Corporate South Africa under the threat of sliding back
It is evident that selfregulation in matters of transformation has failed; the BMF is therefore calling for punitive measures
Transformation in South Africa is in reverse gear. In recent years, the Black Management Forum (BMF), which is at the forefront of advocating and lobbying for transformation in corporate South Africa, has been struggling to find companies to award for their achievements in transformation. This is a clear indication that there is no model company for transformation in South Africa today.
The Jack Hammer Executive Report, released late last year, reveals that the proportion of black South African chief executives has fallen from 15% in 2012 to 10% in 2015. This is direct evidence that the transformation project is indeed in reverse gear and the rainbow nation of Archbishop Tutu is becoming more and more elusive. These astounding statistics prompted the BMF to request companies to consider and favour black candidates when they are in a process of recruiting for chief executive and other executive positions.
The transformation of South African society cannot be achieved without proper and honest implementation of the B-BBEE Act and other pieces of legislation. The B-BBEE Act, Employment Equity Act and related Acts are about levelling the playing field and effecting fairness, equity and justice. This concept of equality is manifested through legal mechanisms such as affirmative action. Originating in the US, affirmative action refers to provisions and programmes affording preferential treatment to members of certain groups considered to be in a disadvantaged position. Affirmative action requires government to take positive measures so that they can enjoy full and equal advantage of particular opportunities. Thus, what may have been deemed directly discriminatory measures that favour relatively disadvantaged groups at the expense of those who are relatively well off, will not constitute discrimination as the consequences of such measures are, in the end, a more equal society. In short, affirmative action is therefore viewed as a manifestation, not a limitation of equality. It is not about the reversal of discrimination, but it reverses discrimination.
Putting matters into perspective, more than 40% of black people are unemployed compared to only about 6% of white people. White families earn six times more than what black families earn; on average, a black family’s annual income is R60 000 whereas a white family earns an annual income of R365 000. As far as management representation is concerned, whites represent only 10% of the economically active population but occupy more than 70% of the top management positions. Only 13.6% of top management positions are held by black people; coloured and Indian people held 4.7% and 8.4% respectively. According to Stats SA, a young white adult with less than a matric is more likely to hold a managerial job than a young black adult with BA degree or diploma.
Based on the above statistics, it is clear that we are sitting on a time bomb as a nation. Business and other institutions have been subscribing to a minimalist approach as far as the implementation of transformation is concerned. It is evident that self-regulation in matters of transformation has clearly failed.
Transformation has been neglected and undermined. However, it is the very instrument that we have leveraged as South African society to achieve the critical mass of the black middle demands of equitable representation. We have firmly come out and condemned corporate South Africa in light of the report, and we have called for an Employment Equity Tribunal. We have since concluded that without punitive measures this specific tool of transformation, the EE Act, will not be fully implemented voluntarily by corporate South Africa. The BMF calls for the Employment Equity Tribunal to be set up and accorded powers to receive, initiate and adjudicate over cases related to the contravention of the Employment Equity Act. Such powers must include determination of penalties against the designated employers.
The role of majority shareholders in advancing transformation must also be scrutinised. The time has come for major shareholders such as the Public Investment Corporation (PIC) as shareholder of reference in most of these companies to advocate and demand for the appointment of black people as key executives. It is a foregone conclusion that the majority shareholder is very crucial in the appointment of a company’s chief executive; it is highly unlikely that anyone can be the chief executive without the endorsement of the majority shareholder. In fact, chief executives occupy those positions precisely because of their alignment with the ideology and the agenda of the majority shareholder. Therefore, major shareholders must weigh in and ensure that transformation is realised — it is, after all, in their investment interests.
On a number of occasions, the BMF announced that the JSE must make transformation targets part of its listing requirements. Targets on race and gender need to be set to ensure fair representation. The JSE needs to insist on disclosure from all the listed companies. The gender parity policy of the JSE is working and must be commended and supported. Through ongoing engagements with the JSE, the BMF welcomed the decision that the JSE undertook to include transformation as part of its listing requirements. Disclosure alone will hopefully embolden companies to improve their performance as this will be put into the public domain. However, the BMF proposes that the disclosure must not only be limited to the boards, but it must also include the executive committees. The BMF proposes that the composition at both levels must reflect 50% black and 40% women at the very minimum.
The dividends of our freedom and democracy are yet to be realised. An organisation that undermines transformation perpetuates societal inequality and economic injustice. The organisation’s espoused and practised values have to be in congruence, otherwise there will be tension between the ideal and real behaviour within the organisation. Transformation should not be in the list of things to be done, but in the very culture and essence of running a business.