The board’s hardest decision: When leadership must change

By Nqobani Mzizi

The departure of a CEO almost always attracts public attention. Such transitions inevitably invite speculation about personalities, performance and internal dynamics. Yet the deeper governance story rarely lies in the headlines themselves. It lies in the board’s decision. Few responsibilities test the judgement of directors more severely than determining when leadership must change.

Recent developments at African Bank have once again brought this reality into focus. The sudden departure of CEO Kennedy Bungane, followed by the suspension and dismissal of additional executives, signals a moment of significant transition for the institution. Initial public messaging suggested a shift toward consolidation after a period of strategic expansion. Subsequent developments, however, have raised questions about performance, execution and leadership stability. While the public narrative often centres on individuals, governance analysis must instead focus on the responsibilities of the board.

Replacing a CEO is among the most consequential decisions a board can make. The decision cannot be taken lightly, nor can it be delayed indefinitely when leadership performance no longer aligns with the institution’s strategic direction or operational requirements. Directors must weigh multiple considerations simultaneously: strategy, performance, institutional stability and stakeholder confidence. The complexity of these considerations explains why leadership transitions often represent the most difficult moment in governance.

Central to this process is the exercise of judgement. Boards must interpret information, evaluate competing perspectives and determine whether the organisation remains on the trajectory envisioned by its strategy. Professional scepticism also plays a critical role. Directors must be prepared to test explanations, interrogate assumptions and consider whether the narratives surrounding performance truly reflect the organisation’s underlying realities. Without this intellectual discipline, boards risk accepting reassurance in circumstances that require deeper scrutiny.

The public rarely witnesses the deliberations that precede such a decision. Governance decisions of this magnitude unfold through structured internal processes rather than public debate. Boards gather information from multiple sources. They consult regulators where appropriate, review operational and financial indicators and consider whether leadership capability remains aligned with the organisation’s strategic ambitions. These discussions are often extensive and conducted over time, even though the final decision may appear sudden to external observers.

This is why executive transitions frequently seem abrupt. By the time a board intervenes, the decision typically reflects a culmination of internal assessment rather than a reaction to a single event. Directors may have observed patterns of performance concern, execution challenges or strategic misalignment that require intervention. When the moment for action arrives, the transition may occur quickly to preserve organisational stability and maintain confidence among stakeholders.

Accountability sits at the centre of this responsibility. Chief executives are entrusted with executing the strategy and leading the institution’s operations. When performance falls short or strategic direction requires recalibration, the board must act. This obligation is not discretionary. Directors are fiduciaries of the organisation and carry the responsibility of ensuring that leadership remains capable of delivering sustainable value. Allowing underperformance to persist would represent a failure of governance rather than an act of patience.

King V reinforces this responsibility clearly. The code emphasises that governing bodies must exercise independent judgement and act in the best interests of the organisation to promote ethical leadership, effective control and sustainable value creation. Directors are expected to apply their minds objectively and to hold executive leadership accountable for performance and strategy execution. When leadership effectiveness becomes misaligned with the organisation’s trajectory, the governing body cannot remain passive. Acting to recalibrate leadership is therefore not merely a strategic choice; it is an expression of the board’s fiduciary duty and its obligation to safeguard the long-term health of the institution.

When boards delay intervention despite clear signs of strategic drift, the consequences can cascade. Institutional confidence erodes, employees grow uncertain about direction and regulators increase scrutiny. In many governance failures, warning signs were visible long before the crisis emerged, yet hesitation allowed problems to compound. By the time intervention occurs, organisations may already face reputational damage or operational instability. Acting decisively when leadership effectiveness comes into question, therefore, protects the institution from the far greater risks created by prolonged inaction.

At the same time, boards must carefully balance accountability with stability. Succession processes carry inherent risks. Sudden changes can unsettle employees, customers, regulators and investors. The board must therefore ensure that decisive action does not undermine institutional continuity. The appointment of interim leadership often serves this stabilising function. By installing an experienced executive to guide the organisation during the transition period, boards create space for careful succession planning while maintaining operational confidence.

The interim appointment of Zweli Manyathi at African Bank illustrates this principle. Interim leadership provides continuity at a moment when organisational certainty is particularly important. It allows the board to conduct a comprehensive search for permanent leadership while ensuring that strategic execution continues uninterrupted. Such arrangements also reassure regulators and stakeholders that oversight remains firmly in place.

Leadership transitions can also signal broader strategic recalibration. Under Bungane’s tenure, African Bank pursued an ambitious expansion strategy that included acquisitions such as UBank, Grindrod Bank and elements of Sasfin’s business. These moves reflected a deliberate effort to diversify the institution beyond its traditional unsecured lending model. Strategic expansion, however, often requires subsequent consolidation. Boards must periodically assess whether the organisation has the operational capacity and institutional coherence to absorb rapid growth.

When a board determines that consolidation or recalibration is necessary, leadership capability becomes a central consideration. Expansion strategies demand one set of leadership skills, while consolidation and integration require another. In such circumstances, the board may conclude that a different leadership profile is needed to guide the organisation through its next phase. Such changes sometimes reflect strategic adjustment rather than simple performance failure.

The subsequent suspension and dismissal of additional executives reveal how deeply governance intervention can reach during leadership transitions. Boards may determine that restoring accountability requires change beyond a single individual. These actions may be uncomfortable in the short term, but they are often necessary to reinforce governance standards and ensure institutional integrity.

Ultimately, how a board handles succession reveals whether governance structures function as intended. When boards question rigorously, exercise independent judgement and act in the long-term interests of the organisation, difficult decisions become evidence of governance working rather than governance failing. The willingness to intervene when leadership no longer aligns with institutional needs demonstrates stewardship rather than instability.

The public narrative surrounding executive departures will inevitably focus on personalities and speculation. Governance analysis, however, must remain anchored in principle. Directors are not appointed to preserve individual careers. They are entrusted with safeguarding the institution itself. That responsibility sometimes requires decisions that are uncomfortable, disruptive and highly visible.

In this sense, the board’s hardest decision is also one of its most important. Changing leadership signals that governance oversight remains active, accountable and prepared to act when circumstances demand it. When directors demonstrate the courage to intervene in the interests of the institution, they reinforce the very purpose of corporate governance: protecting the long-term resilience and credibility of the organisations they serve.

* Nqobani Mzizi is a Professional Accountant (SA), Cert.Dir (IoDSA) and an Academic.

** The views expressed do not necessarily reflect the views of IOL or Independent Media.

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