Photo by Simone Viani on Unsplash
By Lulama Qabaka
Articles written about state-owned entities (SOEs) in the last decade and a half always depict a bleak and overwhelmingly gloomy reality for South Africans. There are, however, small slivers of hope which don’t receive the limelight they deserve, yet which may inspire others to perform better. We consume so many negative stories about our SOEs that it clouds our ability to think of practical solutions which might yield positive outcomes.
If we compare our SOEs to SA football, we can all agree that the level of SA football is nowhere near where it should be. At the very least, much like South African footballers who don’t have the requisite technical skills, SOEs tend to have insufficient skills with which to run SOE organisations efficiently and effectively. This is directly due to deployment issues whereby political interference means that individuals are put in positions of power without having the requisite skills with which to successfully execute their mandates.
In spite of the lack of sufficient skills and autonomy, there are indeed SOEs which function optimally given the available resources. This is not unlike Mamelodi Sundowns who manage to excel on the field, which is a testament to the fact that if one places the right people in the right positions, the possibility for excellence increases exponentially.
The sad state of affairs is that all SOEs are painted with the same scathing and cynical brush. As much as we harshly criticise the many poorly performing SOEs, we should invest as much energy into extolling the virtues of those SOEs that are performing well, rather than denying them their moment in the sun.
These SOEs do – in fact – exist and may not be known to many since they are often overshadowed by the overwhelming amount of SOEs receiving negative coverage. You may be asking “Which SOEs are you talking about?”, and “Do they even exist in SA?”. While the answer is more complex than it should be, organisations such as DBSA, Telkom, Sasria, and a few others are good examples of ethically effective SOEs.
It is interesting to note that some of these ethically effective SOEs that The Ethics Institute has had the privilege of working with share some common traits.
Good to excellent ethical cultures
Many of the abovementioned organisations have a relatively mature ethical culture, where ethics is taken seriously and proactively managed. Talking about ethics is part of the organisational ‘speak’ and usually observable to employees at all levels. They have a dedicated official/s who manage ethics and provide support to individuals by allocating ethics-related resources to enable them to meet their objectives.
Governance is diligently managed and often features high on the agenda of Board and Executive meetings. Top leadership often works hard at subscribing to leading governance standards and legislation (such as adherence to the Companies Act and the King IV recommendations).
Ethically effective organisations tend to have employees who work autonomously, without fear of retribution for carrying out their duties in good faith. Employees feel free to voice their concerns without being punished. While micromanagement does occur due to the somewhat bureaucratic nature of SOEs, this is not as prevalent as it is in SOEs with toxic working environments.
Relationship with facts
Rather than denying the existence of structural and ethical issues, SOEs who are willing to engage with the facts make conscious decisions to mitigate potential and current risks. They are also not afraid to make difficult decisions no matter how unpopular these might be. Management tends to act in the best interest of the organisation, rather than making selfish decisions (for example, favourable tenders for friends and family).
A closer glance at how these high-performing organisations came to occupy their current positions reveals that some of them went through a large-scale organisational overhaul. They were not afraid to make unpopular changes and even tolerated some mistakes. The end result was a positive start to the demands of the 21st century.
Many employees and other stakeholders do not feel comfortable with the leadership in more successful SOEs. For example, leaders in these organisations create environments where there is less tolerance for unchecked greed and wrongdoing, as well as increased accountability for decisions made and actions taken. The majority of functional SOEs are led by individuals who are not easily swayed by external influences. Such leaders fully understand and appropriately respond to the core of the calling of SOEs, which is to utilise taxpayers’ money responsibly and efficiently.
So, what to do? How does one go about ensuring that SOEs don’t fall into familiar traps of failure as a result of bad governance? We have reached a point where we know where the stumbling blocks are. Similarly, we’ve identified the paths to success, and we know that if we continue to keep our heads in the sand, we are likely to plunge our country into further gloom. The few existing well-governed organisations, therefore, should function as guides on the route to the efficient running of our SOEs.
The Ethics Institute has conducted a Differential Analysis on SOEs and has found that ethically effective organisations versus ethically ineffective organisations have the following elements in place:
- Ethics accountability and responsibility: The degree to which employees are held accountable for unethical conduct and decision-making in a swift, decisive, fair, and transparent manner.
- Employee commitment to ethics: This refers to the degree to which non-managerial employees understand the importance of ethics for business and sustainable development and are committed to conducting themselves in an ethical way
- Senior management and middle management commitment to ethics: This is the extent to which leaders understand the case for ethics in business, are committed to acting ethically, and act as ethical role-models for non-managerial employees.
- Ethics talk: The degree to which an environment is created where employees can openly discuss ethics and the potential ethical consequences of business decisions and actions.
- Ethical treatment of people: The degree to which employees and other stakeholders perceive that they are treated with respect, dignity, and fairness.
- Ethics awareness: The degree to which employees are aware that ethics needs to be factored into the everyday functioning of the business in meeting organisational objectives.
It should be noted that ethics alone will not ensure a fully functional organisation. Organisations that are ethically effective, however, tend to be more efficient and productive than those that are not. This may not be the ‘Aha!’ solution we all seek, but it is a good starting point for our organisations that have fallen by the wayside.
Lulama Qabaka is an Ethics and Anti-Corruption Specialist at The Ethics Institute.