Bruce Whitfield: The problem at Sasol was not (just) its leaders, but its entire culture
- Sasol’s joint CEOs, Bongani Nqwababa and Stephen Cornell, have agreed to resign following a damning independent review of why its US project has run so far over time.
- The admission that a “culture of fear” had prevented bad news about its Lake Charles project in Louisiana from being communicated is a terrible indictment of the company and its leaders.
- But that is probably more pervasive in large organisations than companies care to admit.
- For more go to Business Insider South Africa.
Sasol is in a sorry state. But if the company thinks that getting rid of a whole bunch of senior managers (including its joint CEOs), taking massive write-offs, and cancelling bonuses for senior leaders is going to fix the problem, then it is underestimating the depth of the issues it faces.
The admission that a “culture of fear” had prevented bad news about its massive Lake Charles project in Louisiana flowing up the management layers of the organisation is a terrible indictment of the company and its leadership. But that kind of thing is probably more pervasive in large organisations than companies care to admit.
The lesson to other companies should be that bad culture is bad business – and bad for executive longevity inside dysfunctional companies.
The “give me good news!” or “give me solutions, not problems!” culture is one that stifles the flow of honest, useful communication, and will in the long term undermine financial performance, and shred corporate reputations.
“Culture eats strategy for breakfast”, is a phrase originated by management consultant Peter Drucker. You can have the best strategy and plans, but if your culture is weak, effective implementation is unlikely.
This week saw Sasol’s joint CEOs, Bongani Nqwababa and Stephen Cornell agree to resign following a damning independent review as to why its US project has run so far over time and over budget. The cost of the Lake Charles Chemicals Project (LCCP) has almost doubled to about R12.9 billion since inception. It’s been hard hit by multiple technical problem, news of which either never made it to executives, or was so sanitised that those executives were making decisions in the dark.
And they have nobody to blame but themselves.
The investigation into the failings around the Lake Charles project revealed that senior leaders did not adequately challenge one another, and that key decisions were not adequately interrogated.
As highly paid leaders in organisations, CEOs have to traverse massive complexity. Culture is probably one of the hardest issues to deal with, because there is no manual.
"To be clear, the Board has neither identified misconduct nor incompetence on the part of the joint CEOs," Sasol said in a statement.
But the investigation did find that there was a combination of inappropriate conduct or incompetence in stemming the massive outflows on the project.
To protect themselves, the report finds, managers failed to provide accurate cost and timings to the CEOs, who in turn it would appear, did not force the information from the team on the ground.
It now falls to CEO designate, Fleetwood Grobler, who is an executive vice president of chemicals at Sasol, to not only drive a financial turnaround but “embed a new culture at all levels in the company".
He is going to need a lot of help.
The top-down culture at Sasol is long established and he would have grown up in that culture himself.
Receive a daily email with all our latest news: click here
Also from Bruce Whitfield:
- What Gwede Mantashe should be reading this weekend
- Machines promise a ‘golden age’ for banking – and that is very bad news for bank employees
- The petrol price goes up, but Sasol goes down
- Bruce Whitfield: Bank Zero has delayed its launch, and South Africa’s soft economy isn’t helping Discovery Bank and Tyme either
- Bruce Whitfield: Recipe for a real crisis - just add load shedding
- South Africa is facing a middle-class emigration wave – and there isn't time to play nice with Cosatu anymore
- So now we know what Tito Mboweni has been cooking up: fast food that will get everyone talking