A leadership transition and an interruption to transformation
15 FEBRUARY 2021
A little over 5 years ago, as the American election campaign pitting Hilary Clinton against Donald Trump reached fever pitch, Hilary Clinton was confronted with a simple yet instrumental question. ‘Secretary Clinton, do you believe you deserve to be President because you are a woman?’ Without missing a beat, Hilary Clinton responded ‘I believe that the next American President should be chosen on merit. And one of my merits is that I am a woman.’
The relevance of this statement in the middle of a ground-breaking campaign that saw Clinton get closer to the US Presidency than any other woman had ever managed to do, is that it touched on one of the last remaining social frontiers of our age – the glass ceiling. Many years before, as she sat in a panel discussion about women’s aspirations, Marilyn Loden had introduced the phrase in seeking to address the question of why women in corporate America seemed stuck in the lower rungs of middle management. The evidence of women’s careers plateauing at middle management phase, in spite of the fact that they were as educated and as competent as the men, had mainly been blamed on deficiencies in women’s socialisation skills in the workplace amongst other fallacies. Loden’s characterisation of the glass ceiling, was that it was the by-product of institutionalised cultures and practices embedded in workplaces designed and presided over by men that struggled to undergo a gender transition.
The glass ceiling phenomenon, was even more acute for black women who had to conquer the race hurdle alongside the gender hurdle. The gender hurdle, remains an ongoing challenge for women across the globe. Over 10 years ago, in response to the lack of female representation in boardrooms across Europe, Helena Morrisey initiated the 30% Club which sought to ensure that FTSE-listed companies could achieve 30% representation by 2015. In South Africa, PwC stated in its 2021 ‘Practices and fees trends’ report, that just 29% of non-executive directors are women. In comparing the gender balance and gender pay gap, PwC had stated in 2020 that no meaningful comparison could be made between the pay of CEOs across genders simply because just 7 women served as CEOs of listed companies in South Africa, a number that declined during the course of 2020 with the delisting of Grit which was led by Bronwyn Corbett.
In light of these odds, and South Africa’s unique history of mass exclusion, the rise to positions of authority for black people and in particular – black women – remains a seminal moment whenever it happens. Around 3 years ago, Basani Maluleke rose to become the first black female CEO of a frontline bank in South Africa. Her rise to the top – capping a stellar career in financial services, was an illustration in how leadership transitions and transformation can be fostered when an organisation is committed to getting it right. Her previous role within the bank, had enabled her to obtain insights into the organisation that facilitated a smooth transition at the point of the handover. Her choice of organisation was an informed one as African Bank has a track record of engaging and supporting transformation initiatives. Its role as a champion of financial inclusion directly addressed the historical plight of the unbanked population of black people in a country where many exclusionary practices had rendered access to the financial system elusive.
In the 3 years of her reign as the CEO of the bank, Basani managed to steer the bank towards the type of diversified financial services player that its various shareholders – including the Reserve Bank – had sought to create from the moment they rescued it from curatorship in 2014. As expected from roles of such stature, the job came with its own pressures which were amplified by the longstanding hangover of the bank’s brand which had been dented by the curatorship. As the accolades from the industry and the financial statements reflected her ability to run the bank; its standing in society improved by various measures. In its 2020 annual report, the bank highlighted achievements including coming first in 5 different categories in the South African Consumer Satisfaction Index. The 2019 results – reflecting a profit of R1,2 billion and over R29 billion in assets, capped an extraordinary run for a bank which had been so badly run it went into curatorship just 5 years earlier.
Basani’s achievements, in a sector where few women have ever emerged as CEOs and absolutely none had ever emerged as black female CEOs in banking, represented South Africa’s single most impactful dent on the glass ceiling. Her resignation in January 2021, has therefore taken the progress of black professionals and black women a step back. The obvious tensions regarding leadership transitions are known. Occasionally, a CEO whose personal legacy has been cemented takes the decision to pursue greener pastures. A board that has taken a different view on matters of strategic direction may indeed conclude that it needs new leadership. None of these situations are unknown; but what is completely unknown in the local context, is a failure to manage a leadership transition in a bank. The reasons for this are simple; as institutions that serve as custodians of public funds based on the trust the public has in the system, any uncoordinated interruptions in bank leadership feed into anxieties for stakeholders.
Critically in the African Bank case, the board has offered little in the way of explanation for the reasons underpinning Basani’s departure. In the public discourse, the optics of the story have been poorly handled. Rather than providing insights into the deliberations and considerations of the board and the CEO leading to the parting of the ways; the bank has conspired to pronounce the announcement of an interim CEO – subject to Prudential Approval. In an orderly-managed transition, such approval or concurrence would have been agreed prior to the resignation. A rushed process only implies that the resignation was not an orderly one. Senior executives like Basani have structured transition plans that include a managed exit process. A day after her resignation, African Bank’s interim CEO – Gustav Raubenheimer – delivered the bank’s latest results. The conclusions drawn by observers, is that a successful black leader had been ushered out by a board that couldn’t even implement a transition plan – assuming one actually existed.
As the Association of Black Securities and Investment Professionals, issues of transformation are central to our mandate as an advocacy organisation. Having engaged with the board of African Bank in light of the recent developments, we remain unconvinced about the board’s explanation for the turn of events; and remain even less convinced about the leadership management process at the Bank. In the past 12 months; 7 of the 12 directors have left the Bank. Basani’s exit, represented the loss of the third of four black women on the board.
Curiously, in the same period, the board – under the leadership of Mr Thabo Dloti – has recruited 3 white male directors as replacements. As it stands today, in a country with where women make up half the population and where black people make up 78% of the national demographics, African Bank’s leadership is made up of 5 white men, 2 black men and just 1 woman. Given where the bank was just a year ago, perhaps no greater indictment on a failure of leadership exists in South Africa today.
As ABSIP, we highlighted this problematic trend to the board and managed to secure a commitment that in the process of seeking a new CEO, the bank will prioritise the search for candidates of stature amongst black professionals. Whilst recent events have indeed cast doubt on the bank’s transformation imperative, we regard this commitment as the board’s acknowledgment of the importance of transformation in financial services. This is a process we will be monitoring with great scrutiny over the next few months.
In a world where the history of glass ceilings forms a fundamental part of how organisations have perpetuated exclusion, the recent turn of events at African Bank leaves us all seriously concerned as ABSIP. And in a country where the support for black executives remains fragmented and elusive – just like their prevalence; we find the African Bank story to be a tragic tale and major setback for transformation in the sector and the country at large. As African Bank seeks to restructure its leadership, we would hope that the commitment to transformation would loom large in the deliberations. Any result at odds with the transformation mandate, would mean that the bank’s third lease on life after its curatorship episodes of 1995 and 2014; would be a stillborn lease seriously at odds with the evolving nature of the society in which the bank seeks to thrive.