Chronicle Editor
Davies Ndumiso Sibanda, Labour Matters
FROM time to time, organisations through their boards of directors for various reasons would like to remove everybody in senior management resulting in loss of jobs, expensive litigation and huge financial settlements.
There are many reasons why the board of directors would like to remove senior managers or some senior managers.
One such reason is that the organisation will be taking a new strategic direction and there will be a mismatch between the qualifications, experiences, attitudes and knowledge of the crop of current managers and the requirements of the new roadmap.
There are instances when shareholders or the board notice some anomalies in the organisation and they put the blame on the executive team.
Thus, the decision is made to get rid of them. There are also occasions when a new board comes in particularly in parastatals and quasi- government organisations and decides to get rid of all previous board members. This is because appointment to the board will be through patronage, loyalty and other relationships as opposed to performance.
There are many other reasons why senior managers will be chopped off. However, this article looks at the fact that the removal of senior managers in a majority of cases should be a well thought out exercise to avoid damaging the organisation’s image, expensive prolonged litigation that could paralyse the organisation and huge out of court settlements and not to mention the complete collapse of the business.
Organisations faced with a need to terminate contracts of executives must first of all do a cost benefit analysis of getting rid of each executive and have a solid plan of dealing with the business turbulence that may occur during the period of removal and replacement of executives.
The method of exiting senior management must be legally appropriate. Many organisations in haste, unprocedurally terminate executives be it in the private sector, parastatals or government without the board fully understanding the implications of the journey it is embarking on. It is only when the executives put up a fight that the board wakes up.
On many occasions, board members will approach lawyers to find out if it is possible to terminate senior managers through the disciplinary process, and with lawyers help each other to put fishing charges that cannot stand the legal challenge but in desperation they dismiss executives contrary to evidence on the ground only to lose cases and pay huge amounts of money.
Terminating senior executives has a number of hidden costs such as hanging the organissation’s dirty linen in public, executives using hidden skeletons as part of their defence, smearing the board and shareholders with mud they cannot wash themselves off, damaging allegations against certain individuals in leadership and ultimately ruining the image of the organisation.
As a result of the above, the organisation should make an informed decision if it takes the litigation route and put in place damage control mechanisms in the event fell-outs start.
Incoming boards have to first fully understand the operations of the organisation, the history of the organisation, obtaining culture of the organisation, problems the organisation is facing, success stories of the organisation, ongoing projects, roles and abilities of individual key managers before tempering with the executive team.
When embarking on the litigation route, boards must understand that it is never smooth sailing.
They might take a direction that could keep the board in a litigation journey for a long time at a huge cost while the organisation bleeds. Thus, many organisations when dealing with executive managers will opt for golden handshakes or out of court settlements which will be covered in the next article.
In conclusion, “cleaning the top” must be done with all the information available in a smart way in the interest of the business and with minimal business turbulence.
Online Reporter