Megan stayed the course despite the challenges EOH faces, believing she can make a difference.
CFO South Africa starts our interview with EOH CFO Megan Pydigadu by asking whether she had any idea what she was in for when she took the job. “No,” she says, and laughs.
Then she elaborates:
“Before I took the job at EOH, I had taken time off and had really been reflecting on what I wanted my next challenge and assignment to be. When Stephen van Coller, EOH CEO, first approached me about this opportunity, I was excited by the fact that EOH was in the tech space. I have experience across various industries such as professional services, mining, engineering, industrial and telematics and have always been drawn to the tech space due to the dynamic nature of the sector. This is an industry that allows for innovation and has given me the opportunity to be a disruptive leader always encouraging my team to challenge the status quo with no fear or limitations.”
She had initial reservations, she said, because of the rumours about EOH and the bad press that the IT services company had been receiving. But she made the decision because she had faith in Stephen and his leadership. “Ultimately, companies are made up of the people who work there, and I trusted Stephen’s judgement and shared his belief that this was a company that still had inherent value and had a significant positive role to play in the South African economy. I thought it was a great opportunity to join him and help rebuild the organisation.”
The challenge that was laid out in front of Stephen and Megan was that in the five years prior to their appointments, EOH had experienced exponential growth in the number of companies they’d acquired, “without much consolidation in terms of synergy between the operations.” So, Megan says, there were opportunities for interesting work there.
She started two weeks before the half-year end, and had to jump in the deep end to make some tough decisions.
“One of the first challenges we encountered was that while the organisation was going through its growth phrase prompted by an aggressive acquisition driven model, there was a lack of focus on the balance sheet. So, we did a big clean up and there were significant impairments and write-offs that we took off at half-year. When we announced the half-year results in April 2019, even though there were write-offs of R3 billion, the market reaction was extremely positive as investors drew comfort from our transparent communication and were supportive of our turnaround strategy especially with regards to optimising the capital structure.”
She says that when they released EOH’s full-year results in October 2019, it was viewed as another positive milestone in the company’s improved market sentiment.
Baptism of fire
Results are only part of the picture however, and when Megan had only been on the job for a month, the Microsoft situation came to a head. In February, Microsoft issued a notice that it was terminating a contract with EOH Mthombo, an EOH subsidiary and Microsoft Channel partner. It emerged that the termination followed a complaint registered by a whistleblower, alleging corruption in a Department of Defence software deal.
This shake-up, Megan says, made her and Stephen “get real”. “We had to do a deep dive into what had been going on in the organisation.” They appointed law firm ENSafrica to conduct the investigation.
In mid-July 2019, they announced the findings. Their statement read: “To date, the ENSafrica investigation has found evidence of a number of governance failing and wrongdoing at EOH, including unsubstantiated payments, tender irregularities and other unethical business practices which are primarily limited to the public sector business centralised in EOH Mthombo and to a limited number of EOH employees.”
“Suspicious transactions of R1.2 billion have been identified and are being investigated by ENSafrica.”
“It isn’t nice to find things like that,” Megan says. “It was a big shock. It set us on a faster track in the process of creating transparency within the organisation. We sat with the finance team to say, ‘We’ve found this. If there’s anything that you know, tell us. There’s a window period for you to come clean, otherwise afterwards if it discovered that you have withheld anything, you will be held accountable.’ It wasn’t easy. There was a lot of emotion. There are people who have been here a long time. It’s easy with hindsight to spot inconsistencies, and quite hard to have been part of the process that should have picked them up.”
Megan said that the historical culture of “command and control” is extremely different to the approach that herself and Stephen employ. “We are far more transparent and empowering of people, so it’s 180 degrees in terms of culture. Over time, we have begun rebuilding that trust, and things are changing.”
The organisation has continued to navigate the complexities around these findings, as well as addressing the reputational fall-out that resulted. Many stakeholders have been surprised that Megan and Stephen have stayed the course.
“When the news started breaking, I got quite a few phone calls from friends and head hunters asking if I really wanted to be at EOH. I feel strongly that I do. There are 10 000 people working here, and so we have to find a way through this and build a sustainable business – for the security of their jobs, for their families, and because job creation is key to the stability of South Africa.”
At the same time, she says, EOH is an exciting business, and the reasons she took the job in the first place are still valid. “We are now at a point where we have dealt with the legacy corruption issues. It hasn’t been easy but we are now positioned to take advantage of the fourth industrial revolution. We are one of the few ICT players that offer the full suite of services and products. I am really excited about what the future for EOH can be, in terms of being a disrupter in the economy and bringing innovation to the South African economy. ”
Prepared by the past
Before Megan joined EOH, she’d taken a sabbatical to try to identify her purpose, the type of organisation she’d best fit into, and what management and leadership style would work best for her.
“From my time at Mix Telematics, I knew that I enjoyed working in a listed environment. While I was there, they also listed on the New York Stock Exchange, and there were high levels of governance requirements, which broadened my understanding and was sorely needed at EOH.”
That being the case, when she joined EOH, one of the first things that she and Stephen decided was that since they were serious about governance, they would bring in an exco member to take on that responsibility. Fatima Newman was appointed as chief risk officer in what Megan describes as an important step in the right direction.
Megan says that from a values perspective, finding alignment at leadership level is critical for her. “Stephen, Fatima and I are highly aligned to move forward, and there’s a circle of trust between the three of us, making decisions based on the same values and principles. And if we don’t agree, we can have honest discussions about it.”
Being a woman in traditionally male-dominated spaces has given Megan a sense of responsibility about developing others.
“At EOH, many women have approached me to say they are so happy to see a woman in a leadership position. While I always say that I am not a woman first, I am a professional first, it’s nice to have women looking up to you so that you can engender leadership in other women in the organisation.”
Megan and Fatima have also started producing a series of talks around Courageous Leadership within the organisation. “We invited people within the organisation, clients and suppliers to an inaugural event, just to start setting a stage to talk about what it is to have Courageous Leadership and to start tapping into some of the issues in society. We’ve got a great public platform at EOH, which gives us the opportunity to try to change South Africa and perhaps create a different outcome.”
She says that they also try to grow their young leaders, and selected two individuals from their organisation that went to One Young World in London. This is to illustrate the EOH ethos that leadership can be nurtured at any level in the organisation.
“Following the recent spate of corporate scandals in South Africa, there’s a renewal of what it means to be ethical. With everything that’s happened we have had to deal very publicly with the corruption we have found, while other companies have the luxury to deal with it behind closed doors. So we feel that we could share our learnings with others through our transparency.”
She would also like to participate in finding ways to address unemployment and create sustainable businesses in South Africa. “There is a bigger purpose here than a job for me.”
This article was first published on CFO South Africa.