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Nontobeko ”Distinguished Woman”. Is Black Economic Empowerment (BEE) in the Insurance Industry a business imperative or is it a matter of social consciousness?.

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Nontobeko distinguished woman

Nontobeko”Distinguished Woman”

Is Black Economic Empowerment (BEE) in the Insurance Industry a business imperative or is it a matter of social consciousness?


“Debates over black economic empowerment (BEE) are alive and kicking. They are often emotionally charged, driven by white fears and black aspirations. In many cases though, there is a dearth of information underlying the debates”

Financial Mail-Top Empowerment Companies 2004


Purpose
Purpose and kicking. They are often emotionally charged, driven by white fears and black aspirations. In many cases though, there is a dearth of information underlying the debates”

  • To determine whether BEE is a business imperative in the insurance industry or are there other motivating factors.

  • To identify best practices.

  • To make recommendations, which will assist companies toovercome obstacles they are faced with and which will assist the Insurance industry to implement BEE successfully as a business imperative.


Agenda
Agenda and kicking. They are often emotionally charged, driven by white fears and black aspirations. In many cases though, there is a dearth of information underlying the debates”

  • Background to BEE

  • Scope of the Study

  • Research Conducted

  • Primary Research Findings

  • Alternative Solutions

  • Recommendations and Implementation Plan

  • Conclusion


Background
Background and kicking. They are often emotionally charged, driven by white fears and black aspirations. In many cases though, there is a dearth of information underlying the debates”

  • Narrow-minded approach applied to BEE and seen as a “commercial reality”

  • BEE relegated to a category of “necessary evil”

  • Various levels of commitment and motivation exist:

    • Political

    • Compliance

    • Social Consciousness

    • Business Imperative

    • Other


Background continued
Background… and kicking. They are often emotionally charged, driven by white fears and black aspirations. In many cases though, there is a dearth of information underlying the debates” continued

  • Transformation remains key for both government and private sector

  • BEE must be seen as an integrated socio-economic process as a mechanism to normalise the SA economy


Background continued1
Background… and kicking. They are often emotionally charged, driven by white fears and black aspirations. In many cases though, there is a dearth of information underlying the debates” continued

  • Evolution of transformation in SA

  • First wave of BEE

    • Aimed to create meaningful participation by black people in the economy

    • Very little change as the economy remained mainly in the hands of a minority.

  • Second wave of BEE

    • Primarily driven by charters to fortify the already existing extensive BEE and EE legislative framework.

    • Specific to Insurance Industry is the Financial Sector Charter


Scope
Scope and kicking. They are often emotionally charged, driven by white fears and black aspirations. In many cases though, there is a dearth of information underlying the debates”

  • The scope of this project is the Financial Services Charter (FSC), with specific emphasis on the Balanced Scorecard incorporated in the Charter as a measurement tool.

  • Recommendations will be made taking the pillars of the balanced scorecard into consideration leading to a focused approach


Research conducted
Research Conducted and kicking. They are often emotionally charged, driven by white fears and black aspirations. In many cases though, there is a dearth of information underlying the debates”

  • Qualitative approach followed

  • Literature Review

  • Interviews & Questionnaires

  • Best Practices


Application of classroom learning
Application of Classroom Learning and kicking. They are often emotionally charged, driven by white fears and black aspirations. In many cases though, there is a dearth of information underlying the debates”

Research conducted was integrated with WIN classroom learning with emphasis on the following areas:

  • Leadership

  • Transformation/Change Management

  • Economics

  • Finance

  • Marketing


Research literature review
Research - Literature Review and kicking. They are often emotionally charged, driven by white fears and black aspirations. In many cases though, there is a dearth of information underlying the debates”

  • Research included the Empowerdex JSE Survey 2004

  • Top 5 BEE companies of the sector, according to this survey:


Research literature review continued
Research - Literature Review … and kicking. They are often emotionally charged, driven by white fears and black aspirations. In many cases though, there is a dearth of information underlying the debates” continued

Empowerment Comparisons – Benchmarking

Lessons learnt from USA

  • Avoid the pitfall of affirmative action being stigmatised as reverse discrimination

  • Focus on minority firms to grow and develop

  • Focus on skills needed to develop a digital workforce era

  • Personal involvement and mentorship


Research literature review continued1
Research - Literature Review … and kicking. They are often emotionally charged, driven by white fears and black aspirations. In many cases though, there is a dearth of information underlying the debates” continued

Empowerment Comparisons – Benchmarking

Malaysia

  • Used as a true benchmark

  • Plans included

    • Expanded educational opportunities

    • Employment quotas

    • Incentives for corporate restructuring

  • One of the main tools was the transfer of up to 30% ownership


Research questionnaire and interviews
Research – Questionnaire and Interviews and kicking. They are often emotionally charged, driven by white fears and black aspirations. In many cases though, there is a dearth of information underlying the debates”

  • Used as the main research tool to ascertain where companies in the insurance industry are at in respect of BEE

  • Stakeholders included:

    • MD’s and employees of companies in the sector

    • Individuals and/or committees identified as the “responsible persons” for the Charter requirements within and across companies.

    • External stakeholders like suppliers and service providers

    • BEE Charter Focus Groups and Task Groups


Research best practices
Research – Best Practices and kicking. They are often emotionally charged, driven by white fears and black aspirations. In many cases though, there is a dearth of information underlying the debates”

  • National and international best practices and success stories were researched

  • Specific emphasis on “Top Empowerment Companies 2004” as per the April edition of the Financial Mail


Primary research findings
Primary Research Findings and kicking. They are often emotionally charged, driven by white fears and black aspirations. In many cases though, there is a dearth of information underlying the debates”

Interviews:

  • BEE and the FSC now transformational philosophy and strategy

  • 50% = BEE is a business imperative

  • 50% = BEE started out as a social conscious and compliance issue, slowly turning into a business imperative

  • BEE does not increase business risk


Primary research findings continued
Primary Research Findings… and kicking. They are often emotionally charged, driven by white fears and black aspirations. In many cases though, there is a dearth of information underlying the debates” continued

  • All organisations interviewed have a BEE policy and strategy

  • Not all organisations’ BEE strategy focus on all focus areas of the FSC

  • Primary focus is:

    • HumanResourceDevelopment

    • Procurement and

    • Corporate Social Investment


Primary research findings continued1
Primary Research Findings… and kicking. They are often emotionally charged, driven by white fears and black aspirations. In many cases though, there is a dearth of information underlying the debates” continued

  • The BEE benefits for business are:-

    • A growing economy

    • Business Growth

    • Compliance

    • Good reputation

    • Clients in new markets

    • Diversity

    • Business Opportunities

    • Reduction in crime


Primary research findings continued2
Primary Research Findings… and kicking. They are often emotionally charged, driven by white fears and black aspirations. In many cases though, there is a dearth of information underlying the debates” continued

  • What makes organisations committed to BEE?

    • Espoused and personal values

    • Sense of responsibility

    • Financial Benefits

    • New opportunities

    • Willingness to change

    • Financial commitment toward own business,industry,economy,country

    • Compliance with legislation


Primary research findings continued3
Primary Research Findings… and kicking. They are often emotionally charged, driven by white fears and black aspirations. In many cases though, there is a dearth of information underlying the debates” continued

  • General challenges include

    • Perceptions, mythsand misunderstanding of the intent of BEE

    • Companies have to compromise to comply:

      • Additional funds

      • Change systems & processes

      • Road shows for communication

      • Time & money invested in meetings & planning

      • Reporting

      • Training


Primary research findings continued4
Primary Research Findings… and kicking. They are often emotionally charged, driven by white fears and black aspirations. In many cases though, there is a dearth of information underlying the debates” continued

  • Procurement: suitable service providers & accreditation

  • Finding suitable EE candidates for senior positions

  • Changing cultures and mindsets

  • Different legislative reporting structures and targets

  • Lack of an operational Charter Council


Reflections bee as a business imperative
Reflections: BEE as a business imperative and kicking. They are often emotionally charged, driven by white fears and black aspirations. In many cases though, there is a dearth of information underlying the debates”

  • Regarded as a tool to integrate our society into the surrounding global environment

  • Unique approach to BEE

  • Long Term success = BEE as core strategy

  • Knowledge, commitment and willingness to change

  • BEE does not equal charity

  • BEE = moral, social, business and economic imperative


Reflections bee as a business imperative1
Reflections: BEE as a business imperative and kicking. They are often emotionally charged, driven by white fears and black aspirations. In many cases though, there is a dearth of information underlying the debates”

  • “BEE is not a zero sum game. It doesn’t mean that for some to win others must lose.” Desmond Lockey, Channel Life

  • Moses Kgosana, Chairman of KPMG explains that: “BEE is not a threat. It is a business imperative and an opportunity to strategically prepare businesses to thrive in an economy that has never looked as good as it does today and will grow strongly as the majority of the population is economically included.”


Reflections bee as a business imperative2
Reflections: BEE as a business imperative and kicking. They are often emotionally charged, driven by white fears and black aspirations. In many cases though, there is a dearth of information underlying the debates”

Leon Vermaak of Auto & General:

  • … there are wider issues at stake than basic compliance, namely the transformation of the country and the opportunities that exist in the emerging black market

  • … transformation can be the platform businesses need in order to take advantage of these huge business opportunities


Barriers
Barriers and kicking. They are often emotionally charged, driven by white fears and black aspirations. In many cases though, there is a dearth of information underlying the debates”

  • Lack of Finance

  • Limited skills pool

  • Conflicting legislation

  • Illegal immigrants

  • Lack of commitment

  • White fears

  • Regulations and reporting overload

  • Competitive edge


The findings thus illustrate that in spite of the barriers identified, BEE fundamentally is a business imperative in the Insurance Industry.

Levels of commitment and motivation are definitely changing towards recognising BEE as a business imperative.


Alternative solutions
Alternative Solutions barriers identified, BEE fundamentally is a business imperative in the Insurance Industry.

  • Create an appropriate environment for a business entity to succeed in and to achieve its goals

  • Black ownership and BEE is a process that should develop sensibly to be sustainable

  • To ensure that BEE transactions are successful, the appropriate funding structures must be developed fully


Alternative solutions continued
Alternative Solutions … barriers identified, BEE fundamentally is a business imperative in the Insurance Industry.continued

  • Skills development and training is critical to ensure a sustainable & educated labor force

  • AIDS will negatively impact on skilled labour levels, include in risk management plan

  • Levies and Incentives as rewards

  • Provide lucrative government business to compliant companies


Alternative solutions continued1
Alternative Solutions … barriers identified, BEE fundamentally is a business imperative in the Insurance Industry.continued

  • Consider that one size does not fit all

  • Captains of the industry must take charge in the successful implementation of the Charter

  • Focus must change from development to implementation of BEE as a way of business


Alternative solutions continued2
Alternative Solutions … barriers identified, BEE fundamentally is a business imperative in the Insurance Industry.continued

  • BEE should be understood an supported throughout the organisation to ensure a holistic approach

  • Company culture must embrace and encourage black economic empowerment

  • Visionary leadership with firm commitment to BEE is crucial

  • Expect resistance & ensure commitment at all managerial levels

  • Diversity management provides people with skills to enable them to deal with change

  • Consumer education


Alternative solutions continued3
Alternative Solutions … barriers identified, BEE fundamentally is a business imperative in the Insurance Industry.continued

  • The visibility of high profile “role model” companies is essential

  • BEE poses great opportunities for those who are flexible and innovative; change is inevitable

  • Procurement – companies face the same challenges and must work together to find solutions

  • Become mentors!

  • Success is dependant on peer-driven processes that capture the commitment, hearts and minds of the entire financial services sector

  • “Experience is Priceless” – use the lessons learned


Alternative solutions continued4
Alternative solutions … barriers identified, BEE fundamentally is a business imperative in the Insurance Industry.continued

  • Work together to increase SA market share - create opportunities

  • Form strategic alliances, collaborations and partnerships

  • Provide employee share ownership schemes

  • Outsource where possible to contribute to enterprise development

  • Develop other African markets and the continent as a whole


Recommendations and implementation plan
Recommendations and Implementation Plan barriers identified, BEE fundamentally is a business imperative in the Insurance Industry.

  • Create a communication vehicle in the Insurance Industry that would reach every employee and share BEE successes

  • Share the vision within the industry

  • Create structured and organized forums


Recommendations and implementation plan continued
Recommendations and Implementation Plan … barriers identified, BEE fundamentally is a business imperative in the Insurance Industry.continued

  • Employee share ownership schemes and participative management a way to retain and incentivise black employees

  • Share and learn from industry best practices

  • Celebrate successes of those companies who excel and ensure acknowledgement at an industry level


Embracing BEE in organisations is a function of leadership and management, transformation and change management and has an economic impact.

“It is not the strongest of the species that

survive, nor the most intelligent,but

the one most responsive to change.”

Charles Darwin


In conclusion
In Conclusion and management, transformation and change management and has an economic impact.

  • Take the time to reflect on the successes of transformation and how we touch the lives of black people through our initiatives. John is a plumber and building contractor whose life and business have been changed through BEE – for the better. He receives work, support, training, guidance and quick payments from one of our short-term insurance companies. The quality of his service and workmanship is an asset for the insurer, but he couldn’t have done it on his own in such a short space of time. Meet John!


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