SA’s top management is set for at least another decade of slow transformation, with very few new faces representing diversity in terms of race and gender expected until at least 2015.

 

“While top companies are increasingly ensuring that their general workforce reflects the country’s demographics – in line with both ethical and legal requirements - the faces at the very top will continue to look the same for many years and, more likely, even the next decade,” says Debbie Goodman-Bhyat, MD of Jack Hammer Executive Headhunters.

 

Senior executives are still being cut from the same cookie cutter with 95% of the top positions filled by white males, nearly 60% of whom are over 50, and close to 70% of whom have degrees in finance.

 

This has been revealed in a new study on top executives in South Africa, which shows a stereotypical CEO still exists in South Africa despite the significant push towards greater racial and gender equity.

 

The Jack Hammer Executive Report which was created in order to debunk myths around executive appointments and create an informed view of SA’s business leadership landscape, provides interesting insights into the C-suite, and is intended to become an annual measure of the changing face of top executives in SA.

 

The study which has created a clear identi-kit of the typical CEO, pulled together free-floating facts and statistics garnered from 80 top companies in South Africa. They comprise SA’s top 40 JSE listed companies as measured by market capitalisation as well as 40 leading corporate businesses from the broader industry, dubbed the ‘Broad 40’.

 

Debbie Goodman Bhyat, MD of Jack Hammer Executive Head Hunters says that the issue is not that business is loath to transform, but rather about companies’ perception of the risks of appointing non-traditional CEO’s who don’t fit the previously cast mould and might be seen as mavericks or outliers.

 

“It is no secret that there is some unhappiness about the slow pace of transformation and while good intentions abound, boards remain very risk averse, particularly in tough economic times.

 

 “Neither the decision makers, nor shareholders they are accountable to, like change. No one seems to want to shake up the status quo, for fear of a negative impact on the bottom line. Instead corporate employment decisions revert to default positions rather than making bold new moves to change those at the helm in top corporations.

 

“The general feeling is that we have progressed a great deal since the introduction of broad black economic empowerment policies. However, the snapshot our researchers have gleaned shows little progress has been made at the top echelons of South African business.

 

“Making the top appointment is one of the most intricate decisions especially in an age where accountability and transformation are crucial. The right information and insights are imperative as it takes things out of the realm of gut feel and guesswork”, she says.

 

The figures show that 15% of the Top 40 CEO’s are black, 5% are female and the vast majority have a degree in finance and at least one post graduate qualification. By expanding the view to the Broad 40, the picture is similar with only 13% black and 10% female.

 

Interestingly not many foreigners head the top 40 companies in SA – one of the corporate myths that can now be debunked. In the Top 40, 85% of the CEO’s are South African and among the Broad 40, 77% are South African citizens. 

 

Unsurprisingly, every top executive has at least one university degree and the MBA remains the most popular postgraduate qualification among this group, with 25% of  the top 40 CEO’s, and 20% of the broad 40 CEO’s having earned these. However, the CEO’s in the Top 40 have a significantly greater number of masters and doctorate degrees – 28%, versus only 11% in the broad 40.

 

Aside from the vast majority holding degrees in finance, 17,5% hold Mining and Engineering degrees, and 5% have a degree in Geology 5% . Only 1% has made it to the corner office with a Marketing degree.

 

The research shows among the top 40 group, not one of the CEO’s are younger than 40, 22% of them are under 50 and 20% are over 60 years old.

 

 “Among the larger corporations, significant experience (and by implication, age) is non-negotiable due to the levels of complexity and scale inherent in running such organisations. In the broad 40, age is less of a definer, with 62% of the CEO’s being below 50 years old, only 25% in their 50’s and 7% in their sixties.

 

“Among the Top 40, younger, more energetic and innovative executives may be overlooked in favour of a steady, older hand. There seems to be a reluctance to take a chance on a leader with ‘potential’. Instead, boards want tried and tested performers, and are more willing to forfeit supercharged outperformance, if it means that they can minimise potential downside risk,” says Goodman-Bhyat.

 

“Not surprisingly, 55% of these top executives have held their positions for longer than 5 years.  Among the top 40 companies, change is lot slower. These companies are big enough to accommodate several moves by a leader before reaching the CEO role and once there they tend to hold the position for at least a 5 year period, and sometime longer. 

“There seems to be shorter tenure in the broad 40 companies with nearly 50% of the incumbents having held their position for less than 3 years.”

 

The majority of executives from both groupings are married and have children and regularly play sport. Interestingly the top 40 executives overwhelmingly favour organised team sports such as cricket and tennis while within the broad 40, individual competitive sports are favoured such as cycling, running and golf.

 

“It is interesting that 75% of all the top leaders participate in sport, many of them at very competitive levels including marathons. Many proudly list their participation in endurance sport events such as Iron Man contests among their achievements, “ she says.

A people problem triple whammy has hit some of South Africa’s blue-chip companies hard this year and one expert says this could worsen in 2013.

Finding the right executives and talented leaders to drive growth, deliver shareholder value and ensure commercial sustainability for top organisations, whilst balancing the on-going need to comply with employment equity and other governance and transformation imperatives has become an increasing headache for companies, according to top executive headhunters.

 

Companies need clear strategies to cope with staff problems and meet the challenges of 2013

A survey conducted by Jack Hammer Executive Headhunters of  companies in the banking, investment, insurance and FMCG sectors has revealed that the on-going struggle to attract the right people, retain good people and cut those who add overhead but don’t deliver, are causing knockout blows to business.

The majority of those polled said they were clear on key strategic initiatives for 2012, but their major challenges related to human resources and their inability to reconcile staffing needs with business priorities.

 

While companies can take steps to factor in slow economic growth, it is much more difficult to predict and rectify the impact of the big three – strikes, retrenchments and  employment equity compliance and it seems an on-going corporate struggle to attract the right people.

 

Despite our massive unemployment issues, there is still a lack of skilled people to fill specialist positions and some Cape-based companies have the added issue of struggling with transformation imperatives as Johannesburg remains the preferred base for EE candidates.

 

Resourcing has a knock-on effect when it comes to achieving business goals – when budgets are not met due to inadequate people or gaps in executive teams, this has an impact on business confidence and ultimately results in a lack of investor confidence, creating a vicious cycle for which there is no quick fix.

 

Participation in the survey guarantees anonymity. One participant in the insurance sector who cannot be named said: “We just don’t have the right people to do the sorts of thing that need to be done. Implementation of key initiatives for 2012 is behind schedule.”

 

A respondent from the investment banking sector said that they face “major challenges” when it comes to EE compliance, which in turn hampers their overall success. A Cape-based corporation commented that “the one major challenge that impedes long-term strategy is that the pool of EE talent is based in Joburg with no interest in working in Cape Town. We would have more luxury of choice if we were a Gauteng-based organisation.”

 

And it’s not only transformation issues that have presented significant challenges to growth. The banking sector was stymied by waves of retrenchments throughout the country – “when other businesses do badly, it has a negative effect on ours. There is room for improvement on our 2012 implementation.”

A major player in the FMCG industry agreed that labour upheavals, like 2012’s bitter strike season, had a significant impact on their business, saying, “When people are striking, they are not buying.”

 

The survey shows that many companies perceive people issues as the key variable holding business back, at a time and in an era when business sustainability is at its most vulnerable.

 

In business, people can be equated to money. HR and labour issues are placing an immense strain on our economy. Companies need clear strategies to cope with staff problems and meet the challenges of 2013. What we have learnt in 2012 is that it’s just not business as usual.

Conflict is an inevitable and potentially valuable part of human existence. Yet most of us are ill-equipped to deal constructively with differences, whether in the personal, political or organisational context. For example, a 2009 UK survey of over 600 senior business people revealed that only 37 % regarded themselves as being adequately trained to cope with business conflict. Just how prevalent conflict is, is demonstrated by another UK survey in 2008 which found that the average UK employee spends over two hours a week dealing with conflict, which meant in total more than 370 million working days were lost in the UK the previous year alone. Middle managers in organisations experience most role stress.

Stress leads to conflict, which leads to stress. A recent WHO study found that of the 1.6m people on average who die per year as a result of violence, 55% were as a result of suicides. Given high levels of conflict in South Africa generally but also in the typical SA workplace, chances are that the situation is, at best, similar here. In fact, our experience working with many organisations in both the private and public sectors suggests that many organisations are indeed in distress. Low levels of trust, uncooperativeness, high levels of staff turnover and low productivity abound.

Given a world that is full of conflict and a human race that tries to resolve it without the necessary skills to do so, it is no wonder that we seem to struggle along from one conflict situation to the next without seemingly progressing to a point where we can resolve our differences peacefully, quickly and cost effectively.

A general lack of conflict resolution skills is not the only cause. A big contributor is our view of conflict is something that must be avoided. Because of this, it is no wonder that when we see conflict we either fail to deal with the issue, or we go into attack mode, using whatever power or legal remedies is available to us. Link this to a general unwillingness to listen to those who have different views to our own, and the way many of our so-called ‘service delivery protests’ develop and turn out starts making sense: instead of pro-actively seeking joint solutions, the police are called in or recourse is taken to the courts to stop the protests. These only provide short-term relief, however.

If and when the people concerned are listened to, relationships are already at a low ebb, making the search for constructive and cooperative solutions difficult and sometimes even impossible. Yet, as one of the early pioneers of conflict resolution, Mary Parker Follett, once said: “It is possible to conceive conflict as not necessarily a wasteful outbreak of incompatibilities, but a normal process by which socially valuable differences register themselves for the enrichment of all concerned”.

One challenge therefore is to begin to see conflict not only as inevitable but also as a potential opportunity to resolve differences, find common ground and strengthen relationships. Within organisations this translates into becoming conflict wise, i.e. harnessing the power of conflict to promote understanding, cooperation and growth.

In Jim Collins’ best-selling book, Good to Great, he recalls how the 11 “great” organisations (they had each delivered cumulative returns at least 3 times greater than the market over a 15-year period) all displayed a similar approach to dealing with conflict: “All the good-to-great companies had a penchant for intense dialogue. Phrases like ‘loud debate’, ‘heated discussions’ and ‘healthy conflict’ peppered the articles and interview transcripts from all the companies”. A 2003 UK survey of top management teams also found that the more productive ones treated conflicts as opportunities for collaboration to achieve the best solution for the organisation as a whole.

Another obstacle is the mind set with which we usually approach differences: we assume that our interests are necessarily in conflict with those of people we contend with and therefore fail to exploit the common ground and collaborative opportunities that most often do exist and instead take up opposing positions to engage in a tit-for-tat battle for supremacy.

Take the ‘Spear’ issue, for instance: the debate almost immediately started off with opposing, extreme demands, one for protection of individual dignity and the other for protection of freedom of expression. The ‘frame’ going into the debate was one of opposing and irreconcilable differences that could only be resolved through the use of power (sometimes violence) or the decision of a judge. Eventually a solution of sorts was found. Yet, despite the subsequent political hype about a resolution having been found, the damage had been done not only to relationships and reputations but also to our young democracy and its institutions. Instead of approaching our differences from a narrow winner-takes-all mind set where the goal is victory and not agreement, we have a choice to view differences in the way Parker-Follett suggested at the turn of the previous century.

Poor leadership or outdated leadership models also contribute to our inability to effectively deal with differences. Instead of inclusive leadership styles that would allow decision-makers the chance to hear others’ concerns, viewpoints and suggestions before making a decision that affects them, our politicians and captains of industry promote the outdated idea of ‘decisive’ (i.e. exclusionary, power-based) leadership. Business schools are sometimes to blame as well because of the kind of profit-driven rather than a stakeholder relationship model of leadership they promote. As a recent article in the California Management Review notes: “The emphasis on analysis has produced a generation of MBA’s who are critters with lopsided brains, icy hearts and shrunken souls”.

There are no doubt many other contributing factors, some of which we have little or no control over. However, we do have control over things like our willingness to listen and not just hear; to move away from apathy to action; to stop being victims and instead become masters of our own destiny; and, most of all, over the attitudes that we bring into those difficult conversations.

It is perhaps apposite to end off with this powerful reminder from Parker-Follett, written shortly before her death as war clouds started gathering yet again over Europe: “We have thought of peace as passive and war as the active way of living. The opposite is true. War is not the most strenuous life. It is a kind of rest cure compared to the task of reconciling our differences... From War to Peace is not from the strenuous to the easy existence; it is from the futile to the effective, from the stagnant to the active, from the destructive to the creative way of life. The world will be regenerated by the people who rise above these passive ways and heroically seek, by whatever hardship, by whatever toil, the methods by which people can agree.”

Prof Jordaan is head of the Africa Centre for Dispute Settlement (ACDS) at Stellenbosch University. The Centre forms part of the University’s HOPE Project, a campus-wide initiative through which the institution uses its teaching, research and community interaction expertise to seek sustainable solutions for pressing challenges in South Africa and the rest of the continent.