• Large firms are key to driving the transformation agenda
Articles:

Large firms are key to driving the transformation agenda

25 June 2019

Sumesh Somaroo , Managing Partner |

The 17th Commission for Employment Equity (CEE) report showed that among other things, 68.5 percent of top management positions were occupied by whites, 14.4 percent by Africans, 8.9 percent by coloureds and 3.4 percent by foreign nationals.

  

Last year’s CEE Report unsurprisingly showed that the pace of transformation was, to say the least, pedestrian, especially at the upper levels of management where whites (especially males) still dominate. In the audit industry these numbers hold up with SAICA membership demographics being African 13%; Indian 12%; coloured 4%; Whites 70%.

Resolving this gap between the haves and the have-nots is a national imperative. A key tool for implementing this is the process of social and economic transformation.  

With its multi-layered approach to addressing the evils of apartheid using employment equity, skills development, ownership, management, socioeconomic development, and preferential procurement, our B-BEE codes are a relatively sophisticated tool for effecting transformation.

Transformation is in fact twofold, though. Besides B-BBEE, internal transformation through a company’s employees f is another component. In this context, it is larger businesses, the JSE-listed companies and the large government-run enterprises that have the resources to implement transformation.

In the case of smaller businesses, the critical priorities of having to make ends meet mean transformation cannot always be given the level of investment required.

Larger organisations have the capital and the human-resources assets it requires  to make a significant difference to transforming the country.

Historically, some listed companies have not taken this role as urgently as they should, and treated transformation as a” box-ticking” exercise. For transformation to be meaningful, there needs to be a sustainable part of a coherent strategy that creates equal opportunity.

One way of creating these opportunities is through preferential procurement. Companies are letting the process of transformation down when they fall back on established white-owned suppliers, saying the business is too important to “risk” using a black supplier.

This is a fallacy. Transformation is not a risk. In fact, a business runs a greater risk by failing to transform – especially if it relies on government business.

Bigger businesses have an obligation to support smaller businesses, and to help them grow. One way to support small, black-owned businesses is via preferential payment terms, which boosts cashflow, so businesses grow organically.

Big firms can also support small firms with training and development. They might refer work to these firms, which helps the black firms gain experience and technical skills.

Fortunately, most large firms now realise that transformation is a business imperative and insist that their service providers embrace its principles. If a supplier is not compliant, the client firm risks losing contracts, and it becomes imperative that everyone in the supply chain complies. In this way, large firms are driving the transformation agenda.

As more black companies are empowered, and given opportunities, their ability to deliver grows. At this point, when more firms are fighting for work on an equal footing, transformation will be closer to realising its aims.

In terms of staff development, larger firms are able to effect transformation through better remuneration, benefits and incentives. This is an often-overlooked aspect of transformation. We drive transformation by paying our existing workforce better and uplifting their economic standards.

Better remuneration – which tends to come from larger firms – is transformative from a generational perspective. It allows staff a better quality of life, and it enables them to send their children to better schools, which gives them better opportunities when they in turn enter the workforce.

Staff development is another critical aspect of transformation. Someone who was fortunate enough to attend an elite school, would have learned exam techniques and might find it easier to study than someone who attended a government school, where some of those processes aren’t taught. One finds that discrepancy continues into the workforce, and even affects confidence levels.

To truly create equal opportunities, as transformation demands, training and development is required. Large organisations are better equipped to bridge this gap.

Big firms are also better equipped to provide the tools to help staff to work better and to operate on an equal footing. For instance, a top firm might allow flexible working hours to accommodate staff who live far from the office. They might provide a 3G card for workers without home internet.

Larger organisations can invest in HR processes to understand their staff, to work to their strengths and get the best out of all the people in their organisation. Thus, we start to level the playing fields.

But having all these processes requires a significant investment. Larger firms generally have the budgets to make this kind of difference. Where they do, they are empowering the entire workforce. South Africa, as a whole, then benefits.

There has been some great development across industries in enhancing transformation – much of it driven by large, listed companies in the true spirit of transformation. But there is more to do to close the poverty gap, and transformation has a genuine role to play in that process.

  • Sumesh Somaroo is Managing Partner at BDO Durban

 

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