HomeBusiness DigestPoor corporate governance blights companies

Poor corporate governance blights companies

Kudzai Kuwaza

The two biggest obstacles to the success of organisations are poor corporate governance and top-heavy structures, a report by the Industrial Psychology (PC) Consultants has revealed.

According to the report titled The State of Zimbabwean Corporate Leadership Survey 2020, the major concern is over corporate governance practices, which threaten the viability of organisations.

“The two biggest obstacles to the success of organisations are poor corporate governance and top-heavy structures, both with dimension indices of 39%. This implies that 39% of the participants believe that poor corporate governance and top-heavy structure are the main obstacles to the success of organisations,” the report observes. “Organisations should also move away from top-heavy structures as they bring with them unnecessary overheads and can create a difficult environment in the workplace as employees receive instructions from many different superiors. Also, this can create a management connection gap were management becomes disconnected from either the job function or the customer.

“Poor corporate governance at the executive and management levels can lead to bad business decisions, which can, in turn, lower the overall value of the organisation and make it more difficult for the business to meet its financial obligations, ” the report points out.

Other major obstacles to the success of the organisations noted by the report are nepotism, corruption, incompetent leadership, lack of financial resources and shareholder support deficit.

“The results from this survey indicate that most people are not very convinced with the corporate leadership in Zimbabwe,” the report noted. However, some dimensions were found to be associated with building confidence within participants. For Chief executive officers and top leadership, showing Integrity, leading by example, exhibiting business acumen (making profitable business decisions) and driving the right culture were found to inspire people to be more confident in them. In addition to this, CEOs or leaders in organisations without incompetent leadership were found to have more people believe in them.”

The survey established that 68,3% of the participants have confidence in the leadership of the chief executive officer or managing director, and 53,1% have agreed that they have confidence in the leadership of the Board of organisation.

On human resources issues, the survey found that 9,87% believe that Boards of the organization show no evidence of competence, while 23,32% says that the board of the organisation is far below expectations, and 27,80% says that it is somewhat competent.

“From the participants’ perspective, top leadership is most competent at putting customers first but believes that top leadership should work more on adapting to and effecting change,” the report states. A total number of 20 sectors were represented in the survey.

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