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

2. “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

3. Purpose 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 to overcome obstacles they are faced with and which will assist the Insurance industry to implement BEE successfully as a business imperative.

4. Agenda Background to BEE Scope of the Study Research Conducted Primary Research Findings Alternative Solutions Recommendations and Implementation Plan Conclusion

5. Background 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

6. Background… 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

7. Background… 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

8. Scope 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

9. Research Conducted Qualitative approach followed Literature Review Interviews & Questionnaires Best Practices

10. Application of Classroom Learning Research conducted was integrated with WIN classroom learning with emphasis on the following areas: –Leadership –Transformation/Change Management –Economics –Finance –Marketing

11. Research - Literature Review Research included the Empowerdex JSE Survey 2004 Top 5 BEE companies of the sector, according to this survey:

12. Research - Literature Review … 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

13. Research - Literature Review … 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

14. Research – Questionnaire and Interviews 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

15. Research – Best Practices 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

16. Primary Research Findings 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

17. Primary Research Findings… 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: –Human Resource Development –Procurement and –Corporate Social Investment

18. Primary Research Findings… 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

19. Primary Research Findings… 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

20. Primary Research Findings… continued General challenges include –Perceptions, myths and 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

21. Primary Research Findings… 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

22. Reflections: BEE as a business imperative 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

23. Reflections: BEE as a business imperative “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.”

24. Reflections: BEE as a business imperative 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

25. Barriers Lack of Finance Limited skills pool Conflicting legislation Illegal immigrants Lack of commitment White fears Regulations and reporting overload Competitive edge

26. 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.

27. Alternative Solutions 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

28. Alternative Solutions … 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

29. Alternative Solutions … 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

30. Alternative Solutions … 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

31. Alternative Solutions … 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

32. Alternative solutions … 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

33. Recommendations and Implementation Plan 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

34. Recommendations and Implementation Plan … 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

35. 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

36. In Conclusion 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!