The Sunday Mail
Enacy Mapakame
ABOUT seven percent of companies that are operational are doing extremely well, while close to 61 percent of the firms are performing well, according to a recent survey by Industrial Psychology Consultants.
However, it is estimated that 31 percent of companies open for business are struggling to remain viable.
IPC managing consultant Mr Memory Nguwi noted that companies that successfully restructured had made a break from a troubled past.
“Some corporate failed to embrace the changes in the economic landscape and failed to restructure. Those that restructured after dollarisation, say around 2010 have been doing well, and those that took long to realise this are struggling,” he said.
Though industry continues to be affected by liquidity challenges, 47 percent of the companies surveyed indicated that wrong strategies were one of the major causes of their floundering fortunes.
“Organisation leadership was identified as a common cause for corporate crisis, 78,2 percent of responses in our survey mentioned that leadership exhibited by top management is a common cause of corporate crisis.
“Poor internal communication, poor corporate governance, liquidity problems, unclear performance goals for employees and wrong strategic goals were cited as the major contributors of companies’ poor performance,” said the IPC report.
Organisations, the report added, could successfully turn around their fortunes if management facilitated efficient internal communication and good corporate governance.
A total 1 052 companies with an average annual turnover of over US$1 million from all sectors participated in the survey.
Middle and junior management constituted the highest number of respondents at 28 percent and 20 percent respectively. Senior management and executives made up 19 percent and 14 percent of respondents, while 15 percent were non-managerial employees.
Of the sectors surveyed, agro-processing, public service and local government had the highest proportion of companies struggling to remain afloat.
The product distribution sector had the highest number of companies performing extremely well, according to the report. None of the companies in petro-chemicals, media, marketing and advertising, public service and local government, engineering, automotive and agro-processing and agriculture sectors were observed to be doing well.
It is feared that the El Nino weather conditions, which are negatively affecting agriculture, will further weigh down agro-processing and related sub-sectors.
Agriculture feeds the local manufacturing sector with an estimated 70 percent of its raw materials.
The IPC report said Government policy and worsening electricity supply had forced companies to restructure.
Poor corporate governance is cited as a major challenge to local industry.
The Confederation of Zimbabwe Industries 2015 Manufacturing Sector Survey blamed falling industrial capacity on liquidity challenges, power and water shortages, the continued influx of imports, low FDI and obsolete equipment.
Said the IPC report: “An organisation’s performance also relies on the performance of the economy in general.
“However, it is interesting to note that the majority of participants in the survey view issues related to organisations’ management as the more important causes of poor performance. This means that organisations can achieve a lot if they address their internal issues first.”
Government is working to improve the ease of doing business through a cocktail of policy and legislative measures.
