There are many boards that contain directors who are highly numerate, yet have little or no knowledge of marketing or the technological world we live in.
I was talking recently to a friend who has a strong marketing background and is a director of various JSE-listed companies. He told me how, in one consumer-goods company, the board pack of more than 100 pages contained not a single reference to "customers" or "brands". It’s a gaping hole, considering the spate of corporate "situations" in recent months — such as Eskom, Steinhoff and Capitec.
Invariably, the CEO is left to respond, with the board nowhere to be seen. In the case of Steinhoff, it took weeks before the directors — some of whose stellar reputations are now shredded — emerged.
So what about Tiger Brands? Obviously, it’s an evolving situation and listeriosis is a complex subject.
But the fact appears to be that Enterprise Foods, a division of Tiger Brands that makes 6% of its revenue from ready-to-eat polony, sausages, viennas and Russians, was distributing products contaminated with listeriosis. At a low level, the bacteria are harmless, but at a high level it can be fatal.
Reports say as far back as September 2017, levels of listeriosis began rising worryingly. Over Christmas, a rising tide of deaths should have sounded warning bells. Yet Tiger remained silent. It seemed to be business as usual. When we needed action, we had denial.
According to the National Institute for Communicable Diseases, in mid-February evidence linked the Polokwane manufacturing plant to the outbreak. At this point Tiger should have closed that plant. It didn’t. Instead, government had to close the plant on March 4.
The next day, at 3pm, Tiger called a media conference, having issued no holding statement.
CEO Lawrence MacDougall, who has been at Tiger less than two years, was understandably uncomfortable. But he was no doubt briefed to be extremely careful about what he said, especially facing a hostile media.
It’s now nearly a month since the plant closed, but there’s been scant communication. There are days of total silence, no hint of an apology, and a lack of empathy for those who have suffered. Now there is talk of lawsuits and damages of up to R800m — nearly a fifth of Tiger’s pretax profit last year of R4.2bn.
It’s worth remembering that today, especially for consumer-goods companies, the value of their brands makes up a significant portion of their market value. So where was the crisis management of the situation, the risk management of these valuable assets?
Tiger’s board has undergone much change recently, with many high-profile departures. It looks balanced from a racial and gender perspective, but does it bring the relevant experience?
Endangered Tiger?
The big question is, can Tiger survive this? Well, it has taken big hits before, and is still standing, so it should ride this out. Especially since it still owns 70 top SA brands, including household favourites.
But whether Enterprise will survive as a brand is hard to say.
Should the CEO resign as at Steinhoff? Certainly not. MacDougall should stay and clean up the mess. Recent CEO departures at MTN over its Nigerian fiasco, as well as at BP and Volkswagen, show that this process is financially and emotionally draining.
But could the disaster have been handled better? Certainly. Simply put: more empathy, more communication. Today, there is little sympathy for Tiger, but that can be changed over time.
As Warren Buffett put it: "If you lose dollars for the firm by bad decisions, I will be understanding. If you lose reputation for the firm, I will be ruthless." Now where is that Awol board of directors?
• Sampson is director of Brand Finance Africa