From the CEO

The HSRC undertook some two hundred and fifty development-oriented social-scientific projects during the 2004/05 year for its many public-sector users. Several projects were very large; many occurred in other African countries; and the majority involved collaboration with other research entities.

These activities are summarised the Highlights section, with more detail in subsequent sections. As in previous years, this leaves me to consider the organisational side of the HSRC?s development. Since this is my last CEO Message, as I end my five-year contract, it may be helpful to subject the HSRC?s renascence in this period to some reflection, both for its own future next development and for other entities undergoing similar change.

In essence, we have roughly tripled our activity in three key respects: our expenditure on research has soared to R230 million per annum; our research complement has grown to approximately 140 social scientists plus 30 interns; and our scientific output has improved to 0.8 journal articles per researcher (0.6 adjusted for multiple authorship), ahead of the figure for social science at distinguished South African universities. During this period we also became majority-black, and improved our qualifications profile.

To assess these developments, my last year?s Message applied the McKinsey?s ?seven S? checklist from the management literature. It illustrated how the HSRC had tackled the requirements for change and growth in respect of its strategy, structure, staff, skills, style, systems, and shared values.

This perspective identified the ingredients of transformation, but does not comprehend the dynamic: what drove the process, and how one stage could lead to the next. This Message offers the complementary historical perspective, using John Kotter?s analysis of how organisations achieve major change,^{Note 1} which Christa van Zyl has recently applied to the HSRC^{Note 2}.

Kotter argues that successful transformation involves eight steps, all of which are necessary if it is to succeed and be sustained. One first has to ?defrost? the status quo, in four steps: ?establishing a sense of urgency, creating a guiding coalition, developing a vision and strategy, [and] communicating the change vision?. Only then can one turn to transformation, in four further steps: ?empowering a broad base of people to take action, generating short-term wins, consolidating gains and producing even more change, and institutionalising new approaches in the culture.?

I shall review the HSRC?s transformation in terms of this schema. The eight steps turn out to provide a handy map of the route we have travelled since 2000, though the sequence they propose is too tidy and linear. In our case ? and, one might surmise, in many organisational transformations that are far-reaching ? the stages overlapped, practice sometimes preceded planning, we made some mistakes, and had some lucky breaks.

Establishing a sense of urgency, Kotter?s first step, was straightforward. The parliamentary grant to the HSRC had been steadily shrinking, for two reasons. The government was top-slicing from science-council funds to support the Innovation Fund. And the HSRC was a tempting target, having been characterised in its Institutional Review of 1977 by its ?isolation from the social science community, generally weak research staff, limited contribution to building social science capacity, imbalance in favour of administrative staff, and inadequate diversity?.^{Note 3} Having failed to improve its earnings despite oft-repeated intentions, the HSRC had responded with successive downsizings. Senior researchers were quickest to leave, so by 2000 there were more than two administrative members of staff for every researcher; and half of the latter were too junior to drive projects. This was evidently unsustainable.

Fresh leaders were required, prepared to embrace a change of direction. With the participation of the Chair of Council, a guiding coalition of ten entrepreneurially minded Executive Directors (EDs) of research was created, through recruitment and promotions, together with new counterparts on the support side. An important move in this regard was to open centres in Cape Town and Durban to accommodate people who were interested in joining our cause.

The EDs and their teams were selected not only for being academically and managerially strong, but for sharing an explicit change vision for the HSRC. This involved an unequivocal user-orientation: to counter the dwindling Parliamentary grant we would grow by responding to the social-research needs of public-sector users who could pay. But we would avoid the treadmill of short-term contracts by focusing on those of their research problems that had the substance to attract excellent colleagues. This strategy crystallised into an acronym, COUPE, and became the HSRC?s mantra: Contracts and grants, Outreach to collaborators, User-orientation, Performance (regarding representivity and administrative efficiency), and Excellence (regarding scientific publications and academic qualifications).

The elements of COUPE mapped onto the ?balanced scorecard?^{Note 4} that was being adopted by the Department of Science and Technology. This helped us align our annual planning, budgeting and reporting to theirs. And we shall see below how COUPE shaped important developments such as right-sizing the administration and key performance areas for staff.

An early strategic analysis of likely user needs yielded a vital breakthrough. The obvious social challenges included poverty, unemployment, skills shortages, substandard education, rural under-development, urban renewal, HIV/AIDS, fragile families, and uneven service delivery. These clearly required social research cutting across the traditional, university-style disciplines. So, as the Chair of Council recalls in his Message, early in 2001 the EDs boldly proposed to reorganise the HSRC?s research activities into some ten problem-oriented interdisciplinary Research Programmes, initially called ?new priority areas?.

Researchers responded readily to reassigning themselves into the new structure, and to bidding for users? tenders. This reinforced the communicating of the new vision, Kotter?s fourth step, with immediate action under the guidance of the new EDs. The flexible Research Programmes allowed the set-up of customised teams (also involving experts from outside research entities) in responding to users? problems. As a result research earnings, which had languished for several years, soared to R16 million within the year, and nearly doubled to R28 million in the next. These were crucial quick wins that affirmed the strategic approach. They allowed the EDs to hire extra researchers, overwhelmingly at the level of specialists, who could drive projects. The CEO monitored the hires to ensure that they advanced the overall representivity and qualifications profile.

As soon as several EDs were in place, extensive authority was devolved to them for financial and human-resource decisions as well as identifying research priorities: the broad-based empowerment that Kotter identifies. The significance of this aspect has been underlined by Rosabeth Moss Kanter: ?In the end, the only way a CEO can reverse a corporate decline is to change the momentum and empower people anew, replacing secrecy and denial with dialogue, blame and scorn with respect, avoidance and turf protection with collaboration, and passivity and helplessness with initiative.?^{Note 5} In this vein, we commenced frequent ?management information meetings? for staff to share news of contacts and developments; and ?research business meetings? to scan for funding opportunities. Bottom-up planning and budgeting soon followed: a year-end lekgotla identifies strategic priorities, and a new-year lekgotla provides peer discussion of planned projects among the Research Programmes and possibilities for collaborations.

This implementation of the COUPE strategy on the research side occurred in interaction with a transformation of the organisation?s support services. Benchmarking with comparable organisations internationally suggested having two administrative staff, rather than the prevailing seven, for every three researchers. The Council approved a reconceived organisational chart for support services, with new positions suitable to the changed research requirements, which was then adapted in extensive discussions with the staff union. The posts were defined in terms of key performance areas derived from COUPE; and then selection was conducted among those staff members who had not chosen voluntary retrenchment, through a process of competency tests, interviews, and review. Following the rightsizing, recruitment improved representivity and qualifications.

Support services raced to keep up with the research growth, through projects such as a financial model (including charge-out rates and over-head calculations to inform ever-larger project budgeting); modernised conditions of employment; enhanced IT systems; communications by video and refurbished premises in Pretoria; and knowledge management through an intranet.

These gains were consolidated in various ways on both the research and the support side, enabling the growth to continue and further changes to be introduced. Alongside tendering, EDs increased the proportion of earnings from high-quality research foundations and development agencies; performance management in terms of COUPE-based key performance areas was extended to researchers; capacity-development through an intern programme was expanded; and collaborations with other science councils were improved. Renewed external communications yielded a near forty-fold increase in media coverage of research results, over the five years. On the support side, the intranet expanded to include a digital library and a research project management system; the burgeoning publications department found that free internet publication actually grew print sales; and so on.

These gains have gradually been taken into the organisational culture. A research ethics committee has achieved formal international accreditation, and screens all proposals. An Editorial Board advises the HSRC Press after commissioning external reviews of manuscripts. A vigorous research dialogue has developed, with weekly seminars of internal and external participants held across the three centres by video-conference, and an annual research conference for HSRC staff with more than a hundred papers. In all these aspects the research culture, when coupled with the need for earnings, may be experienced as quite demanding by new recruits ? an impression confirmed in a recent gender audit. A staff survey has pointed to mentoring and training as key areas for improvement.

On the support side, the annual cycle of planning, budgeting, monitoring, and reporting is now tightly structured among management, the Council, the Minister and his department; financial and human-resources policies have been modernised; the delegations of authority from Council to the CEO have been cascaded to EDs and their section heads; and an employment-equity plan is being formulated by a forum, aligned with a professional development framework.

In addition to the eight steps that we have illustrated, Kotter stresses the importance of leadership. In an entity like the HSRC this has to occur at several levels. We have noted the pivotal leadership role of the EDs. As a result, my own role could largely consist of fostering the COUPE strategy, facilitating the devising of collaborative solutions among the EDs, and monitoring their budgets and appointments. The Chair, Professor Jakes Gerwel, and his Council steered with a light but influential touch, setting expectations for the changes, research priorities, and reporting, and authorising management to deliver the results. The Minister and his Director-General in turn provided a supportive science-policy environment, culminating most recently in a nuanced dialogue towards a new statute for the HSRC.

The HSRC?s resulting transformation has greatly improved its capacity to discharge its statutory mandate. The most obvious indication has been the near-tripling of its turnover mentioned earlier. Within this, one may distinguish the 72% average annual growth in research earnings, from March 2001 to March 2005, from the 7% average annual growth in the Parliamentary grant (including ring-fenced amounts). In the last couple of years the Parliamentary grant has been growing faster than this average, but its share of total HSRC income has nevertheless shrunk to about one-third. An increase in this proportion would help the HSRC maintain space in its work programme for some exploratory social research, and projects for which users in marginalised communities are unable to pay.

TABLE 1: HSRC COUPE INDICATORS MARCH 2001? MARCH 2005

More detailed quantitative indications of the HSRC?s transformation are shown in the accompanying table of the main COUPE indicators, upon which I have reported each year. The table reflects the improvements over the four completed reporting years that fall within my term. We have exceeded our targets in most respects: i.e. in addition to earnings, in collaborative projects, successful tender bids, researchers with senior degrees, and published scientific articles. The Annual Reports supplement these measures with many qualitative indications. We were accordingly pleased when the institutional review of 2003 felt that the HSRC ?has earned the respect given to it by the bulk of its stakeholders and collaborators by the breadth, quality and relevance of its contributions to the study and practice of social development?.^{Note 6}

A minor reservation in the COUPE scorecard concerns the proportion of total staff in support services. Although a great improvement, this is higher than the initial benchmark because we underestimated the complexity of maintaining a country-wide infrastructure, supporting multi-country projects, and achieving effective dissemination; and one of our early mistakes was not budgeting sufficiently for it.

A more important exception is that we have managed to improve the proportion of black researchers in the organisation only by some two-and-a-half percentage points per year, instead of the intended four (although the improvement has been much faster on the support side). Better co-ordination and further expansion of our internship programme will be central to improving this important aspect of COUPE.

Another area for improvement is the systematising of our research engagement with the rest of Africa. Our involvement is already formidable, as the map on p. 26 indicates. But it is currently largely project-based, whereas a more sustained engagement with partner institutions, e.g. in networked ?centres of excellence?, will allow a more comprehensive response to, for example, the research challenges posed by NEPAD.

My successor, Dr Olive Shisana (whose appointment was announced as this Report was going to press), has already set a lead in these important respects, capacity-building and networking, at the same time as having established the Cape Town office of the HSRC, built a massive research programme, and delivered path-breaking enquiries regarding the social aspects of HIV/AIDS. She is powerfully equipped to inspire and support her colleagues, and serve the Council, in taking the HSRC to new heights.

Dr Mark Orkin, HSRC President and CEO