COMMENT: Does better corporate governance mean better hiring?

Sean Rutter talks about the importance of corporate governance for operators
Sean Rutter is managing director of KWR.
Sean Rutter is managing director of KWR.

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Sean Rutter, managing director at KWR, explains how corporate governance excellence ensures a telecom operator a higher chance of attracting the very best talent in the industry.

Today in the region we hear frequently of the benefits to business of embracing corporate governance best practice. Increasingly, we understand the strictures of international-standard governance, such as transparency, accountability and responsibility, are not merely cosmetic in value, but are instead likely to markedly improve commercial performance and to attract and protect long term investors.

However, an aspect of corporate governance excellence that is often overlooked is the potential it unlocks for a telecoms operator to attract highly talented staff, particularly to senior roles.

In my experience as a head-hunter specialising in chief officers and other senior appointments, again and again I see highly effective and superb leaders, shying away from wonderfully remunerated positions with well-known regional operators over concerns about standards of governance.

Similarly, I am approached with considerable frequency by senior executives working for operators in the region (often with significant government ownership) with lower levels of governance, looking for a way to exit.

There are various reasons why talented people do not want to work for operators that do not practice higher levels of governance. Chief amongst them is the realisation that higher levels of governance usually translates to a meritocratic environment, strong employee engagement, accountability and strong productivity, while the opposite holds true for operators that practice lower levels of governance.

People who work in well governed organisations feel they have input into the direction of the business, and therefore feel engaged. Likewise, they feel their career prospects depend upon the quality of their output and not on who they know, to whom they are related, or on their nationality.

Generally, executives who work for operators that have ensured good corporate governance is second-nature at all levels will enjoy more responsibility, will feel corporate decision making processes are clearly defined (and, crucially, subject to accountability), and they will feel their working environment is characterised by transparency.

As a result, talented executives at well governed operators will typically stay where they are for long periods, and when they are approached by head-hunters will require a very attractive proposition to turn their heads. Usually, they will be earning a highly competitive salary, and so money alone (even tax-free) will not be a strong enough motivation to cause them to leave.These people are looking for career progression and are smart enough to spot a career dead-end when they see one.

Why would these people, usually in the prime of their working life, want to move to an operator that isn’t properly governed? I have never heard anyone say: “I want to work for a telecoms operator that doesn’t practice accountability, transparency or disclosure.”

If money is the only or main tool an operator has to lure senior staff, then in my experience that operator is most likely to attract mercenaries, eventually more interested in playing the politics of self-preservation than in effecting professional excellence, and I see examples of this throughout the region, particularly at operators where there is high concentration of ownership, sovereign or private.

Often, at these organisations senior executives will remain in position for a very long time. Typically, they are professionally unsatisfied and always eager to consider an opportunity elsewhere, but their association with an operator that practices lower levels of governance can sometimes be a blot on their CV, preventing them from being taken seriously by the type of operators for which they would most like to work.

Certainly, these executives will have to take a significant cut in pay to leave for a new job in their home countries, something they will often be very reluctant to do. The result is stasis, both personal and professional.

The corporate world is a small one – talented people know the reputations of the operators in their industry, and, even if they don’t, they are never more than two degrees of separation from someone who does. Strong corporate governance practice is a compelling proposition for potential employees, and one that causes the best candidates to sit up with serious interest when they are approached.

As the regional economies continue to modernise and embrace corporate governance best practice to attract foreign investment, I believe they will rapidly discover the quality of executive they are able to attract to their top operators will also markedly improve.

The rewards of good corporate governance are as various as the downsides are few.

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