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Cover Story: Facing The Giants

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In 2011 the landmark merger between SizweNtsaluba VSP and Gobodo Incorporated formed the largest black-owned and managed auditing and accounting firm in South Africa. September 2012 witnessed the birth of SekelaXabiso, the country’s second largest black-owned and managed practice, when Xabiso Chartered Accountants and Sekela Consulting joined forces. South Africa’s corporations and public sector companies can now confidently source their auditing requirements from reputable black firms rather than being limited to the usual choice from among the multi-national audit firms.

For this month’s lead article, Accountancy SA spends time with SekelaXabiso Executive Chairman, Mr Abel Dlamini and its CEO, Ms Lindani Dhlamini, to talk about the merger, SekelaXabiso’s vision, their personal career journeys and the challenges to a new generation of chartered accountants.

Meeting the principals
Before founding their own practices, which led to SekelaXabiso, Abel Dlamini and Lindani Dhlamini learned the ropes in recording noteworthy careers with the major firms.

Abel Dlamini has a Bachelor of Accountancy, Honours B Compt and completed his articles at Coopers and Lybrand to become a CA(SA). He became a partner at Arthur Anderson and then KPMG before leaving to found Seleka Consulting, which he grew to a workforce of over 70 professionals and revenue of R70 million. Dlamini is renowned for the quality of the internal audit services his firm Sekela has provided to numerous public sector entities and he chairs the audit committees of two private sector companies.

Lindani Dhlamini commenced her working life as a computer programmer with a BSc degree, before deciding that accountancy was her true calling. After gaining a BCom and PGDA, Lindani completed her articles through Deloittes and spent several years in its corporate finance division before her entrepreneurial calling became too strong to deny. In 2003 Lindani left Deloitte to found Xabiso Chartered Accountants with just two employees and grew it to a workforce of 60 before the merger with Sekela Consulting.

Lindani sits on various public and private sector boards and is a regularly published ‘thought leader’ in the accountancy profession.

Discussing the merger
Abel and Lindani’s objective in deciding to merge was to focus strongly on internal auditing and create the capacity to make a meaningful impact in this area. Lindani says that the merger comes as a response to the market need for consolidation and capacity, with large corporations in particular wanting the assurance of dealing with major firms. The Sekela and Xabiso merger has created a practice big enough to compete with the traditional ‘big four’ firms for South African business. Abel states that the market is responding most positively to the merger, and envisages SekelaXabiso is being a ‘Proudly South African Brewed’ firm that will create a legacy for future generations of accountants.

It is not ‘timing a merger’: it is ‘time IN a merger’
This merger did not happen overnight. Lindani and Abel have been building their business relationship since 2003 in working together on various projects for clients, at times involving dozens of their respective workforces. Both leaders believe that nine years of working together ‘in the trenches’ gave them time to build trust, get to know each other well, find a common vision and align values to make this merger work. They agree that a merger opportunity like this comes once in a lifetime and will drive their business vision, our profession and our country. Key aspects of this merger are to combine years of experience, capacity and depth of skill to gain market share in support of a shared vision of becoming the market leader in providing internal audit, IT audit and forensic audit services to the private, public and institutional sectors.

South Africa’s newest and second largest black owned and managed audit firm is attracting the attention and goodwill to open up many new opportunities. A shared vision for the future is to grow SekelaXabiso footprint across South Africa and Sub-Saharan Africa and expand revenue from R200 million in 2013 to R1 billion in 2020, while creating job opportunities for between 1 000 and 1 200 people in South Africa alone.

Leading change with a sense of urgency
Accountancy in South Africa is in a volatile period of change – with SAICA most recent the last decade leading the way with initiatives such as the new CA(SA) Training and Assessment model, Thuthuka, the AAT(SA) qualification, the B-BBEE Charter, appointing the first female Chairperson of the SAICA Board – and the list goes on.

Harvard Business School Professor and ‘change guru’, John P. Kotter (2008), states in his book ‘A Sense of Urgency’ that businesses will not succeed or even survive if they do not lead change with a sense of urgency. Kotter emphasises that creating and sustaining a sufficient sense of urgency to deal with continuous change is always necessary. Abel and Lindani agreed that the merger is a challenging process of change, as in reality one can never be fully prepared for, or predict how, your human capital will respond to this daunting change. Abel emphasised that as a leader this is an opportunity to learn and lead as the merger unfolds, by regularly assessing the employee environment. But he notes: “We all knew the time was right, we did the right thing and we are committed to the cause”.

To prevent the frantic ‘wheel-spinning’ often associated with mergers or acquisitions, Abel and Lindani consciously prepared and integrated their teams and systems by approaching the change as, in Lindani’s words: “a marriage”. In a marriage partners are faced with continuous change (in-laws, having kids, sickness, unemployment, household budgets). It is a process and it takes time and a sense of urgency to adapt to the changes.

A strong team makes a strong business
Both Abel and Lindani feel that they did not have to sacrifice position or power to become a leadership team and make the merger a success. As Executive Chairman and CEO respectively, each offers unique and diverse qualities in terms of strengths, leadership approach, personality, gender and generation. They are convinced that they can weld together a unique team that will achieve their 2020 projections for SekelaXabiso.

Their approach is along the lines of Nancy Ortberg’s words in her book ‘Non Linear Leadership Principles’ published in 2010, which urges team members to accept that there is too much to be accomplished for one person to be responsible for every aspect. The world is moving too quickly for us to achieve – unless with a great team of people. Ortberg emphasises that leaders must have the character and humility to invite people onto their teams who:
• have better skills in particular aspects,
• can come up with new and innovative ways to do things, and
• will tell leaders the truth and help make great collaborative decisions.

Lindani and Abel put specific measures in place to ensure that the new SekelaXabiso team works and operates as a singular entity with a collective purpose. These measures included retaining the services of a professional change agent, crafting a new and shared ‘Vision, Values and Strategy’ philosophy, conducting induction sessions for all employees on the new business, followed by culture workshops in the new financial year on the “SekelaXabiso Way”.

John Maxwell explains in his 2002 book, ‘The 17 Essential Qualities of a Team Player’, that a team is simply a collection a people. Developing a better team always begins with you. Your natural ability may be out of your control, but the ability to work in a team is not. All people can choose to become better teammates. The conscious choice by both Lindani and Abel to become better team players is evidence of why their teams are successfully adapting to the merger – they actively lead by example.

Steps along their own entrepreneurial journeys
Pavlo Phitidis, Director of Aurik Enterprise Development and a regular guest on 702 Talk Radio says: “More than 80% of all start-up businesses do not make it through to their third year and only one in 10 survives to year five. What makes it particularly scary is that many of these businesses are started by smart people”. Fortunately, Abel and Lindani’s businesses have bucked the trend and thrived.

Lindani makes it clear that becoming a successful entrepreneur is not an easy journey. She highlights two important lessons that she believes contributed to her success.

Capacity building – create partnerships with current firms
Lindani firmly believes that her business succeeded mainly due to partnering with suitable accountancy firms. As an up-and-coming entrepreneur with limited resources and employees, re-inventing the wheel was not an option. The best way to build the capacity and credibility of her business was to enter strategic partnerships with bigger firms on joint projects. This generated the capital to grow her business, employ more people, expand regionally and build credibility.

Pride and quality of work
Lindani emphasises that to sustainably build a business, work quality and excellent customer service is vital. She states that quality work speaks for itself in proving that your business is solid. Pavlo Phitidis noted that those entrepreneurs who build long-term companies think of their business 24 hours a day 7 days a week. Having pride in the quality of your work means that you cannot afford to switch off.

Abel is a spirited entrepreneur with unceasing drive and outlines two factors that he believes every enterprising accountant should embrace.

Have courage to stay on course to leave a legacy
Abel recognised that qualifying as a CA(SA) is a ticket to steady employment. However Abel was willing to swop the safety of a prime job for entrepreneurship in following his own aspirations. He emphasises that starting small and on your own is not easy: “No one is immune to the challenges of a start-up. But one has to endure the pain of building the blocks in the short run to realise your legacy in the long run”.

Abel recognised a niche in South African accountancy in which he could create value and build an environment for young black professionals to flourish and grow. He was willing to work through the growing pains and challenges of a small business to build up a practice that could compete with the giants in his profession.

Be a leader that shapes your people’s destinies
Abel states that the reality of our profession is that size and numbers matter to clients and the market – only then can firms offer the variety of specialised services that makes bigger clients comfortable.

To grow your business you need to attract and retain real talent, which means having people in your team who are as capable as and possibly even better equipped than you in various skills. Abel believes that a leader must be mature enough to accept being challenged and having your views questioned. He emphasises that as a leader you must consult and engage so your people feel that their destiny is not dictated by you and that they are part of shaping it. This will keep your real talent in your business and less likely to be tempted away by the big four firms and other major competitors.

B-BBEE opportunities may only come once
Lindani and Abel emphasise that B-BBEE has contributed to the development and retention of leadership talent in our profession Founding their firms – and the consequent merger into SekelaXabiso – are prime examples to younger generations of the opportunities that B-BBEE enables. In their own words: “Some opportunities only come once – use them wisely!” SekelaXabiso is mindful that the majority of young blacks struggle to cope with the consequences of dysfunctional basic education and often aren’t taken up by the bigger firms. SekelaXabiso offers a viable alternative career option for these young students, creating a home and hope for them. In Abel’s words: “We lived it and we know how to respond to it and develop these youngsters’ potential.”

Abel and Lindani are well aware that competing with the established giants of the profession is a stern challenge. It requires leaders in accountancy with resilience, strategy, a passion for our country’s future and unconventional thinking. But having sweated the ‘hard yards’ into becoming one of the top six South African firms, they have accepted their responsibility facing up to the auditing giants. SekelaXabiso is ready for leading roles in major projects, and has the leadership, will and systems to stay on track to the top. ❐

Author: Adele du Plessis CA(SA) is Director at Themba Thandeka Leadership Institute.