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How can SOEs fix their reputations

For any organisation, there is a point at which ethics and reputation intersect. This is truer for state-owned enterprises (SOE) as they have a social delivery mandate and are required to maintain trust and good relations with its customers and stakeholders. It is a self-evident fact that any well-run SOE, with a good reputation, can deliver both social and economic value.

However, many of our SOEs are saddled with poor governance and mediocre financial performance such that the phrase “a well-run SOE” has become an oxymoron. With ongoing bailouts, corruption scandals and deep-rooted maladministration, many South Africans have run out of patience when it comes to fixing these cash-guzzling SOEs.

Amid debates on how SOEs can be fixed, one of the least spoken-about issues is rebuilding their reputation. It is unclear why, because SOEs subscribe to the King IV code on corporate governance, which enjoins boards to promote the principles of trust, good reputation and legitimacy.

Perhaps one of the reasons is that during rebuilding processes, the ministers responsible for SOEs become de facto boards and executive committees. This is done through the appointment of interim boards or administrators, such as was the case at Eskom, SAA, the Passenger Rail Agency of South Africa and the SA Post Office.

The boards were there for compliance purposes but the ministers called the shorts in terms of key decisions, including the appointment of executives and service providers. The results were disastrous, as we saw at entities such as Eskom and SAA. Eskom is showing promise at the moment largely due to less political meddling.

We now know that the consequence of political interference, even with good intentions, is a dysfunctional SOE. This is because of the unpredictable nature of politics, where priorities can change on a whim. Boards are not able to focus and implement the turnaround strategy. 

Richard Foster, a member of the King IV task team, correctly warns that “boards should recognise that the sustainability of an enterprise is based to a great extent on a solid foundation of ethics and integrity, and the value of these linked to long-term trust and reputation”.

Caught deep in this quagmire, communication professionals are tasked with leading the reputational restoration process. It is a tough balancing act having to communicate a new way forward amid the interplay between political and commercial interests.

Under these circumstances, communicators often find themselves caught between three “courts”, namely, the court of public opinion, the court of law and the political court. In the ideal world, a communicator would prefer to win in all three courts, but it seldom happens that way. What may resonate with the public may not be the correct political message and could have legal ramifications for the SOE.

Take, for example, the SA Post Office, which has been in the news for all the wrong reasons recently. Consequently, whatever it had managed to save in its reputational bank has been depleted. The brand is in tatters, soiled by reports of deteriorating service, executive infighting, ministerial interference and malfeasance. 

Ironically, in its 2020-2023 corporate plan, the embattled SOE indicated that work was under way to rejig its brand reputation to align it to its values of respect, trust, reliability, innovation and accountability. To give effect to this, the annual marketing budget was to be increased by more than 1 300% to R30-million. Truth be told, the image many people have of the organisation is not anywhere near its intended values. In simple terms, the organisation, as things stand, does not live, talk and walk its values.

To fix this, the first obvious task is to appoint a competent board, not friends and associates of the minister, and allow it to do its work. 

This is proving to be a serious problem, as there has been a high turnover of board members over the past year. A new board was appointed in October 2019. Exactly a year later, there is already a new board with an acting chairperson.

The second task is to appoint an appropriate experienced and skilled executive committee to employ an honest and transparent communication approach as part of the turnaround strategy. The work of a communicator is to communicate the new vision and decisions of the executive in a way that will align the perceptions of stakeholders with organisational values. It requires the communicator not to merely be conveyer of unrefined information but use the communication process to assist with embedding ethical conduct in the organisation by developing appropriate messages.

It should however be acknowledged that this, given all the shenanigans going on, will only serve as a temporary Band-Aid, while the main issue of governance is resolved. In the interim, the communication strategy cannot be to simply dismiss the serious allegations of corruption, political interference and maladministration levelled against the organisation as “misinformation” without providing facts to dispel the accusations.  

Under these circumstances, it is the duty of the communicator to provide those in charge with reputational counsel about the impact of their actions on the organisation. Ethical conduct impacts on organisational reputation. If left unattended, the SA Post Office is unlikely to become recognised for its values of respect, trust, reliability, innovation and accountability.

The views expressed are those of the author and do not reflect the official policy or position of the Mail & Guardian.

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Solomon Makgale
Solomon Makgale is an independent communications consultant working in sectors such as listed property, energy, FMCG, aviation and financial services

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