Executive Report | Volume Three - Jack Hammer · questions about transformation trends – from where CEOs are being appointed and how the profiles of CEOs have changed over the past

FINDING THE FACTS: SOUTH AFRICA’S FUTURE LEADERS

Executive Report | Volume Three

jack hammer polish final 8 feb.indd 1 2016/02/08 4:37 PM


CONTENTS

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Leadership 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

CEOs 2012 vs 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

ExecutiveTeams2015.....................................................................................17

Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Decline in Black South African CEOs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19

RolesPriortoAppointment.................................................................................20

BattingOrder............................................................................................22

Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

KeyInsights:WomenintheWorkplace2015..................................................................25

Education...............................................................................................37

Unconscious Bias . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30

YoungGunsOfferHopefortheFuture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Contact Details . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36


“ 2

Areweontherightpathorarewecontinuingdownthesameroadwiththesamechallengesandroadblocksuniquetoourcountry?

Byusingvariousdatasets,andcomparing,analysingandextrapolatingthem,wewereabletoarriveatsomesurprisinginsights.Webelievethattheinsightsgainedshouldgivepausetocompanies,andinsomeinstancespromptstrategyrethink.

Fortunately,theanswerswefoundalsoprovideausefulroadmapforcompanieswhowanttogobeyondcomplyingwithcodes,andtowardembracinganewtrajectoryontheirgrowthpath.

AtJackHammer,weareprivilegedtobeabletoassistSA’sleadingcompaniesonthisimportantjourney,byfindingthemtherightleadersintherightplacesattherighttime.

Becausewhenleadersfit,theyrevealtheirgreatness,andhelptogrowgreatcompanies.

Happyhunting!

Debbie Goodman-Bhyat, CEO, Jack Hammer

Companiescan’t improvewhat theydon’tmeasure.”- Sheryl Sandberg, Facebook


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JackHammerExecutiveReportVolume Three

Most importantly:ArecompaniesbasedinSouthAfricapositioningthemselveswellenoughformeaningfultransformationamongsttheirleadershipintothefuture?

Further:Whatdoesdiversityactuallymeanforyourbusiness?Doorganisationsseethebiggerpictureadvantagesofdiversity?

These are tough questions.Andimportanttoaskatthisjuncture, ifbusinessinfactdesiresmeaningfulandsubstantialtransformationthatbenefitsallstakeholderspositively.

THETIMEHASARRIVEDFOR US TO START ASKING QUESTIONS. NEWQUESTIONS.


In2014,McKinsey&Companyresearched366publiccompaniesacrossarangeofindustriesinCanada,LatinAmerica,theUnitedKingdom,andtheUnitedStates,lookingatfinancialresultsandthecompositionoftopmanagementandboards.Resultsshowedaclearbusinesscasefordiversity,including:

•Winningthewarfortalent

•Strengtheningcustomerorientation

•Increasingemployeesatisfaction

•Improvingdecisionmaking

•Enhancinganorganisation’simage

•Outperformingthecompetition.

GENDER DIVERSE ETHNICALLY DIVERSE

15% 35%

Whencompaniescommitthemselvestodiverseleadership,theyaremoresuccessful.

McKINSEY&COMPANY:DIVERSITYMATTERS

Diversity’sdividend:What’sthelikelihoodthatcompaniesinthetopquartilefordiversityfinanciallyoutperformthoseinthe bottomquartile?

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It’sveryimportanttohaveafeedbackloop,whereyou’reconstantlythinkingaboutwhatyou’vedoneandhowyoucouldbedoingitbetter.”- Elon Musk, Tesla

“


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Survey OverviewTheresearchwhichinformstheJackHammerExecutiveReportVolumeThreewasconductedbyindependentresearchconsultancy Merchantec.

Examiningvariousdatasets,themakeupandtrajectoryoftheCEOsandexecutiveteamsofSouthAfrica’sTop40companiesweredetermined.

Thefindingsfrom2015werecomparedtothefindingsfromresearch conducted for the 2012 ExecutiveReport.

Theresearchfocusedonanumberofareas,includingtheage,race,gender,remuneration,nationality,tenure,routetothetopandqualificationsofCEOsandtheirseniorteams.

ComparisonsweremadenotonlybetweentheCEOfindingsfromthefirstandthethirdreport,butalsobetweentheCEOsandExecutiveTeamsin2015.

Ultimately,theresearchsoughttoanswerquestionsabouttransformationtrends–fromwhereCEOsarebeingappointedandhowtheprofilesofCEOshavechangedoverthepastthreeyears,tohowtheprofilesofExecutiveTeamscomparetothoseofCEOs,andwhethertransformationwasspeedingupatthesecondtier.

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TheprofileofSA’sTop40leadershiphas

shownlittlechangesinceJackHammer’s

previousCEOresearchthreeyearsago.

Representationfromblackandfemale

candidatesinthetopjobsisnegligible,

asboardscontinuetoerronthesideof

conservativedecision-making.

The captains of SA’s Top40companiescontinuetobewhitemalesintheir50s, withaslightincreaseinforeignCEOs.

THE(UN)CHANGINGFACESATTHETOP

Leadership 2015

7


+5.2%

+2.6%

-14%

+5.2%

WHITE

SOUTH AFRICAN

MALE

50’s

TYPICAL CEOJSE TOP 40

8



RACE&GENDER

9.8% BLACK

5.2% DECREASESINCE 2012

9


MALE2.5% FEMALE

2.5% DECREASE SINCE 2012

97.5%

JSE TOP 40

10



0%70’s

0%30’s

12.560’s

62.5%50’s

25%40’s

AGE

11


EDUCATION

FINANCE 65%

HUMANITIES 5%

LAW 5%

SCIENCE 12.5%

ENGINEERING 12.5%

5

12.5

65

5

12.5

JSE TOP 40

12



2012 vs 2015CEOs

13


17

5.2% decrease

15%

9.8%

2015

2012

BLACK CEOsJSE TOP 40

14


% OF CEOs IN SOUTH AFRICA WHOAREFOREIGN14% INCREASE


NATIONALITY

15% 29%2012 201515


AGE GENDER

JSE TOP 40

20% 12.5%

CEOsOVER607.5% DECREASE

FEMALE CEOs2.5% DECREASE

2012 20155%

20122.5%2015 16


ExecutiveTeams2015

20


At first glance,theprofilesoftheexecutiveteamsinSouthAfrica’sTop40companiesappeartooffersomeconsolationthatindeedtransformationishappening, albeitatthenexttier.

However further analysis burststhatbubble.

Thefactis,topleadershipisunlikelytoexperienceanymajorchangesincomingyears,

withtoofewblackandfemaleprofessionals

incorebusinessfunctionswhichshifttheseatofinfluence,andleadtothe topposition.

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ofExecutivesarefemale

ofExecutivesareblackSouth Africans

ofExecutivesare white or foreign

17%

21%

79%

ofExecutivesareblackfemales

7%

JSE TOP 40

18

334 Executives



TrendsDECLINE IN BLACK SOUTH AFRICAN CEOsThepercentagessuggestthattherehasbeenadramaticdeclineinthenumberofblackSouthAfricancaptainsofindustry.Butthatisbecausethebaselinefigureissolow to start with.

Hence,whenoneortwopeopleleavethetopjob–whetherbecauseofretirement,resignation,orleavingaTop40company–thereisamassivedropinrepresentation.

19


AlmostallcurrentTop40CEOsrose fromcorebusinessroles.MostCEOswereheavilyinvolvedinoperationsbeforepromotionsandmanyofthemweredrawnfromfinance.8.3%

FOUNDERS

16.6% FINANCE

16.6% SUBSIDIARIES

58.3% OPERATIONS

Thisdoesnotsoftenrealitythough. Because at the end oftheday,theresimplyhasnotbeenanincreaseasone would have expected three years down the line.

JSE TOP 40

ROLES PRIOR TO APPOINTMENT

20



Althoughmoreblackexecutivesfindthemselvesinveryseniorpositons,only half of them are positioned to reach the top jobinlinewiththeestablishedroadmap.

21

OF WHICH HALF ARE POSITIONEDFOR TOP LEADERSHIP

BLACK21%


WhiletheexecutiveteamsofSA’sTop40companiesareslowlybecomingmorerepresentative,veryfewofthesetopblackleadersaredestinedtomakeittothepinnaclepositionintheircompanies.

Ofatotalof334peopleconstitutingtheexecutiveteamsinSA’sTop40companies,21%areblackSouthAfricans.

But,onlyhalfofthemarecurrentlyinbusinessstrategy,operationsorfinancepositions,destinedforcompanyleadership.ThebalanceareincorporateservicesrolessuchasHR,marketing,legalandcorporateaffairs,whichareunlikelytoleadtoapromotiontothetopposition.

Organisations must become more strategic about transformation. Iftheintentionistodevelopa substantialpoolofdiverse leaders inthecorebusinessspace,wheretheywillbepositionedforstrategicallyinfluentialroles,andpotentiallythetopjob,that’swherecompaniesmustmaketheirappointments.

BATTING ORDERJSE TOP 40

22


Companieswithahighrepresentationofwomenboardmemberssignificantlyoutperformedthosewithnofemaledirectors,accordingtoa2011CatalystAnalysisoffinancialresultsatFortune500companies.

Fact:In South Africa, women are being appointed to senior positions. But too many of these appointments remain in support roles. While these roles are certainly important, they do not lead to the top job.

It is imperative that more women be actively sourced and appointed to the critical profit-and-loss jobs – the core business roles – which will see substantial gender transformation happen at CEO and executive levels in years to come.

JSE TOP 40

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KEY INSIGHTS FROM LEAN IN AND McKINSEY&COMPANY: WOMENINTHEWORKPLACE2015*Femaleleadershipisanimperativefororganisationsthatwanttoperformatthehighestlevels,yetwomencontinuetofacegreaterbarrierstoadvancementandasteeperpathtoseniorleadership.Basedontheslowrateofprogressoverthelastthreeyears,itwilltaketwenty-fiveyearstoreachgenderparityatthesenior-VPlevelandmorethanonehundredyearsintheC-suite.

*Allinsightsabovearecontainedinthe‘WomenintheWorkplaceReport’,availableatwww.mckinsey.com

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Rita McGrath, Columbia Business School

Seventy-fourpercentofcompaniesreportthattheirCEOsarehighlycommittedtogenderdiversity.However,lessthanhalfofemployeesbelievethatgenderdiversity is a top priority for their CEO and only a third view it as a a top priority fortheirdirectmanager.Womenarealmostfourtimesmorelikelythanmentothinktheyhavefeweropportunitiestoadvancebecauseoftheirgender–andtheyaretwiceaslikelytothinktheirgenderwillmakeitharderforthemto advance. ““

Image:FortuneLiveMedia

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Ifyoudon’thavewomeninthepipeline,theyarenotgoingtoget thetopjob.”


BACHELORS

BACHELORS

BACHELORS HONOURS

HONOURS


EDUCATION

TopjobscallfortopqualificationsWithasingleexception,allCEOsboasttertiaryqualifications,with45%ofthemholdingaMaster’sDegreeorhigher.90%ofthemhaveasolidtechnicalqualification,whetheritbeinbusiness,finance,engineeringorscience.ItneednotbeanMBA,butifyouaregoingtomakeitallthewaytothetop,

apost-graduatequalificationisessential.

TheroleofMBAs,astheresearchshows,ispossiblyover-estimated,withmanyleadershavinghigherdegreesinotherfields.Whatisclearthough,isthatmuchmoreworkisrequiredatschool-level,andthatthebasiceducationsystemisoneofthekeychallengesinthecountry’stransformationjourney.Ifmathsandsciencearenotmasteredatschool,thereislittlehopethatacandidatewillbeabletoovercometheinitialhurdlesofacquiringafinancial,technicalorbusinessdegree,andultimatelyclaimatopleadershipposition.

An MBAisnottheonly–orevenbest–waytogetinthefastlanetothetop.

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While we should continue to push at the top to ensure substantial transformation, there is crucial change that needs to be effected at the foundations, which currently do not support transformation efforts.

JSE TOP 40

28

97.5%

90%

45%

12.5%PHD

HONOURS

MASTERS

19.5%have MBA’s

BACHELORS

MASTERS

HONOURS

HONOURS



“Combatting our unconscious biases is hard, because they don’t feel wrong; they feel right. But it’s necessary to fight against bias in order to create a work environment that supports and encourages diverse

perspectives and people. Not only is that the right thing to do, but without a diverse workforce, there’s a pretty good chance that our products won’t work for everyone. That means we need to make the unconscious, conscious.”

“

- Laszlo Bock and Brian Welle, Google

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Unconscious BiasAsglobalresearchincreasinglyfocusesontheideaofunconsciousbias,agreaterunderstandingisemergingabouthowbiga role that which we don’t know we don’t know plays in the workplace.

Eventhosewhobelievetheydonothold,muchlessactupon,theirinnatebiases,willbesurprisedtowhatdegreedecisionsareinfluencedby thesubjective.

Inordertoeffectmeaningfultransformationoforganisations,itisimperativethataclearunderstandingisgainedofhowdecision-makersareaffectedbyunconsciousbias,andtoeliminateitasmuchaspossible.

GOOGLEADVISESFOURSTEPSTOADDRESSINGUNCONSCIOUSBIAS,WHICHAREUSEDINTHEIR OWNCOMPANY:

Getthefactsandusethem:Youcan’tchangewhatyoudon’tmeasure.

Sticktoclearlydefinedcriteriafordecisionmaking:Usingthesamestandardstoevaluatealloptionseliminatesbias.

Bemindfulofsubtlecues:Whatdoesthepanellooklike?Whoaretheboardroomsnamedafter?

Fosterawareness:Holdeveryone–includingyourself–accountable.

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Onepromisingaspectemergingfromthe2015research,isthesmallbutsignificantpoolofblackandfemaleleadersunder40.

Butforthemtostepintotopleadershippositionsinthefuture,thefollowingadviceapplies:

1. Don’trushtobecomeCEO–gettheexperienceyouneedtodothejobwell.

2. Getyourpostgraduatequalification,preferablyinabusinessorfinancialfield.

3. Don’tautomaticallymoveupwhenofferedapromotion–movingsidewaysintoanoperationalrolewithP&Lresponsibilitycouldbejusttheticketyouneedforfuturepromotion.

86%BLACKOF THE 4% ARE

FINANCE OPERATIONS

50% 53% 47%WOMENMEN

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Theseleaderscanputinplacemeasurestodramaticallyimprovetheirchancesofbecomingcompanychiefsdowntheline.Andforcompanies,theyprovideasignificantopportunitytochangethefaceof their top echelons – if this opportunity is properly harnessed rightnow.

Thegoodnewsisthatthereisapooloftalentcomingupthroughtheranks,withmanyyoungblackSouthAfricansundertheageof40.

4%

UNDER 40OF THE EXECUTIVE GROUP

32



ConclusionIfthereisonemessagethatcomesthroughloudandclearinthewakeof JackHammer’s2015research,itisthatnotenoughisbeingdonetoactivelytransformSouthAfrica’scompaniesinawaythatwillallowthemtogrowinto thefuturewithasolidfoundationofintegrityandinclusiveness.

Butwhatisequallyclear,isthatweneedtochangeour

approachfrom(sometimesgrudging)compliancewith

legislation,toaradicalnewpathofidentifyingandaddressing

thefactorsthatyearafteryearseestopleadershipremain

largelythesameastheyear(anddecades)before.

Askyourself:Whatwillitmeanforyourbusinessifyoustop

tryingtotickboxes,andratheridentifyandeliminateblockages

togetaheadofthecurve?Aheadofregulationandpolicy

demands?Totrulyseekouttoptalentwhichisdiverse,

inclusiveandultimatelytransformative?

The facts are clear:

1. Therehasbeenlittletransformationininfluentialrolesin

the past three years.

2. Wecanexpectlittletransformationininfluentialrolesinthe

nextdecade,unlessbigshiftsaremade.

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Bynow,weshouldnolongerneedfurtherconvincing:thecase

forbuildingatrulyinclusiveandtransformedcompanyhas

beenproventhroughimpeccableglobalresearch.

Forfuture-facingcompanies,thetimehascometoembracediversityinawaythatwillensuretheirgrowthandviability.

But how does one eat this particular elephant?

• Unconsciousbiasesneedtobeidentifiedandincapacitated.• Thepublicsectorandbusinessmustfocusoninvestmentin

thefoundationsoftransformation–namelyeducation,andinparticularinmathsskillsinprimaryeducation.

• Companieshavetobecomeconsciouslystrategicabouttransformationandappointblackandfemaleprofessionalsintocorebusinessroles,inordertoshiftthe seat of influence.

Andfinally,youcan’tchangewhatyoudon’tmeasure.Sostartlookingatthebigpictureandwhatthenumbersshowyouaboutthebigpicture.

Newfrontiersawait,buttheywillonlybereachedbythevisionaryleaderswhocanidentifyandembarkonthenew pathsthatleadtothem.

DEBBIE GOODMAN-BHYATCEO, Jack Hammer

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“Itdoesseemoddthatwe’restillmakingastatisticalcaseforwhateveryoneknowstobetrue:diverse thought, experience, outlooks and culture make stronger solutions,morerapidinnovation,moreengagedemployees andcustomers,andbetterallaroundperformance.”

- China Gorman, CEO Great Place to Work Institute

“

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mailto:[email protected]

www.jhammer.co.za

www.ircsearchpartners.com


Disclaimer:TheJackHammerExecutiveReportascontainedinVolumeThreerepresentsonlysomeofthesalientandinterestingfactsandobservationsgainedfromtheresearchconductedbyJackHammerandtheirpartnersanddoesnotseektobeacomprehensivereflectionofallthedatacontainedinthefullreport.Researchforthisthird

editionwasconcludedinOctober2015.

Exclusive SA member of IRC Global Executive Search Partners


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Executive Report | Volume Three - Jack Hammer · questions about transformation trends – from where CEOs are being appointed and how the profiles of CEOs have changed over the past