- The financial services sector has had ample time to effect
transformation but has chosen not to. - The demographics of the economically active population in
South Africa are 78% African Blacks; but White employees occupy 66.5% of top
management positions. - Directors and shareholders
must be visibly supportive of diversity initiatives and be seen to walk the
talk.
Is it too cold to make
a clarion call that the financial services sector should be radically
transformed to become a vibrant, and globally competitive industry that
reflects the demographics of South Africa?
Not at all.
Despite more than two
decades of effort through policy papers and even legislation, this sector’s
notoriously closed white and male networks continue to permeate many companies.
They are not in a hurry to redress the wrongs and legacy of the past.
The financial services
sector has had ample time to effect transformation but has chosen not to and
simply pay lip service to calls for transformation of the sector to reflect the
demographics of this Rainbow Nation.
Latest appointments
After all, how would
one explain the appointment of Iain Williamson as Chief Executive Officer of
Old Mutual, Duncan Artus as Chief Investment Officer at Allan Gray, both white
men, and the Eskom Provident Fund seeking to appoint a white person as the new
chairman to lead its Board of Trustees?
In all these entities
and many others, the appointments made and proposed unfortunately do little to
narrow the diversity and ethnicity gap and by extension, the transformation gap
in corporate South Africa.
This has been a
recurring theme for many years. This is disingenuous and unjust.
Commission for Employment Equity report
Let me put this matter
of demographic representation in the financial services sector into
perspective. Last August, the Commission for Employment Equity released its
19th report on Employment Equity. The results of the report reflected an
enduring gap between the national demographics and representation in key
decision-making roles.
According to the
report, the demographics of the Economically Active Population in South Africa
are 78% African Blacks; 10% Coloured; 9% White and 2, 7% Indian. In analysing
the actual data however, the Commission reported that in relation to top
management positions, White employees occupied 66, 5% of the positions;
followed by 15% Africans, 10% Indians and 5% Coloured.
Lack of progression of black candidates
The mismatch in employee assistance programme representation
versus top management representation is glaring. In this context, top
management is regarded as a proxy for critical decision-making.
The mismatch in
demographics, therefore, implies either a lack of progression of black
candidates within the management pipeline, or an inability of organisations to
put together roadmaps aimed at ensuring their own demographics indicate some
correlation with the national picture.
It is of course not the
intention of this statement to say that perfect correlation is expected between
the employee assistance programme and the management picture, but the glaring
picture indicates that the desired roadmap that would assist in narrowing the
gap – at least on a national level – doesn’t actually exist.
Acute gender gap
A secondary, but
equally important, point stated in the Employment Equity Report, was that in
the top management positions mentioned above, the gender gap was even more
acute than the racial gap.
Despite making up 45%
of the Economically Active Population, women made up just 23% of the top
management positions. This type of underrepresentation in critical
decision-making, is not only an affront on women but also has implications for
businesses and the larger economy.
In its May 2020 report
on the benefits of diversity in the workplace – – following up from similar
reports in 2015 and 2018 – – McKinsey reports that companies that are in the
top quartile in terms of gender diversity, were 25% more likely to experience
‘above-average’ profitability than peer companies in the fourth quartile.
In relation to ethnic
diversity; the outperformance between the two quartiles was 36%. This then
provides illustrative data on the business case for diversity and inclusion.
But more importantly, for a country like South Africa – where the arc of
history materially influences the curve of progress – the case for inclusivity
and diversity need not be bolstered by references to McKinsey.
Righting the wrongs of our past
Rather, it is a
national imperative that finds its soul not only in the universal acknowledgment
that transformation is an important instrument of righting the wrongs of our
past, but also finds constitutional expression through the various legislative
measures that have been implemented since 1994.
The tragic reality,
however, is that even with the existence of such instruments, the progress
remains lethargic at best and actively resisted at worst.
We at the Association
of Black Securities and Investment Professionals, a lead activist for black
professionals and black businesses in the financial services sector, are
concerned that natural, organic succession plans have seen people like
Williamson and Artus assume their current positions failed to live up to the
transformation imperative in the country.
Constrained by strategic inertia
As a result, the change
in the number of women and black professionals being appointed to positions of
authority remains constrained by past practices and strategic inertia. The hard
reality, however, is that such a state of affairs is quite simply no longer
sustainable.
We live in a country
with immense opportunity and a deep history of racism. Like other countries,
our Rainbow Nation has a flaw in its societal fabric. In other nations it is
religion, class, caste and colour. Here it is race.
It is a pity that
opponents of transformation are saying “enough is enough”. They say
there comes a time when every one of us must begin to be judged based on
criteria that do not include race, ethnicity, physical capabilities and gender.
The truth is the basic
tenets of transformation involves providing opportunities for those locked out
historically, with a serious attempt to establish a level playing field.
Embracing diversity
Having failed with the implementation of Broad Based Black Economic
Empowerment scorecards and policy, all we can do is to embrace and accept that
diversity is a life and professional philosophy, one that touches on the
psychological impact and success and culture of a workplace.
From my point of view, there are indeed many benefits to planning for,
creating and maintaining a diverse workforce let alone executive management
team that represents the demography of our nation.
A diverse executive management serves to build loyal employees and
long-term loyal customers and ultimately the reputation of an organisation.
I understand that a diverse workplace culture doesn’t just happen. It
also goes beyond creating a diversity policy — developing a culture must be
planned.
So, how can an organisations such as Old Mutual, Allan Gray go about
this? I believe that the board of directors and shareholders must be visibly
supportive of diversity initiatives and be seen to walk the talk. They should
stop and look at the leadership team and ponder if it reflects the customer
base and community and focus on creating a management team that reflects the
diversity of the nation, employee and customer base.
If South Africa is to
achieve true transformation and growth in the financial services sector, we
need the courage to create conditions that make it entice people to come out of
their comfort zones and venture onto the critical path of transformation.
Polo Leteka-Radebe is President of the Association
of Black Securities and Investment Professionals and Chairman
of the Financial Sector Transformation Council.
