SA companies do not have enough black middle and senior level managers in their businesses, new research shows.
In the inaugural Sanlam Gauge report published Thursday, SA businesses scored 57% in the management control section of their Broad-based Black Economic Empowerment (B-BBEE) scores.
And while ownership scores were relatively strong at 85.56%, “the target for most sectors is 25% black equity, meaning that 27 years into democracy, less than a quarter of the business sector is black-owned”, the report says.
The Sanlam Gauge report, in partnership with Sunday Times Business Times, provides a national and sectoral score on transformation in the SA economy. The research and the report were done by Intellidex.
The report accounts for all elements of B-BBEE and represents data received from 3,154 businesses’ B-BBEE scorecards.
As per the department of trade and industry’s B-BBEE classification, the Sanlam Gauge included ownership, management control, skills development, enterprise and supplier development and socioeconomic development in its report.
Panellists at the Sanlam Gauge conference on Thursday morning concurred that a lack of management control was a concern. The Sanlam Gauge report says: “Management scores are lowest across all sectors and all size categories, the research found, with companies generally meeting targets at junior management level but falling short in higher levels.”
“We don’t have a critical mass of black managers,” said Lerato Ratsoma, managing director of Empowerdex. “This low figure (in management control) came as quite a shock. This is something that definitely needs to be discussed,” she said.
We don’t have a critical mass of black managers ... This low figure came as quite a shock, this is something that definitely needs to be discussed.
— Lerato Ratsoma, managing director of Empowerdex
Andile Khumalo, CEO of KhumaloCO and co-founder of the Sanlam Gauge, said the consistently poor management control figures across all industries needed to be investigated.
“We need to get to the bottom of what is the fundamental issue when it comes to management control,” he said, as well as why the high ownership figures have not translated into an increase in management control.
This anomaly could be directly linked to low exercisable voting rights.
Lindiwe Madonsela, head of compliance at the B-BBEE Commission at the department of trade and industry, said the research showed “we are not doing well when it comes to increasing the pace of transformation”.
She said the figures for 2020, which the commission is scheduled to publish, showed that in 2020 there was a 28-29% increase in ownership deals, in 2019 there was a 29% increase and in 2018 the a 28% increase. The commission would like the annual percentage increase to exceed 29%.
Figures might show a slight increase in ownership, said Madonsela, but they did not translate to an equal vote in the boardroom. “The voting rights for these owners are limited, especially for black women,” she said.
“This raises a question whether it (the B-BBEE score) is more about achieving the levels or if it’s about meaningful transformation,” said Madonsela.
Karl Socikwa, group executive for market development at Sanlam, attributed the lack of black people in management positions to fear. He believes companies fear creating an inclusive management team because they believe it will lower the standards of the business and reduce opportunities for other groups of people.
Sandile Zungu, chairperson of the Black Business Council, said the time for transformation was running out and anticipated civil unrest from South Africans who were still excluded from the economy.
He said until 75% of the economy’s ownership was in the hands of black South Africans “it’s going to disturb our nation-state, and it will all go up in smoke”.
“This is not an empty threat,” said Zungu.
He believes that when people feel excluded and have nothing to lose, “their behaviour tends to be viewed by those who have something to lose as being utterly irresponsible”.
He encourages those who have “something to lose” to embrace transformation to “hasten the process of change” and prevent social upheaval.
