Stephen Koseff: CFOs must be careful when imposing financial discipline


The former Investec CEO says CFOs should take care not to damage positive organisational culture.

Investec co-founder, director and former CEO Stephen Koseff has been with the international specialist banking and asset management group for over 40 years. Though Koseff only joined on a part-time basis in 1980, he is also recognised as one of the founders and held the CEO position for 21 years. had the opportunity to interview Stephen at the Business is Adventure event in Johannesburg last week. Here’s what he had to say. 

Why do you think business is an adventure?

When you go on an adventure, like a hike, there will be uphills and downhills. You need to have the stomach to handle all that. Business is exactly the same. It’s not all plain sailing. 

For each phase of building something, you need to have a slightly different approach. You need to be flexible and adaptable to the environment that you are in because it plays a big part in your success or failure. Your resilience to get through a difficult environment helps ensure your success.

You can’t do exactly what you did yesterday, tomorrow. In life, if you’re standing still, you’re going backwards. 

What is your view of the future CFO – how do you see the role evolving? 

There was a time where all the CFO did was provide numbers. Today, a CFO has to have a much wider idea of things. 

There was a tech company in the US that started with no financial discipline. It gave its employees free Coke every day. After two or three years they found that they were doing better so they hired a professional CFO. He came in and started controlling the cost. He charged 25 cents for the coke, which everyone could afford, but they started leaving the company because the culture was changing. 

A CFO has to be careful when imposing financial disciplines. He must do it in a way that isn’t going to damage the positive side of a culture. 

There’s been recent news about how Investec has changed to a “no leave” policy (meaning you have no leave limit). There was also mention of the dress code changing. How do you think these kinds of changes are shaping business today? Do you feel they reduce or enhance productivity?

The no leave policy gives people the freedom to operate, within good judgement. They still need to deliver on their promise, be a valued corporate citizen, look after their clients and create value for the organisation. They can do all of that at home, on holiday, or wherever they may be. 

I’ve found that, if they are committed citizens of the organisation and want to see it grow, the probability with the no leave policy is that they will rather take less leave than more. 

There’s a lot of personal responsibility, which I think is a good thing. 

The same applies to the dress code. They know that they’re not going to see clients in shorts. They have to have the common sense or the emotional intelligence to determine whether what they’re wearing is appropriate.

What other changes do you see in the world of work?

In the developed world, you will see a lot more people working for themselves. There are even apps that utilise the gig economy where people get contractual work. 

Anyone my generation will know that in the early days when you did a bank reconciliation you would sit on one side and another qualified person would sit on the other side and you would call numbers across to each other. Today, computers match and reconcile for you. 

Women participation in the workforce is much higher than it has ever been. When I qualified as an accountant there were two women in my class of 200. Today, more than 50 percent of any accounting class is female. 

Do you think South Africa is poised for growth? We seem to always just manage to avert utter disaster but never quite get back on a growth path. What needs to happen for that to change?

Government needs to shift its focus completely to create a business-friendly enabling environment that focuses on growth. The growth needs to be inclusive in order to uplift people from poverty. 

28 percent of every rand of GDP goes to the government in tax. The government collects more money when the economy grows and they are able to put in key services. 

Where we are falling down completely is education. We have a two-tier education system that consists of private schooling and old Model-C schools versus the township schools. You need to get everyone uplifted so that everyone has an equal chance. 

The government also needs to fix the state-owned enterprises, like Eskom. The generation does not need to come from the government, it can be mostly private. Eskom as you see it today, as a monopoly, will not be that in 20 years time. It will own the grid that distributes the electricity and there can be subgrids owned by municipalities or the private sector. If the new generation comes from private sector investment, it will save the government a lot of money. They can’t keep bailing these companies out. 

South Africa is the perfect place for us to encourage international companies to put their head offices. Government needs to allow these guys to bring their people in because although we have high unemployment we’re short 800,000 skills. You need to bring the skills in and over time the next generation will be developed if you focus on improving education. 

South Africa is stuck between a 0 and 3 percent growth rate. We need to get up to 5 percent. If we’d grown 4.2 percent over the last 10 years under Zuma, which we were growing at under Trevor Manual and Mbeki, we would have had an extra R1.3 trillion of GDP, government would have had over R300 billion of extra revenue, we wouldn’t have had a deficit and we wouldn’t be talking ratings downgrades. 

Growth is the key and it has to be inclusive. It’s incumbent upon us as corporates to make sure that we help uplift all the people. 

And that’s what the President is trying to do, but his party is pulling him to the left. I’ve said all along, government needs to have centre-right economic policies and centre-left social policies, and then combine those to get the economy to grow. So we’re uplifting all boats and eliminating poverty. You’ll never be able to eliminate inequality because you will always get an entrepreneur who does brilliantly. You’ll always get the Facebooks, the Apples and the Amazons of the world. 

What do you do outside of work? 

I don’t do fun. I walk with my wife and go visit my family, who don’t live here. I’m also a big sports fan.

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