How Liberty achieved its gains

Liberty has climbed strongly up the rankings over the past few years. We went in search of answers to how it achieved its gains.

It has risen dramatically in the Empowerdex rankings from 50th place in 2011, 18th place in 2012 and now in eighth position. In the financial services sector, it is the fourth-most empowered.

It was in 2009, however, that the group made a conscious decision to improve its BEE rating, even though its first verification against the department of trade and industry's codes of best practice in that year yielded a level four rating — which represents 100% compliance against the criteria.
(A level 1 procurement recognition rating gets a 135% weighting on the generic scorecard, so supplier companies get recognised for R135 for every R100 spent by the level 2 entity; level 6 suppliers get a 60% weighting.)

"We recognised that in order for us to be taken seriously as an organisation committed to transformation, we needed to improve our rating," says Ivan Mzimela, Liberty's group executive for strategic services.

In 2009 and 2010, in the fallout from the global financial crisis, Liberty instituted a process of focusing on the key value drivers in the business.

Focus on BEE elements
"Transformation was a key aspect of this," Mzimela says. "Additionally in 2009 Liberty was required to submit a new employment equity plan to the department of labour, which detailed a projected year-on-year change in the demographic profile of our staff to 2013."

The company chose to focus on three BEE elements: employment equity, preferential procurement and management control.

It revised its employment equity plan with set targets to 2013, which it has met and in some instances, exceeded. Liberty scored 11 points out of a possible 15 in 2013 for employment equity. For preferential procurement, it instituted a requirement for its supplier base to be at least level 4 BEE entities, which is 100% BEE compliant.

"In addition," says Mzimela, "we launched a development programme specifically targeted at black female-owned suppliers. A series of workshops aimed at developing black female-owned businesses took place between 2010 and 2011. These workshops also served as a platform for the business to engage with black female-owned businesses and we were able to grow our supplier network as a result."

The upshot is a maximum score: 20 out of 20 for preferential procurement. To improve its management control rating, the group focused on increasing diversity in its executive committee.

While it has largely succeeded in this respect, Mzimela says gender representation "is still a challenge", although progress has been made. It scored 5.62 out of 10 in this category.

Liberty Holdings has maximum points in the categories of ownership, enterprise development and socioeconomic development. Achieving those gains involved integrating transformation policies with the company's management strategy.

"Our leaders are the drivers behind transformation within our organisation," Mzimela says. "Our transformation agenda is set by our executive committee."

A culture change
Each of the seven pillars making up the scorecard has an executive sponsor and a senior manager leading it in the business. "For certain of our focus BEE pillars, key performance indicators are written into executive and senior management contracts," he says.

A culture change was also necessary. "In 2010 and 2011 we saw the need to shift our culture so as to overtly embrace diversity instead of simply focusing on the numbers."

In line with this, the board set about formulating a transformation vision and the strategic principles for the group.

"This vision serves to guide our efforts and transformation activities across the group."

There is no sense that the company feels it has achieved its transformation goals: it is in fact revising its transformation and social investment strategies, not only for further improvements domestically, but also to roll out to other markets in which it operates. Mzimela says this will be a key focus for the group this year.

And where things really matter, on the bottom line?

"Quantitatively we have seen a positive effect as transformation is directly linked to our ability to attract certain types of business," he says.

"Qualitatively, the fact that we are more transformed has resulted in positive impacts against staff-related measures such as recruitment and attracting black talent, and it has positively affected our staff turnover."

He says transformation at senior leadership level sends a positive message to staff: "Achieving representation across all key decision-making bodies across the organisation speaks to our commitment to embracing diversity."

Focusing on education
Liberty's corporate social investment initiatives focus strongly on education. Its all-encompassing approach enables it to meet both the country's socioeconomic development goals and the company's specific business objectives. The latter is promoted through financial literacy programmes and bursary schemes, while it extends commitments to needy schools and pupils.

Another novel aspect to its strategy is its employee matching programme, in which the group matches the financial contributions made by employees to registered charities or non-profit organisations on a rand-for-rand basis — up to a maximum of R5 000 per employee a year.

The bulk of Liberty's CSI expenditure is on maths and science education. This aligns with the National Development Plan 2030, which includes a schooling target of increasing the number of students eligible to study maths and science at university to 450 000 (three times the current level).

A lapdesk programme, in conjunction with subsidiary Stanlib, donates portable lapdesks to needy schools together with science, maths and technology kits, books, cabinets, printers, sports equipment, backpacks, school shoes, classroom doors and windows, a mobile kitchen, fire extinguishers and gardening equipment. The company is shifting its emphasis to "whole school support", which aims to address shortcomings in teacher training, school infrastructure and equipment, and learning materials.

Its bursary scheme caters for high school and tertiary education students. Although recipients are not obliged to work for the company on graduation, Liberty and Stanlib do hire a high number as full-time employees.

In response to SA's specific environment, in 2011 Liberty designed and implemented a xenophobia awareness campaign which was executed in five provinces. It included discussions on community radio stations and initiatives that educate the youth on topics ranging from welcoming diversity to debunking myths about people and customs from foreign countries.

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