Hunting for black executives

Black people hold 180 out of a total 603 directorships on boards of the top 40 companies listed on the JSE, but a third of those are held by a clique of just 22 individuals who sit on multiple boards.

While companies argue that they are doing what they can to drive transformation in an environment where skills are in short supply - there is mounting activism and a determination, as illustrated by Brian Molefe of Public Investment Corporation's (PIC) public criticism last month of Barloworld, to force companies to up the ante.

While the pool of non-executive talent in South Africa is small - the number of black executives on the boards of the country's 40 most valuable listed companies almost pales into insignificance.

Black people fill just 25 executive positions in those firms, with a number of dual listed companies having little or no black representation on their boards despite their being listed on the JSE.

Coming at a cost

While board composition is not indicative of transformation in companies, it's a public symbol of corporate transformation. Many companies, banks in particular, have only one or two executives on the board of the company while their executive committees, where day-to-day operational decisions are taken, have a higher number of black representatives.

Molefe's attack on Barloworld is the first time that he has forced change on a big company, and most certainly won't be the last. He previously publicly criticised petrochemicals group Sasol for its failure to transform its management structure. The net result is a senior management team that has been substantially and aggressively transformed.

But that has come at a cost to other companies from whom directors were poached to improve Sasol's complexion.

Nowadays, Sasol has three black executive directors: FD Christine Ramon left Johnnic after its takeover by HCI, Nolitha Fakude left Nedbank just 18 months after being enticed to move from Sandton to Rosebank, and Benny Mokaba moved to Sasol from Shell South Africa where he was executive chairperson. The addition of Hixonia Nyasulu, a former Nedbank co-deputy chairperson as a non-executive director at Sasol also negatively affected the bank's BEE credentials.

Women barely feature

It's worth noting that the two companies in the top 40 that are run by black CEOs have a considerably higher number of black directors on their boards. With Papi Molotsane as CEO, Telkom's board has just two white directors and nine black executives and non-executives, while MTN, run by Phutuma Nhleko, has nine directors on its board who are not white. In reality three of those individuals are middle-eastern shareholder representatives and not South Africans, but the group's board is made up of predominantly non-white directors.

While Bidvest has nine black directors on its board, it does have the largest board of any listed company on the JSE with 26 members, which critics suggest dilutes the impact of all but the most outspoken individuals.

Also illuminating is the fact that women barely feature as executive directors of big listed companies. Canadian-born Anglo American CEO designate Cynthia Carroll has broken the mould to become the first female CEO of a top 40 company. Just eight other women hold executive positions in the JSE's biggest companies.

The five top 40 companies with the lowest level of black representation on their boards all have their primary listings offshore. BHP Billiton and Richemont have no black directors, Liberty International, SABMiller and Old Mutual each have one non-executive director who is not white.

Struggle to retain black talent

However, several companies that are domiciled in South Africa and have their operations based here are likely to come into the firing line in the months ahead.

Among possible targets for black shareholder activism could be: Remgro, which has two black non-executive directors on its board of 15, Pick 'n Pay, which also has two black non-executives on its board of 13, Barloworld subsidiary PPC with two black directors, one of whom is an executive however, while Steinhoff and Sappi are thinly represented with professional non-execs Franklin Sonn and Len Konar on both boards.

Many South African companies struggle to retain upwardly mobile black talent due to the fact that companies, under pressure to transform, are prepared to write big cheques to attract the right skills. Often, however, that's where the company commitment stops.

HR directors acknowledge the importance of competitive salaries when it comes to attracting staff - but it's not all about money.

Governments internationally are rising to the challenge: France has a special visa to encourage scientists, Germany now makes it easier for skilled workers to get access to its labour market, while Singapore aggressively pursues foreign talent.

Exodus from public to private sector

In South Africa, demand for black executive talent and a plethora of BEE deals have seen an exodus from the public sector with highly skilled bureaucrats and politicians lured to the private sector. Big names like Andile Ngcaba, who left the department of communications to join Didata, Cheryl Carolus who left SA Tourism for a more lucrative future in the private sector, and former elected officials like Valli Moosa and Popo Molefe, are making their presence felt as dealmakers.

But the skills crunch goes beyond board pigmentation. One gold mining CEO discloses privately that his firm is forced to pay over the odds to acquire engineering talent or face losing it in the global market.

With an international resources boom and no apparent end in sight for demand from countries like China, international mining companies are paying considerably more than South African companies are used to - and skills are highly mobile.

South African boardrooms, already feeling the dearth of skills, face considerably more global competition as the hunt for talent is increasingly internationalised.