Transformation shouldn't just be a tick-box exercise for businesses, instead it should be seen as something necessary for businesses to grow and thrive, says Busiswe Sithole.
The social worker turned group head of transformation at MMI Holdings, shared with Fin24 how the financial services group achieved its level one Broad-Based Black Economic Empowerment certificate earlier this year, while acknowledging that the financial services sector still has a long way to go in truly reflecting the diversity of the country.
Having joined MMI in 2017, Sithole was the head of Old Mutual Insure's Responsible Business department. She also has a background in the corporate social responsibility space in various industries including mining.
She had been working as a social worker for two years, when she discovered the concept of corporate social investment as another means of making a difference in people's lives. At the time Black Economic Empowerment (BEE) was first promulgated, and she took up a position at Impala Platinum in 2004 with the task of implementing its BEE objectives.
"As a young person I said, 'I think I can do this'. That's when my transformation work started in the corporate world," she said.
Sithole believes her social work background was invaluable, because it allowed her to understand the socio-economic challenges facing the country, especially people on the ground.
Not just compliance
Sithole said that most individuals or businesses make the mistake of thinking transformation is just about compliance.
"When you approach it from the compliance perspective, then it becomes difficult …You have to demonstrate that it is good for the country." Sithole explained that businesses need to see it as something which adds value to their businesses as well.
Sithole's MBA, which she completed in 2015 looked into how "responsible business" could contribute to a business's competitiveness and productivity. She found that when transformation is seen as something that yields return on investment, then it is much easier to shape a culture change in a business.
Sithole is currently working on her doctorate in business leadership – her studies focus on economic transformation in the area of ownership. "My experience over the years is that most companies have mastered it (transformation) in terms of other elements like employment equity, skills or procurement. But where we are lacking as a country is in terms of ownership."
Almost 80% of the economically active population is black, but when considering who the owners of companies are, the demographics reflect the opposite, she said.
"When more people start owning then real transformation starts happening. The economy of the country starts growing because people have more interests in growing the economy of the country."
Sithole explained that transformation involves corporates using their resources to meet the socio-economic needs of the country. At the same time, corporates can contribute to economic growth. "When the economy grows, the companies also grow. So, it’s a shared value principle," she said.
"If you do not know the value of transformation to business, then you would think it is a racial thing which is about replacing one race with another. You would think it is about exclusion, while it’s actually about inclusion and diversity.
"But when you understand the value that transformation brings as an investor to your business, then you start understanding that this is something your business needs to grow and thrive. There is power in diversity."
Sithole said she learnt that transformation programmes need to align with business for businesses to benefit.
"A lot of transformation initiatives require investment. You don’t want to invest as a business and not really see the return of it… The transformation agenda will start adding value to your business if it is aligned to your business strategy," Sithole explained.
The transformation programme should form part of the strategic objectives of the business. As an insurance company, MMI recognised that it needed to embrace diversity in order to better understand the diverse South African market.
"The financial sector is one of those sectors where in the past, black people were not fully exposed to. There is still a lot of areas where there are barriers to entry."
She said for example, many insurance companies, depend on brokers as the distribution channel for their products. In the past, black people were not exposed to that space, said Sithole.
So through its enterprise and supplier development, MMI contributes to the development of a diverse broker landscape. This doesn’t only enable new comers to enter the market, but also help those that have been in the field longer to transform and become more relevant and grow their businesses. "It is not about excluding others to include others. It is about diversifying the landscape, so that diverse needs of diverse customers can be better understood and serviced." she explained.
Access to financial services
Sithole hopes that the financial service industry will be more accessible to individuals.
"We have a critical role to play as an industry, to grow our country economically. The financial sector has much needed resources to do a lot of things. We are key in driving transformation as an industry."
Sithole said that the sector was key in ensuring individuals increase their financial wellness. Individuals need to be able to access financial products. If they cannot, it would be detrimental for the business case of the financial sector, which relies on its consumers to grow.