Why is the CEO turnover at MAS so high?

The airline's new boss needs to stick around for a bit

FOUR captains in ten years. That's way too many changes to a pivotal seat for a company that can ill-afford leadership volatility. Malaysia Airlines.

When a company has seen a change of guard four times in ten years, two of whom were asked to leave, it begs the nagging question is the board making the best choices in selecting its CEOs? Note one of the most important jobs of a board is to pick the CEO.

First, a quick recap of the changes at the helm of MAS over the last decade. Post Asian Financial crisis 1998, MAS buckled under pressure from huge debts. Long-serving executive chairman Tan Sri Tajudin Ramli stepped down in 2001. In swooped seasoned banker Tan Sri Md Nor Yusof as managing director of the airline on Feb 14, 2001. But he left three years later (end-March 2004) to take up the post of Securities Commission chairman but not before putting in place a radical restructuring. During his time on the saddle, MAS underwent a Widespread Asset Unbundling (WAU) plan which true benefits till today remain a hot topic for debate.

Md Nor was succeeded by Datuk Ahmad Fuad Dahlan whose reign was unusually cut short (April 2004-August 2005). The vigorous and thankfully short search for a new CEO to helm MAS proved rewarding. Datuk Seri Idris Jala emerged, silencing critics who had slammed the much-hyped government-linked companies (GLC) reform process for failing in its ability to court fresh blood as most of the management changes largely involved a game of corporate musical chairs within the same talent pool.

Armed with a penchant for details and his trademark “lab” approach, it didn't take long for Idris to plug the gaps in the airline's operations which suffered one of its biggest losses of RM1.2bil in FY05. A year later, the losses narrowed substantially and in the ensuing year, the airline swung back into profitability. But challenges remained.

Sadly, Idris didn't stay on to ensure continuity of his Business Transformation Plan. Instead he got a higher calling he was appointed Minister Without Portfolio in the Prime Minister's Department and CEO of Performance Management and Delivery Unit (Pemandu). Succeeding him was Tengku Datuk Seri Azmil Zahruddin, a familiar face in the airline industry. Two years later, this Aug 9, he vacated his post and made way way for a major shareholder, board and management shakeup. (In early August, the major shareholders of MAS and AirAsia Bhd carried out a share swap, creating an alliance between the rival carriers).

This is as good a time as any to remind MAS' controlling shareholder Khazanah Nasional Bhd to take heed of its own advice. One of the points acknowledged in its Catalyst of Framework for Reform is that the short tenures of CEOs inhibit GLCs' performance. No other GLC lends credence to this more than MAS.

Another point wrapped up in its “Green Book” on best practices for boards to fulfill their roles and responsibilities is the need to oversee the development of future leaders which includes a robust CEO succession plan.

In spite of such clearly articulated guidelines, MAS has today found itself without a CEO and desperately, needing to place a capstone on its corporate pyramid again. One wonders if Tengku Azmil had remained in his seat till a suitable candidate was identified, would the hunt for a CEO appear less dire? If the urgency is reduced, the board's ability to conduct a wide and intense search is somewhat less curtailed, not withstanding the existence of an interim executive committee.

One would think that the glorious position of a CEO of a national airline would be a much-vaunted seat. Truth is, very few (the bold and daring type) would want to be faced with the possibility of having a sunken ship under his or her belt (not exactly a sweet addition to one's otherwise striking resume). Then, there's also the string of operational, regulatory and political headwinds that the CEO would have to put up with (think rising fuel cost, brutal competition and answering to a highly experienced, hence intimidating board).

For that reason, most external candidates may dodge the tough seat, although there may be many takers among internal candidates.

Let's face it MAS' CEO spot is not a gig for someone who wants to strike it rich. It's a gig for someone who wants to strike it good (read: “national service good”).

For that reason, MAS may or may not be able to draw the A-list candidates.

He or she need not be an industry lifer. After all, versatility and range of skills far trump industry-centric knowledge as Md Nor, Idris and even Tengku Azmil have proven. The new CEO will also have to wrap his head around this that if he proves his mettle, he will need to stay around for a bit longer to ensure continuity. Given MAS' current predicament, he should not be someone who simply fits into the culture but one who is a transformative leader.

Finding him/her will be the first test of MAS' newly-installed bench.

Senior business editor Anita Gabriel's Fantasy CEO list would include Jon Hamm (he is always in control), Simon Baker (he's a pretty face but who wouldn't want to work for him?) and Hugh Jackman (a realistic action hero would make the company indomitable).