Common goals inspire trust

2014-12-07 15:00

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Corporate executives need to be more creative and engaged to tackle risk and create real value, writes Ketso Gordhan

Corporate South Africa is embattled. The country’s economic slowdown is presenting severe challenges to growth and performance, and there is a growing trust deficit between white- and blue-collar workers, as well as between business and society in general.

If South Africa is going to realise its post-democracy vision of a more equal and prosperous society, we need to tackle the corporate challenges to growth and value creation.

While there are policy and trading environment-related issues beyond the control of corporate South Africa, corporate leadership needs to be creative in tackling the problems it can control.

The work we had begun at PPC when I was chief executive was exactly about this project – creating a company that was capable of navigating the challenges facing many South African corporates.

I believe this requires alignment of interests between investors, company leadership and employees. This goes beyond addressing the trust/productivity deficit between business and labour, but is about building the kind of legitimacy that will empower executives to be more effective in pushing for a better enabling environment for business.

While the initiatives I implemented at PPC to reduce the wage gap have been well noted, the past few weeks have made it clear to me that I made a powerful connection with PPC workers by engaging with them.

I received numerous messages of support from staff who were eager to tell me what a difference I had made as a CEO. They were at pains to point out that it was not only about reducing the wage gap, but the fact that I took the time to go out to plants to listen to and engage with workers. More than half the PPC workers signed a petition for my reinstatement.

I raise this not to lord it over the company. I am very willing to help get the staff re-engaged around the new leadership as it is in my financial best interest.

I make the point to underscore the critical issue that workers, especially ordinary workers, want their executives to engage with them.

We complain about poor productivity and yet many executives are completely disengaged from the reality of their workers’ lives and needs.

At PPC, we set about creating a culture of improving executive alignment with our workforce and the response was extraordinary.

I will not get a chance to test if it would have yielded improved productivity but I think it was worth it just to have a workforce that was beginning to feel a sense of true ownership of the company they worked for.

One of the accusations made about me during the recent “face-off” with the PPC board was that I was against transformation. This allegation is one that needs to be carefully considered before it is levelled.

On this occasion, it is a cheap, scurrilous and wholly untrue shot levelled in order to avoid the substantive and important issues that needed to be addressed in this debate.

My personal history in the struggle against apartheid as well as in my professional career speak for themselves.

It is a sad day in South Africa when we discount fundamental transformation such as empowering ordinary workers as owners, reducing the wage gap between executives and workers, and initiating projects aimed at improving the overall financial health of blue-collar workers.

This pathetic accusation also discounts the excellent and skilled black managers I recruited, some of whom are cutting their teeth on the tough and competitive battleground of building the company in Africa.

Limiting transformation to corporate capture by a small elite will not help corporate South Africa build the legitimacy it so crucially needs.

If we are to build “SA Inc”, we need to move the transformation debate from a tick box, elitist exercise

to fundamental transformation that includes ordinary workers, and tie that into increasing the productivity of South African companies.

We need to hold a mirror up to ourselves and ask the burning question: Is our transformation project genuinely about building a more globally competitive, prosperous and equal South Africa, or have we all connived an elite carve-up of the golden goose?

There are, of course, the challenges of growth in a harsh macro environment. But as the old adage goes: “Nothing creates alignment like success.”

Geographical expansion, in particular across Africa, represents a clear business opportunity for companies in search of new markets to power their growth.

The African opportunity is reflected in substantively higher short- and medium-term growth prospects compared with South Africa.

Furthermore, South Africa benefits from growth in the rest of Africa, which accounts for 15% of our exports.

There is mutual benefit in South African companies continuing to invest in our African neighbours, where there is stronger demand and growth.

Some corporates have been successful in leveraging these African growth opportunities. But many South African companies still need to prove themselves in these geographies – a very tough task.

The rest of the continent offers ample opportunity for PPC. Improved macroeconomic management, increased political stability and low fixed interest rates have underpinned strong public spending and investment, especially on infrastructure, which is good news for the company.

But the rest of the continent is not a walk in the park. Executives must operate outside of the comfort zones they are used to in South Africa.

Relationships are critical, as is creativity and flexibility. Similarly, boards need to be focused on strategy, risk and value creation, and not simply on compliance on domestic issues.

SA Inc needs to prioritise the right leadership to create globally competitive firms, grow new markets, particularly in Africa, and ultimately address the nation’s socioeconomic needs.

Boards must reflect the country’s transformation agenda while displaying strong commercial, risk management and financial attributes to provide executives with the appropriate support for building winning African strategies.

We need boards that provide advice and perspective, enriching strategy with stakeholders’ views and experiences that combine sector expertise and experience with that of other industries and disciplines.

Reconstituting the PPC board at the annual general meeting next month and appointing six new members is a victory for shareholders, including ordinary workers. Hopefully it creates a board better aligned to the company’s core challenges and priorities.

As the largest individual shareholder of PPC, I believe we need to keep the pressure on the new board to demonstrate that it is focused on the right issues and has the courage to help management navigate the execution risks of doing business in the rest of the continent.

I remain passionate about what we started at PPC. I wish the new team all the success that PPC and its employees deserve.

Gordhan is former CEO of PPC

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