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Murray & Roberts group CE Brian Bruce
identifies three requirements for empowerment to succeed: employment
equity, management policy and business control.
These three requirements traverse the
internal and external environments – the external being a composite of
legislation, socio-economic and business environments and the internal a
composite of the challenges which Murray & Roberts sets for itself.
The Government's strategy appears to be
that companies must achieve an appropriate level of BEE by applying a
balanced scorecard approach which looks not only at equity partnerships,
but also procurement, joint venture partnerships, affirmative action and a
host of other issues.
In the case of Murray & Roberts, there are
several unique challenges.
"We are currently a 100% free float
company," explains Brian, "and to maintain shareholder value, conventional
wisdom dictates that we maintain that status." Shares in Murray & Roberts
can only be acquired through the market on the same terms as those offered
to any other shareholder.
Approximately 40% of the assets of Murray &
Roberts are employed outside South Africa, where the group has to
accommodate varying national prerogatives.
Employment equity at senior level is also a
challenge. "We serve a technically-orientated industry, and at that level
there is a dire current shortage of previously disadvantaged individuals (PDIs)
who are suitably qualified and experienced. So we have to adopt a longer
time frame."
Murray & Roberts proposes to have a
holistic BEE strategy that satisfies the requirements of the JSE
Securities Exchange, the governance requirements of shareholders and the
government's balanced scorecard.
"We believe that the balanced scorecard is
the best way to achieve this and we are positioning our strategy around
it," says Brian.
One of the first actions in formalising the
balanced scorecard approach will be collating all relevant information
relating to BEE, safety, health and environmental issues (the triple
bottom line) which the company will in future publish as part of its
annual report to shareholders.
While the constraints Murray & Roberts
faces may suggest that it will struggle to meet the requirements of the
balanced scorecard, the reality is that the company is already making good
progress.
According to an assessment by Empowerdex,
an empowerment monitoring and rating agency, Murray & Roberts scores a
BEE-weighting of 40% compared to an industry average of 23%. Empowerdex
lists Murray & Roberts as "showing exceptional overall BEE contribution."
The Public Investment Commissioner (PIC),
which holds and invests funds on behalf of public sector pension funds,
has a 16% stake in the company, and this stake is recognised by Empowerdex
as BEE.
While the Empowerdex report is being
assessed, Murray & Roberts is focused on its internal objectives and
targets in respect of empowerment.
Zaid Nordien, the group’s empowerment
executive explains: "The bedrock of our strategy is the statement by the
company that Murray & Roberts is South African. We don't embrace
transformation for external reasons or to win business, but to reflect
South Africa in all of its facets, including legitimacy and representivity."
The reality, says Zaid, is that many of the
group's operating companies remain in a ‘pale male and middle-aged’
comfort zone. Quite apart from PDIs, this has been an alienating
environment for newcomers from whatever social background.
The fundamental challenge therefore has
been to change the mindset at all levels of leadership, business partners
and employees.
A parallel challenge is to change the
representivity of all levels of the organisation, from directors to
management, and staff to service providers.
"We have to engage in partnerships with BEE
firms to ensure that the economic opportunity spreads wider, and to ensure
that our own policies are implemented by our subcontractors," Zaid says.
Millard Arnold, recently appointed
commercial director of Murray & Roberts, says that the appointment of PDIs
into top executive positions holds particular challenges.
Murray & Roberts has appointed a number of
black non-executive directors who for many years have played a meaningful
role, and there is a growing number of executive directors in the
operating companies.
"First choice is to develop the leadership
capability of PDIs internally, so that any individual who progresses
through the group will do so with a complete understanding of the
objectives, ethos and strategy of the group. There are such leaders at
subsidiary level right now, and ideally I would like to see more black
leadership develop at this level.
“But in the short-term second choice may
have to be to look outside the company to find people who have the
capacity, experience and expertise to join the group in an executive
leadership position,” says Millard.
In his short time at Murray & Roberts,
Millard has detected a clear commitment to the process of transformation.
"It is a subject which rarely fails to come up at any meeting I attend.
Like many South African companies, Murray & Roberts is searching for the
most effective strategy to further the aims of BEE generally, and the
group specifically," he says.
One area where the group can and does
aggressively pursue black empowerment is in strategic partnerships.
"Within the context of our non-negotiable
commitment to earnings growth and value creation, we can identify partners
with the right level of thinking and capacity to add to our value," says
Zaid.
Procurement is another area where much can
be achieved, but the process is currently inhibited by the lack of
statistical analysis to verify the effectiveness of procurement policies.
"We are currently putting in place an audit system to address this,” he
says.
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