Complying with the expectations of B-BBEE in a way that facilitates scorecard optimisation while ensuring meaningful and sustainable transformation, not only requires a fundamental understanding of the underlying legislation, but vast, on-the-ground experience in the practical implementation.
The reference to ‘B-BBEE Beyond the Boardroom’ underlines the considerable amount of time, resources, skills, technical ability and commitment necessary for experts and Consultants in-the-field of B-BBEE to guide Transforming organisations. Navigating and practically applying the B-BBEE legislation can often be a minefield of complexity, which is further exacerbated by the underlying ‘substance over legal form’.
Sporadic notices, gazettes, regulations, as well as Explanatory Notices issued by the BBBEE Commissioner, continually change the rules of engagement. For a B-BBEE Consultant to be on top of their game in the B-BBEE arena, they must to be on point with all relevant legislation and amendments as and when issued.
I think it is fair to surmise that working in the B-BBEE arena is not for the faint-hearted or the lone ranger. An effective B-BBEE solution, for the most, boils down to team collaboration, interaction and an individual’s appetite to continuously develop their BBBEE knowledge. Know that when a B-BBEE Consultant is versed on all aspects of BBBEE legislation, it is a result of hours in training, brainstorming interpretations, then aligning them to the expectations, spirit and principles of B-BBEE to develop a workable, impactful and ethical solution for their clients. Saul Symanowitz, the Managing Director of Sage BEE 123, recently invited TFM Magazine to join his consulting team as they shared their insights and fleshed out solutions to challenges facing their clients.
Saul and his consulting team, consisting of Micah Gengan, Rene VanDerWalt, Yonela Ntsaluba, BhavnaMaharaj and Denvor Phokaners, boast more than 80 years collective experience in the B-BBEE arena. As a team, they represent a unique set of skills with their collective expertise gained first-hand from a corporate, verification and consulting perspective.
‘Don’t allow consultants to steal your watch, then tell you your own time’. Take control of transformation in your business and be the lead.
Beyond the Boardroom is a series of articles that will appear in TFM Magazine, addressing all elements of the Codes. The Sage BEE123 consulting team will share their unique insight as to what drives successful Transformation, element-by-element. They will further highlight red-flag issues that pose a risk to an organisation’s Transformation investment and provide top tips to take into account during the development and implementation phase of a B-BBEE Strategy.
BEE 1 | In-the-field Insight
Transformation is a national imperative in terms of history and structural participation. The objective is to promote inclusivity that will bridge the gap of wealth facing our nation. The core aim is to build a strong economic base for a thriving and sustainable economy.
B-BBEE is a uniquely South African empowerment policy. Solutions have to be tailormade to meet the distinctive needs of both the organisation in question and the objectives of the government’s National Development Plan. Unlike any other corporate strategies, B-BBEE cannot be merely Googled and then applied as a one size fits all. It has to meet criteria that will bolster broad economic opportunities for ‘Black’ People and businesses. The overriding principles of B-BBEE are to promote economic growth through encouraging broad participation.
The approach to developing and implementing a B-BBEE strategy should never be driven by the end-result of a scorecard and must not contribute to a point where it is detrimental to a business’ bottom line.
Although many organisations are in a position to use the services of external consultants, there should be at least one internal person who has a holistic understanding of B-BBEE. This would ensure that organisations are fully aware of the validity of solutions being implemented and able to manage the process end-to-end. In many cases, organisations fall short on rebates and incentives available through either a lack knowledge as to what can be claimed or, worse still, not submitting such claims through the correct channels or on prescribed documentation.
Never over-simplify B-BBEE, as it is not an annual event; it’s an ongoing process that should be consistently monitored and evaluated.
It is vital to bear in mind that, following the implementation of a B-BBEE strategy, results may not be realized immediately. However, year-on-year the collective benefits of a well implemented B-BBEE strategy will emerge. Mostly it is the appetite with which an organisation approaches B-BBEE that dictates the outcome.
BEE 2 | Practical Challenges & Red Flags
There are many reasons why organisations do not wholeheartedly embrace B-BBEE. In some instances, it is the historic reputation of B-BBEE stemming from questionable interpretations of the Codes that challenged best practice. This is further propelled through organisations using the services of unethical B-BBEE Consultants or those without solid credentials. Then there is the general confusion surrounding targets and discounting, in particular sub-minimum requirements. However, the most highlighted challenge facing organisations is inadequate internal resources to drive the process.
Before the establishment of the B-BBEE Commission, Fronting Practices continued with impunity, as there was no point of contact to report misconduct. However, the BBBEE Commission is making great strides in making organisations accountable, which is currently re-establishing the credibility of B-BBEE.
Like any financial audit, a B-BBEE audit or verification requires checks and balances, with evidence to back-up any claims. In respect to a financial audit, a Financial Director, who is versed in accounting and good governance, drives the process. However, in the case of B-BBEE, many organisations allow the process to be lead by a skeleton staff due to a lack of resources, while the salary to drive specific B-BBEE initiates may be claimed.
When measuring the success of a B-BBEE Strategy, it should be based on the outcome, not the contribution made
At the other end of the spectrum, organisations have added the title Transformation Manager to their organogram. These professionals are mandated to secure a favourable B-BBEE status level, however, more often than not they are disempowered before making an impact. This is usually due to the absence of a viable vision or strategy to drive the process. By having a Transformation Manager, an organisation’s intent to transform is evident, however, once steps such as introducing Transformation KPIs are proposed, or a budget is presented, a Transformation Manager often loses support from the top. More often than not, when losing such support, a Transformation Manager will become disenfranchised, and the downward trajectory of their enthusiasm follows. This often leads to a tick the box approach to B-BBEE and, in some cases, the overuse of consultants to ensure that initiatives are taken out-house.
BEE 3 | Top Tips
Always remember, the best intentions sometimes have unintended outcomes. Being on point in terms of beneficiaries, third-party consultants and mechanisms to secure accountability is vital to the long-term sustainability of a B-BBEE strategy.
- Never over-simplify B-BBEE, as it is not an annual event; it’s an ongoing process that should be consistently monitored and evaluated.
- Support those mandated to drive Transformation internally.
- Never Transform blindly; always have a solid strategy in place which includes tactics and the implementation plan.
- Never buy into a scorecard; buy into the B-BBEE strategy at hand.
- ‘Don’t allow consultants to steal your watch, then tell you your own time’. Take control of transformation in your business and be the lead.
- When measuring the success of a B-BBEE Strategy, it should be based on the outcome, not the contribution made.
- Incorporate all internal departments into the roll-out of a B-BBEE strategy.
- Manage outsourced consultants. Ensure that all parties are aware of the integral deliverables and actual outcomes expected from third-parties.
- Have processes in place to track money spent. For example, have mechanisms in place to ensure Skills Development Beneficiaries receive their stipend or that beneficiaries allocated to your organisation and relevant SETA are not duplicated.
- Always follow the money trail. A contribution does not end after the transfer of funds.
- Have solid legally binding contracts in place with all third-parties. This can include consequences for non-delivery and whether a Grant contribution is refundable or not.
- Everything works on evidence in B-BBEE, keep all documentation.
- Always have a post-mortem following an evaluation. Let the outcome serve as lessons learnt.
“In 1995 nobody thought a camera phone would become the norm. Phone companies that adapted early and invested in technology managed to get ahead and have stayed ahead of those focusing on camera technology only. Over time, the investment made in technology by phone companies negated the need for cameras. This resulted in organisations only focusing on camera technology going out of business. The same applies to B-BBEE in terms of organisations being resistant to embracing B-BBEE as an imperative. A lesson – be an early adapter to remain in the game!”
B-BBEE in its infancy was primarily viewed as a process that needed to be controlled, instead of being allowed to evolve organically. Many organisations have only dipped their toes into the unknown waters of B-BBEE and have instantly recoiled, never having learnt to swim. However, those that learnt to swim before taking the plunge have gone deep into the unknown waters without the need for coming up for air.
BEE123 is a content contributor and strategic partner to TFM Magazine.