Tuesday, May 3, 2016


This article first appeared in the Business Times section of The Sunday Times on 1 May 2016. 

‘THE South African labour market continues to be racialised and gendered, it remains hierarchical with blacks concentrated at the lower levels and the white group occupying decision-making positions.”

This was the conclusion of the Commission for Employment Equity’s 16th annual report on the state of transformation in the workforce.

It’s no surprise the statistics have once again revealed a lethargic pace of racial and gender transformation in the private sector, especially in top and senior management.

The ratio of whites in top management relative to blacks remains extremely high relative to their share of the economically active population — which is a measure of people between the ages 15 and 64, who are either employed or unemployed and who are seeking employment.

Whites represent only 9.9% of the total EAP of South Africa yet they constitute almost 70% of top management.

Africans were the biggest beneficiaries of the decrease in white top management, rising from 13.6% representation in 2014 to a paltry 14.3%.

It is worth noting that they form over 77% of the total EAP.

Further analysis shows that in the public sector, over 73% of top management are African, while the largely white-controlled private sector has only 10.8% of Africans in top management.

Chalk and cheese!

So the question arises: why has the pace of transformation been so slow in the private sector and what should be done to ensure its acceleration?

Ntsoaki Mamashela, director of employment equity at the Department of Labour, puts it down to excuses of “shortage of skills” and lack of “commitment to transformation”.

She points out that the Skills Development Act was promulgated in 1998 and for 18 years companies have had clear guidelines on developing the skills of their workforce.

If you are depressed by the poor ratio of Africans in top private sector management positions, you will be horrified by the report’s observations on skills development.

At top management level, the report says, the white group benefited the most from skills development opportunities.

“What the designated employers are reporting is that preferential treatment is given to the white group at the expense of the designated groups in terms of skills development,” it says.

So South African companies are training a higher proportion of their white employees over their black employees, yet they argue that a shortage of skills is the reason they don’t have black top managers.

I often hear business leaders and government officials say “transformation is a business imperative”.

The Commission for Employment Equity also says “transformation does make business sense. No business will survive in the long run unless it reinvents itself and constantly adapts to the ever-changing demands of an increasingly competitive global environment in which it operates.”

In this context, the term “transformation ” carries two connotations.

One refers to transforming the racial, gender and broader demographic profile of employees, suppliers and owners of a company.

The other is more of a global and universal connotation. This refers to transformation of a business model, culture or even the product or service offering of a company in order to remain competitive in a rapidly changing world. Think Über — a service that used mobile technology to transform the taxi industry.

Those who want to argue that transformation, in the South African context, makes business sense conveniently confuse the two connotations.

If that were true, how do we explain the lily-white top management teams that have led South African business since 1948 to date?

Even if one argues that apartheid protected the status quo until 1994, how then do you explain the past 22 years?

How is it that multibillion-dollar companies have not only flourished but more than doubled their value in the past 20 years, yet their best record, as a collective, over the two decades, shows the 10% white population controls almost 70% of all business decisions?

We all know about the meteoric rise of Capitec.

Fourteen years ago, the bank’s share price was R2.

Today it’s just under R600. I don’t recall the company ever crediting its amazing growth to transformation, notwithstanding the fact that its core customers are Africans.

It’s a farce. For most business leaders, transformation is not a business imperative and frankly, does not always make business sense.

For them, it is a government requirement that is at best an inconvenience and at worst a destroyer of value.

Case in point is the CEOs of mining companies. They argue their companies should only have to do one BEE transaction in their lives.

They say when the BEE shareholders eventually, and rightfully, exit to realise value, the company should be allowed to remain 100% white-owned into perpetuity.

To them it “makes no business sense” to require mining companies to always have meaningful black shareholder participation.

Let’s wake up and smell the coffee. Enough with the carrots — it’s time for the stick.

Take off the kid gloves and deal decisively with these transformation dodgers.

Or history will judge us as a bunch of cowards who dishonoured the blood of those who died for this freedom.

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