Beyond share empowerment

LESSONS FROM THE VERY EXPENSIVE FAILED SCHEME Ownership purely for self-gain and self-gratification becomes barren as an economic factor.

In their heyday, employee share option schemes (Esops) were nothing more than an extension of the agency system: that ’80s snake oil which enticed executives to “think like shareholders” and pursue the narrow dictates of shareholder value growth.

One can’t blame shareholders only. They’re such a divergent, sometimes even naïve, group with varying interests that to attribute to them clearly-defined expectations via abstracts created in business schools, is misplaced at best.

However, it made them easy prey for a new mercenary breed of executives who understood those theoretical concoctions enough to create smoke, mirrors and myths around their exceptionality and extract short-term gain from them.

Despite the mounting body of evidence against them, shareholder-value criteria – according to a Forbes article – still predominates most executive thinking.

The key lesson from Sasol’s Inzalo scheme is the limitations these programmes have in B-BBEE. The costly, complex nature of a massive multi-billion rand exercise such as Inzalo must beg the question of whether they can deliver on their large promise?

From a labour perspective, no one can still seriously consider Esops as a method of enhancing employee involvement in an enterprise’s destiny. If you view a company as a means of extraction, you’ll focus on where you can extract the most. As a worker the more you extract through wages, the less you can extract through profits. That creates an inherent conflict of interest.

But one could use the same argument against labour, capital and government. This has swung economic emphasis globally from tangible wealth creation to wealth accumulation and ownership. Value-adding, or wealth creation, and not wealth accumulation, encourages inclusivity and broader empowerment. Because the latter naturally encourages concentration, it’ll always end up in the hands of the few and worsen inequality.

Possession on its own doesn’t represent power. Ownership that exists purely for self-gain and self-gratification becomes barren as an economic factor.

Asset ownership, via capital, land, property, equity, or companies themselves is a highly-flawed cornerstone of populist rhetoric and regulatory thinking. But now politicians seem to understand that power, or empowerment, cannot be narrowly confined to ownership, and have added “control” and “management” in their latest radical economic transformation framework.

That doesn’t make the framework better, but more flawed. The entire empowerment framework must change or be redefined to embrace tasks, operations and ownership.

It starts with the individual taking ownership and responsibility of their own destiny and being willing to make a meaningful contribution to their social and economic environment. That willingness is reflected in their tasks, which are part of operations that have a common purpose in adding value. Such a commitment removes barriers to being part of “management and control” and it’s a small leap to being given equity in the company itself. Only then will share option schemes make sense.

The empowerment progression is from self-accountability to ownership of tasks, to operations, then to assets.