WHY GHANAIAN COMPANIES GROW FAST BUT DON’T GO FAR

• Some school of thoughts have given reasons that may account for why almost all African owned companies especially Ghanaian owned ones do not go far despite their fast growth after establishment.

• In Ghana 25% of businesses do not go beyond the founders, all the researches have shown that only about 5% of businesses go beyond the founders in Ghana.

• Most companies want to be the supernova in their sector and so they use all kinds of ways to achieve that and then they end up destroying everything they have built when they explode.

• My advice is that be like the sun instead, Burn slow, burn long and be the constant, trustworthy light that shines on the path of others in order for them to find their way.

African owned companies especially the local Ghanaian owned companies could become giants and global entities if the right organizational structures are in place but the recipe for sustainability of growth is elusive. Establishing a company is a very daunting task and what even makes it more challenging is ensuring its longevity. Growth in itself is not bad for a business though how the growth comes about is what is important. Companies grow simply by finding the very best way to meet the demand customers have, and the customers like the solutions and the way it’s being delivered.

Most companies in Africa do not leave beyond the generation of their founders simply because, the idea and the vision rest with just the founder and when he/she dies, the company mostly also die with them.

MAJORITY OF LOCALLY OWNED COMPANIES IN AFRICA ESPECIALLY GHANA, PRIDE THEMSELVES IN FAST GROWTH TO BOOST PROFITABILITY I.E. ARTIFICIAL PROFIT SO THE CEO AND EXCO MEMBERS WOULD BE ABLE TO ENJOY FAT BONUS AND INCREMENT IN THEIR REMUNERATION. EXAMPLES OF SUCH COMPANIES ARE THE DEFUNCT CAPITAL BANK, MENZGOLD, UT BANK, ETC.

Some school of thoughts have given reasons that may account for why almost all African owned companies especially Ghanaian owned ones do not go far despite their fast growth after establishment. In Ghana 25% of businesses do not go beyond the founders, all the researches have shown that only about 5% of businesses go beyond the founders in Ghana.

Enumerating some of these reasons to back that thought indeed is the bases for this write up and also make some workable and strategic recommendation going forward. The most predominant reason why African companies especially Ghanaian owned companies grow fast but do not go far is leadership, management style and culture. Most literature on this subject suggest, African founder mostly have the vision of their company in their heads and not on paper, they are unable to communicate it to their team or even document the vision.

Moreover, most founders do not have succession plan or if even they have, it’s a member of the family that succeed the found who may not have or know about the vision.

Majority of locally owned companies in Africa especially Ghana, pride themselves in fast growth to boost profitability i.e. artificial profit so the CEO and EXCO members would be able to enjoy fat bonus and increment in their remuneration. Examples of such companies are the defunct Capital Bank, MenzGold, UT Bank, etc.

COLLAPSED GHANAIAN COMPANIES THAT COULD BE GIANTS

Whereas it is important to check growth at each stage and make sure its real growth, the EXCO members should ensure they carry along their team. In Ghana, most companies want to be the supernova in their sector and so they use all kinds of ways to achieve that and then they end up destroying everything they have built when they explode.

My advice is that be like the sun instead, Burn slow, burn long and be the constant, trustworthy light that shines on the path of others in order for them to find their way.

Reasons why locally owned companies don’t go far

Poor Leadership

Company’s fail not because they lack capital really but because of poor leadership. It’s often said that at the core of any successful company or startup is a unique idea. Indeed, great vision and a cooperative team lead by inspiring leader is what makes companies go far. My take is a bit different on this. I truly believe that at the core of any successful business is an inspired leader, who is able to motivate its team to perform at their full potential. These kinds of leaders are able to create an environment within the organization, where people, even with average talent are able to achieve remarkable things through teamwork.

Most of the time, the failure of most companies is attributed to poor work environment, bad culture, undercapitalization, poor marketing strategies or unfavorable market environment. However, I believe that the real reason for the failure of any company globally especially in Ghana as it is the case, is lack of leadership, which is driven by a purpose and vision. This kind of leaders are able to attract people, who will not be motivated by salary or EXCO favors, but by the same vision and mission as that of a leader. I have seen numerous examples, where businesses are not achieving their full potential, despite of a great business model, because of distracted or laid back leadership, which creates an environment, where even the best of the staff end up not giving their best performances. Some statistics on factors that causes a company to collapse.

32.1% Poor management of financial activities

14.6% Lack of management competence or experience

12.4% Inflation and economic conditions

12.3% Poor books and records

10.7% Sales and Marketing problems

6.2% Union problems

9.0% staffing problems

2.7% Failure to use external advice

Corporate Culture and Management Style

Companies that grow steadily but go far in the world are those that focus on culture and the culture is focused on the people/staff/employees. This means, by paying them better, empowering them to live a more full life, encouraging them to educate themselves, providing time to let parents be parents, they make it crystal clear what they care about in their culture; People/staff/employees. Some key lessons as a take away;

Lesson #1 — Care about your people and they will care about you.

Lesson #2 —  Don’t build a team; Build a tribe.

Lesson #3 — Start diverse. Scale diverse.

Company culture is an organism, and it takes serious work to get it right. But if you do nail it, you have potentially hundreds of employees and thousands of family members to thank you for it.

Having a strong corporate culture is an achievable goal for companies and this is key for the growth and longevity of the company. Yet, this doesn’t always just naturally happen. A corporate culture that is enjoyable for employees and enables their best work to be produced. African companies have been at the mercy of bad corporate culture due to the founder’s management style. Some factors influence bad corporate culture and I give examples; poor internal communication, Micromanagement, Lack of empathy and office gossip

The effect that a negative company culture can have can be huge. Often contributing to increased employee turnover and decreased motivation. These can then influence their work, aiding in the production of work that is perhaps not as great as it otherwise could have been.

Poor internal communication

A lack of team spirit in the office can be toxic to a business. This is why it’s no surprise that poor internal communication is an undeniable sign of a negative culture. However, because your business aims to create a culture where everyone is friendly and supportive of each other, communication is key. Creating an atmosphere where internal communication is free flowing and easy is ideal for culture creation. When speaking to one another becomes difficult, forced and un-enjoyable, this is where a problem arises. To positively influence your corporate culture, ensure the team is able to freely speak their minds. This can be fostered and easily achieved through the hiring process.

Micromanagement

When under constant scrutiny from management, it can create an atmosphere full of tension. Regardless that micromanagement doesn’t work, all its good for is slowing down work and ensuring employees are under unnecessary pressure.To avoid this, avoid micromanagement. Trust in your hiring process and trust in your employees. Creating a great company culture is easiest when the tasks are clearly laid out. But allowing the individual to work autonomously and at a comfortable speed.

Office Gossip

Gossip is negative regardless what environment one is in. When in the office, it can be detrimental to the atmosphere, causing a shift in the culture and may even constitute bullying and therefore termination. Office gossip can be hurtful, spiteful and leaves everyone becoming closed off and guarded. Influencing a negative corporate culture can be easy when gossip starts. To deal with this, the best thing to do is to speak directly to those in the office effected by it, as well as those who may be the culprits. Following this, it’s good managerial practice to speak to the office as a group.

Lack of empathy

When it comes to human interaction, empathy is important. Yet, when it’s not there, it can appear even more important. Engaging employees and having empathy for them and their lives is fundamental to creating relationships as well as culture. In the working environment it can be as important. For example, understanding and being empathetic towards co-workers strengths and weaknesses is of value. Know that although something may come easily to some, it mightn’t come easy to others.

Succession Plan

As bad as succession management is at the top, it is much worse as you climb down the organizational ladder. In these days of lean-and-mean, each position in many companies plays a vital role. The absence of a single worker can compromise the business. An abrupt absence or even a planned retirement can cripple it.

Even when a company creates a succession plan, the failure rate is high. However, it even becomes worse when there is no succession plan at all and it business as usual. Indeed, identifying and grooming a successor is a daunting task and requires much planning and effort to get it right.

Red flags that Shows Company wouldn’t go far includes;

Poor leadership Bad culture and management style Increased customer complaints Increased HR problems Cash flow difficulties High levels of employee stress Low morale Inability to keep up with demand despite up-to-date systems Inventory maintenance difficulties Significantly increased waste (space, human resources, inventory, etc.)

Conclusion

Growing fast and going far could be very difficult and may take several years to make that possible but guess what some great companies have done that, and I give example;Microsoft,Oracle,Bank of America, Baker’s Chocolate,Citigroup and JP Morgan Chase. On the other hand, the story is very much different in Africa, companies don’t live beyond their generation of establishment. African companies should strive to live beyond the lifetime of their founders and this can be possible if the right structures are put in place and a system of work flow is not intercepted for selfish and greedy gains by managers or founders. Furthermore, it is very important for shareholding structure of the locally owned Ghanaian companies to be diluted to allow broad base ownership, culture and diversity in management style and new expertise into the company. Listing on the Ghana Stock Exchange is also a very good way to grow the company and allow it to go far.Culture is very critical and a key catalyst to catapult the company into the future.

Written by: Jerry.J. AFOLABI a Financial & Economic expert who believes that ordinary people can do extraordinary things when given opportunity. He is a Change Maker with the ability of easily getting people to get things done for the good of humanity.

Email: jelilius@gmail.com / 0541238987

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