to introduce a time limitation for the appointment to CEO positions on listed companies.

Paper Succession Plans

Progressive organizations have elaborate succession plans at various levels of management including the CEO position. However, when the CEO’s position falls vacant the board or appointing authority seems to overlook the plans for a number of reasons. One major dilemma is whether to appoint an insider with the challenges of inbreeding or an outsider with new blood to steer the firm in a different direction.

In some cases, residents of the locality the company is domiciled may demand that one of their own takes over regardless of his or her competencies. Other interested parties could play the card of equitable national distribution of CEO positions. Boards that have interest in organization stability are expected to base their choice of CEO on objective factors such as previous track record in running a similar enterprise, among others.

Pool of Future CEOs

In the developed world, renowned business schools such Harvard and Oxford prepare graduates who later on qualify for CEO position in blue-chip companies. At the national level, the countries have a pool of potential CEOs from whom firms can draw when the need arises. Business schools in Kenyan universities should borrow a leaf and review their curriculum accordingly.

Some local companies run management trainee programs to mold future senior managers in various business operations. The senior managers stand a high chance of heading to the CEO slots either in their organizations or others. Initiatives of growing future CEOs, particularly women, should be encouraged to make our corporate sector competitive.

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SAMSON OSEROhttp://www.businesstoday.co.ke
Samson Osero is Human Resource Development Consultant and Author of 'Transition into Retirement'. My personal email is: [email protected]
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