By Mbatjiua Ngavirue
WINDHOEK
Retrenched NHE employees and managers are incensed over a statement by NHE Chief Executive, Vincent Hailulu, published in New Era roughly a month ago, feeling that as a matter of fairness the newspaper should give them an opportunity to respond.
A delegation of both former managers and employees visited New Era to set the record straight, accusing the CEO of misleading the public and the government.
They were highly dissatisfied with the new CEO’s explanation of how the corporation adopted its so-called new vision, corporate strategy and organizational structure.
The former employees acknowledge that, after the company appointed the new CEO on September 1, 2005, he held a few strategic planning meetings with staff starting in November that same year.
He also instructed each division headed by a general manager to submit proposed new operating plans and organizational structures.
They, however, feel these exercises were mostly sham and that only a tiny portion of their input was included in the final corporate strategy and organizational structure.
One former general manager estimates the company only adopted 30% of his division’s recommendation in the final strategic plan and structure.
The question then, they ask, is who actually drafted the final restructuring plans?
Was it a reputable outside consulting firm, or the new CEO alone? Was it Hailulu together with a former financial manager at the Windhoek Municipality, and now apparently NHE consultant, Deon Gerber?
Newcomer
The former employees emphasize that Hailulu was a complete newcomer to NHE, and the housing industry. They question the soundness of a newcomer to an organization ignoring all the accumulated knowledge and institutional memory of an organization – built up over many years – to draw up radical plans, seemingly in a vacuum.
In his statement, Hailulu says the Board adopted the new vision, corporate strategy and organizational structure in February 2006. It is, however, believed that the board only adopted the final revised structure on June 6, 2006 at a board meeting at which only three other directors, except Hailulu, were present.
The CEO only verbally informed the general managers of the new organizational structure – without actually showing it to them – on June 30, 2006. The former managers say this is when he informed them that the company had decided to make the general manager positions redundant.
On July 21, 2006, he announced salary increases for the general managers, only to summon them individually six days later to give them the devastating news that the company was terminating their services.
They played no part in drafting the final organizational structure or final corporate strategy – which, to this day, they have not even seen. They argue that while Hailulu says in his statement that the restructuring plan “is not a personal programme of the CEO”, the board did not draft the plan but only adopted it on his recommendation.
Core Business
The retrenched NHE employees vehemently contest the argument that the company has changed its core business. They seriously question whether Hailulu has any understanding of what the term “change in core business” means.
The former employees say the NHE’s core business will still consist of buying land, putting in services, building houses and selling and financing them. NHE, they add, entered the rental market a long time ago and building flats and renting them out is therefore not something new.
Previous CEO, Mike Kavekotora, initiated the purchase of the NBC flats to rent them out commercially, so this is not an innovation introduced by Hailulu. According to the former employees, the only genuine innovation mentioned by Hailulu is building houses in rural areas.
Even this, however, they say does not constitute a change in core business. Building houses in rural areas is merely expanding the “product line”, not a change in core business.
The NHE, they argue, is not suddenly changing into another Fruit & Veg City, for example. The NHE will fundamentally remain a “housing corporation” even after the adoption of the so-called new “corporate strategy”, they argue.
Salary Bill
They also say the new CEO’s explanation that the aim of restructuring was to reduce salary costs in order to shift saved resources to building more houses is unconvincing on several levels.
In his statement, the new CEO stated that employment costs stood at 68%, with 42% of that attributable to the management salary bill.
The former employees explained that because the NHE is partially a financial institution, the interest rate has a strong bearing on the company’s economic fortunes. The interest rate came down from 19% in 2003 to 11.5% in 2006, sharply reducing NHE’s income and pushing up employment costs as a percentage of total costs.
The retrenched employees point out that the NHE staff component before the restructuring process made provision for 102 posts. The new structure increases the number of staff to 159 posts.
They want to know how increasing the number of posts from 102 to 159 is going to reduce NHE’s employment costs and allow it to build more houses.
They allege that the new CEO himself at one meeting said, “Restructuring does not always mean downsizing”.
They described the new CEO’s claim that he negotiated a 40% reduction in his remuneration package compared to what the former CEO was earning as laughable.
They point out that most large companies have a predetermined scale for CEO salaries. The scale usually starts at entry-level salary with incremental increases based on experience, performance and length of service until the executive reaches the top-end of the scale.
The previous CEO had five years’ service at NHE, so it was only natural that his final salary package should be 40% higher than Hailulu’s entry-level salary. However, an experienced executive can negotiate a package somewhere in the middle of the scale, or even at the top end, depending on his record.
The former employees said Hailulu negotiated a poor package for himself, accusing Hailulu of trying to make a virtue out of his own ineptitude.
He then allegedly became enraged when he discovered that his basic salary was more or less on a par with some of his four general managers.
Some general managers’ salaries were not far from the new CEO’s even in terms of “total cost to company”, and they feel the resentment this brought about is partly why the new CEO decided to get rid of them.
The new CEO, however, soon made up for this deficiency by increasing his company credit card allowance from N$50??????’??