Post-Marikana, South Africa should consider adopting the two-tier German board system, which allowed for up to 50% worker representation on the supervisory board, Webber Wentzel Africa mining head Peter Leon said last week.

Leon, who took part in a panel discussion at the second yearly Transformation Indaba, organised by Managing Transformation Solutions, said that it was something South Africa should “seriously look at”, given the environment in which the country found itself in the wake of the Marikana tragedy.

Under the system, public companies had two boards – a management board and a supervisory board.

The management board, which was responsible for day-to-day company operations, was made up of executive board members, while the supervisory board, which oversaw the management board, was non- executive in nature.

While the number of employee representatives on the board was contingent on the size of the company’s workforce and the type of company, at maximum, employee representa- tion could constitute half of the membership on the supervisory board.

Crucially, and in contrast to the single-tier South African model, the supervisory boards of major German public companies were subject to the principle of employee codetermination, with the nonexecutive supervisory boards overseeing the company-running management boards.

“In my view, this system has the potential to be well suited to the environment in which corporate South Africa finds itself.

“It could give employees an important voice in directing the operations of companies, and might help in attuning businesses to their broader social responsibilities,” said Leon, who is the immediate past chairperson of the International Bar Association’s mining law committee.

The model had been “very successful” in Germany for many years and might prove a more cohesive approach to running businesses.

“It effectively involves workers in the management of the company,” he added.

The prior consent of the supervisory board was required on matters deemed to be of fundamental importance.

“In order to override that, a three-quarter shareholder vote would be required, so the supervisory board is not just ornamental,” Leon said.

To broaden failed black economic empower- ment, Leon proposed the promotion and development of employee share ownership schemes (Esops), with Kumba Iron Ore’s Esop coming in for particular praise, and the use of community development agreements in place of the failed social labour plans in addition to the two-tier German board system.

“But these measures alone will not suffice. The South African government, the business community and civil society need to continue to search for and develop innovative ways in which the benefits of South Africa’s economic wealth might be more broadly and evenly shared and the disadvantaged sectors of society uplifted.

“Not only is the promotion of equality one of the foundational imperatives of our supreme Constitution. It is also, as Marikana has so poignantly reminded us, essential to the attainment of a peaceful, stable and flourishing South Africa,” Leon added.