Insurance and aviation businesses take financial and technological risks because statistics about smoking habits and the efficacy of proven safety measures indicate that those risks will probably, over time, yield enough profit to justify what will then turn out to not have been a risk, but courage to go where the science points.
Is it possible that there’s a way to apply this principle across a broader range of sectors? Is it also possible that despite the availability of the prerequisite information, many businesses aren’t taking advantage of it? Is there a real-world scenario where what appears to be a risk is only a risk in the imagination of a person whose rewards for challenging their own beliefs would be as statistically assured as general profits are (over time) for insurance and aviation businesses?
Fortunately and unfortunately, the answer to these questions is a resounding yes — and it’s crippling the economy.
A McKinsey report titled, “Delivering Through Diversity” says that around the world, businesses with diverse boards are 43% more likely to be profitable. In 2012, Harvard Business Review went beyond saying, “Diversity on boards is critical to sustaining performance” to listing a number of studies that seek to explain why the presence of women on boards often correlates with better business outcomes. In business-to-customer spaces, “Women directors are likely to be more in tune with women’s needs than men, which helps develop successful products and services. After all, women drive 70% of purchase decisions by consumers in the European Union and 80% of them in the United States.” And whether you believe gender-typical behaviour results from socialisation or from nature, a Forbes Magazine article points out that traits normally associated with women — empathy, communication and good listening skills listening — are both crucial to sound leadership, and they’re the reason women are passed over for leadership roles. And the World Economic Forum noted that, “Venture capital firms that increased their proportion of female partner hires by 10% saw, on average, a 1.5% spike in overall fund returns each year and had 9.7% more profitable exits”, dovetailing this observation with theories explaining statistics correlating diversity with profitability (a homogenous group is less likely to see all the risks and opportunities around an investment, for example).
Are South African businesses leveraging the opportunity this presents through Broad-Based Black Economic Empowerment (B-BBEE), or do scorecards hide a corporate culture that is as unprofitable as it is insular? “Women are still not advancing in corporate South Africa,” notes Bonang Mohale, elsewhere arguing, “Economic justice and racial fairness have always been one and the same thing. Asking for a hand-up is not the same as asking for a handout. B-BBEE is not a permanent crutch against which black people want to lean for the rest of their lives.” His analyses on the structural inequalities laid bare by Covid-19 underscored the findings of the BBBEE Commission on the general slowness of transformation as well as the Department of Labour’s anxieties about the effectiveness of Employment Equity legislation in bringing about workplace equity and equality.
Why is business ignoring the science about black women and commercial sustainability?
Much of the problem has to do with the word-cloud association around transformation and B-BBEE, which is often of crony capitalism and corruption. We believe this is because there’s a steady output (in the marketplace of thought) of content that instead of arguing that B-BBEE is being corrupted, instead says B-BBEE is inherently corrupt and corrupts anyone who comes into contact with it. Consequently, in our interactions with stakeholders such as strategic partners, event attendees and clients, we find that general belief in the spirit and intent of B-BBEE is pitted against its history and general implementation. But, contrary to the conclusions that have poured forth since the official opposition party’s policy conference sparked a countrywide debate on whether race should be proxy for disadvantage in post-apartheid South Africa, B-BBEE is the most business-friendly economic policy instrument we have for accomplishing inclusive economic growth, without which South African business owners remain surrounded by the risky reality of frustrated fellow countrymen who have no access to the mainstream economy.
Unaddressed, this risk gives impetus for rhetoric on nationalisation and expropriation without compensation; it also erupts in protests, damage to public and private property, as well as the disruption of business operations. This set of outcomes is a far cry from the glowing possibilities opened by a business focus on diversity, inclusion and gender parity in the workplace.
BEE Novation can locate your business on the transformation journey map, and help your organisation develop and implement both technical B-BBEE and softer cultural skills for diversity management and inclusion. Contact us now to be part of a transformation that’ll benefit both the broader economy and your organisation.