Koon Yew Yin is now more known for his philanthropy and awesome stock picking skills. We should not forget that the great man was also the co-founder of not just one but 3 of the top listed construction firms (IJM, Gamuda, Mudajaya) in the country. I mean one is already a fantastic achievement, but 3 is .... I am running out of superlatives.
And so... at IJM's annual dinner, in light of Krishnan Tan's exit from his CEO post, Koon made the following speech:
My purpose of reproducing my speech here is to record the CEO of IJM, Dato Krishnan Tan’s excellent performance which will be a useful lesson to many an executive who is aspiring to be a good CEO. This lesson is very essential especially in view of the significant number of poorly managed listed companies. As one of the founders of IJM, I feel obliged to record my appreciation of his excellent achievement.
In 1997 when Krishnan took over the helm as CEO, the market capitalization of the company was only Rm 441 million and basing on the current share price, its market cap is more than Rm 7 billion. Krishnan has made the company 15 times larger in 13 years. His performance as a CEO must be among the best in Malaysian corporate history.
There are about 1,200 public listed companies in Malaysia. A significant number of them are performing below the Kuala Lumpur Stocks Index. As we all know that the share price of any company moves up and down for various reasons but if a company share consistently performs poorly over long period of time, the reason is often due to bad management.
There is a classical saying ‘Good management produces good share price and bad management produces bad share price’. This simply means that if management cannot continue to enhance shareholders value by making increasing profit every year, its share price will remain depressed. But in case the share price still remain depressed in spite of showing increasing profits, management must find out why?
A CEO is the highest ranking officer in a business organization. He reports to the board of directors which is presided by the chairman. In some companies the role of the chairman and the CEO is the same person. But in larger companies, like IJM Corporation, the chairman is an independent and non executive director. As a result, all the business decisions taken at the board level are based on consensus. Any director can voice his opinion. There is a classical saying ‘I never learn anything from the people who always agree with me’. The board reports to the investors who are actually the owners of the company and the management’s main object is to enhance shareholders value by making more profit every year.
At every occasion when I praise Krishnan, he would say that it was the basic management method established by the founders that made his work so easy to perform. What he said is not completely true. He is too humble to take all the credit for himself. As far as I can remember is that we have a weekly meeting among all the heads of divisions to evaluate the work done during the week and see how we can improve our efficiency. We must always consider new idea or proposal to expand our business.
Since 1997 when Krishnan became the CEO, the speed of doing business had increased tremendously due to the use of the computer and the internet. Many businesses are going global at a faster pace than before. In fact, dependency of business on technology is making business more complex and challenging. The competing forces are growing at a much faster rate, competing choices to a customer is just a click away. It is getting ever more difficult to get and retain a customer, since switching to find a cheaper resource is just a click in a few seconds. All correspondence can be sent by email and frequently you can receive a response almost instantly.
So if you aspire to become a CEO, then start behaving like a CEO and be willing to consider new ideas and opinions. You must realize that it is so foolish to think that you already know everything.
There are other qualities that one must also develop as follows:
- Never write an insulting memo or letter to anybody including your sub-ordinate staff because it reflects on yourself. This is not the best way to promote cooperation among your team members.
- Emotional competence is an important quality to have, as it can take you to a next level that the technical competence alone cannot.
- Always listen attentively and speak only when required.
- Be honest, diligent and down-to-earth.
- Be yourself and speak your mind in a tactful and diplomatic manner.
- Before you start work every morning, sort out your priorities and think on ways to improve your work.
- Attitude is most important. Will you react positively?
Reaching the top is not difficult, especially you have a rich father or political connection, but staying on the top to enhance shareholders value continuously is.