Deep levels of mistrust between government, business and labour can only be resolved through negotiation and compromise, Vice President of the Chamber of Mines and Executive Head of Anglo American South Africa, Andile Sangqu, told a leadership engagement forum at the Gordon Institute of Business Science (GIBS).
“We have to think critically and creatively about our collective future, and identify solutions to bring us together and advance the conversation. Even if we disagree, we cannot give up. We have to negotiate to find a lasting solution to look beyond our own interest and at the national interest.”
A damaging trust deficit
CEO of the Hollard Group, Nic Kohler said relations between the parties had deteriorated to such an extent that it was now in government’s hands to demonstrate they could be trusted again.
Stephen Koseff, chief executive officer of Investec Group, said South Africa’s leadership failed to understand that an environment conducive to encouraging growth and investment was a necessary prerequisite to transform society at a pace that is fast enough to satisfy the needs of the people, while not dissuading investors or discouraging entrepreneurs.
“We have to change the whole philosophy to encourage growth, but at the moment that is falling on deaf ears. If you are not globally competitive, you will just get closed down. There has to be a measure of realism.”
The latest iteration of the Mining Charter had been imposed on business without the appropriate and necessary consultation, Sangqu said, whereas previous iterations had been created through “an elaborate consultative process.”
“Of course, we are very aware of the challenges presented by the downturn in the economy and the need to move with speed, but things cannot move beyond the pace at which business can afford, and that is the reality, even if there are a myriad of social challenges out there,” he added.
Koseff argued that South Africa’s business model no longer works, which he blamed on the centrally controlled developmental state: “We are in a hole, and we need to stop digging.”
“The corporate sector and the financial sector are being attacked in the name of transformation. We have to relook at our model and reset the narrative.” Even the language of radical economic transformation, rather than inclusive growth, was problematic, he said.
Kohler said the attitude of business had shifted, as it realised the quiet diplomacy of the past hadn’t worked. Business leadership had learnt that you could not be friendly with everyone, Koseff added.
Positive contributions of business
South African business continues to operate within the context of Apartheid legacy, which meant it is necessary to go beyond what is merely legally required, Sangqu said. “We are dealing with a society that is hurting.”
However, much had been done by business to address challenges of health, safety and security, and this needed to be acknowledged as positive practices could not be discounted.
“There is a need to communicate the good that has been done by business, even if it isn’t enough, so that we are treated as an important role player in society. The assumption is that we are just doing harm,” Kohler said.
Balancing social and financial returns
Top employees wanted to be associated with companies with a more holistic purpose, and the same principle could be applied to customers, making it a competitive issue.
While some trade-off between social and financial returns is necessary in order to create trust between business and broader societal stakeholders, it is perfectly possible to achieve both, Kohler said.
It is possible to make a positive contribution to society as well as financial rewards. But companies run the risk of losing their license to operate if they are narrowly focused on profit and don’t engage with wider stakeholder needs. Benefits from making a positive contribution included a more engaged customer and employee base, and eventually a more sustainable business.
Koseff said in order to strike a balance between short term and long term returns, institutional fund managers must shift their mentality to long term sustainability and more moderate returns.
“The objective of a firm is not just to maximise profits, but to satisfy the needs of all stakeholders. It is important to be more than just about the money in order to build a strong sustainable firm.”