Mark Lamberti: An additional absurdity to EE

John Kane-Berman says businessmen are damned if they do and damned if they don't on race and gender targets

In his parting advice to Imperial Holdings earlier this month, Mark Lamberti urged his former colleagues to "redouble your efforts to align Imperial's employee and leadership profile with the economically active demographics of South Africa".

Mr Lamberti, who is stepping down from his position as chief executive of the group, was found by the Gauteng Local Division of the High Court to have impaired the dignity of Adila Chowan, a chartered accountant who was dismissed after complaining that Mr Lamberti had reneged on a promise to appoint her as a chief financial officer within the group.

The judge said that it was common cause between Ms Chowan and the company that she had been hurt and insulted by being made to feel "that the only reason why she had been employed with the group was because (sic) she was an 'employment equity' employee". There had been "no need for Mr Lamberti to have mentioned her race and gender".

Perhaps not. Mr Lamberti has indeed urged "those of us who are privileged to lead" to address transformation "with sensitivity and humility". Good advice. But the implication of this affair is that Imperial must "redouble" its efforts to meet racial and gender targets without informing any beneficiaries of these efforts that they actually are beneficiaries. "Redoubled" efforts must be tempered not only with "sensitivity and humility" but also with dissimulation.

For Imperial (or anyone else) to align their "leadership and employee profiles" with the country's "economically active demographics" means making such profiles 78.6 % African, 9.6% coloured, 9.1% white, and 2.7% Indian/Asian.

According to the most recent report of the government's Commission for Employment Equity, 68.5% of top management positions were occupied by whites, 14.4% by Africans, 8.9 % by Indians, 4.9% by coloured people, and 3.4% by foreign nationals. Aligning the racial composition of these jobs with the country's demographics cannot be done without frequently using race as a criterion for appointment and/or promotion. The same applies to various non-management jobs as well.

Using race as a criterion is in fact what the law in the form of the Employment Equity Act of 1998 requires. Racial "targets" must be used to overcome any "under-representation" of "designated groups". Not only has the Constitutional Court found this to be lawful, but the minister of labour was last year threatening to "'up the ante" and use the "stick" against companies that failed to meet their racial targets. The Act was indeed amended in 2013 to provide for fines of up to R1.5 million or 2% of turnover (whichever is the higher) for non-compliance.

Yet if the Lamberti/Chowan experience is anything to go by, people who are appointed to enable companies to meet their demographic targets should best not be told that this is the reason for their appointment. Employers and employees alike must instead create a world of make-believe. Employers must comply with the law but pretend that they are not doing so. Employees appointed or promoted to enable their companies to meet its racial targets must be led to believe that this is not the case.

One tragic consequence of this is that people promoted or appointed not on racial grounds but because they are the best person for the job risk being tarred with the same brush as those who are not. They have reason to feel demeaned by this and to resent it.

Those who support using the law to enforce racial targeting sometimes argue that it is necessary "to use race to get beyond race". This is presumably what Cyril Ramaphosa had in mind in his state-of-the-nation address earlier this year. On the one hand he said that "we are building a country where a person's prospects are determined by their own initiative and hard work and not by the colour of their skin." On the other, he promised to "deal decisively with companies that resist transformation". Such decisive action no doubt includes the fines for which the legislation provides. The absurdity is that companies must "use race to get beyond race" but pretend otherwise.

* John Kane-Berman is a policy fellow at the IRR, a think-tank that promotes political and economic freedom.