When Alake, Dangote GMD, outlined panacea for good corporate governance
GROUP Managing Director of Dangote Industries Limited, Mr. Olakunle Alake has identified absence of sound Corporate Governance structures and proper succession planning as reasons indigenous companies hardly outlive their founders.
Delivering a paper titled “Corporate Governance and Succession Planning” at the 35th Omolayole Management Lecture series in Lagos, Alake said many great indigenous businesses collapsed partly because effective corporate governance structures and succession processes were not put in place to ensure that these businesses were sustained.
According to him “for businesses with poor corporate governance structures, the founder was often the chairman and the chief executive and made all decisions. They believe in owning all without a thought for tomorrow. He alone had the vision, energy, strategy and ran the business. When the man died, the business died.”
However, the Dangote Group helmsman pointed out that with a good board, sound Corporate Governance structures and proper succession planning, the founder can retire without looking back and the company will continue to thrive because there would be transferred vision and goals. “There would be effective Corporate Governance and shared operational sustainability. These are fundamental reasons why a business must have a proper and effective board.”
Alake recalled that in the period of the early 70s and late 90s, several Nigerians held sway at the top of many blue chips and they adopted sound corporate governance practices and implemented credible succession plans, which was why many of them are still existing till date.
Drawing inference, Alake cited Dr. Omolayole and Mr. Felix Ohiwere among others who oversaw board with sound corporate governance saying “Dr. Michael Olawole Omolayole joined Lever Brothers Nigeria Limited (now Unilever Nig. Plc) as a Training Manager. Dr. Omolayole proved his outstanding qualities and within seven years, he rose to the post of a Personnel Director in Unilever. He became Vice Chairman of the Company in 1971, a post he held until 1975 when he was appointed the first Nigerian Chairman and Managing Director.
“As Chairman/Managing Director of Unilever plc, he initiated a succession system that groomed and trained Nigerians for top positions. He was a stickler for sound and strong Corporate Governance, which to him is of more importance than immediate gratification. Today, he is rewarded for his tenacity with the longest annual running lecture series in management being held in his honour.
“Mr. Felix Ohiwerei stands out as a promoter of Corporate Governance. He was appointed to the Board of Nigerian Breweries Plc in 1977 as Marketing Director. Mr. Ohiwerei was appointed Deputy Chairman/Managing Director of Nigerian Breweries Plc in 1987, became Chairman/Managing Director in June 1989 and Chairman/Chief Executive Officer of the company in 1997. He retired from the service of Nigerian Breweries in June 1999, was appointed Non-Executive Chairman of the company in July 1999 before retiring from the Board in December 2007.”
Giving an instance of Dangote group as a multinational with corporate governance and succession plan in place, the Group Managing Director said a lot of people assumed and wrongly so that the Dangote Group business is a family business and, therefore, operates completely as such.
Contrary to such view, Alake explained that Dangote group is a well- structured business with a lot of professionals responsible and accountable for key aspects of the business and who have no family relationship with the founder.
“This is pertinent given that there are several family businesses which have failed to go beyond the second generation. To build an organization for the future and one which outlives it owner, you must have the right structure and system in place and resource your organization with people, with the right skills, capabilities and experience and not based on nepotism.
“As an ambitious business, good corporate governance system as well as succession planning has remained at the heart of our strategy in our journey to deliver our long-term and business transformation plans,” he said
To underscore, the premium placed on corporate governance and succession plan, he disclosed that the company embarked on a Business Continuity Management (BCM) Certification audit with British Standards Institute (BSI) to promote corporate governance and ensure seamless transition and continuous operations in the case of disruptions.
“Business Continuity Management (BCM) is a holistic process that identifies threats to an organisation and the impact to business operations that those threats, if realised, might cause. It provides a framework for building resilience with the capability for an effective response that safeguards the interests of key stakeholders, reputation, brand and value-creating activities.”
“A major plank of the BCM is succession planning where reporting lines were defined and successors to Group Heads identified and appropriate technical leadership and technical interventions are made to ensure the readiness of potential replacements in the system.”
Earlier, both Dr. Michael Omolayole, in whose honour the lecture was instituted and Sir. Remi Omotosho, Chairman of Standard Chartered Bank in Nigeria adduced reason why multinationals of the 70s survived even with Nigerians at the helms of affairs.
They also spoke on the choice of Alake as the lecturer on the occasion because he is shouldering the responsibility of directing one the largest pan-Africa conglomerates with diverse interest in many sectors.