Make business leaders accountable

In the aftermath of the financial crisis in the United States, the Dodd Frank Act put in place guidelines through which organisations could be bailed out in the likelihood of bankruptcy. This legislation was created to promote the financial stability of the country by improving accountability in the financial system and to protect taxpayers' funds. Organisations subject to these rescue packages are loosely defined as systemic important, specifically due to their size.

In cases where profitability on investment was the measure, there was consensus that for institutions like Citibank and Bank of America, the Troubled Asset Relief Program was a success. However, for a lot of other organisations the jury is still out on whether government-aided financial rescue has been effective.

I refer to this specific legislation in the United States because it brings to light a couple of things we seem to have lost cognisance of in light of our own troubled institutions. One is the fact that history has proved that government-backed financial support can, but does not necessarily, avoid the process of insolvency for institutions.

So if pumping taxpayers' money into distressed organisations is not the magic sauce for organisational turnaround, then what is? One of the most recent features in the news has been revolving around one of Kenya's oldest retailers and sugar processors, which have been struggling amid a rather lacklustre financial performance.

While we're on the topic of Uchumi, a recent incident at one of the outlets just goes to reinforce their below par performance. While mobile money has revolutionised our shopping experiences, it can also be the source of angst, especially when systems do not integrate as they are expected to.

Soon after the retailer implemented a new mobile money payment system, I noticed the frequency of errors increasing with transaction discrepancies almost one out of every two times I tried to make a payment. As someone who has worked in a system implementation environment, I fully understand that all systems have teething problems.

In fact, sometimes, especially when the needs assessment has not been undertaken comprehensively, organisations tend to solve problems that did not exist in the first place, leaving the root cause of the pain points untouched.

Back to the retailer. The last straw for me was when I used mobile money to pay for goods at the till, only to have a discrepancy between what was effected on my account and what the system showed as paid. As I interacted with the teller, the supervisor, the IT department, all trying to resolve what had turned into a 45-minute pain, I couldn't help but make two mental notes. One; to avoid mobile money payments in future and two; to avoid this particular store, settling for their competitor across the road.

This makes me sad on many levels. Most of us have an emotional connection with the retailer, given that it gave us fond memories of shopping while we were growing up. But this loyalty starts to wear thin when you cannot complete your monthly shopping at the store because you are guaranteed not to find a certain percentage of the items on your shopping list.

Whether or not its fortunes will be turned around by the recent loans being arranged to pay suppliers and the dismissal of senior executives, only time will tell. But for an institution that was once a monopoly in the retail sector to have fallen this far from grace starting with receivership in 2006, and to face the same challenges it faced almost a decade ago does not inspire confidence.

While this is not a government bailout incident per se, the fact that it is a listed company means that there are taxpayers who have invested in the firm with the hope of returns, and it is these investors who will have nothing to show for putting up their hard-earned money.

A clear-cut case of government aid, which we are watching keenly, is the debt-ridden Mumias Sugar Company. Again, the cause of the firm's woes is deep-rooted and would take a couple of days to dissect. In true Kenyan fashion, there is a lacklustre endeavour to address management, environmental and organisational challenges until insolvency takes the decision out of the hands of the decision makers and creates a situation that, in most cases, cannot be amicably or wholly resolved.

In my opinion, the recent cases of financial improprieties leading to outright and quasi bailouts point to a very thin line between abetting poor decision making and bolstering the financial muscle of a company. To what extent, especially in publicly-listed firms that use investors' money, is the team entrusted with strategy setting and direction held accountable for the poor decisions they make?

We all know that to a large extent, poor decision making is a factor of vested interests and conflicting priorities. But as long as we continue to accept these failures of execution, then the kind of improprieties we're seeing are only going to increase in number and frequency.