The stark news surrounding the Marikana tragedy enveloped South Africa and changed the perception of our then still young democracy forever.
There has been much analysis and attribution of blame since then, but there has also been much soul searching and introspection.
The title of my lecture today – Lessons on the power of shared value – has very strong links to my observations over the past decade, and the research that I have been undertaking in the past few years towards my doctoral work on the asymmetric power relationships between mining firms and community stakeholders.
In 2011, Professor Michael Porter and Mark Kramer of Harvard Business School defined shared value as the policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates.
I would argue that the desire to drive shared value has been an integral part of the mining industry in South Africa even before the advent of democracy, driven by necessity. This was not always, or even often, achieved. But the building blocks were there. Why then, if the intention is there, do things so often go wrong?
When relationships between a business and its stakeholders work optimally, they drive sustainable business performance, create social value, attract investment, improve harmony and cooperation and more. Not everyone gets what they want, but everyone gets a share.
Nowadays one doesn’t find many business leaders who would disagree with this.
Yet it may not be obvious – to the CEOs, the managers, and indeed the workers, their unions, the community members and their organisations – that there are obstacles that need their active and conscious efforts to be overcome in order to achieve such a happy state of affairs.
The main source of the obstacles is power asymmetry, or the imbalance of power. Power determines the way in which we – as fallible human beings – behave and react, particularly when under pressure. If asymmetry is not effectively addressed, it is likely to engender conflicts or schisms. A firm’s greater power implies that conflict will exist regardless of whether it exploits power relations to the detriment of specific stakeholders or not. And the stakeholders may, in response, use the power that they have in a highly adversarial manner. This was the case in the days leading up to the Marikana shootings, and was aimed at disrupting the activities of the business.
Social stakeholders form the bedrock of stakeholder relationships with the business and have an integral role to play in the process of creating sustainable value for the business.
My research has shown: When firms flex their authority in exercising power over stakeholders, they rarely live up to the expectation that they should promote goals based on shared interests. When stakeholders tolerate power asymmetry, they give the firm and its shareholders an outsized advantage over how engagements are constructed and relationships between the parties are defined.
So, what can be done about this?
To reduce power asymmetry and create balance, the firm needs to be intentional and committed to achieving collaboration with stakeholders with different power sources and divergent and opposing interests. To achieve this, the firm needs to capacitate vulnerable stakeholders, giving them the power to exercise direct influence on the firm.
The history of the mining industry in South Africa – in particular the relationship between mining firms and mine-host community stakeholders – has been characterised by conflicts. These include confrontations due to the deliberate and intentional disempowerment by mining firms of mine-host community stakeholders through, among others, forced land dispossession, the payment of below-market amounts for mining royalties and land leases and the poverty wages paid to black African mine workers.
Both the system of colonialism and the apartheid government, from 1867 to 1994, further aided, abetted and intensified the dominant power of mining firms over their mine-host community stakeholder counterparts.
Marikana remains a grim reminder of what can happen when power asymmetry and its resulting conflicts escalate and the parties involved have approached it in ways that fail to promote the shared interests of all. The current efforts by Sibanye-Stillwater and stakeholders to address the legacy of Marikana are welcome and remarkable. It is to be hoped that a further outcome of the legacy serves to teach other businesses and stakeholders of the potential dangers.
Social stakeholders form the bedrock of stakeholder relationships with the business and have an integral role to play in the process of creating sustainable value for the business.
Stakeholders’ interests are legitimate, even where they diverge from the business’s interests, and even where their aspirations cannot be fully met by the business. Overlooking or undermining those interests will harm the business. A relationship where legitimate stakeholders feel excluded, with their interests disregarded, is inevitably going to be counterproductive and unsustainable. What is rather required is to develop or introduce mechanisms between stakeholders and the business that reduce the impact of power asymmetry on the overall relationship.
Mine-host community stakeholders legitimately expect mining firms to develop and co-create long-term strategic plans with them.
From their side, stakeholders need to engage with mining firms in ways that do not exacerbate conflict and instead use problem-solving methods. From the business’s perspective, these engagements need to be conducted in a way that seeks to address power asymmetry and facilitate stakeholders’ participation in the engagement processes.
Because the circumstances of relationships between mining operations and local community stakeholders differ from one to the other, no single, uniform set of desirable practices can be imposed or recommended. Rather, guiding practices and principles for conduct, supported by underpinning mechanisms, must be developed. These require the foundations of common humanity, the promotion of shared interests and long-term value creation to mitigate socioeconomic risks.
It is important to remember that mine-host communities have limited access to information. As the Centre for Environmental Rights has said, they are not empowered to know their rights or understand mining law.
The Benchmarks Foundation, in its 2018 annual report, highlighted that mining firms do not engage with mine-host communities or their representatives as equals.
Mine-host community stakeholders legitimately expect mining firms to develop and co-create long-term strategic plans with them. I have read about Sibanye-Stillwater’s efforts to address this legacy, and they are welcome and most appropriate. But having to be doing this still 12 years later is part of the grim reminder of what better, more timeous solutions could have prevented.
These principles need to be enshrined in the values of the firm and in the purpose of the company and to embody an explicit, long-term vision.
This entails the firm undertaking deep introspection about the commitments it has made to its stakeholders. It must provide reasons for any failure to honour commitments and demonstrate humility in accounting openly and transparently to its stakeholders.
Businesses must additionally invest in building the capacity for and skills of leadership, negotiation and collaboration for all stakeholders. Those skills need to stand alongside a shared sense of community, joint destiny and shared value.
While companies have things they need to do, both parties need to focus on finding common ground and co-creating solutions that work for all parties. Engagements need to be open, honest and transparent. A bigger goal remains shared: improving the lives of the marginalised and vulnerable communities where the mining firm operates. The nature of the journey of engagement is as important, perhaps more important, than the outcomes reached.
The interconnectedness of our sense of humanity is not to be taken for granted. Our feelings, aspirations and ambitions need to be expressed, shared, embraced and respected.
Community leaders have obligations too. They need to engage proactively with the firm to understand its plan for promoting stakeholder interests and its long-term growth strategies to create shared value.
In conclusion, the purpose of days like today is to help us to not forget what happened. Days of this nature are to remind us of our common humanity. That we are capable of hurting each other. We are capable of inflicting wounds and pain on each other.
Today is to remind ourselves once again to never choose this method as a way of solving our problems and settling our differences. Rather, let us look at what is good among us. To use the moment of deep pain and sorrow to rid ourselves of deep-seated anger, sadness, emptiness and despair.
We need, as we are seeing today, leadership visibility right up to the level of the CEO and board. It is necessary for employees to appreciate and see for themselves the level of commitment to the values and the principles that the company says it stands for.
The interconnectedness of our sense of humanity is not to be taken for granted. Our feelings, aspirations and ambitions need to be expressed, shared, embraced and respected.
This is important and valuable for us and to us, whether you are the CEO, the finance manager, the production supervisor, the cleaner or the security guard
The pain of Marikana will take a long time to heal. The historical learnings of this painful chapter should be our guiding light on the urgency to refashion stakeholder engagements and how to recalibrate the workings of these relationships.
Shared value is what must be the focus of the short, medium and long term of these relationships. But for true shared value to be created, it must be collectively defined and co-created with a deep commitment to accountability, transparency and openness. DM
This is an edited version of Andile Sangqu’s lecture at the 5th Annual Marikana Commemoration Lecture, organised by Sibanye-Stillwater.