Looking at the latest figures from the 2015 Jack Hammer Executive report, it reveals a bleak image when it comes to the transformation in executive teams. And while slow movement is noticeable, it shows that few black leaders are destined to make it to the top.
The findings show that there has in fact been a decline in the number of black South African CEOs, from 15% three years ago, to 10% at the time of this year’s research. It also showed that, out of a total of 334 people constituting the executive teams in SA’s Top 40 companies, 21% were black South Africans.
“This year’s research has allowed us a gaze into the transformation crystal ball, and what we saw was not very encouraging,” says Debbie Goodman-Bhyat, CEO of Jack Hammer, a leading executive search firm. “Using various data sets, comparing, analysing and extrapolating them, we were able to construct a roadmap of the route to the top followed by our previous and current captains of industry.
“Then, we investigated where the current crop of top black executives of SA’s Top 40 companies found themselves at the moment. And what we saw was that, although many find themselves in very senior positions, only 10% of them were on the right track to the top, in line with the roadmap,” she says.
BBQ spoke to Goodman-Bhyat about some of the findings and what her suggestions are regarding transformation in top company positions. “While the immediate thought may be that transformation was at least happening in the executive space, which could indicate that top leadership is set for a facelift in coming years, there is another piece of information that shows up this interpretation as false. To make a prediction for the future, one must also look at the route the CEOs took to the top, and compare that to where these senior black executives currently find themselves,” she says.
Core business roles
Historical data shows that almost all current Top 40 CEOs rose from core business roles. However in the executive teams, only about half of the black South Africans were currently in business strategy, operations or finance positions, with the balance being in corporate services roles which are most unlikely to lead to a promotion to the top position. “In other words, there is a pool of only 36 black executives, which forms 10% of the total number of executives, within SA’s Top 40 companies who are even in contention to make it to the top,” she says.
When asked what the latest figures reveal about leadership in top management positions, Goodman-Bhyat says, “Firstly, there is a fair increase in the number of black South African executives in South Africa’s Top 40 JSE Listed Corporations. Nevertheless, the percentage of black executives in core business, financial and operational roles is still very small---the potential pool of black professionals with the potential to be promoted to the top CEO role is therefore limited, and transformation at the top level will remain slow.
“The implication of all of this is that, at least for the next five to ten years, we will continue to have peripheral transformation. Companies have certainly been attempting to deliver on their transformation agendas, but the big picture is showing that much of this is taking place in non-core functions. In the long run, the base of influence is therefore unlikely to change. Simply put, by continuing to appoint people into secondary, non-business roles, their ability to transform at the core, and top, is hampered. Nevertheless, a few companies---notably MTN and Vodacom---are leading the way with more integrated diversity. The majority of their black executives occupy major operational and business roles, and they have achieved more meaningful executive transformation than most of their peers,” she says.
So what are the biggest barriers to transformation in the top strata of companies? According to Goodman-Bhyat, firstly there is the issue of supply and demand. She says there is currently a much greater demand for black professionals with sufficient experience working in similar scale organisations in relevant roles for substantial enough tenure, than there is a supply. This, she says connects all the way down to poor foundations in the education system. A second barrier Goodman-Bhyat highlights is an approach to transformation that does not always take the bigger picture into account, and is not strategic in assessing how to transition black professionals to core business roles as opposed to support services functions.
Looking at the finding of the Jack Hammer Executive Report, it also indicated there was a drop in the black CEOs between 2012 and 2015. Goodman-Bhyat says, “We need to be clear that the number of black CEOs in 2012 was very small to start off with – no more than a handful. So when one or two individuals resign, retire, or if a company is no longer part of the Top 40, this will significantly impact the numbers. More importantly, what this is pointing to is the fact that the numbers have not increased at all.”
But there are some industries and sectors that are displaying encouraging progress when looking at transformation in their top structures. Goodman-Bhyat says among the Top 40, the telecommunications sector is substantially more transformed across their executive teams than any other. This she says is possibly because as relatively ‘new’ industries, which have been heavily regulated from inception, they have not had to deal with legacy issues and the typical barriers to transformation and diversity which older, more established organizations have encountered.
As Goodman-Bhyat mentions, we are seeing some black representation at the top level of certain companies, but senior black role player are often not on the “the right track” when looking at the roadmap of the company. “When one analyses the trajectory to the top (ie, the CEO role), it is almost always individuals with strong technical backgrounds in finance, business, engineering or similar, who have previously been in core business roles (for example, COO, CFO, or MD of a division or subsidiary) who are appointed to take on the CEO role. They seldom (if ever) are promoted from support services roles (HR, Marketing, Corporate Affairs, Legal, etc),” she says.
Goodman-Bhyat concludes with some advice to corporate South Africa. “Companies need to be more strategic about their transformation process, and drive as hard as possible to focus on appointing black professionals into core business functions, in order to shift the seat of influence. To keep making appointments of black professionals into support, secondary (albeit weighty and complex) roles, will mean that transformation at the top---and at the core---continues to crawl. However, once the first few key appointments are made, this creates a snowball effect which carries momentum and will enable a greater pace of change.”