Management Control Scorecard
The Management Control Element measures the effective control of Measured Entities by Black People.
The Management Control Element aims at addressing certain key issues surrounding Black Management and control of entities. These issues include the following:
- Representation of Black People at Board and Executive Management level: This provides incentives for the representation of Black People as Board Members and Executive Directors, to reverse the trend that companies hire Black People as Non-Executive Directors only.
- Involvement of Black People in daily operations and strategic decision making at all Management levels: This Code encourages the inclusion of Black People in driving the implementation of operational and strategic decisions.
- Black People represented in positions that are key to the functioning of companies: This Code encourages the employment of Black People in positions that are core to the operations of a company at all management levels.
The measurement takes place through Indicator Weightings, which are as follows:
- Key measurement principles
For the CA Sector Management Control Scorecard, the following key measurement principles apply:
1.1 The requirement to submit data to the Department of Labour in terms of the Employment Equity Act (EE Act) is only applicable to “designated employers” who employ 50 or more employees. However, for measurement for both the Generic and QSE scorecards, entities that employ less than 50 employees are required to submit sufficient evidence for verification purposes.
1.2 An Entity must use the current payroll data in calculating its score for the Management Control Section of the Scorecard.
- Demographic representation
2.1 The Compliance targets for Senior Management (Indicator 2.3), Middle Management (Indicator 2.4), and Junior Management (Indicator 2.5) are based on the overall demographic representation of Black People as defined in the Regulations, the EE Act, and the Commission on Employment Equity Report, as amended from time to time.
2.2 In determining a Measured Entity’s score, the targets should be further broken down into specific criteria according to the different race subgroups within the definition of Black in accordance with the EE Act, on an equitable representation and weighted accordingly.
- Board participation
3.1 Board members
3.1.1 The Board consists of persons appointed to exercise governance over the Entity. Their main functions are to approve and monitor the implementation of policies.
3.1.2 This body is generally responsible for the corporate governance of the Measured Entity.
3.1.3 Functions could typically include the approval of the Measured Entity’s strategy, appointment of the Chief Executive Officer, and performance evaluation of the Chief Executive Officer.
3.2 Executive Directors
3.2.1 Members of the Executive Committee who have also been appointed to the Board of the Measured Entity.
3.2.2 These members will have Exercisable Voting Rights on the Board.
- Other Executive Management
4.1 The body consists of persons, typically appointed by the Chief Executive Officer, responsible for the development of the Measured Entity’s strategy, directing the day-to-day operations of the Measured Entity.
4.2 This category includes all members of the Executive Committee who do not serve on the Board, as well as Heads of Key Business Units or divisions.
4.3 If a Measured Entity does not distinguish between Other Executive Management and Senior Management, then Executive Management is measurable as a single indicator with a weighting of 6 points under Indicator 2.2.1 and 2.2.2 split as 4 and 2 points, respectively.
- Management
5.1 Principles
5.1.1 The Compliance targets for Senior Management, Middle Management, and Junior Management are based on the overall demographic representation of Black People as defined in the Regulations of the EE Act and the Commission on Employment Equity Report, as amended from time to time. However, this does not apply to Black People with disabilities (Indicator 2.6).
5.1.2 In determining a Measured Entity’s score, the targets should be further broken down into specific criteria according to the different race subgroups within the definition of Black People by the EE Act, on an equitable representation, and weighted accordingly.
5.2 Senior Management
5.2.1 These persons undertake the day-to-day management of assignments and are actively involved in the implementation of strategy and development of staff, limited to their areas of responsibility.
5.2.2 These persons would generally have 5–10 years’ experience, and would be entrusted with large accounts or responsibilities in an administrative or support function.
5.2.3 These persons’ levels as reported to the Department of Labour and salary should also be taken into account.
5.3 Middle Management
5.3.1 These roles are typically entrusted with a supervisory or managerial responsibility. In the audit context, it would include the senior on the assignment, who is equivalent to a manager, assistant manager, or senior consultant, and has at least 3–5 years of relevant experience.
5.3.2 These persons’ levels as reported to the Department of Labour and salary should also be taken into account.
5.4 Junior Management
5.4.1 The roles are typically responsible for the execution of assignments under the guidance of a manager or senior. Individuals in this category usually have 0–3 years’ relevant experience.
5.4.2 These persons’ levels as reported to the Department of Labour and salary should also be taken into account.
One example of a calculation used in Management Control is as follows:
Measurement of Management Control Indicators:
Indicator 2.1, 2.2, and 2.6
This equation explains the method of measurement of the criteria dealing with Board Participation, Other Executive Management, and employees with disabilities.
A = B/C x D
Where:
A = Score for the measurement category indicator
B = Exercisable Voting Rights in the hands of Black Board Members as a percentage of Voting Rights of all Board Members in the Measured Entity
= Exercisable Voting Rights in the hands of Black Female Board Members as a percentage of Voting Rights of all Board Members in the Measured Entity
= Black Executive Directors as a percentage of all Executive Directors
= Black Female Executive Directors as a percentage of all Executive Directors
= Black Executive Management as a percentage of all Executive Management
And where:
= Black Female Executive Management as a percentage of all Executive Management
= Black employees with a disability as a percentage of all employees in the Measured Entity
C = Compliance target as specified in Paragraph 12.2.2 (this article), Indicators 2.1, 2.2, and 2.6.
D = Weighting for the applicable criteria as referred to in Paragraph 12.2.2 (this article), Indicators 2.1, 2.2, and 2.6.
Several other calculation formulae are used for Management Control as well, but are too lengthy to publish in this article. The reader is advised to review the formula in the CA’s Charter for further details.
