“Stop Checking Boxes and Ask if this is Right for Where You Need to Be”

 

After 38-years as being one of the key stocks that make up the Straits Times Industrial Index (STI), Singapore Press Holdings (SPH) was delisted four days ago. The once dominant player in the media market is now a subsidiary of Cuscaden Peak, an investment vehicle led by the property tycoon, Mr. Ong Beng Seng and two companies linked to the state investment firm – Temasek Holdings. The CEO of SPH, Mr. Ng Yat Chung has been replaced by Mr. Gerald Yong. More of the story can be found at:

https://www.straitstimes.com/singapore/singapore-press-holdings-officially-delisted-gerald-yong-to-take-over-as-ceo

 

 

SPH was a symbol of economic might (Singapore’s stock index being named after SPH’s flagship product). The flagship product, The Straits Times, was something that most of us over 40 grew up with. For me, it was especially personal. As mentioned in previous postings, my mother was an editor and many of the former journalist were part of my childhood. Seeing SPH shrivel into a non-profit and a property company was like watching someone you knew from childhood vanish.

However, this was something to be expected. In fairness to the former CEO, Mr. Ng Yat Chung, readership of newspapers and the accompanying advertising dollars had been on the decline before he became CEO and the management before his had tried to keep things afloat by investing in other businesses like property and old folk’s homes. One might be inclined to argue that Mr. Ng should be hailed as a hero for breaking up SPH in the same way that Jack Welch, former CEO General Electric (GE) was.

While it is tempting to try and make this argument, there’s a crucial difference. Mr. Welch sold units of GE and made the core company stronger. He units that he sold went to other commercial enterprises and they managed to do better once they left the GE umbrella. Shareholder value soared along with Mr. Welch’s hero status.

Mr. Ng by contrast had to hive off the core business of SPH, which was the media business into a non-profit dependent on government handouts and while shareholders did receive more per share than previous market price, the offer of S$2.35 per share offered by Cuscaden Peak was still lower what it was when Mr. Ng took over as CEO in September 2017 (S$2.72 per share):

https://finance.yahoo.com/quote/T39.SI/?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAADLfB0mzq4ZYMnDlEJWghdHZrTfkEJ4ma_VA1gpucnt7QyDki3ZYXThZLCz3BYp83mp6C7_7vZj7P-eYonee6UZ8XozwmpGjQYztFGW4c38g6I9GwyH7HXbL-BwjereA5YBQlJoM0hwAzSudm29U1fI80rR4DGmxlw4ixW-K3drY

 

Taken from Yahoo Finance

If the criteria for leadership is leaving the organisation in a better place than when you took over, then Mr. Ng failed. Let’s remember that when Mr. Ng took over SPH it was effectively two businesses and whilst he did sell the property business for a sum of money, one has to remember that he didn’t exactly sell the media business. If anything, shareholders actually paid for him to “hive off” the media business. At the Extraordinary General Meeting (EGM) held on 10 September 2021, the shareholders received a nominal sum of $1 (one) and the entity that was taking over the media business would receive assistance from SPH to the sum of $80 million in cash and $30 million in shares. So, if you discount the share portion, the disposal of SPH’s media business costs the shareholders of SPH $79,999,999, a sum which should be factored in when one calculates how much Mr. Ng made for the shareholders when he sold the property business. More can be found at:

https://www.straitstimes.com/singapore/sph-shareholders-vote-in-favour-of-hiving-off-media-business

So, even if Mr. Ng was unable to turn the media business around, one might imagine that as a CEO of a listed company, he had an obligation to ensure that the shareholders received the best possible deal from the disposal. Given that the government has championed itself as a defender of free market liberalism, one might have imagined that Mr. Ng would have looked for someone from elsewhere who could run it better and give better value to the shareholders.

This was something which he had done in his previous job as CEO of Neptune Orient Line (NOL). He couldn’t make it profitable, so he sold it to CMA, who were able to announce a profit in Q1 of 2017. In this instance, one can say that at least Mr. Ng sold the business rather than paid to give it away.

In fairness to Mr. Ng, he’s not the first general who has stumbled in running a near monopoly business. His successor as Chief of Defence Force, Mr. Desmond Kuek, famously became a champion of maximising shareholder value at the SMRT Corporation by selling the company to the shareholders.

Here’s the thing. Singapore promotes itself as a financial centre. We are supposed to be safe haven for international investors and we claim to be a meritocracy where the best and brightest get promoted regardless of race or religion. This is what we sell to the community of international investors.

Yet, the reality is that we have a strange tolerance for leaders who don’t live up their hype. If you look at the qualifications of Mr. Kuek and Mr. Ng, you would conclude that they’re highly intelligent and qualified people. However, they were clearly wrong for the organisations that they were supposed to lead. What’s worse in Mr. Ng’s case is that after a mediocre performance in one organisation, they saw fit to put him in another.

Interestingly enough, the answer came from an interview that Rick Wilson, the former Republican Strategist, to Trevor Noah. In this interview, Mr. Wilson explained why the Republicans had been more effective as a political party.

His explanation was simple, the Democrats were picking candidates who were right from an ideological perspective. However, the party that Mr. Wilson advised was picking candidates that were right for the voters in the area they were contesting in. That interview can be found at:

https://www.youtube.com/watch?v=Vdiw7IkWRJ4     

 

 

There’s a parallel here. People like Mr. Kuek and Mr. Ng are right candidates to run things based on a check list designed by a central committee. Both are highly educated. Both worked as civil servants. Both owe their success to the system.

However, nobody asked if they were the right people to run a subway or a shipping company or newspapers. Sure, there’s an Oxbridge Degree and an MBA somewhere there. However, was there anything to suggests that they were the right people for the organisations they were tasked to lead.

This is not to say that being military men should be used against them. Military experience is supposed to teach leadership and discipline, which if applied can lead to success in the commercial field. Bob McDonald, former CEO of Proctor & Gamble for example, was in the military before he joined the commercial sector.

However, to use a military term, Mr. McDonald succeeded because he understood his battlefield was changed and he went down on the ground and learnt what he needed to know in order to succeed in the commercial field.

This was clearly not the case with either Mr. Ng or Mr. Kuek (though to be fair, Mr. Kuek’s successor as Chief of Defence Force and CEO of SMRT, Mr. Neo Kian Hong did try to at least show he was trying to learn the ropes – saw to it that he was photographed ridding in an MRT). Mr. Ng even went as far as to show how little he understood of what journalist do for a living when he proceeded to turn the term “Umbrage” into a meme when asked a question at a press conference by a journalist.

There’s no doubt that both Mr. Ng and Mr. Kuek have place that’s right for them. However, both need to find that out for themselves and not rely on a system where they’re deemed perfect for every organisation around just because they check a few boxes.

If Singapore needs anything, it is a need for the system to stop relying on box checking. Institutions need to be given the ability to hire people who are right for them rather than what boxes suggests. Any HR practitioner will tell you that the process of finding the right candidate for an organisation is a challenge. The job of HR should not be made more challenging when it has to answer to a boss that is imposed on it merely because the boss checks some boxes and we should not go out of our way to glorify top CEOs when they screw up – they’re paid well enough to take responsibility for their actions and shareholders shouldn’t be made to pay for bosses who diminish value.