Succession planningIJM Corp Bhd deserves credit for having a clear succession plan in place for its top management.
Best of all, the management is being transparent about it, with managing director Datuk Krishnan Tan even announcing to the press last week that he would likely step down at end-2010 to make way for his deputy Teh Kean Ming.
Other companies that claim to have in place a succession plan should also follow Tan’s example and announce the next in line. Many, especially the older companies, are hesistant for reasons best known to themselves.
Save for family-controlled companies such as the Genting group or IOI where the next generation is groomed to take over, succession planning is indeed rare in Corporate Malaysia, especially among government-linked corporations (GLCs).
In GLCs, top management is often appointed from outside, sometimes from other industries, rather than groomed internally.
This is not to say that there is no merit in sourcing CEOs from outside the organisation. Due to their different background or exposure, they may bring different ideas or a work culture that could benefit the companies.
But in most cases, companies generally resort to “importing” CEOs either because their present management has failed to perform or because the corporate culture, such as an authoritarian management style, is not conducive for grooming a suitable candidate from within the organisation.
Clearly, a successor who is groomed from within would have a superior understanding of the company’s operations and how to take it to greater heights.
Successful corporations and organisations around the world, such as the US’ General Electric Co (whose CEO Jack Welch made way for Jeff Immelt) and Microsoft Corp (Bill Gates to Steve Ballmer) have well-thought-out succession plans that benefit their companies.
Given its importance, it is not surprising that investors have been questioning the succession of the top management at Berkshire Hathaway and Apple Computers. There are concerns about who would succeed Warren Buffet at Berkshire and Steve Jobs at Apple. The latter’s health condition, in particular, has a bearing on Apple’s share price.
Succession planning is crucial for the continuation of a company’s value, culture and strategy. In corporate Malaysia, where “good deals or lucrative projects” come first, even before the quality of management, there is really a need for a change in mindset.A test of practical thinkingRight from the start, the proposal for a pass in the English language paper to be made compulsory for the Sijil Pelajaran Malaysia examination should be freed of all political baggage.
If this is done, the importance of the issue that led Deputy Prime Minister and Education Minister Tan Sri Muhyiddin Yassin to make this suggestion last week becomes abundantly clear.
Indeed, behind the issue of language and cultural identity lies the more pressing question of Malaysia’s competitiveness as an economy. Keeping this in mind, there is little to argue against enhancing the competency of the workforce in the international language of commerce.
Once this priority is understood, the more sensitive question of the position of the national language falls into proper perspective. Then, it becomes a simple matter to provide effective institutional incentives to enhance excellence in Bahasa Malaysia.
Again, in the matter of the cultural rights of Malaysia’s multi-racial population, the best decisions will become evident once politics is kept out of the discussion. It follows then that all communities should be encouraged and assisted to preserve their language and culture in a just and equitable manner.
This is a simple and proven formula for ensuring that all ethnic groups enjoy a sense of belonging to the Malaysian identity and therefore buy into the concept of a united nation of diverse cultures.
If we can just have faith in ourselves as a multicultural nation, there will be many reasons to celebrate that plurality without succumbing to chauvinism or attempting to diminish others for narrow political ends.Is that so difficult to achieve for a nation that prides itself on its spirit of accommodation?Why the secrecy over MGM Mirage?Last week, while the Securities Commission (SC) and Bursa Malaysia were having the inaugural Corporate Governance Week to encourage public-listed companies to be transparent and to uphold a high level of corporate governance, rumours were swirling in the investing community that the Genting group was on an acquisition trail and that it may buy a substantial stake in either ailing MGM Mirage in Las Vegas or the latter’s operation in Macau.
The speculation started when Genting Bhd and Resorts World Bhd announced separately that they had both subscribed to the US$50 million bonds issued by MGM Mirage about three weeks back. The rumours gained momentum when news that the Genting group had bought a 3.2% stake in MGM Mirage broke last week. Genting did not file any announcement to Bursa, perhaps because the amount involved is small compared to its shareholders’ funds. However, both Genting and Resorts World saw it fit to announce to the exchange the subscription of US$50 million bond issued by MGM Mirage, although the sum involved is the same.
Genting says it does not comment on speculation and that the group is “constantly looking to broaden our portfolio of strategic investments and strengthening partnerships around the world”. Such a comment certainly does not tell much about the group’s plan going forward, especially with regard to its investments in MGM Mirage. So, it is not surprising that such an ambiguous statement will only fan speculation, instead of putting it to rest.
Interestingly, MGM Mirage, in faraway Las Vegas, admitted to news agencies last Friday that it is in talks with the Genting group to “brainstorm” the formation of global marketing relationships, strategic ventures and partnerships. The US casino group, at least, keeps its shareholders and the public informed that it is in talks with the Malaysia-based firm. It responded to enquiries from the media and it answers were certainly clearer. That is something Malaysian companies should learn to practise.
Although nothing has been firmed up, Genting could have been more forthcoming with its answers. Of course, the group may argue that it is not answerable to the press. But bear in mind, public-listed companies are all answerable to their shareholders, who source most of their information from the media.
This article apeared in The Edge Malaysia, Issue 759, June 15-21, 2009