Take diversity and inclusivity to the executive committee level

It is almost a generation since the dawn of freedom and democracy in South Africa. Our transformation journey has been remarkable, but does not reflect the demographics of our society. To break the glass ceiling and accelerate black talent to executive heights in companies and organisations, the conversion of nonexecutive directors to full-time executive roles will be groundbreaking in realising transformation. The 2017 Commission for Employment Equity Report showed that white people are only 9.5% of the economically active population but occupy more than 68.5% of the top management positions in companies and organisations. About 78% of black Africans are economically active yet hold only 14.4% of top management positions.

Corporate South Africa needs to reflect the demographics of our society both at board and executive committee levels. People are invited to boards based on their business expertise and leadership records. The directors spend extensive hours understanding the business of companies they serve, to be effective in holding the executives accountable and guiding corporate governance.

David Larcker and Brian Tayan of Stanford Graduate School of Business argued that the benefit of appointing a current (nonexecutive) director to the position of CEO is that the director can act as a hybrid “inside-outside” CEO. They are likely well versed in all aspects of the company, including strategy, business model and risk-management practices. A current director also likely has personal relationships with the executive team and fellow board members, making it easier to determine cultural fit prior to hiring. At the same time, this individual is not a member of the current senior management team, and therefore has greater freedom to make organisational changes if needed.

This concept is also supported by executive search gurus James

Citrin and Dayton Ogden, who found that board members-turnedCEOs outperform all other types of candidates (including insiders, outsiders, former executives and chief operating officer promotions).

They measure performance using a combination of relative stock price returns, revenue growth and profit growth, and conclude that directorsturned-CEOs represent a strong blend of insider and outsider attributes.

It makes sense for companies to leverage high performance and thought leadership already within their boards and use these nonexecutives as a talent pool to fill vacancies at executive levels.

At MMI Holdings, the deputy CEO, Mary Vilakazi, highlighted the success of this. She used to be a partner in an audit firm. She then became a nonexecutive director at MMI, and because she could demonstrate aptitude, she was appointed chief financial officer. Peter Matlare, deputy CEO of Barclays Africa, also started as a nonexecutive director before being appointed an executive director.

At Sasol joint CEO Bongani Nqwababa started as a nonexecutive director on the board. He converted to the chief financial officer role and later to his current role. Basani Maluleke, CEO-designate of African Bank — the first black woman CEO of a bank — also started as a nonexecutive director there.

The conversion of nonexecutive directors to executive directors will accelerate black talent and help the top management of organisations to reflect the demographics of our society. It is easy for companies to achieve diversity and inclusivity at board level, but most companies find it challenging to achieve that at executive committee levels. The conversion of nonexecutive directors to executive directors will ensure diversity and inclusivity in companies, as well as achieve corporate transformation.

Director sturned-CEOs represent a strong blend of insider and outsider attributes