No wonder Dis-Chem boss wrote that memo ...

The furore over the leaked memo from Dis-Chem CEO Ivan Saltzman last month has largely died down.

In the memo, Saltzman announced a moratorium on the hiring of white managers in an effort to improve its transformation objectives.

The retailer’s board rushed to apologise for the tone of the letter but noted that its “intention” would remain.

The group’s disclosure of the composition of its workforce in its annual report is limited.

It states that 84.5% of its roughly 20 000 employees are black, Indian or coloured, and that 63% are female.

There is no detailed breakdown.

Closer read

However, buried in the group’s consolidated environment, social and governance (ESG) data table for 2022 is a view of just how poorly the group is performing when it comes to the transformation of its leadership team.

Astonishingly, just 5% of Dis-Chem’s "top and senior management" are women and only 11% are defined as "Historically Disadvantaged South Africans" (HDSAs).

This definition generally incorporates all women, including white women.

This is slightly at odds with its scorecard report from its last BEE audit, which reveals that 9% of executive management are black and 16% of senior managers are black. At middle management level, the number is 25%, while at junior management, it is 59%.

One could be generous and suppose that the ‘HDSA’ reference does not include white women.

Still, practically nine out of every 10 top and senior managers at Dis-Chem Group are white. It does not disclose how many management positions fall into the ‘top’ and ‘senior’ categories.

It is no wonder Saltzman has frozen the hiring or promotion of white managers.

Under new regulations, the company could be fined 10% of its turnover for not meeting employment equity targets, something Saltzman pointed out in his memo. This could cost it billions of rands.

Clicks comparison

A direct comparison with JSE-listed competitor Clicks Group is logical, as they operate in the same sector and hold roughly similar market shares.

According to its 2021 sustainability report, Clicks has five white male managers out of 12 in top management, and 31 white male senior managers out of a total of 92.

At board level, Clicks is also ahead, but Dis-Chem at least fares better here than in its management ranks. However, Dis-Chem has not a single black executive director.

Dis-Chem’s B-BBEE certificate (dated 2 August 2022) shows that it has Level 8 status, with a score of 55.7 points. This is the lowest possible level, with scores of under 40 deemed ‘non-compliant’.

On the management control score, it achieved 7.03 points. Clicks, with a rating of Level 4, obtained 83.54 points in its 2021 scorecard. For the management control measure, it got 14.06 points.

Legal questions

In its 2022 annual report, Dis-Chem hinted at changes needed in its pool of potential management talent.

It has trained 255 delegates in its Trainee Management Programme since its inception in 2018, but the group says the programme “is being revamped to enrich the learning experience and accelerate the transformation of our management pipeline”.

In a statement last week, Dis-Chem maintained there “is simply no ban on employing and promoting white individuals” and that: “All appointments at junior, middle and senior management level will require CEO approval, and appointments will be made based on merit and the necessity of giving employment preference to previously disadvantaged individuals.”

Last week, Solidarity said it planned to take the retailer to the Labour Court as it argues the policy “goes beyond what the Employment Equity Act allows”. It intended to serve papers on Dis-Chem last week, but has not yet confirmed whether this was done.