Everyones guide to B-BBEE updated against the Revised Codes of Good Practice

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TABLE OF CONTENTSTable of Contents 1

Introduction 4

Chapter 1: The Context of B-BBEE 6

1.1. What is B-BBEE?.....................................................................................................................................................6

1.2. Who are the beneficiaries of B-BBEE?.....................................................................................................................7

1.3. Ok, but how does the average person view B-BBEE?..............................................................................................8

1.4. Some of the concerns that have emerged over the past seven years:...................................................................10

1.5. What can be learnt from the Malaysian example?..................................................................................................12

1.6. A quick overview of the Revised Codes of Good Practice (RCoGP)......................................................................14

1.7. A quick overview of legislative alignment to Charters.............................................................................................17

Chapter 2: Developing a Technical Understanding of the Revised Codes of Good Practice 18

2.1 B-BBEE Ownership..........................................................................................................................................19

2.1.1 Capturing black ownership on the scorecard..................................................................................................19

2.1.2 B-BBEE Ownership options.........................................................................................................................23

2.2 Management Control........................................................................................................................................33

2.2.1 The Management Control scorecard.......................................................................................................33

2.2.2 Management Control Best Practice........................................................................................................36

2.3 Skills Development...........................................................................................................................................41

2.4 Enterprise and Supplier Development..............................................................................................................49

2.5 Socio-Economic Development..........................................................................................................................67

Chapter 3: Developing a Transformation Strategy 69

3.1 Why is Transformation Strategic?.....................................................................................................................69

3.2 Developing a Value Based Strategy................................................................................................................74

3.3 Determining the value drivers of your business:..............................................................................................75

3.4 Developing the business purpose....................................................................................................................78

3.5 Using the Value drivers and purpose................................................................................................................80

3.6 The three core transformation questions:.........................................................................................................83

3.7 An Organic verses Acquisitive Approach to Transformation.............................................................................87

3.8 The rate of transformation................................................................................................................................90

3.9 Critical success factors...................................................................................................................................91

Chapter 4 – Implementation 92

4.1 Other Goals and Objectives of Transformation Management..................................................................................93

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4.2 Assessing your company’s B-BBEE maturity..........................................................................................................96

4.3 Getting the input from your organisation..................................................................................................................99

4.4 Consolidating and sorting the list of actions:.........................................................................................................101

4.5. Implementing the Sorted Actions:.........................................................................................................................102

4.5.1 Approving the developed Activities:..............................................................................................................102

4.5.2 Developing the processes that sustain the transformation strategy:.............................................................103

Chapter 5: Communication and Review 107

5.1 Measuring your actions against your scorecard?............................................................................................107

5.1.1 Revisiting your Strategy:.......................................................................................................................107

5.1.2 Revisiting the scorecard:.......................................................................................................................108

5.2 Communicating your empowerment position:.................................................................................................108

5.3 How do you know if your transformation process is working?.......................................................................108

5.3.1 Understanding the moment:..................................................................................................................108

5 3.2 It’s all invented:.....................................................................................................................................109

5.3.3 Stepping into a universe of possibilities:...............................................................................................109

5.3.4 Dreaming our dreams in the daylight....................................................................................................110

5.3.5 Contribution…Moments of truth:...........................................................................................................110

5.3.6 Giving away to passion:........................................................................................................................110

5.3.7 Igniting the spark:................................................................................................................................111

Chapter 6 Conclusion 112

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INTRODUCTION

Economic and social transformation in South Africa is an evolving and fluid issue, with the rules being written by, and

through our actions. The revision of the Code of Good Practice (RCoGP) on B-BBEE is reflective of some of these actions

(behaviors) over approximately the past seven years, both good and bad, and provides us with some indication of how the

Department of Trade and Industry (Dti) views the progress made to date. As such it is difficult to define best practice in

absolute terms. There is no right or wrong approach, as it is very dependent on the context. Having said this, this book

offers a detailed step-by-step approach to understanding and implementing enterprise transformation, based on the

revised Code of Good Practice and empirical best practice, in a sustainable manner so that it delivers value to your

business.

The area of transformation remains a very emotive, complex, business defining, social issue of our time. As a

consequence, discussions on transformation still tend to provoke strong reactions with key stakeholders in business and

politics sometimes having quite divergent views. While not discounting the importance of allowing these emotions to

surface, be openly discussed and become mutually understood; this handbook does not set out to specifically explore the

philosophical issues surrounding transformation in South Africa, or evaluate government policy, but prefers to concentrate

on the necessary steps and best practice to implementing the broad based approach to enterprise transformation based

on the revised B-BBEE Codes of Good Practice.

The objective of this book is to show organizations how to move beyond classical tick-box compliance thinking around B-BBEE, and to truly embrace the new enterprise transformation paradigm, to achieve a successful and sustainable business in symbiosis with the ever changing environment, able to compete nationally and internationally,

delivering value to its clients.

The authors have attempted to provide a cohesive framework for understanding, enabling, and achieving enterprise

transformation in this specific context. In this book we provide a breakdown and explanation of the Dti’s revised code of

good practice and scorecard measurements, as well as a set of enterprise principles and a transformation process

roadmap that serve as the foundation for a holistic analysis framework that captures the current state, envisions the

future state, and determines actions needed for guiding transformation efforts.

We explore in detail the three interdependent, interconnected cycles that every enterprise should enact along its

transformation journey – the strategic cycle where the need to transform is understood and defined, the planning cycle

where the enterprise determines the actions it needs to take, and the execution cycle where the enterprise translates

plans and ideas into action. This holistic analysis framework integrates discrete analyses of stakeholders, processes,

performance measurements (scorecard elements), change management principles including change maturity (readiness),

resources allocation and role clarity, alignment with corporate strategic objectives, and enterprise characteristics to

identify gaps and opportunities for improvement. These gaps, in conjunction with the desired future state, are used to

develop the enterprise transformation plan. We will walk through each element of the analyses and use examples and

best practice drawn from actual organizations that we have worked with to illustrate key concepts.

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CHAPTER 1: THE CONTEXT OF B-BBEE

This chapter serves to map the evolutions of B-BBEE in order to understand the specific objectives in the RCoGP. If you

have a good grounding in B-BBEE you could choose to move to chapter 2.

1.1. What is B-BBEE?

B-BBEE stands for Broad Based Black Economic Empowerment. The government defines B-BBEE as “an integrated and

coherent socio-economic process that directly contributes to the economic transformation of South Africa and brings

about significant increases in the number of black people that manage, own and control the country’s economy, as well as

significant decreases in income inequalities.”1

In layman terms, it simply means that B-BBEE is about government using pieces of legislation and policy framework

instruments to encourage a change (transformation) in the landscape of the South African economy.

While this is a very rigorous definition it certainly does not roll off the tongue, so then what’s this all about? If we don’t

know what we are dealing with, or where we are trying to go with it, then we cannot even start the journey. We are seeing

in our society the stakeholders, jostling with each other as the view on what transformation is depends on who’s asking

the questions. Black business, white business, government and organized labour all have differing (but sometimes

overlapping) views of what transformation is and what it is trying to achieve. It is the thrust and parry of this debate that

forms the nature of B-BBEE on an ongoing basis and so one thing we are sure of, is B-BBEE in its essence is in rapid

evolution, hence the revised version of the codes of good practice (RCoGP).

In this book B-BBEE will be linked to transformation, as it is an overlapping concept. “trans – form” or changing form of

the nature of South Africa’s capacity to enable its citizens to be the best they can be is also at the heart of the B-BBEE

issue.

What transformation is about is best understood by the diagram in Fig 1 below:

1 South Africa’s Economic Transformation: A strategy for Broad-Based Black Economic Empowerment (www.dti.gov.za)

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Figure 1

Part of the transformation process is bringing the resources of the company to bear which involves ensuring your

employees are individually engaged creatively in this task, and so….in simple terms the basic unit of transformation is the individual and the ethos of transformation involves creating an enabling context for the individual to be all that they can be and make their best contribution.

1.2. Who are the beneficiaries of B-BBEE?

In formal legal terms the beneficiaries of B-BBEE are “black people” which according to the B-BBEE Act is “a generic term

which means Africans, Coloured’s and Indians, including only natural persons who are citizens of the Republic of South

Africa by birth or decent; or are citizens of the Republic of South Africa by naturalization: a) Occurring before the

commencement date of the Constitution of the Republic of South Africa Act of 1993; or b) Occurring after the

commencement date of the Constitution of the Republic of South Africa Act of 1993; but who, without the Apartheid policy

would have qualified naturalization before then.”2. Second generation South African Chinese have also been subsequently

added to the above definition. It is also interesting to note that we have no legislative basis of defining “black” or “white”

South Africans, Hence the entire process is built upon self-disclosure through the Employment Equity process (EEA1

form). Hence this entire edifice of B-BBEE is depending on the legal principle of people acting in a fair and reasonable

manner. Anything else runs the risk of being seen as discrimination and against our constitution.

It also just makes good business sense to ensure that all your employees are given the tools to contribute to growth of

your business. B-BBEE recognizes that some racial groupings in South Africa have been significantly more

disempowered than others.

B-BBEE is also a mitigation strategy against South Africa’s social, political and economic risks. Its aim is also to address

the legitimacy of a mixed market economy and dramatically reduce our gap between the wealthy and the poor. South

Africa has the highest GINI co-efficient in the world at 0.7 (SA transformation report (2013)). Therefore as a country, if

2 The first Code of Good Practice, (2003)

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South Africa can achieve a more equal society (including specifically economic equality) then all the people of South

Africa will benefit from such transformation as it brings with it a new set of shared values and increased socio-economic

and political stability.

1.3. Ok, but how does the average person view B-BBEE?

Most people have seen the process of empowering or transforming their enterprise as coming at a cost and impeding the

performance/ growth of the business.

While this is very true that transformation does have immediate costs associated with it, in this view transformation tends

to decrease performance, which in turn leads to slower or negative growth, which in turn makes transformation more

difficult to sustain. Transformation if viewed as just another necessary evil of doing business in South Africa (like death or

taxes), will simply not happen, as a manager’s function is to increase performance and reduce the costs.

In our experience this prevailing and dominant management logic is the biggest single obstacle to sustainable

transformation. If your view is to cut off your leg before you lose an arm and a leg, and then to try to hop into the future not

globally competitive, then that is what will happen. So the first hurdle to transformation starts in the mind of you and your employees, as transformation need not only be a ticket to the game, but can also become a ticket to an emerging

growth market. If it becomes only a ticket to the game the cost could be so high that many will be unable to afford to play

in the game anymore!

So, the big question which we will explore in coming chapters is:

HOW CAN TRANSFORMATION BE USED TO INCREASE PERFORMANCE IN YOUR BUSINESS WHILE CONTRIBUTING TO SOCIETY?

This question is obviously of a strategic nature, and so in order to explore this question in a substantive manner in your

business, we need to first develop a common understanding of transformation, and then develop some simple strategic

frameworks and a common strategic toolkit.

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1.4. Some of the concerns that have emerged over the past seven years:

If you did a street survey you would see the following concerns raised by the average South African:

Compliance – at a costThe nature of the role between state and the free market is a complex one, and the degree to which these two key

stakeholders build a common interface on transformation is important. As a whole not enough businesses have translated

the concept of aligning the B-BBEE balanced scorecard into the organizations strategy, and too often it has become an

exercise in tick box compliance as part of doing business in the country, instead of making strategic sense of it. The main

reason has been poor marketing and insufficient national vision on the B-BBEE strategy. Malaysia and Rwanda have

been far more effective in creating a citizen involvement and activism around the concept of transformation.

The social compactThere is a risk of a culture of entitlement becoming increasingly entrenched with the concept of B-BBEE and tends to

proliferate in context of poor implementation.

The concerns, racial arbitrageB-BBEE can easily legitimise rent taking of key political figures (just under 1/3 of the ANC’s national executive committee

are non-executive board members)3, with the party becoming entangled in investment ventures. This entrenches a neo

liberal rightist approach to the economy; there is a risk that the ruling party acquires a reflexive sympathy for policies that

push the market ahead of society and social justice.

There is also a risk of tending to defocus off grass roots change. B-BBEE is not really a grass roots mechanism of

change, as un-officially its objectives in the short term were focused on the deepening of a middle class which can act as

a social buffer toward the longer term grass-roots issues. Looking at the terms of “historically disadvantaged vs. looking at

the concept of “currently disadvantaged” would prevent excessive racial arbitrage.

The role of the stateWe have seen the emergence of a two camp view. Firstly we have the left camp that represents the marginalized poor

and labour. This camp is impatiently calling for service delivery and an end to the so-called enrichment empowerment

deals. This is a constituency that needs to be satisfied as it makes up the bulk, in numbers of the support base of the

ANC. From an empowerment perspective this grouping will be demanding a developmental broad- based approach. To

satisfy these groupings, the ANC will be under increasing pressure to use mechanisms to bring more poor people into the

economy.

Secondly we have the ANC's NEC stalwart’s camp. This camp have been the bastion, and of course the major

beneficiaries of empowerment to date. They have been fighting for the broad-based codes and especially for the growth of

black capitalists.

Societal polarisationPoorly implemented B-BBEE most often creates societal polarisation, and an increase in racial tension as you are trying

to compress what by normal societal forces take generations. Malaysia is a useful forward looking lens in this regard.

3 Marias, H.(2012): “South Africa Pushed to the Limit”

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1.5. What can be learnt from the Malaysian example?

While Malaysia is not a complete clean cut example of success, its amazing reduction in ethnic inequality in twenty years,

with strong parallels makes it worth understanding.

The Malaysian context:

Three main ethnic groupings formed the population of Malaysia in 1970, namely the Malays (53%), Chinese (36%) and

Indians (11%). The Malays had the political power and the Chinese had most of the wealth. These large ethnic-based

inequalities resulted in a strong risk to the countries long-term stability and growth. This stimulated a response from the

government to implement what was to be called the New Economic Program (NEP).

The program consisted of structural interventions into education, employment equity, skills development, preferential

procurement, Malay ownership and enterprise development to address barrier to entry issues4.

Besides the structural themes detailed above, an environment of national “togetherness” was enabled through the

promotion of the Malay national ideal.5

The diagram below shows how Malaysia has effectively utilised a “Maslow’s chronological sequencing of hierarchy of

needs” form of approach, by first focusing on foundational psychological themes (national vision and culture building) to

build togetherness and then on job creation and education that influences economic access at that time and provide

enablement to the next level of themes. With the supply of talent addressed, the model then focused on the mobility of this

talent pool within companies, and then how to encourage the growth of Malaysian dominated enterprises within their

industries.

4 Klitgaard, R., & Katz, R. (1983). Ethnic Overcoming Inequalities: Lessons from Malaysia. Journal of Policy Analysis and Management, 2(3), 333-349.5Wang,B.-Lan C. (1978). Educational Reforms for National Integration : the West Malaysian Experience. Comparative Education Review, 22(3), 464-479

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Figure 2

The implications for B-BBEE: are that we need to sequence chronologically the detailed themes so that they are able to

re-enforce each other, and create a sustainable talent pool to the nation. We are also reminded of the importance of a

clear transformation vision and a need to build a strong psychological compact between ethnic groups if the process of B-

BBEE is to have the desired impact.

Furthermore, the heart of entrepreneur development in the NEP model was to get the informal sector and the formal sector to compact and interact as supplier and client, and to learn a common vocabulary to achieve this goal. This

supply compact would require supplier effectiveness, and corporates would play a role in the development of the

technical, quality and business aspects of the suppliers business. There is a parallel need in South Africa with our “twin

economies” context being similar to Malaysia.

1.6. A quick overview of the Revised Codes of Good Practice (RCoGP)

The original objectives of B-BBEE were formed from the late 1990’s to 2003, while the country, at a socio-political level,

was driven by a Neoliberal model. There was an understanding that B-BBEE was predominantly focused on building and

strengthening a middle class, rather than being a grass-roots poverty alleviation and access mechanism. This can be

seen in the relatively low weighting given to socio-economic development.

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It was tacitly understood that business would focus on the barriers to entry for those economic actors that were about to

become active, thus stimulating quick growth and increasing the tax base, which the government could then use to enable

those participants that were further away (in time and capacity) from becoming economically active.

Times and circumstances change and the Codes of Good Practice (CoGP) have a built-in process for updating best practice every five years to ensure a good fit with the emergent current reality… and have resulted in the Revised CoGP (2013), which this analysis includes.

Reviewing the original intent

While we have seen some significant development of a black middle class, the country has clearly emerged over the

years since 2003 with fresh challenges.

These can be best understood and seen through the lens of the nine critical success factors detailed in the National

Development Plan (2011). A good video clip summarizing this can be found at http://www.youtube.com/watch?

v=Bt1pl4SYPc4

1. Too few people work.

2. Poor Education.

3. Infrastructure is under maintained and insufficient.

4. Spatial patterns drive inequality.

5. Economy is overly resource intensive.

6. Failing public health system.

7. Corruption.

8. Poor public services.

9. Divided society.

After reviewing behavior against the first five-year round of the CoGP, as well as taking global best practice into account,

such as Malaysia’s experiences in the 1980’s it was felt that the following principle changes were needed in the CoGP.

The figure below shows a high level view of the re-orientation of B-BBEE under the Revised Code of Good Practice.

Don’t worry about the detail of these aspects for the moment as in a later chapter we will detail these dimensions fully as

we develop a full B-BBEE scorecard for your business.

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http://www.youtube.com/watch?v=Bt1pl4SYPc4

http://www.youtube.com/watch?v=Bt1pl4SYPc4

Figure 3

The figure above is analogues to a Maslow’s Hierarchy of Needs view to resolve transformation interrelationships

between issues.

The diagram refers to five key principle changes reflected in the revised CoGP that need to be resolved in the right

sequence as follows:

1) We need to re-channel the focus on SED out of education (the informal elements of which will be captured in

skills development) and into other barriers to economic access, such as heath, poverty alleviation and basic

service delivery. Note environmental and infrastructure projects are now explicitly part of SED contributions

2) We need to refocus our skills efforts to include non-employees (unemployed people), such that our future skills

pool is developed and equipped to become employed. We need to ensure that our learnership and artisanship

processes are effectively used as work preparation and employee courtship processes, so that there is effective

retention of our unemployed learners.

3) We need to be recruiting and training employees in proportion to the Economically Active Population (E.A.P).

4) We need to ensure that access to economic opportunity for small black-owned businesses is enhanced through

supplier development. This will benefit both entrepreneurs and the jobs that are stimulated through this process.

Malaysia utilised this to overcome the “twin economies” behaviour evident in their economy at the time. In South

Africa the same concept could apply, namely: bringing established business and small informal business into

supply partnerships to stimulate growth and competitiveness and mutual benefit. This manifests as a black

ownership, small business focus in this pillar, as 95% of businesses in the country are small enterprises with the

bulk of these being black-owned.

5) We need to ensure, as far as is economically viable, that our supply chains are localised, to enhance value

added supply and job creation.

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6) We need to ensure that ownership (through broad-based, employee ownership or strategic partners) exceeds

the unencumbered subminimum of 10% (which is 40% of the Net value points).

In an environment where we have a worsening state of inequality, it is vital for the country to revise its efforts and focus

wholeheartedly on promoting social inclusivity, in an attempt to deal effectively with varying expectations in South Africa.

However, it is when we translate this national compact into a business context that difficulties emerge. We need to

simultaneously promote and stimulate economic growth and at the same time promote inclusivity if we are to emerge as a

country that effectively serves all its citizens. The RCoGP require a fundamental strategic review in order to align itself

with both national and business objectives. Invasive surgery is never easy, but it is sometimes necessary.

When are the RCoGP applicable to our B-BBEE process?

There are different lenses whereby one can understand this question as follows:

1. They should be understood immediately.

2. They should be incorporated in your strategic thinking immediately.

3. They need to be implemented in your 2014 financial year.

4. Any audit done after 11 October 2014 will be against the RCoGP.

1.7. A quick overview of legislative alignment to Charters

If you fall under a valid sector Code which has been gazetted against section 9 an 12 then that Sector Code is what you

should follow and be audited against. This however is unlikely to give a window for Sector Codes to hide behind as all

Sector Codes will have to be revised in 2014 to take the changes in the General Revised Codes of Good Practice into

account. This is what was originally intended in the legislation and is currently playing itself out. Hence our advice to

companies that are currently under a sector codes is that you might as well start adapting the principles described in the

RCoGP into your strategy so long… because it’s going to catch up with you.

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CHAPTER 2: DEVELOPING A TECHNICAL UNDERSTANDING OF THE REVISED CODES OF GOOD PRACTICE

Now that you have developed an understanding of the context of B-BBEE and its objectives, it is now time to take an in-

depth look into the detail of the key dimensions of RCoGP.

We have tried to approach these technical compliance aspects in a way that deals with the mechanical and technical

workings and criteria but also in a way that reflects their value to the business in terms of how they relate to usual

business practices so that they make business sense. Hence we will explain what qualifies against each pillar on the

scorecard, how is it measured, and lastly what are best practice approaches to correct the weaker position.

The toolkit supplied with this handbook allows you to capture the raw data relating to the scorecard and provides an

indicative score based on the weighting and targets detailed above. This is available for all 5 pillars respectively.

The principles in the calculation are reasonably straightforward even for those that would prefer to avoid a mathematical

formula.

These principles are as follows:

1. There’s always a division of numerator by denominator to determine your % achievement against the target.

The numerator is normally your current contribution or reality and the denominator is a defined by the category

being measured – e.g. for skills its payroll as this is indicative of headcount, for SED its Net Profit after Tax

(NPAT), as this is indicative of how much you have to invest in social activities. So, as an ownership example,

to determine the economic interest described below of your black shareholders you would divide black

shareholding by total shareholding and express this as a percentage (say black shareholders held 25 shares

out of a possible 200 issued shares that 25/200 = 12.5%

2. For each pillar the compliance targets are expressed as a percentage. So for example in the case of black

shareholders the target is 25%. To determine your progress against this target just divide you result from 1,

above by the target and you will achieve a new percentage that shows you the portion of the points available for

this category you will get. In this example this would be 12.5/ 25 = 50%

3. Take your progress percentage and multiply by the weighted points applicable for that category. So in this

example black economic interest in the ownership scorecard attract 4 points so 50% multiplied by 4 is 2, Hence

you score 2 out of the maximum of 4 points.

Now there are always exceptions to the rule above (the employment equity calculations and skills calculations are more

complex and worked examples are included in those sections), but this understanding would give you enough know-how

to develop an intuitive sense of what a result should look like as you input data into the templates supplied with this

handbook.

2.1 B-BBEE Ownership

2.1.1 Capturing black ownership on the scorecard

The issue of B-BBEE ownership in a business is the dimension most often equated with transformation because of the

way empowerment was viewed in the late 1990’s. We equated equality with equity, which while it has a basis; it cannot be

the only aspect of transformation. The second reason ownership has such a high profile is that ownership is the criterion

most explored from a preferential procurement perspective, meaning preferential procurement scoring is based solely on

ownership for most charters and for the first code (if you are outside a charter). Furthermore, we now see the revised

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codes placing more emphasis on this area with subminimum targets to be achieved without which penalties to bottom line

score will be incurred, in this way, drawing ownership firmly into center stage.

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The table below represents the revised ownership scorecard with its targets, weights and points.

Indicator Description Weighting Points

Compliance Target

Voting Rights

Exercisable Voting Rights in the Entity in the hands of Black people 4 25%+ 1 Vote

Exercisable Voting Rights in the Entity in the hands of Black women 2 10%

Economic Interest

Economic Interest in the Entity to which Black people are entitled 4 25%

Economic Interest in the Entity to which Black women are entitled 2 10%

Economic Interest of any of the following people in the Measured Entity

Black designated groups;

3 3%

Black participants in Employee Share ownership programmes

Black people in Broad-based ownership schemes

Black participants in Co-operatives

New Entrants

Net Value 2 2%

Realisation Points 8

Table 1

The main changes in the RCoGP include:

• New entrants are included in main points and the threshold for qualifying as a new entrant increases from R20

million to R50 million. This means that the black shareholder cannot have owned shares in prior B-BBEE deals that

are greater than R50 million in value and still qualify as “new entrants”.

• Threshold requirement applies. If threshold is not reached you still get the ownership score achieved but the overall

scorecard Level will be discounted one Level. This sub-minimum is based on the Net Value points.

• Consolidated Net Value points and ownership fulfillment points.

• There are no longer any bonus points.

• You can’t make use of modified flow through and exclusion principle at the same time. (See below revision of these

concepts)

Modified flow-through and the exclusion principal.

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As a general principle, when measuring the rights of ownership of any category of black people in a measure enterprise,

only rights held by natural persons are relevant. If the rights of ownership of black people pass through a juristic person,

then the rights of ownership of black people in that juristic person are measurable. This principle applies across every tier

of ownership in a multi-tiered chain of ownership until that chain ends with a black person holding rights of ownership.

This can be shown graphically as follows:

Figure 4

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The modified flow-through principle

The modified flow-through principle applies to any B-BBEE-owned or controlled company in the ownership of the

measured enterprise. Where in the chain of ownership, black people have a flow-through level of participation in excess of

50%, then only once in that chain may such black participation be treated as if it were 100% black.

This can be shown graphically as follows:

Figure 5

The exclusion principle.

Many publically listed companies have large portions of their share capital held by Collective Investment Schemes, for

example Pension Funds and Unit Trusts. These mandated investments made by or through any third party regulated by

legislation on behalf of the actual owner of the funds, pursuant to a mandate given by the owners to a third party, which

mandate is governed by that legislation are allowed to be excluded from the measurement of ownership up to a maximum

of 40% of the total company equity.

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To demonstrate a simple practical example of this, take Company A and let’s assume that 30% of Company A’s share

capital is owned by some form of mandated investment (such as a pension fund) and a further 20% is owned by a B-

BBEE shareholder. Without the Exclusion Principle the percentage “black” shareholding would be 20/100 x 100 = 20%.

However, if the Exclusion Principal is applied then the formula would be 20/(100-30) x 100 = 28.57% “black” shareholding.

The change in the RCoGP is that you may not apply both the Modified Flow-Through and Exclusion Principal in the same

measurement.

2.1.2 B-BBEE Ownership options

There are three broad approaches to meaningfully address the ownership issue in your business:

Employee ownership: Develop your employees through the business to the point where they are able to

exercise employee share options. This is a limited approach though common. It acts to prevent employees

voting their shares together and thus from emerging as a full partner. Employees often sell the shares and so

exhibit a ‘disloyalty’. In the USA, ESOPs (Employee Stock Option Plans) attract tax breaks and are popular for

that reason. However, the law does not require ‘democratic’ forms of employee working. Without that, the

company and the employees are denied the important additional company performance – and self-financing -

possible if the set-up is correct. Employee shares could also be held jointly by a Trust. All the employees, as

members / owners of the Trust, vote their shares together and discuss and act within the company through the

Trust. This maximizes employee information and education and gains total employee commitment. Employee

options are not inexpensive, as employees often are using future dividend flow (which belongs to current

shareholders) to “purchase” into the trust.

Direct shareholding: Find black individuals who understand your industry or are in a position to quickly

develop the understanding of your business and begin to add value at a senior level and become an intrinsic

part of the business.

Broad-based participation: A company can allow broad-based participation in a company of: charities,

communities, black entrepreneurs in their value chain, future employees (sponsoring bursaries), distributors or

even customers. Well developed, this can have very effective strategic halos.

Black Economic Empowerment Group: Sell off shareholding to a group of black people or empowered

businesses (BEEG) that don’t become operationally involved in your business. This is essentially venture

capital or private equity financing, with the sources of finance being black investors.

Selling off non-core assets: The RCoGP allow for you to sell off non-core assets to a black owned company

and this action allows for recognition of black ownership in your company even though your ownership is

unchanged. The reason for this is that assets are transferring off the balance sheet of a white owned business

into a black owned business, which is after all what ownership in B-BBEE is attempting to achieve.

These five options can all make potential sense for your business depending on the needs and nature of your business.

Combinations of these options are also possible in order to harvest the advantages that exist in all five. For example, one

could lay the foundations for the organic development of your staff to the point where some (or all?) of them are in a

position to contribute at an ownership level. This would take some time. Even middle level South African employees find it

hard to invest regularly so tight is take-home pay and so high employee indebtedness.

You could develop medium term actions that result in an empowerment trust effectively warehousing the shareholding for

a defined period before passing on the fruits of such a long term (individual) ownership plan.

These five options and their related financial engineering structures are now explored in more depth:

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Employee ownership

The international evidence from the USA and the UK is that democratic employee owned firms (the EOT), with all

employees owning from, say, [typically] 20% to 100%, outperform comparable conventional firms by considerable

margins.6 Moreover, their shares that are still traded sell for large premiums.7 On average, they grow capital, market

share and employment by from 3% to 11% faster per annum. Because they pay dividends inside the ‘family’ of the firm,

their benefit plans are two to three times better and more diverse - and little money travels abroad! Democratic employee

owned firms are some 40% more stable. These results are dependent upon, not employee ownership as a structural

matter, but that it leads to employee information, education, and participation and that alters management in progressive

ways.

Several principles of the Employee Ownership Trust follow: -

Achieving B-BBEE in terms of ownership and achieving a proper racial and gender balance can be done within the

firm.

If Employee Ownership secures a higher performing company, then the old owners do not have to / will not want to

leave. They will face a decline year by year in their percentage ownership but the value of their holding will likely rise

ahead of that relative decline. Employee Ownership should grow mainly by using the expansion of the firm to issue

new shares that are taken up by the Employee Ownership Trust (EOT).

The limitations of an EOT re the B-BBEE scorecard will be the speed at which an EOT can acquire shares and the

B-BBEE composition of employee / owners and of management.

Our national cultural heritage supports a collective view of ownership.

How an Employee Ownership Trust works

In employee owned firms, all employees vote their common ownership through an Employee Ownership Trust in which

employee owners enjoy equal voting rights. This move separates the firm as a ‘command’ organization from the

‘democratic / co-operative’ mode of the Trust. Benefit flows match each employee’s contribution – best measured by the

salary. This two part structure – company and EOT – preserves the right of the Board and of management to set policy

and to manage day by day while it provides the vehicle for employee participation and commitment. In fact it adds agility

to the whole decision-making system as all ‘members’ of the company are more knowledgeable and they become party to

all crucial decisions.

The Structure of the firm and the EOT

Essentially the structure of the EOT is a circle in which employees are able to raise issues through the EOT and from

there to the Board via the Trustees. Equally, the Board or management can use the EOT to open information and debate

on important issues, particularly those that require employee support – such as new directions.

6 See the National Productivity Institute report, “Empowerment for the 21st Century”, April 2003. It can be downloaded from www.npi.org.76 On the FTSE, shares in employee owned firms grew + 280% compared to the average over the last 8 years.

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Figure 6

Direct shareholding

This often-neglected aspect of empowerment can be a pillar to your long term transformation position. Your empowerment

partner might well already be in your business, understand your business and its clients etc. The principles however of

establishing if that candidate is suitable as a shareholder are the same types of checks and balances that you need to

follow if you are considering an empowerment group. You might also find that individuals who are not currently in your

business per se but in your supply chain or in your industry might bring a gain in made an owner. The disadvantages to be

aware of in terms of individuals are: if anything happens to these individuals this can affect your empowerment position

quite strongly and these individuals are often not in a strong position to refinance the business if it should be needed.

Broad-based structures

Many B-BBEE equity transactions are not sufficiently focusing on individuals who are mostly external to the enterprises

but could be important stakeholders. Other collective ownership schemes for women, poor communities and other groups

without economic resources should be pursued. The core of broad based structures, but not limited to, is facilitating

ownership and management of enterprises and productive assets by communities, workers, cooperatives and other

collective enterprises with shares held via direct equity, non-profit organizations and trusts.8 Examples include:

Mines involving the communities they operate in to strengthen the skills pool to draw from and create rural

economic activity beyond the life of the mine;

Development and involvement of suppliers;

Charitable trusts to support grass-roots development activity;

Development of distributors;

8The Constitution signals the importance, in a country where most own little or nothing, of social capital. This can be translated into the approach that favours employees and social groups.

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Support of education (scholarships and bursaries) through the broad based structure;

Development of customers education and economic access.

Involving a BEEG (Black Economic Empowerment Group)9

This approach to ownership given the history of empowerment has been the most prevalent, and over time there has

evolved many structures to facilitate the involvement of an empowerment group. This approach would carry the same

risks as any merger or acquisition process which has a notoriously poor track record. Some of these empowerment

structures, their advantages and disadvantages are discussed below:

Issuing new shares to a BEEG

This is one of the most often used of the approaches to ownership as it is seen as clean and less complex to execute. It is

generally suited to issue not more than 15% of the companies issued share capital.

The impact on the company is that new capital is injected into the business, but it does have a dilution effect on the

current shareholders. The cost of the deal is borne by all the current shareholders in proportion to their shareholding. The

issue of how the BEEG sources funding and what the terms are must be carefully explored.

Merge/takeover of BEEG

This is seen as a complex option with all the typical risks associated with all merger and acquisition transactions. This

would be undertaken if combining the strengths of organizations could achieve strategic and financial objectives that

neither side can accomplish easily and affordably on its’ own.

Key considerations:

Valuation of BEEG vs. your company.

Tendency to be generous with valuation of BEEG.

Will BEEG be big enough to enable your company to be empowered?

Most such transactions do not achieve the stated objectives and this option should not be undertaken lightly.

Sale of shares by existing shareholders to BEEG

Shareholders sell a portion of their shares to BEEG or selected shareholder(s) sell their interest to BEEG. There is a

change in shareholding but no new cash into company as the shareholder receives the cash.

This option is seen as clean but complicated by sourcing of shares for BEEG in larger companies.

Key considerations:

Cost of deal borne by selling shareholders;

Does not adequately tie-in company;

No impact on earnings per share or dividends

Some issues:

How is the company tied in?

Are all shareholders interests aligned?

Who bears the cost of the B-BBEE transaction?

9Source: Derrick Msibi

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Sale of B-BEE sensitive subsidiaries to BEEG or black individuals

If your company consists of a number of divisions some of which are more B-BBEE sensitive than the other divisions it

might make more sense to handle these subsidiaries separately rather than on a group level. What makes some areas

more sensitive than others? For example a subsidiary of your business might be depending on government contracts and

hence require B-BBEE as an entrance ticket to the tender process.

Earn-ins by BEEG or Black Individuals

Your company issues a special class of shares to BEEG which convert on an agreed predetermined formula and the

BEEG converts shares into fully participating shares based on meeting new business targets which is seen as rewarding

performance.

Impact on your company:

Lessens dilution impact.

Minimal cash injected upfront.

Key considerations:

What equity will vest upfront and what portion is at risk?

Valuation of new business generated by BEEG.

Length of time to conversion.

Options to acquire shares by BEEG or black individuals

Shareholders of your company issue an option to BEEG to acquire shares at a predetermined price subject to

performance criteria. This method is seen as easy to implement.

Impact on your company:

No immediate cash inflow.

Limits ability of shareholders to buy and sell shares under option.

Option could be one-way bet for BEEG.

Key considerations:

Pricing of option especially in unlisted environment.

Determination of the performance criteria.

What the adequate time frame for exercising the option is?

Incentives for BEEG to exercise option.

It is likely that successful structures in the future will combine some of these methods.

You need to answer the question: “Which structure (or combination of structures) works best for your business, and why?”

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Partner selection issues10

While the selection of the correct deal structure to facilitate the deal is an important component, the selection of the right

partner (as in a marriage) is a critical issue. As in a marriage you look to the sustainability of the relationship and not just

the wedding.

The following steps should be followed when looking for a black empowerment partner:

1. Develop a business case for B-BBEE transaction.

2. Define specific role of BEEG or direct black shareholders.

3. Develop a screening process for selecting BEEG or individuals.

4. Manage selection process in-house.

5. Sign contract with BEEG or the individuals.

6. Compensate BEEG for specific work done.

7. Create break-up clause.

The following are critical questions to ask when looking for a new shareholder:

1. What is the track record and skills of the BEEG both for the individuals and the team as a whole?

2. Review previous transactions of the group or its members and understand reasons for success/failure.

3. What failures/success stories result from this review that are relevant to your situation?

4. What are your needs (lobbying or direct operational involvement) and are the skills in the BEEG compatible with

your needs?

5. Are there specialist skills such as finance, strategic planning, operational or general management that are

required in your business?

6. What is the resource availability in BEEG and who makes everything happens in BEEG?

7. What is their availability?

8. Who is full-time in BEEG?

9. Is BEEG appropriately capitalised to fulfill its participation over the medium to long term and who are the

providers of capital to BEEG and what are their terms?

10. What other businesses is the BEEG involved in, are these businesses compatible with your own and do they

require a lot of attention?

11. Do the businesses demonstrate sound business acumen?

12. What is the relative value of other businesses compared to yours?

You need to use this list as a guide to developing a comprehensive checklist to clarify “What are you looking for in a

partner?”, and then be able to compare your needs against what the BEEG provides.

Once you have selected what you believe is the best list of potential partners around the criteria you have set, it is

important at that stage to undertake a rigorous due diligence process. This can be undertaken by yourself or if you feel

this is a bit out of your depth a consultant or external advisor that specialises in these processes can be used to undertake

the due diligence process. Your potential partner will also want to undertake a due diligence on your company.

10Source: Derrick Msibi

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2.2 Management Control

It is an accepted fact that governments do not make profits, but do create the environment in which organisations and

employees can interact to the advantage and benefit of all concerned. Thus, the well-being of the citizens of any country is

inextricably linked to the effectiveness of their organisations. A substantial body of evidence indicates that many

organisations can obtain a competitive advantage by adopting a management style that involves employees in the business

of their organisation. Employee involvement and most of the management practices that are part of it have been shown to

have significant positive effects on organisational effectiveness. There is thus a growing recognition that a primary source of

competitive advantage derives from a company’s human resources; also that this source of advantage may be more

inimitable and enduring than a particular product is. Therefore having a view of HR as a strategic lever can have

economically significant effects on a company’s bottom line and the focus therefore should be on resource based view of

value creation through people.11

2.2.1 The Management Control scorecard

The table below sets out the targets and weighting for the management control (and historically employment equity) element

of the scorecard.

Measurement Category & Criteria Weighting points Compliance targets

Board participation:

Exercisable voting rights of black board members as a percentage of all board members 2 50%

Exercisable voting rights of black female board members as a percentage of all board members 1 25%

Black Executive directors as a percentage of all executive directors 2 50%

Black female Executive directors as a percentage of all executive directors 1 25%

Other Executive Management:

Black Executive Management as a percentage of all executive directors 2 60%

Black female Executive Management as a percentage of all executive directors 1 30%

Senior Management

Black employees in Senior Management as a percentage of all senior management 2 60%

Black female employees in Senior Management as a percentage of all senior management 1 30%

Middle Management

Black employees in Middle Management as a percentage of all middle management 2 75%

Black female employees in Middle Management as a percentage of all 1 38%

11 Source: based on Brewster, C, Carey, L, Grobler, P, and Warnich, S, 2008. Contemporary issues in Human Resource Management; gaining a competitive advantage, 3rd edition: chapter 2, p 31.

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middle management

Junior Management

Black employees in Junior Management as a percentage of all junior management 1 88%

Black female employees in Junior Management as a percentage of all junior management 1 44%

Employees with disabilities

Black employees with disabilities as a percentage of all employees 2 2%

Table 2

Whereas in the first code of good practice the management control and employment equity section were separate, they have now been combined into one human capital scorecard called management control. The fundamental changes include:

• The overall weighting of management and control and employment equity is reduced in the RCoGP (down from

25% to 15%).

• There is no adjusted recognition for gender calculation but in its place is a simple carve out with specific targets

and weights for black females.

• There is no threshold or subminimum requirement per occupational level.

• Targets are aligned to the Commission for Employment Equity Report on a national basis – Economically Active

Population (E.A.P) as of 2013 (A.M = 40.7%, C.M = 5.8%, I.M = 1.9%, A.F = 34.5%, C.F = 5.5%, I.F = 1.1%). This

is difficult for those companies that have a regional footprint with a strong demographic bias (e.g. Durban)

• There is no measure of the number of black executive directors only voting rights are measured but with carve out

specifically for black executive directors.

• There is no measure of number of black executive directors only voting rights are measured but with carve out

specifically for black executive directors

• Bonus point for independent directors is removed.

The calculation for this pillar can appear confusing so a worked example is developed below as follows:

For each indicator where:

A is the percentage of Black employees for each occupational level as measured in the Management Control Scorecard

using the annual EAP targets as published in the Regulations of Employment Equity Act and Commission on Employment

Equity Report, as amended from time to time.

AM is the percentage of employees in the measured category that are African Males.

CM is the percentage of employees in the measurement category that are Coloured Males.

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IM is the percentage of employees in the measurement category that are Indian Males.

AF is the percentage of employees in the measured category that are African Females.

CF is the percentage of employees in the measurement category that are Coloured Females.

IF is the percentage of employees in the measurement category that are Indian Females.

C is the compliance target as per the Regulations of Employment Equity Act and Commission on Employment Equity Report

for that measurement sub-category. (You could use regional or national statistics)

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EXAMPLE: If you had 10 middle managers all male, one of which is African black, one is Indian and one is coloured this

calculation would look as follows (based on EAP’s quoted earlier):

((10% / 40.7%) + (10% / 5.8%) + (10% / 1.9%) + (0% / 34.5%) + (0% / 5.5%) + (0% / 1.1%)) 6

= (0.246 + 1 + 1 + 0 + 0 + 0) / 6

= 37.3% now if one is to look 2.4.1 above the target for middle management is 75% for 2 points, so 37.3% / 75% is

49.7% of the points or 0.497 x 2 = 1 point (rounded).

Note: that if the representation exceeds EAP it is capped at the EAP. This is not explicit in the Code but would be a

necessity or it actively drives people to increase representation with Indians and away from African blacks.

2.2.2 Management Control Best Practice

Human capital pitfalls to avoid:

In our experience this is an area of the scorecard that is often manipulated on paper to achieve a better score (playing with

job tittles). This is not an advisable practice as people have to have the skills and ability to be able to add value in the role

and should also have the authority and responsibility to execute their duties, otherwise it does not make business sense and

will harm your business as it is not empowering for the individual or the business.

Keep in mind that job descriptions, duties and responsibilities and remuneration should all be congruent with job titles. This is

not to say that black candidates that have potential should not be identified and targeted for promotion, but it does mean that

this has to be done based on merit and supported with the correct skills training and mentorship before people are appointed

simply for the purpose of points.

The heart of effective management control lies in understanding the strategic benefits of a diverse workforce and striving to

attract this talent. Typical strategic reasons for diversity in your business include:

Being able to “speak the language” of your customers.

Diversity gives you a richer solution IF IT IS WELL MANAGED.

Being able to “speak the language” of your workers.

Attracting talent off the full ethnic pool of the nation vs being limited to one ethnic group.

Addressing legislative pressure.

Responding to the social and moral reality of South Africa today.

If businesses do not put in processes to achieve these strategic objectives the business will follow the path of least

resistance with “like tending to hire like”. This given the ethnic imbalance of participation in companies today can easily be

labeled as subconscious discrimination.

Best Practice in attracting and retaining talent12

In a market where the supply chain of skilled black professionals might or might not be limited (sometimes this is just used as

a jaded excuse), employee attraction and retention remains a challenge.

The human capital section requires a long-term strategy of talent attraction and retention, and not just a “quick fix”.

12Source: John Moalusi (2003)

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The heart of ensuring you have the environment that attracts and retains the right talent

involves changing the psychological contract:

From To

Imposed relationship (compliance, command and control) Mutual relationship (commitment, participation and involvement)

Focus on promotion Focus on lateral career development

Defined job requirements Flexible roles

Meet job requirements Adding value

Emphasis on job security and loyalty to company Emphasis on employability and loyalty to own career and skills

Training provided by organisation Opportunities for self-managed learning

The job is everything A work / life balance

Table 3

This while sounding simple, affecting the culture like this is an extremely difficult thing to achieve and involves the strategic

consideration of the external and internal influences on your employees alongside their resultant expectations.

These factors can be more specifically detailed as follows:

Figure 7

The question that needs to be asked is “How can I influence these attraction and retention factors to ensure my organisation

is the best place to be?”

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Research on retention shows that in any given organization 20% of the employees deliver a disproportionate amount of

value. From an attraction and retention perspective it makes sense to reward and enable those stars, but not at the expense

of the rest of the organisation. These high potential growers of your business need development assignments to maintain

their interest and leverage their potential. Johnson and Johnson developed the following talent assessment matrix described

below in Fig. 8 to help in the assessment of the talent in the organisation:

Figure 8

There is an abundance of good literature locally and globally on the principles involved in attraction and retention of talent

generally, as this is a strategic issue both locally and globally. There are however some principles that a company needs to

understand that relate specifically to the racial and gender realities of South Africa today. These principles include:

1. You need a specific process intervention into the recruitment and promotion process to eliminate personal bias or

we never really hire the “best person for the job” but rather someone like ourselves.

2. We need to be aware of the nation’s history and the imbalances currently in our companies hence should be

prepared to invest in a talented individual that can be equipped to do the job.

3. We need to strive for a critical mass in all categories of African, Coloured, Indian and White or new incumbents will

feel isolated and possibly leave.

4. We need a clear transparent Employment Equity (EE) principle that all employees understand and that guides

behaviour around points 1. To 3. Above

5. If you are a designated employer (See the Employment Equity Act Details for this on the CD) you need to be

completing your DOL submission and have proof of this to be able to count your EE position on the B-BBEE

scorecard. If you are assessed as a generic large enterprise in your B-BBEE audit every year then this is certainly

Page 30

true of your company.

6. Your EE committee can assist in drafting, communicating and supporting adherence to the principles above so

align their inputs into your B-BBEE process.

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2.3 Skills Development

There is a desperate need to develop the broad base of skills in the country. The issue South Africa faces is in many ways is

the opposite to that of advanced economies where there is not enough people to fill the skills gap. In South Africa’s case we

have too many people and too few jobs. This is exacerbated by fact that many South Africans are structurally marginalised

as a consequence of a lack of basic skills training. The focus is therefore not just on employment per se but rather on

employability. This is where the skills development section of the transformation scorecard can now have a big influence on

the future of the South African economy. It just makes business sense to equip your resources with the skills and ability to do

their jobs. The shift in the RCoGP to include non-employees opens up this opportunity and is a positive and interesting

development in the countries journey given the size of the education crisis we currently face as a nation.

The skills aspect of the scorecard hence is a sub-set of the attraction and retention issues described earlier as well as

addressing competency both in implicit and explicit skills. Implicit skills being the practical job based learning’s expressed

through the “learnerships” category in the table below and the explicit being the spend on more class room type of learning’s.

The table below sets out the targets and weighting for the explicit skills development element of the

scorecard.

Skills Development Element Weighting points Compliance Target

2.1.1.1: Skills Development Expenditure on Learning Programmes specified in the Learning Programme Matrix for black people as a percentage of Leviable Amount.

8 6%

2.1.1.2: Skills Development Expenditure on Learning Programmes specified in the Learning Programme Matrix for black employees with disabilities as a percentage of Leviable Amount.

4 0.3%

Table 4

The below section focuses on the development of the implicit skills sets of black South Africans (not just employees), and is

measured as the Rand spend as a percentage of payroll on Skills Development.

Learnerships, Apprenticeships, and Internships

2.1.2.1: Number of black people participating in Learnerships, Apprenticeships and internships as a percentage of total employees 4 2.5%

2.1.2.2: Number of black unemployed people participating in training specified in the learning programme matrix as a percentage of number of employees

4 2.5%

Bonus points:

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2.1.3: Number of black people absorbed by the Measured and Industry Entity at the end of the Learnerships programme 5 100%

Table 5

Notes in the above:

2.1.1.1 Applies to employees and unemployed people.

2.1.1.2 Applies only to disabled employees.

2.1.2.1 Refers to any Learnership of employees and unemployed people.

2.1.2.2 Is a target for the training of only unemployed people – i.e. not your employees.

2.1.3 Works proportionally i.e. if half the people get employed you get half the bonus points. You are required to run a

tracking process to prove employment.

The main issues that are raised above in the RCoGP are as follows:

The following are key shifts in principle:

The weighting showing the importance of skills increases from 15% to 25% on the B-BBEE scorecard if one is to

include the bonus points and is the largest single gain of all the B-BBEE pillars.

The shift in the RCoGP to include the training of non-employees as part of skills development opens up this

opportunity to unemployed South Africans. This helps executives to start to think more aggressively about future

employees skills sets. A corresponding increase in the targeted spend from 3% of payroll to 6% of payroll is a

step change quantum of investment in the skills pool of the nation.

The skills cap of a maximum of 15% of total skills spend allowed to come from category F (informal training ) & G

(informal work based training) drives the focus of this huge skills spend toward certified training more

significantly, which is strongly supported by amendments in the skills Act toward certified skill training. Hence for

companies to maximise the claim back on their skills Levy and to maximise the claim on their B-BBEE scorecard,

their training needs to be certified.

By requiring the skills spend to follow the economically active population (EAP) profile, this will aggressively drive

the skills spend on people from Indian and Coloured population groups as the targets are lower in these

areas. This is a perverse and unwanted outcome of the way the legislation has been drafted.

The calculation in skills is complex so a worked example is given below:

For each indicator where:

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A is the percentage of Black employees (indicator 2.1.1.1) or percentage Black people (indicator 2.1.2) for each indicator as

measured in the Skills Development Scorecard using the annual EAP targets as published in the Regulations of Employment

Equity Act and Commission on Employment Equity Report, as amended from time to time.

AM is the percentage of spend (indicator 2.1.1.1) or people (indicator 2.1.2) in the measured category that are African Males.

CM is the percentage of spend (indicator 2.1.1.1) or people (indicator 2.1.2) in the measurement category that are Coloured

Males.

IM is the percentage of spend (indicator 2.1.1.1) or people (indicator 2.1.2) in the measurement category that are Indian

Males.

AF is the percentage of spend (indicator 2.1.1.1) or people (indicator 2.1.2) in the measured category that are African

Females.

CF is the percentage of spend (indicator 2.1.1.1) or people (indicator 2.1.2) in the measurement category that are Coloured

Females.

IF is the percentage of spend (indicator 2.1.1.1) or people (indicator 2.1.2) in the measurement category that are Indian

Females.

C is the compliance target as per the Regulations of Employment Equity Act and Commission on Employment Equity Report

for that measurement sub-category.

EXAMPLE: If you had a total leviable amount of R 1000.00 and all people trained are female. If you spent R 10 on training

the African black women, R 10 on training the Coloured women and R 10 on training the Indian women, and no training on

black men, then this calculation would look as follows (based on EAP’s quoted earlier):

(((R10 / R60) / 34.5%) + ((R10 / R60) / 5.5%) + ((R10 / R60) / 1.1%)))

6

= (0 + 0 + 0 + 16% / 34.5% + 16% / 5.5% + 16% / 1.1%) / 6

= (0 + 0 + 0 + 0.46 + 1 + 1)/6 = 0.41 or 41% black spend averaged to EAP

Now if one is to look 2.1.1.1 above the target for skills spend is 6% of payroll = R 60 for 8 points, so we have calculated and

average weighted spend showing we should achieve 41% of 6% is 0.41 x 8 = 2.5 points (rounded).

This broadly follows the calculation in the legislation but a simpler way of understanding and managing this calculation is as

follows:

1) The targeted spend is R 60 in this example (6% of payroll)

2) If we were to work out what this spend should look like as a sub-target for each ethnic group it would be – African

female is R 60 x (0.345) = R 20.7 , Coloured Female = R 60 x 0.055 = R 3.3, Indian female = R 60 x 0.011 = R

0.66. (Note that this logical approach to the calculation in the legislation as the total spend from the ratios above

does not add up to R60 as the white EAP is ignored, highlighting the mistake in the legislation – we are actually

having a target of 89% of 6% of payroll on current EAPs)

3) We need to work out one average what we actually spend against these targets = ((0 + 0 + 0 + R 10 /R 20.7+ R 10

/R 3.3 + R 10 / R 0.66)) / 6 = (0.48 + 1 + 1)/6 = 41%, as in the last two categories we are overspending relative

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to the targets they are capped at a max contribution to average of 1.

4) We are one average achieving 41% of the targeted spend and so this is the portion of the 8 points we should

achieve 8 x 0.41 = 2.5 points.

Note: that if the percentage training exceeds EAP it is capped at the EAP. This is not explicit is the Code but would be

a necessity or it actively drives people to increase training with Indians and way from African blacks. Also note in this

calculation the training of employees and unemployed people is included. Without exercising this cap, we would be

driven toward training the lower EAPs.

Some additional points from the RCoGP and the skills matrix:

A new addition is that the indirect training costs cannot exceed 15% of total skills spend. The living stipend is retained as

skills spend for category B, C or D learnerships.

The table below shows the learning programs matrix and this is a guide to understanding what qualifies as different learning

skills programs that are measured under this section. The calculation does not distinguish between Categories A to D but it

is important to be careful on the categories F & G as these attract the 15% cap.

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Cat Narrative

Description Delivery Mode Learning Site Learning Achievement

A Bursaries

Institution-based theoretical instruction alone – formally assessed by the institution

Institutional instruction

Institutions such as universities and colleges, schools, ABET providers

Recognised theoretical knowledge resulting in the achievement of a degree, diploma or certificate issued by an accredited or registered formal institution of learning

B Internships

Institution-based theoretical instruction as well as some practical learning with an employer or in a simulated work environment – formally assessed through the institution

Mixed mode delivery with institutional instruction as well as supervised learning in an appropriate workplace or simulated work environment

Institutions such as universities and colleges, schools, ABET providers and workplace

Theoretical knowledge and workplace experience with set requirements resulting in the achievement of a degree, diploma or certificate issued by an accredited or registered formal institution of learning

C Learnerships

Recognised or registered structured experiential learning in the workplace that is required after the achievement of a qualification – formally assessed by a statutory occupational or professional body

Structured learning in the workplace with mentoring or coaching

Workplace

Occupational or professional knowledge and experience formally recognised through registration or licensing

DLearnerships

or apprenticeship

s

Occupation ally-directed instructional and work-based learning programme that requires a formal contract – formally assessed by an accredited body

Institutional instruction together with structured, supervised experiential learning in the workplace

Institution and workplace

Theoretical knowledge and workplace learning, resulting in the achievement of a South African Qualifications Authority registered qualification, a certificate or other similar occupational or professional qualification issued by an accredited or registered formal institution of learning

EWork

integrated learning

Occupationally-directed instructional and work-based learning programme that does not require a formal contract – formally assessed by an accredited body

Structured, supervised experiential learning in the workplace which may include some institutional instruction

Workplace and some institutional as well as ABET providers

Credits awarded for registered unit standards, continued professional development, improved performance or skills (eg. Evidence of outputs based on Performance Development Programme)

F Informal training

Occupationally-directed informal instructional programmes

Structured information sharing or direct instruction involving workshops, seminars and conferences and short courses

Institutions, conferences and meetings

Continuing professional development, attendance certificates and credits against registered unit standards (in some instances)

G Informal training

Work-based informal programmes

Informal training WorkplaceIncreased understand of job or work context or improved performance or skills

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Table 6

The implicit section of the skills scorecard focuses on learnerships. Learnerships are typically a one -year contract (but can

be shorter or longer) with no obligation of future employment with candidates that through your selection process appear to

have the right potential to your organisation. Your company will be responsible for a sponsored salary (stipend), training

fees, coaching fees and administrative costs for the learner. You will however be able to receive government grants for

undertaking the learnership, which takes the form of a tax incentive and placement incentive (depending on your SETA).

The learnership forms an ideal mechanism for developing a career path where there is a scarcity of skills and acts as a

structured approach for vocational competence through “Learning while you work”. These learnerships can also be linked to

a national qualification for people who do not have access for formal qualifications. They hence can act as a powerful

enabler to the learners without burdening the business and should be seen as a strong retention strategy.

Some additional points from the RCoGP on B, C, D learnerships:

We might be tempted at first glance to feel the learnership target of 5% of permanent employees on learnerships has just

been split into two for 18.1 an 18.1 learners, but this is not the case. If you carefully note the wording in 2.1.2.2 is “Number of

unemployed black people participate in training as a percentage of total employees”. So by this wording we need to have

2.5% of our employee base being the targets on the number of unemployed people TRAINED (i.e. some course – a days

informal training?). This is very easy for companies to achieve and represent the easiest points on the scorecard if the words

are taken literally.

The critical success factors to good learnership programs are:

• Be clear on your organisation’s business needs through identifying where the skills gaps within your organisation

are. Your development strategy needs to be clearly linked to your organisation strategy.

• Identify organisational readiness. Can your organisation cope with the added responsibility?

• Work closely with your SETA and submit a letter of intent to your SETA.

• What are the grants available for these learnerships?

• Recruit the right people that fit your requirements.

• Follow a structured approach to development.

• Create a nurturing and understanding environment using a coaching and mentoring framework with a senior

sponsor.

• Create realistic expectations of the workplace, learners and management through clear upfront contracting.

In the RCoGP it is ever more important that learnerships (Cat B, C, D) are treated as an important business tool toward

attraction and retention. The 5 bonus points awarded for retention of unemployed learners pushes the company to take on

learners that they fully intend hiring if the courtship process works and performance is at the desired level.

The RCoGP place the burden of responsibility on the company for the placement of the unemployed learners into full term

permanent placement or long-term contracted positions in the company or in the industry. It will be interesting how the

verification industry responds to supporting evidence requirements in this regard.

2.4 Enterprise and Supplier Development

There are two dimensions of the previous Codes that are absorbed into this pillar namely:

Preferential Procurement and,

Enterprise and Development.

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The logic of these two pillars being combined revolves around the access of small emerging black enterprises into the value

chains of the formal business sector and so enterprise development should predominantly be done in your value chain and

be supported by your procurement processes.

However the scorecard still has subsets of these two components and therefore we will look at each in turn.

Preferential Procurement

Preferential procurement, if handled correctly, can establish relationships and market access in South Africa:

Black people constitute by far the largest market for most companies operating in SA and might want to

see transformation in the companies that they support.

There is now a presence of black executives in the public and private sector controlling procurement

expenditure demanding preferential procurement.

Corporates require strong B-BBEE credentials of their suppliers and their own empowerment position is

affected by that of their suppliers. This has become “ticket to the door” in many procurement situations.

With the RCoGP, there is a significant strategic shift into ensuring smaller emergent black owned entrepreneurs have access

to economic opportunity enabled through re-defining enterprise development as supplier development. This is important to

the country as a significant barrier to growth of small entrepreneurs is the access to the opportunity to quote for work. By

driving supplier development we increase this opportunity and the ability of this entrepreneur to deliver the right quality.

Entrepreneur development is a strong catalyst to job creation in South Africa.

In order to give force to these principles under enterprise and supplier development there is the need for suppliers to

evidence the following credentials:

be empowering suppliers13 and have a good Level in order to ensure the company avoids falling afoul of the sub-

minim of 40% of 80% (the targeted weighted spend) = 32%. This causes a company to fall down two overall

Levels if this is the case.

To increase the amount of spend with black owned suppliers as the increase in focus on black owned and black

woman owned in the RCoGP is 13 points.

To increase the number of black owned suppliers in order to be able to have candidates to undertake supplier

development with.

13See definition of empowering suppliers below.

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These principles are garnered from the extract from the revised CoGP (2013) as per the below:

Measurement Category & Criteria Weighting points Compliance targets

Preferential procurement

B-BBEE Procurement Spend from all Empowering Suppliers based on the B-BBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend

5 80%

B-BBEE Procurement Spend from all Empowering Suppliers that are Qualifying Small Enterprises based on the applicable B-BBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend

3 15%

B-BBEE Procurement Spend from all Exempted Micro-Enterprises based on the applicable B-BBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend

4 15%

B-BBEE Procurement Spend from Empowering Suppliers that are at least 51% black owned based on the applicable B-BBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend

9 40%

B-BBEE Procurement Spend from Empowering Suppliers that are at least 30% black women owned based on the applicable B-BBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend

4 12%

Bonus points

B-BBEE Procurement Spend from Designated Group Suppliers that are at least 51% Black owned. 2 2%

Table 7

The major changes to the RCoGP are as follows:

a. Increased focus on spend with black owned and black woman suppliers.

b. Support of empowering suppliers which are defined as suppliers for whom:

i. 25% of cost of sales, excl labour force and depreciation must be procured from local

suppliers. If you are in the services sector the labour force can be included to a threshold of

15%

ii. 50% of job created must be for black people. This is without there being any changes to the

previous year’s headcount. This would be referring to additional/new jobs being created.

iii. At least 25% raw material beneficiation / local manufacturing: production, packaging,

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assembly.

iv. There has to be skills transfer at least 12 days per annum assisting beneficiaries on

operational, technical and financial ability of black owned EME’s or QSE’s.

The reason for this category of empowering suppliers is to prevent shallow intermediaries who are there

really because of their empowerment credentials and to increase the localisation of the value chain. This

will stimulate the creation of jobs in South Africa. The stance of not counting the B-BBEE scorecards of

non-empowering suppliers is an overly aggressive stance as companies that cannot comply with at least three of the four components described (for Generic businesses and one component for QSE’s) are not counted in procurement and hence cannot be considered part of B-BBEE!

c. Imports don't attract a “blanket exclusion” but have enough flexibility in the definition that it is unlikely to

pose a large problem.

d. The exempt micro enterprise (EME) threshold is increased to R10 million per annum turnover of the

supplier.

e. The qualifying small enterprise (QSE) threshold is increase to R 50 million per annum turnover of the

supplier.

Developing a process to manage preferential procurement (P.P):

The first point about developing a preferential procurement process is that it should be undertaken by your procurement

department and should be integrated into your procurement processes rather than being a “stand alone” policy or process as

this invites the possibility of being rejected or ignored by your business.

Developing a preferential procurement process involves the following issues to ensure success:

1) Developing a preferential procurement policy:

Policies reflect the ‘rules’ governing the implementation of the Preferential Procurement. The P.P Policy statement

addresses the rule rather than how to implement the rule. Please note that procedures are developed with the user

in mind, therefore it is critical that you involve relevant stakeholders in designing the procedures.

The following are key areas in the formation of a preferential procurement policy:

Purpose of the Policy.

Policy Statement.

Policy Objectives.

Applicability.

Definition of Terms& Policy Authority.

Related policies.

Implementation Guidelines.

Interventions e.g. price preference, B-BBEE weight.

Supplier development.

Supplier Support Initiatives.

Monitoring and Reporting.

2) Procedures:

Procedures represent an implementation of the policy. They are a description of process to be followed. This

varies between companies depending on the nature of the procurement process. The diagram overleaf shows a

typical procurement process with a description of the type of interventions one should consider building into your

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procurement process. The diagram also lists the critical success factors one should monitor during the

development of your preferential procurement process.

Figure 9

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The diagram describes a set principle to establish:

Which supplier are empowering suppliers and which are not and what might be done about those suppliers that fall

short of the empowering suppliers’ category.

Which empowering suppliers are of a robust level and which are not? Of those suppliers that are not empowering

suppliers, which cannot change this position as it is a function of the nature of their value offering, and which of the

dilutive suppliers with some effort could achieve a more robust level. A dialogue must be conducted with the key

large spend suppliers to establish the projected new positions against the revised CoGP.

An analysis should be conducted to establish, based on current scorecards how close the company is to the sub-

minimum in order not to drop one level. You should also do a modelling exercise to establish if all suppliers dropped

one levels what would the resulting score-card look like and if your company is still above the sub-minimum.

Which suppliers are black owned, and EMEs or QSEs. These suppliers will be extracted as candidates for supplier

development potential.

Of the suppliers that are left (i.e. of a strong Level, empowering, not QSE or EME) we wish to establish those which

we do have some discretion in purchasing behaviour. Non-discretionary suppliers are defined as those suppliers that

you are practically or legally unable to change supply in the short term. An example could be your landlord or those

suppliers that are currently in long term service level agreements. These will be isolated from the list that we can

influence.

For the suppliers that are left, i.e. of a strong Level, empowering, non-QSE, EME or black owned, and discretionary

we ask which of these suppliers are core or non-core. Core suppliers are those suppliers for which you could

practically change the spend with them but as their services or goods are core and a change carries a strategic risk.

We would want to first optimise on the non-core suppliers and then only move on to core suppliers if necessary.

We would extract for the suppliers that are left, i.e. Of a strong Level, empowering, non-QSE, EME or black owned,

discretionary and non-core. This list of candidates would be explored to establish if something can be done in terms

of alternative supply to improve the black owned position. This list of suppliers labelled in this report as DSA (do

something about) are researched through desktop research to establish a list of potential candidates that can be

considered by your normal procurement processes.

3 Good preferential procurement programmes have the following characteristics:

There is commitment from top to bottom ensure that there is buy-in.

Communication of goals, methods, progress etc.

Top management support should be unquestionable on an on-going basis.

There must be a written policy in place.

Training - Provide for training as preferential procurement is new and requires new knowledge and new

skills to implement.

Establish goals and targets, organisation-wide with on-going monitoring.

Ensure the organisation culture is conductive to B-BBEE.

Responsibility for preferential procurement is not limited to B-BBEE Manager.

Preferential procurement is also a strategic issue and as a consequence the procurement person driving this initiative also

needs input into the team driving B-BBEE, as it’s not only about whom you buy from but also what you buy. The matrix below

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indicates how if a company procures only low value low risk items from black suppliers it will not be likely to achieve an

appreciable preferential procurement spend. The company needs to start to look at the core of the business and outsource

higher risk and high value items to black suppliers.

This strategic procurement principle is better understood in the figure below:

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Figure 10

Supplier & enterprise development (previously enterprise development)

The authors agree with the change in name for this section of the scorecard from enterprise development to supplier &

enterprise development as the main purpose of the enterprise development dimension is to encourage companies to invest in

supplier development initiatives. These will ultimately enable your supply chain and if done correctly can ensure the supply

chain communicates correctly to deliver efficiently and cost effectively to the end user.

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The table below sets out the targets and weighting for the enterprise and supplier development element of the scorecard.

Supplier development

Annual value of all Supplier Development Contributions made by the Measured Entity as a percentage of the target. 10 2% NPAT

Enterprise development

Annual value of Enterprise Development Contributions and Sector Specific Programmes made by the Measured Entity as a percentage of the target. 5 1% NPAT

Bonus Points

Bonus point for graduation of one or more Enterprise Development beneficiaries to graduate to the Supplier Development level. 1

Bonus point for creating one or more jobs directly as a result of Supplier Development and Enterprise Development initiatives by the Measured Entity.

1

Table 8

3.4.2 Best practice in enterprise development:

A useful matrix to reflect on the impact of B-BBEE pressures on the psychological compact in ED is described below,

Figure 11

We would argue that too often what the ED contributor “wants” is to score points on their B-BBEE scorecard, and is prepared

to offer donations or other contributions in order to secure these points. The qualitative impacts on the country and the

beneficiary are not considered. So we give some cash, it artificially supports the ED beneficiary while we contribute and when

we stop contributing the company falls over.

For the ED beneficiary, if they are offered easy cash, they “want” it, which builds a culture of dependency instead of

entrepreneurship.

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We would argue that this compact is superficial, unsustainable and does not automatically generate growth.

We place quotes over “wants” because if we look at what the country, our corporates and the entrepreneurs “need” and we

reflect on the Malaysian model, we see a very different compact that we believe we can learn from.

The Malaysia model has an enterprise development objective of using the energy of smaller entrepreneurs to plug into and

support / supply the corporates. These “two economies” (formal and informal), are learning to speak each other’s language

toward an objective of mutual growth and benefit.

Figure 12

Therefore we would argue that the current structure of B-BBEE is creating perverse effects in the psychological compact

between contributor and beneficiary, which seriously erode the potential contributions to the growth of the country.

Who qualifies as an enterprise development beneficiary?

1) A greater than 51% black owned or black woman owned “for profit empowering business”, that is either an EME or QSE.

What qualifies as an enterprise development contributions?

These are detailed in the beneficiary matrix below:

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Qualifying Contribution type Contribution Amount Benefit Factor

Grant and Related Contributions

Grant Contribution Full Grant Amount 100%

Direct Cost incurred in supporting Enterprise Development and Supplier Development

Verifiable Cost (including both monetary and non-monetary)

100%

Discounts in addition to normal business practices supporting Enterprise Development and Supplier Development

Discount Amount (in addition to normal business discount)

100%

Overhead Costs incurred in supporting Enterprise Development and Supplier Development (including people appointed in Enterprise Development and Supplier Development)

Verifiable Costs (including both monetary and non-monetary)

70%

Loans and Related Contributions

Interest-Free Loan with no security requirements supporting Enterprise Development and Supplier Development Outstanding Loan Amount 70%

Standard Loan to Enterprise Development and Supplier Development Beneficiaries Outstanding Loan Amount 50%

Guarantees provided on behalf of a Beneficiary entity Guarantee Amount 3%

Lower Interest Rate Outstanding loan amount Refer *

Minority Investment in Enterprise Development and Supplier Development Beneficiaries Investment Amount 70%

Enterprise Development and Supplier Development Investment with lower dividend to financier Investment Amount

Refer #Contributions made in the form of human resource capacity

Professional services rendered at no cost and supporting Enterprise Development and Supplier Development

Commercial hourly rate of professional 60%

Professional services rendered at a discount and supporting Enterprise Development and Supplier Development

Value of discount based on commercial hourly rate of professional

60%

Time of employees of Measured Entity productively deployed in assisting beneficiaries

Monthly salary divided by 160 60%

Other Contributions

Shorter payment periods for 2.2 of this statement (Supplier Development)

Percentage of invoiced amount multiplied by 15% (being an approximation of the cost of short term funding)

Refer ##

* Prime Rate - Actual Rate

# Dividend Rate of Ordinary Shareholders - Actual Dividend Rate of Contributor## Percentage being 15 days less the number of days from invoice to payment Maximum points that can be scored is 15% of 10 points

Table 9

Notes:

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1) The impact of early payments as been correctly degraded to a maximum impact of 1.5 points using the same

calculation method as before.

2) Loans continue to feature and have an ongoing impact every year on your scorecard as long as they remain

unpaid.

Best practice examples in enterprise development:

Outsourcing non-core activities

Establish what is core and non-core to your business, and explore what can be outsourced as an enterprise

development initiative that graduates into the beneficiary becoming a supplier to your organisation. One company

spun off its consumables division, setting up former employees in a separate business. This led to an overall cost

reduction, as this aspect of the business was a distraction, but something the business and its clients did want. “Win-

win”

Building related value offerings (joint ventures)

Often clients require a portfolio of offerings that your business is unable to offer in its entirety. Through stronger

relationships with companies that have related value offerings, you can bolster your overall value proposition to the

client…. again “Win-win”.

Courting future customers

Providing discounted goods and services to smaller customers that might not be able to afford the market rate today

can create strong brand loyalty as they grow into the future.

Courting future distributors

Strengthening your geographic reach by strengthening distributors depth and reach, which helps sell your

product…”Win-win.”

Courting future owners

The interesting aspect to enterprise development is that it can be very useful as a courtship mechanism for future

owners. Rather than diving quickly into a change in your ownership, perhaps consider the partners as an enterprise

development initiative, see how the relationship develops and, if all is progressing well, move into a merger or

acquisition.

Better use of under utilised resources

Assets under-utilised by your organisation could mean the world to a smaller emerging entrepreneur. (This could

include under-utilised intellectual property, processes people, product ranges etc.)

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Best practice in supplier development:

A discussion paper developed by Steven Kelman of Harvard University (2007) highlighted the need for B-BBEE to address the

opportunity barrier existing in the economy due to South African companies being significantly invested in their value chains,

as sanctions did not allow for off-shore investment.

There are productivity implications to this situation, for example if your supplier has a common shareholder with you, you might

use them even if they aren’t the best option. The tenant of the paper was that a shaking out of deep comfortable relationships

in a value chain could create higher competitiveness and growth.

Supplier development was chosen as a mechanism to drive some of this change. It focuses on the development of the

capacity of black companies, and contributions to these companies are measured based on a target of 2 percent of net profit

after-tax, invested annually.

Who qualifies as a supplier development beneficiary:

The difference between enterprise development as we have come to understand it and supplier development is that the

supplier development beneficiaries are firstly your suppliers and then secondly they are part of a structured program of

development that started with a needs analysis, resultant in a project plan with agreed champions supporting the holistic

development of a supplier. This has to be stronger then the piece-meal approach we have so often been guilty of in the past.

Best practice examples of supplier development:

A practical approach to supplier development is to identify three levels of involvement into your suppliers that have the

possibility of migrating into key suppliers to your business:

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Figure 13

Business coaching

At the lowest level (as seen in figure 13 above) the intervention is simply to motivate the supplier towards value adding targets.

Steps in this direction can initiate under initiatives to ensure your suppliers are embarking on meaningful transformation

processes. You might be able to tackle this lower level of involvement using internal resources or a light touch into suppliers

through a business coach that might help provide insight without invasive interventions.

Business training

At the middle level of involvement (as seen in figure 13 above) you are involved in workshops with the supplier to undertake

joint problem solving towards development initiatives.

Business incubation

At the highest level (as seen in figure 13 above) of involvement you (or preferably a specialist in this area acting on your

behalf) are intrinsically involved in mentoring the supplier toward agreed development outcomes.

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All three levels have a value add as not all suppliers are happy with you meddling in their business. Any business should be

careful about substantive intervention using internal skills sets into suppliers as such initiatives can have unforeseen

repercussions but if correctly undertaken can contribute strategically to the growth of competencies in the business.

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2.5 Socio-Economic Development

Socio-economic development Weighting Points

Compliance Target

Annual value of all Socio-Economic Development Contributions by the Measured Entity as a percentage of the target 5 1% NPAT

Table 10

Good corporate social investment rests on three dimensions:

1. Involving the full organisationGood quality SED is not about writing a cheque, it’s about ensuring that the stakeholders in the environment of the

business are developed using all the resources of the organisation. This helps the people in your organisation to

better understand the environment of business in which it operates and better understand your emergent customer

base.

2. Strategic investment in your environment of business:It is good practice to invest in SED initiatives that either builds your capacity or your future clients. Scholarships in

the areas that your business will need specific skills, initiatives that expose your brand to the market place, that grow

and enable your target market etc. Invest in selling through your SED initiatives within reason.

3. Collaboration and partnerships:Most medium sized business are not going to have a large impact on their own and there are many initiatives that

are up and running that are crying for the resources of your organisation. Get your ear to the ground and find out

what’s already working well in your environment of business.

Note that informal community based training might well be best still captured under SED and examples quoted in the RCoGP

allow for this, as you are still subject to the skills cap of 15% for informal training.

Best practice lessons around SED:

The following points would represent a sense of what represents a good SED initiative:

• Alignment of your business to the initiative.

• Development of a clear guiding philosophy– Strategy & focus areas.

• Collaboration & partnerships are key to success.

• Replication of working models into different areas – don’t re-invent the wheel.

• Understand & Measure impact.

• Give more than money – Use resources effectively.

• Encouragement of involvement (in different ways) into other areas and all the resources of your business.

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SED can be a powerful force to get your employees working together and giving more of themselves, getting to know each

other and the emerging environment of business better. Don’t neglect the positive impact SED can have on your culture, brand

and interpersonal relationships.

CHAPTER 3: DEVELOPING A TRANSFORMATION STRATEGY

3.1 Why is Transformation Strategic?

Becoming a B-BBEE compliant company is not good enough. Soon all your competitors will have achieved similar status. Your

company will need to do better than that; it’s about who has undertaken the transformation process in a way that adds the

most value that will be the winners, not those who have dressed up numbers on a scorecard. The key lies in transforming your

business to become compliant while simultaneously creating a sustainable competitive advantage.

True sustainable transformation requires the business to re-examine what it can do, that its competitors can’t do that its

customers want. Thus transformation affects HOW the company does business, WHO it does business with, and WHAT types

of business it should do. These are all components of competitive strategy and the answers to these questions require some

clear and simple view of the strategy of your business. The diagram below helps to sketch the strategic context.

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Figure 14

In the matrix above one can clearly see that the ideal strategic position to be in is b) highly compliant and in strong competitive

position. Being in position a) not compliant but in a strong competitive position, puts your strong competitive position at risk and

potentially undermines your strategic efforts. If you are in position d) not compliant and not in a strong competitive position, the

chances are that you may be out of business soon. Lastly, if you are in position c) highly compliant but in a week competitive

position, there is little value in your compliance efforts and you may be out of business soon.

Why is a transformation strategy not a separate strategy?

Strategy is a very bizarre and broad word, but notwithstanding we often have marketing strategies, operation strategies etc.

that re-designed to more specifically translate our overarching competitive strategy into specific operational terms. Why should

transformation be any different?

Firstly functional strategies are aligned to the competitive strategy and are essentially the re-translation of the competitive

strategy into functional terms. This logic clearly does not apply to transformation as a business requirement. Transformation

does not bow to human resources alone or any other single functional area of business as it impacts across all the areas of

business.

The other obvious concern about a transformation strategy forming a sub-set of your competitive strategy is that then you are

not forced to look at how you can conduct your business so that both transformation and the growth of the business are

enhanced. You would have already looked at the growth of your business in your competitive strategy and so that creative

tension is not there.

Transformation requires a fundamental shift in the way:

your business is structured,

your business strives for customer attention; and

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individuals in your company collectively think and behave.

Sustainable transformation affects the very core of every aspect of your business, and the decisions made now can easily

affect the survival of your company, which is the function of strategy. So we need to take a different view of the current

strategy of your business.

Do we want to replace your current business strategy?

Your core purpose of business might undergo some change as you effect transformation. Your clients, and what they value

from you, might require different products to what you currently offer.

The roles of your supply chain, and even possibly the role-players, might change as you explore transformation. Preferential

Procurement makes you not only reconsider who you buy from, but also what you might buy.

The internal stakeholders can change which will affect your production capacity, internal competency and culture of the

organisation. A change in management can affect the mandate in managing the business.

However, this is not always the case and essentially all we want to do is to develop a different view of your current strategy

and use that view to enhance and enrich your current strategy (which obviously has value as it is what has kept you in

business).

This means that transformation can be the opportunity to enrich your current strategic thinking to help build your company into

one which all your competitors fear, building on the current strengths and maximising opportunities.

But I don’t have a current strategy

Before the detractors of business strategy jump in let’s just be clear that no matter how simple or how complex your business

is, not matter if you have a strategy document or not, your business does have a strategy. We often think that a formal

strategy document equates to a strategy, which is not true. Strategy is a living and evolving. It sits vocalised or unvoiced in the

minds of the leaders of the business. It’s a sense of “this is what we are trying to do with this business”, or “this is the hill we

want to climb”. However, the old adage of; you know what you mean if you write it down is unfortunately very true. So it is

useful sometimes to try and develop a shared sense in your team of which hill you are trying to climb, and how you are going

to get there and then capture some of that into a simple piece of communication for accountability and implementation

purposes.

Who do I develop a transformation strategy with?

The B-BBEE Team:

One of the biggest problems with B-BBEE initiatives is that they become one person’s responsibility, and one person cannot

change an organisation. It is crucial that the team that has been involved in developing the strategy becomes a united

cohesive voice to sell transformation to the rest of the organisation. This B-BBEE team (or guiding coalition) needs to be

carefully formed so that the following roles are in evidence in the team. If the company is small, one person can easily play

multiple roles:

Project manager: the person that will ensure the actions are drawn together and clear paths to implementation are

determined and that initiatives are delivered on time and within scope and budget and according to the desired

outcome.

Boundary spanner: this person tends to talk the different specialist “languages” in evidence in the team and draw

the team’s communication together. This person may be a subject matter expert (SME) themselves and or plays the

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role of coordinating input from other SMEs. In our experience this is most often the Human Resources Manager (but

does not have to be).

Gate keeper: (preferably the procurement manager) this person is in constant interaction with the changes in the

environment of business, the supply chain and informs the group any recent developments in empowerment.

Executive sponsor: this senior person (preferably the C.E.O) ensures the team has the backing to overcome

political and other obstacles. The executive sponsor is also responsible for galvanising the executive leadership

team to buy-in the process and support the undertaking.

Change champion: this person (or could be small team depending on size of the business) is responsible for the

people side of the projects and processes, ensuring that change management principles are brought to bear so that

the change has a lasting effect. In our experience this person/s should be referred to as the B-BBBEE champion and

should also be equipped with a thorough understanding of the Codes of Good Practice on B-BBEE and the workings

of the scorecard.

This does not exonerate the rest of the organisation from doing nothing, but rather there is a clear point to go to with problems

and to hold accountable for the process.

A new view of your current strategy

If transformation is about how to create value for your business then one path toward a transformation strategy is through this

value based view of transformation. We will be using this value based view to answer three questions at the B-BBEE team

level, and then we will use the outcomes from this process to communicate to the organisation and answer further questions:

To the B-BBEE team:

1. Who is going to be your customer in the next 5 – 10 years and what action needs to be taken that will help you

understand this future customer and what do they value? (answered by your top team).

2. Given the very purpose and nature of your business, what actions can you conceive that will enable transformation?

(answered by your top team).

3. How can I action transformation so that it enhances the value drivers and enables the goals of the business?

(answered on a high level by your top team).

To the rest of the company:

4. How can you contribute to enabling these action items? (answered specifically by your entire organisation).

5. How can I help you to be the best you can be? (asked of your entire organisation.)

These five questions represent the core of the transformation process and need to be carefully considered to ensure the best

outcome for your organisation.

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3.2 Developing a Value Based Strategy

To explore a value based view of strategic transformation we need to revisit a few business fundamentals to develop a

common vocabulary and form a basis for further discussion.

Figure 15

Source: Tony Manning (2003)

All businesses generally take resources such as the 7 P’s described above which is the how business is done and combine

them in such a way as to have some value (what is to be done) to someone (the who).

By arranging these 7 P’s so that they create value through your customers eyes, you are able to extract value (normally but

not always in the form of cash) from your client. Clearly in all that you do you need to ensure all your activities and efforts in

your business contribute to those things your client values or the “value drivers” of the business to use more formal terms.

3.3 Determining the value drivers of your business:

Most business people have a gut feel for what the client wants which is built up over the years of running the business and

interacting with the clients of the business (often validated through formal research). It is more difficult however to distil this

sense into three clear simple short descriptions of what your client values in your business but once successfully done these

descriptions can be immensely powerful in communicating the essence of the business to all stakeholders.

In order to develop a value based view of your business you need to ask “what value does the business offer to its clients” (it should answer the question – what makes your client pay for your services). You might want to brainstorm a map of

possibilities but you should distil this down to the three key drivers of value in your business, so as not to spread the focus of

the organisation too widely.

Developing the core value drivers is best done in a workshop environment with your team to build buy-in and a shared sense

of the meaning behind the statements.

A suggested process to develop this shared view of what drives the value in your business is:

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1. Generate possibilities (of the value drivers):

Each individual in the group silently generates concepts that in their view represent the value drivers of the business.

The person should write them down each on a separate Post-it note with a detailed description of what is meant by

that concept captured on the back of the Post-it note. This should take about five minutes.

Case study: Determining the value drivers of Morph14 (Pty) Ltd

Morph held a half day workshop of strategic brainstorming to develop a value view of strategy.

At this workshop the objectives were to clarify the business purpose and to determine a shared sense of what the key value

drivers of the business are, from ETS customer’s perspective (i.e. steps 1 & 2).

The team of nine people in a brainstorming context offered the following list of suggestions (the list has been simplified):

Figure 16

2. Group the possibilities:

The group members engage in a round-robin feedback session to concisely record and group each possibility with

others that have shared characteristics. These possibilities are discussed so that the team has a shared cognition

with the originator. Note that at this point, the group is not evaluating the possibilities but are rather trying to develop

a shared understanding. If the round- robin process prompts new trains of thought causing new possibilities to

surface they should be recorded in a like manner on the Post-it notes. Clear duplicates can be eliminated. Normally

between two and four broad groups of concepts evolve. Suitable descriptors should be assigned to each grouping

on the front of a Post-it note with a description on the back of the same Post-it note detailing what the group

understands by that grouping. These descriptors, assigned to the broad groupings, will be called the value drivers of

14 The name of the company has been changed to protect their identity.

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the business. Try and avoid value drivers that are too general that they don’t mean much to anyone, and avoid

statements that are true of your competition as you are trying to find what it is that makes your clients by from

uniquely YOU.

Case study: Grouping the value drivers of Morph (Pty) Ltd

The ideas generated by the nine “Morph” staff were grouped as follows:

Figure 17

The labels chosen for the groups tried to encapsulate what that group was about. For example in the grouping on the right, the

team felt that there were certain fundamentals to their business described in that grouping that essentially where all about the

necessities that had to be in place to stay (but not excel) in this business – they felt “the rules of the game” was a simple and

engaging statement.

3.4 Developing the business purpose

The business purpose is a simple but rich statement that represents the heartbeat of why the business exists. There are many

approaches to distilling this purpose, which in itself can be a valuable tool in aligning the minds of your employees around what

you want to achieve.

One approach to determine the purpose of the business uses as a starting point each of the developed value drivers, which

need to be distilled down to one statement that captures the essence of:

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what the business is about,

why it matters,

what it wants to achieve.

You are looking at evolving one statement that captures the heartbeat of the organisation, which can be easily understood

across the organisation, but also powerful enough to emotionally engage all employees. Brainstorm the possibilities with your

team and resist old clichés or statements that are loaded with management terms. What is it that makes your team go the

extra mile, what gets them out of bed in the morning, what will engage heart and mind?

Case study: Determining the business purpose of Morph (Pty) Ltd

The three groups of value drivers were incorporated into a single statement that encompassed the ethos of the company:

Figure 18

The team agreed that the above well represented the ethos of the business, as these engineers loved to turn exciting designs

and ideas into reality and that the desire to please and exceed customer expectations was the basis of these innovative

designs. It was clear that some givens like lowest cost, quality etc had to be in place to deliver on the customer expectations

but the heart of the business was about being “creators”.

How do I know if I have got the “right” statement of my business purpose?

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In his book “Good to Great”15 Jim Collins speaks about a good purpose revolving around three things, which is a useful way of

reviewing your purpose statement:

Passion: does your purpose statement illicit passion. Is it what the business is passionate about, or what are you

deeply passionate about?

The business model: Does this statement help drive your economic engine?

Best in the world: Is this what you could be the best in the world at?

3.5 Using the Value drivers and purpose

From a business perspective it is useful to focus the efforts of all employees around these value drivers, so every employee

must be clear on how their role contributes to the overall value experienced by the businesses clients and how they can drive

this value up while containing or reducing costs. The resulting focus of the company’s resources around these simple (but not

simplistic) issues allows the business to have a constant dialogue on how to do to this and strategy becomes a living reality in

the business verses a dead document in the filing cabinet of the CEO.

Do all your employees understand how what they do fits into the “bigger picture” of the business? How do they feel when

asked at home what they do at the company, how energised or “empowered” are they? Too often we consign ourselves or

others to just being a cog in a bigger engine, and we expect one another not to rock the boat and just get on with our own little

part of the job. The value drivers and business purpose can be used to counter this tendency which occurs due to the

increasingly specialised nature of our workplace. They can be used not only to get everyone signing in tune, but singing with

pride and gusto knowing how valuable their own individual contribution is the end objective.

Developing a business & transformation strategy

Every business takes its resources, focuses them around its purpose, while driving down its costs and driving-up shareholder

value. This is the essence of all business, and greater margins result from a larger gap between the costs and the value the

customer experiences. Figure 19 below encapsulates graphically this value based view of strategy:

15 Collins, J (2003): “Good to Great”, Random House.

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Figure 19


This is true on an aggregate level as well as an individual level for every employee in your business, but these broad

statements need to be translated into specific changes in action or behavior or there is no point however interesting the ideas.

Everything that everyone in a company does must produce value. This is an everyday process. It must become a way of thinking, a way of life.

Tony Manning, Competing through Value Management (2003).

Determining the goals for each value driver in your business:

Goals are descriptions of what you want to achieve to drive up the value to the client. The same type of brainstorming process

can be used but this time asking the team to respond to the question, “what goals can be put in place over the short medium

and long term to enhance and enable each of the value drivers in turn”.

Case study: Setting the goals for “Morph” (Pty) Ltd

The three described goals per value driver tend each to have short, medium and longer term horizons to implementation and

impacts.

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Figure 20

Determining the actions- giving feet to the goals:

Each goal needs to be studied in turn in order to develop specific actions that will transform this goal into a reality in your

business. Our experience is that three, well-conceived, high level actions at senior level are more than sufficient to catalyse the

goal, so resist the temptation to list a million actions which won’t see the light of day.

Now that you have a value based view of your company strategy how do you bring transformation into the picture?

3.6 The three core transformation questions:

With this view of your value based strategy, and an “As is” assessment of the seven key dimensions of transformation you are

now equipped to consider three core questions in order to bring transformation into your strategy.

1. Your customer

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Given that for many businesses an emerging black middle class represents a huge new market opportunities to your

business. Given these new markets that are developing, you need to answer “who is going to be your customer in the

next 5 – 10 years”. Leading on from this, you need to answer “what action needs to be taken that will help you understand

this future customer and what they value?” Can your existing team understand the needs of this market? You might

literally be speaking another language. You need to sow the seeds now to build this sense making capacity. List the

actions that result from this question.

2. The nature of your businessGiven the specific purpose and nature of your business, “what actions can you conceive that will enable transformation?”

For example – A business school could significantly enable black entrepreneurs by offering free courses to them. It is

strange, but so many businesses become so focused on the scorecard dimensions, they forget to ask “given who I am,

how can I help transformation?” List the actions that result from this question.

3. Putting growth and transformation into tensionTransformation actions that also grow your business can be explored through asking the question “how can I action

transformation so that it enhances the value drivers and furthers the goals of the business”.

This question can be posed by placing your businesses purpose and value drivers together with the corresponding goals

on the same page as the dimensions of transformation to be considered in turn. This should then ensure the organisation

explores the two in the same breath. The tension that exists between the two requires creative and insightful thought to

unlock powerful possibilities and so should be explored with a team of the key people that might have the right insights to

develop these transformation action items. It has been said that freedom results from the creative conversion of

constraints, which is the core of what is being attempted in exploring this question.

The team should not neglect the action items needed to achieve business goals in favor of action items aimed at

transformation, but rather action the developed goals in such a way that transformation is enabling the business. If

possible the team should avoid setting additional goals that have a transformational component unless these goals clearly

enhance the value drivers already identified.

The team should also avoid a value driver called empowerment as this allows this category to become potentially a catch-

all for any actions that have a transformational impact, and yet which would dilute the creative tension already discussed.

The overall intention is finding actions that are good business sense AND give feet to transformation.

The nature of these action items are very specific to each organisation and might dig right into, and affect, the purpose of

the business. They need to be explored more broadly than just the specific dimensions of the scorecard, and rather focus

on upholding the ethos of sustainable transformation for South Africa. As a consequence there are no specific guidelines

here while some of the best practice strategic implementation of some of the dimensions of the scorecard will be explored

in the next chapter.

Collate the information

The information resulting from these questions should be collected and collated into a single view as pictured in Fig 21

below:

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Figure 21

The following chapters take this transformation picture and enrich it with a deeper understanding of the key dimensions of

transformation and thereafter engage in a debate with the organisation.

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Case study: Building actions from goals in Morph (Pty) Ltd

An example of building actions from two of the goals is described in detail below:

Figure 22

Deep engineering knowledge base:

The industry is weak in its supply chain of engineers and the company is short staff for its contracts, and an opportunity exists

on two fronts:

To bring in young black engineers to serve the extra contracts and mentor them. This will replicate the current deep

(and expensive) skills in a younger (and less expensive) group of engineers. An early supply of such recruits can

come though bursaries and scholarships and these trainees can get to know the organisation during their vacations,

projects etc. The company could look to formal learnership programs as well and so receive grant funding for these

processes.

To source black engineers and use their experience in different industries to catalyse the innovation in the business.

Identify parallel industries and study the skills gaps in ETS.

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The company has not developed any formal processes to capture the knowledge gained from a project and share this across

the team and house this knowledge in a system so that it is easily accessible. This would require a deeper organisational

understanding of knowledge management processes.

Relationships with Subcontractors:

An opportunity exists to identify the young “up and coming” empowered firms that have subcontracting skills in the areas of

interest to the company but lack some of the management, technical or financial resources. These companies can be

partnered with to build a reliable supply chain to delivery.

All of these actions are good business sense and add value to the organisation but can be affected in such a way as to give

feet to the transformation process.

3.7 An Organic verses Acquisitive Approach to Transformation

A long term organic approach:

The transformation triangle (Fig. 23 below) has a slow organic view to the relationships between the transformation

dimensions.

Figure 23

This organic approach would use corporate social investment (Socio-economic development) as a tool to influence the environment of business, but also be influenced by the environment of business. This means that the organisation embarks on initiatives into its community in such a way that its business is exposed to the needs and

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views of the community and builds a brand and relationship with the environment of business. This understanding is what allows the business to be sensitised to and live in symbiosis with its environment of business. This understanding allows the business to embark on transformation initiatives into its supply chain with sensitivity as it in many ways is a transformed supply chain that wins.

A company cannot just transform itself, which is clear from the nature of the transformation dimensions. This sensitivity and the

supply chain initiatives lay the ground for a company understanding and culture that makes it a business that attracts and

retains black talent and is able to understand and develop the employees in the business.

Over time some of that development will allow the best and most able employees to develop into shareholders and when

coupled with employee share options, will result in a stable transformed business that makes the most of the competencies

that are in the business already.

This process takes time and in many businesses there is not this luxury, so many companies employ mixed strategies that

make use of short and medium term strategies acquisitive strategies to reduce the pressure.

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3.8 The rate of transformation

The rate of transformation

It is important as you design your transformation strategy to consider the rate of transformation that suits the nature of your

business and industry climate. The reason for this is industries and businesses that are experiencing strong growth rate can

more easily implement transformation.

A simple analogy:

Think of your company as a whole lot of chairs. Some chairs represent production, others management, etc. In a growing

economic climate you would need to add chairs to fill customer’s needs. In this manner you would not have to take somebody

off a chair in order to make way for a more representative incumbent (which would be very destructive).

One needs to pursue different transformation strategies under different rates of growth. This affects both nature of the strategy

and the rate at which it is implemented as illustrated in Figure 24 below:

Figure 24

This figure shows that if high levels of growth are expected then a mixed strategy that uses both organic and acquisitive

components can be pursued in the short term to help fuel the pace of transformation, but under low rates of growth it is difficult

to attract both the talent or investment or to make space for the incumbents without upsetting the existing capacity. Hence only

under high rates of growth is a mixed strategy viable.

3.9 Critical success factors

A few critical success factors when developing your transformation strategy are:

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1. Make your transformation strategy an integral part of your entire company strategy and not a separate document.

2. Develop a transformation team that can assist in developing the strategy and help build a critical mass in the

organization.

3. Ensure that transformation does not occur at the expense of the performance of your company. (but don’t make this an

excuse to not transform)

4. Approach transformation differently under conditions of high growth versus low growth economic conditions.

5. Be sensitive in your implementation approach, as this topic has the potential to polarise staff. Many deep rooted issues

are just below the friendly surface. Seek specialist consultants to assist here if you have any doubt about achieving

absolute success.

6. Involve your entire organization in input and in giving feet to your strategy.

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CHAPTER 4 – IMPLEMENTATION

Now that you have developed an understanding of the context of B-BBEE, a high level view of your current strategy, an

understanding of the key dimensions of transformation and work shopped them with your top team to develop some actions, it is

now time to get it done – to go in-depth into the detail of how to implement transformation.

The figure below provides a useful high level framework for the overarching process. The diagram serves as a guide only and

some of the aspects have already been covered but others will not necessarily be covered in detail in this book. We would

however like to deal with some of the softer aspects in this chapter.

Figure 25

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4.1 Other Goals and Objectives of Transformation Management16

A transformation management strategy also defines how change is managed in the organisation and should concern itself

with any changes that impact people. A typical transformation management framework engages People, Technology, and

Process. Change programs should simultaneously address these elements in a way that supports the organisations

purpose (vision, mission and values).

The transformation management strategy:

Defines transformation management objectives including, key activities and guidelines for when, where, and

how of the transformation.

Explains the connection between Human Capital Management and Transformation Management and the

business case (best practices).

Describes the model for approaching transformation management.

Details transformation management activities and explains transformation management processes and makes

the link between activities and outcomes.

Because the specialisation engaged on People, Technology and Processes are so very different and complex, it is clear

that transformation management is a multidisciplinary field and it is necessary to appreciate the big picture organisational

dynamic. Transformation management strategy recognises that changes may require communication, buy-in, education,

and changes to job skills requirements, organisational structure, culture or performance management. The transformation

management strategy should create a roadmap of how to “move” the organisation from where we are to where we want to

be (current state – through transition state- to future state).

Transformation management activities require a multidisciplinary appreciation of the organisation. Irrespective of how

seemingly insignificant, change threatens the identity, security and sense of self-worth of the people impacted. The

emotions created by change can be very strong and impact every aspect of an individuals experience and therefore the

main task of transformation management is to facilitate transition into the new status quo. In addition the, other objectives

of transformation management activities included:

Creation and on-going engagement / management of the team responsible for the project management

activities.

Creating expectations and reinforcing consensus by designing and communicating what is happening, what

we can all expect and what is the ultimate objective / outcome of the change process.

Ensuring that those affected by the change understand the impact of the program on them and understand the

role that they play in helping to implement the system or business process or culture etc.

Developing committed, enthusiastic support and sponsorship for the change initiatives.

Communicating (marketing) the change to organisational players. This may involve techniques and strategies

from branding, marketing, public relations, stakeholder management, and internal advertising. It is important to

underline that unless the change is deliberately marketed, organisational participants become free to make up

their own minds about what the change and its impact actually are.

Conduct rituals / ceremonies and celebrate changes.

16 Adapted from Steve Banhegyi and Associates, 2003-2006, Culture, Change and BEE

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Evaluate the extent to which change activities impact on organisational identity.

Identification of meaningful feedback systems and performance measurements that support the goals of the

change initiative. Ideally, these performance measurements can be monitored throughout the program’s life

cycle.

Ensure on-going and transparent communication between all stakeholders and via the correct senders. It is

important to take into account the preferred sender and method of change communication based on the

audience and the nature / content of the message.

Ensure all those who need to make changes to the way they work are provided education and training

opportunities to learn the new required skills.

Evaluation of the organisation structure, role definitions, job design and their interrelationships and ensuring

that it supports new processes and future operational strategy.

Identify the implications of change on human capital management requirements.

Provide background information on transformation management including activities, tools and templates.

It is also important to also keep in mind that when organisations speak of systems change they are really referring to

procedures automated by software in ICT (Information, Communication and Technology) Systems. B-BBEE is no different

and as part of your transformation management strategy consideration should be given to how the reporting of progress

on your B-BBEE scorecard will be handled which should be automated using one of the many scorecard data repository,

scorecard and scenario planning software applications available.

Lastly, consideration should be given to shaping the organisational culture. Goal directed collections of people require

organisation and management to ensure that activities are co-ordinated and that agreed goals are achieved. The outward

manifestation of this “organisation” is often referred to as “culture”. Whilst some aspects of organisation are deliberately

planned and implemented, others arise spontaneously as emergent properties of a complex system. Because many

aspects of organisation cannot be planned and envisaged, a useful way of seeing an organisation is as patterns of

conversation and relationships, these are all aspects of complex systems behaviour. Let us look at each of these aspects

in more detail:

Relationships- Relationships in social systems and organisation exist moment-to-moment between

organisational members and people in the external organisational “environment” which include customers,

competition, regulatory authorities etc.

Conversations- Conversations in organisations are exchanges of stories that reflect thoughts, opinions, and

feelings. These conversations are vitally important because they create an understanding and appreciation of

reality and “what is going on”. Our emotional relationship with the world around us has much to do with the

stories that we hear and tell about. Many change practitioners pay particular attention to the conversations and

the suggestion is made that once the nature, content and focus of the conversations change, so does the

organisation.

Patterns- Patterns are a composite of traits or features characteristic of an individual or a group that observed

to recur over a period of time. Whilst the way networks of relationships emerge might be completely

unpredictable at the lowest levels, there are some overall patterns regularities and consistencies that can be

observed. It is also important to note that the role of observer; if the individual who “sees” the pattern is in a

position of power, then the pattern will have a tendency to become “real”.

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While changes in organisations can be stimulated in a wide variety of ways, the outcomes of these changes are often

unpredictable because organisations are complex systems. Possibly the best we can do is to indirectly “nudge” the

organisation’s culture in a particular direction by selectively reinforcing certain patterns, relationships and conversations

while ignoring others. Some examples of how change can be stimulated include:

Introducing new issues, systems, people, challenges and points of focus;

Introducing new metaphors and stories,

Engaging conversations and stories about observable patterns, experiences, probable futures, relationships

and conversations.

4.2 Assessing your company’s B-BBEE maturity

Different organisations are each at different levels of maturity (as are individuals) with regards to their transformational

understanding and efforts. It is vital to engage with the organisation in such a way that they can contribute to the

transformation process. This high level of communication builds trust and engagement on a personal level, which are all

vital in this very emotive subject.

It is recommended that a general awareness of transformation exists at all levels of your organisation prior to exploring

the questions that relate to the development of the transformation strategy. A good starting point is therefore the

development of a communication plan with your staff. Your staff all has an inherent fear as to how this will affect them

emotionally and their job security, (ranging from privileged expectancy to potential retrenchment). Good communication

cannot be over-emphasised, as any perceived lack of information flow from the top will led to rumors, and other dis-

information, which can easily make your transformation implementation efforts twice as difficult. This is a very sensitive

area (it sits alongside religion and politics in emotive response) and so you need to proceed with caution as you start to

communicate your intents into your business.

To assess your company’s readiness, and act as a guide to review your progress and B-BBEE maturity level, conduct the

following maturity assessment, by ticking the boxes that you believe best describes your companies position for each of

the descriptors in the left hand column in the table below. If you join the ticks with a line, then a broad sense of the overall

maturity of your business will be obtained, ranging from innocence to excellence. (If your organisation is predominantly in

the innocence stage then you need to approach the communication of your transformation strategy very carefully):

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Descriptor Innocence Awareness Understanding Competence Excellence

B-BBEE understandingThe organisation only knows about B-BBEE from its environment of business.

Structured programmes have been run building the managements understanding of B-BBEE.

Programmes have been run building an organisation wide understanding on B-BBEE.

There are linkages to the current developments in B-BBEE that all employees are exposed to

The organisation engages in unstructured debate on B-BBEE developments and their impact.

General attitude of the organisation

High level of resistance and unwillingness to consider B-BBEE.

Reluctant acceptance of the need for B-BBEE as a necessary evil to stay in business.

Clear understanding and broad acceptance of the necessity of B-BBEE. Limited results to date.

Participatory attitude - B-BBEE is perceived as a highly integrated issue.

B-BBEE is well stabilised and entrenched in the culture and day-to-day operation of the organisation.

Orientation Avoidance Re-active and not committed

Management acceptance of the need to drive B-BBEE

Broad acceptance throughout the organisation to drive B-BBEE

Maintaining B-BBEE as part and parcel of the organisation. An open discussion and approach.

Typical drivers/motivator

Maintaining the status quo and resistance towards B-BBEE

Pressure from customers and threat of long-term sustainability

The necessity that B-BBEE needs to be driven as an internal and external issue

To implement B-BBEE as part of the organisation fabric

Maintaining the values and culture

Typical responses Looking for support to maintain point of view.

Fronting and superficial attempt to integrating B-BBEE.

High level of activity to define goals, issue responsibilities, time-lines etc

Broad participation programmes. Change management

Pro-active management of issues which may threaten B-BBEE.

Goals Lack of goalsGoals are defined by doing the minimum to avoid the cost of non-adherence

Goals are quantified but not driven on a day-to-day basis

Goals are reviewed periodically throughout the organisation with clear actions and responsibilities

Although goals are defined and adhered to, they are less important and B-BBEE is predominantly maintained through the culture.

Responsibility No one has responsibility for this function

B-BBEE is driven as a back-office issue

Becoming part of the top management responsibilities

Top management as coach with champions to drive this on a day-to-day basis

Top management as custodians of the values but responsibility is dispersed throughout the organisation.

Change management No change managementAd-hoc and reactive change management limited to the B-BBEE compliance issues.

Understanding of the requirement to formally manage the required change process. Limited progress

The formal management of this process with clear strategies, roles and measures

Change management has virtually disappeared.

Table 11

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4.3 Getting the input from your organisation

In earlier chapters we developed a value view of your company’s strategy with your top team, right down to the goals that drive the

value in the business. We now need to revisit this value view with the employees of your business, and engage their input.

While many companies still experience difficulty in ensuring that the diversity of gender and culture in South Africa is reflected at all

levels in their organisation, some pioneers are talking about difference and diversity in a completely different light, as a source of

organisational creativity.

In South Africa, most of us grew up with the idea that anything “different” from us was to be distrusted and isolated, and most

employees have had a taste of the apartheid experience. This paradigm is changing, rather than treating diversity as a legal

obligation, enlightened companies go out of their way in highlighting diversity stories as part of the conscious creation of their

culture.

Creative insights arise by looking at things in a different way, through differing perspectives and from this view point, South African

companies can offer as many viewpoints as there are employees. When we bring all the diverse views together, we have the sense

that we are seeing something that no-one else does and that we have all contributed to the bigger whole. When we contribute, we

have ownership and feel ourselves as engaged participants in a story that is bigger than ourselves.

A useful starting point that underlines and honours diversity is to create an opportunity that allows everyone’s unique viewpoints,

opinions, aspirations and stories to be heard. In addition to meeting statutory requirements, the goal of your transformation strategy

becomes one that:

energises organizational creativity;

seeks to find a way for everyone to have a voice;

demonstrates to each employee how important they are in the scheme of things and how interdependent everyone in the

organisation is;

creates a sense of meaning and purpose where everybody’s viewpoint is honoured and valued;17

There for once you have enhanced the organisations understanding of B-BBEE through your communication strategy, we will be

asking of your employees two further core transformational questions.

Question 1: Getting their ideas on the transformation strategy

Explain the high level transformation strategy your B-BBEE team has developed to your employees and ask their views on the

strategy and, “how can they contribute to specific actions that will enable that strategy”. This is a vital question in order to take the

strategy and high level actions into specific detailed actions that will enable transformation in the business.

This question can only be posed once the employees have a sound understanding of transformation and the value based view of

the company strategy, and should be tackled through developing teams of people that can have an impact on the action items within

a specific category. An example would be a team of the buyers in order to explore the specifics of the preferential procurement

process, or the human resources people to explore the specifics of skills development, learnerships etc.

Question 2 - Empowering your Employees:

17 This section was adapted from Steve Banhegyi and Associates, 2003-2006, Culture, Change and BEE

78

The managers of the business should take the same conversation to all the employees of the business for their views and to draw

from their insights and to explore an additional equally important question with the employees “How can I help you to be the best you can be?”

Jack Welch (ex CEO of General Electric) is reputed to have asked this question of one of the long standing employees working in

one of the factories of General Electric. The response was that “for all these years my body has been efficiently utilised, while you

could have had my mind as well”18.

Sustainable transformation rests on ensuring that all our employees are given the resources needed to take all of who they can be,

and use this to drive up the value the company gives to the client. This is fully empowering people. There is a magic that happens

as we explore this question with our employees, as the compact between two people forms to enable one another.

The smallest unit of transformation is the individual, and so transformation starts and stops with the individual!

4.4 Consolidating and sorting the list of actions:

The actions that are proposed through dialogue with the management team and the rest of your organisation, will contain elements

of how you affect the scorecard dimensions as well as containing transformational elements outside these dimensions. By drawing

on the full resources of the company and including all employees in this transformational debate, we are able to create an

organisation wide awareness. However you cannot have the entire organisation drawing on the resources of the business to tackle

action items that might or might not have the impact that is anticipated. It is vital at this stage to formally sort and approve the

actions and integrate them into the performance measures of the business.

Sorting the list of actions

The action items should be captured on the single spreadsheet and grouped around the dimensions of the scorecard and sorted into

the short, medium and long term window to implementation (i.e. Those actions we wish to do now and those we want to tackle a

year from now).

You will also find that the actions are of different value in terms of their contribution to growth, transformation, strategic synergy etc.

one can use the framework below to establish which of the actions should be moved forward. The axis of the framework should be

given sorting criteria based on what you believe is important to the organization. So for example you might be looking to prioritise

those actions that have a quick impact as this “low hanging fruit” creates buy-in for the rest of the organisation. In this case quick

wins would be the one axis and another dimension such as impact on transformation might be on the other axis. You would want to

prioritise only those actions that fall in the 1st quadrant (in Figure 26 below).

You can use multiple criteria by taking the actions already sorted and sort them again against the new criterion to establish those

actions that have a strong impact across multiple dimensions. Figure 26 below helps to put this into perspective:

18 N. Tichy & S.Sherman “ Control your Destiny” (1995)

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Figure 26

Once the actions are sorted against the criteria that you believe reflect the needs of your business you are now ready to look at the

processes that can be used to assist in the implementation of these actions.

4.5. Implementing the Sorted Actions:

4.5.1 Approving the developed Activities:

Once a list of value adding empowerment initiatives have been sorted, the B-BBEE team needs to go through the list to establish

whether the list is comprehensive enough, and that the list is well thought through without any obvious actions missing.

The group needs to approve the activities that are worth undertaking and allow for the allocation of the necessary resources to give

effect to the actions. Budgets can be drawn up and the activities can be integrated into the performance measures of the

organisation.

4.5.2 Developing the processes that sustain the transformation strategy:

The B-BBEE team should also be in a position to develop the policies and processes that will sustain the transformation strategy.

These will vary from business to business but a few areas of good practice can be highlighted:

A 30 Day review cycle:

This principle used by GE ensures that the implementation gains momentum from day one by tight 30 day review cycles. As the B-

BBEE team reviews the actions that were developed the first time round, many of the actions will quickly surface as ill-conceived.

This is normal and the idea is to repeat the process of what alternative actions can now be undertaken in order to achieve the goal.

The iterative cycle reflects the organisation learning in this area and it is healthy to act to learn as Figure 27 below illustrates:

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Figure 27


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4.5.3 The implementation process in summary:

We have not covered project management or change management process in any real detail in this book as there is an abundance

of literature widely available on both these subject, however we would like to emphasise that it is vitally important to undertake your

company transformation efforts using a structured project management methodology that coordinates and manages the drawing of it

all together as a “capstone” and a structured change management process methodology that serves as a foundation to support the

likelihood of your transformation success. These two process methodologies have a joint value proposition to ensure that your

transformation efforts are achieved in the agreed time frame, to the right outcome expected (future state), within budget, and in a

way that sticks (changes people’s behaviour long term). To enable a big- picture view of the implementation process we have

drawn this all together in summary as depicted in figure 28 below.

Figure 28

Step 1: (An As-is view of your company): This step looks at the broad key dimensions of transformation and develops a current

status picture against them as well as developing a simple view of your current company’s strategy with your B-BBEE team.

Step 2: (Action Lists): This step looks at to how to extract a first pass list of actions that will give the feet to the transformation

process using input from the organisation within the current management structures.

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Step 3-6: (Implementing): These actions are then sorted based on sensible sorting criteria, approved and integrated into the key

performance areas of the organisation. These actions can be reviewed through a 30 day review cycle.

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CHAPTER 5: COMMUNICATION AND REVIEW

Now that you have developed and implemented this rich transformation plan, it is now time to tell people what you have done. Most

of your clients will be interested in three aspects of your transformation strategy, namely:

1. What is your contribution to broad based empowerment – as determined by your scorecard level.

2. Your ownership status (black owned > 50.1% or engendered > 30% woman ownership).

3. Your empowering status (degree of localisation).

4. Your size (exempt micro enterprise (EME), qualifying small enterprise (QSE), or generic large enterprise)

5. Your intent to transform – i.e. your transformation strategy.

5.1 Measuring your actions against your scorecard?

This conversion of your action list into a full communication document for transformation with your company charter needs to have

one extra step added to it, namely to add up the impacts of each of the approved actions on the scorecard over the short, medium

and long term and use those aggregates to establish if the list of activities is sufficient to ensure you are on track to reach your

target you set in the last chapter. By doing this you are not blindly working towards some target in the distance but you are

formulating actions to ensure you can reach the targets you have set yourself or which your industry has set for you.

If your action list is insubstantial against the targets you have been set then you need to re-iterate the strategic dialogue process

with your company to add some substance to it. This should be repeated until you are satisfied that the approved actions are of

such a nature that they will get you close to the set target.

5.1.1 Revisiting your Strategy:

Once you are satisfied with the action list, it is good policy to then reflect back on the strategy that was set in the “as-is” stage of the

process and check if it still is accurate or if new aspects have come to light through this dialogue. Take some time now to update the

transformation strategy. Now that you are familiar with the process take the time to explore in-depth the areas outside the formal

scorecard. Given the nature of your company, how can you best contribute to the transformation of our country?

5.1.2 Revisiting the scorecard:

You should now re-look at the scorecard supporting detail that you first developed and it is probably worth your while at this stage to

invest in a rating agency to revisit your scorecard and accredit your position. This might bring to light inaccuracies in your method

and will also result in a certificate of accreditation, which independently verifies your empowerment position. This can be used in

tender documentation etc.

Be aware however that the scorecard is a snapshot at any one point in time and so you should be able to do it yourself and you

should organise the access to the underlying information in such a way so that you can update your position without too much effort.

5.2 Communicating your empowerment position:

It would be poor business sense to go to all this trouble and then not effectively market and sell through your empowerment

initiatives. Advise your major customers of your most recent empowerment position so that they can update their position. Develop

an executive summary which encapsulates your transformation strategy and scorecard so that your marketing teams can talk of

your position with their clients. If your industry is currently un-chartered use your transformation understanding to play a role in

developing a charter for your sector rather than leave it to other people who might not be as informed. Communicate this to your

employees and celebrate your contribution to South Africa’s growth.

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5.3 How do you know if your transformation process is working?

The scorecard gives you a snapshot view of how your transformation process is progressing as measured against your

transformation targets. It does not measure how sustainable or meaningful your transformation efforts have been – or do your

employees get what transformation is about? During our experiences of transformation the following organisational characteristics

have surfaced as indicating a healthy transformational mindset:

5.3.1 Understanding the moment:

A business needs a memory of the past (we don’t want to hit our heads against the same walls), and a vision of its future, but as

importantly it needs to ensure it is operating in symbiosis and harmony with its environment of business and understanding the

needs of its customers. Its leaders need to understand and make sense of this moment we are in. This is after all the essence of

leadership.

Do you know South Africans that are living in S.A of the 1980’s? Then you know companies that are living in that time, a time and

place that no longer exists.

What moment are you living in, how can you better understand the world around you?

We come from a country that no longer exists, and We walk into a future that looks very different to this moment we are in.

Transformation is all about your company understanding and transacting effectively in the moment we are in.

5 3.2 It’s all invented:

If you are looking for certainty then stay in bed! To become paralysed by a lack of certainty in the transformation environment can be

very dangerous as the rules of this game are being invented by us by our very actions.

Organisations that are not focused on the scorecard, and the detail of its interpretation but are rather pouring their energy into

developing creative value adding transformational initiatives are focusing on the right issues. Let’s not get caught with a score-

carding mind-set that just “ticks the boxes”, and then its business as usual.

Find the magic people in your business and get them to push the boundaries to create value adding transformation actions. If the

creative solutions make good business sense then it does not matter what the rules are that currently surround transformation.

5.3.3 Stepping into a universe of possibilities:

There are many barriers and excuses as to why this can’t be done. Exciting possibilities do await us every day; we stumble over

them, pick ourselves up and carry on!! Is your organisation bringing every ounce of creative energy to bear to find the possibilities

that are there but we are just not seeing? There is a lovely adage that sums this up, “some men dream dreams in the comfort of

their beds at night, while the great men dream their dreams in the strong daylight.”

What are the possibilities that exist for your business today?

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5.3.4 Dreaming our dreams in the daylight

While I am admittedly a rabid South Africanist, I recognise the need for business leaders to be balanced, to not lose the belief that

we will win this transformation battle, while keeping stock of and reacting to the realities of the complexity of what we are trying to

achieve. If you lean too much to either side the momentum is lost. Idealists lack the credibility for “by-in” as people just see them to

be foaming at the mouth again, and this polarity does not assist implementation. People want a balanced not a biased view. So,

you need to dream our dreams in the harsh daylight of your business.

5.3.5 Contribution…Moments of truth:

This management concept draws from the experience of Scandinavian airlines in their turnaround. They focused their energy on

every moment that they could maximise their customer’s experience. In your organisation there are small moments every day that

slip by us that we could use to enable transformation and we miss them in the rush of our day. How is your organisation seizing

these small moments and using them to build bridges of sustainable transformation?

We often are so busy in our day that someone can be talking to us, but we are simply not there! The screensavers are on! How

can we be more aware of the moment we are in as individuals and to personally take hold of the opportunities that exist moment by

moment? It is in the texture of those small moments that we find the graciousness and the care to give as it is needed. It is these

moments that really empower people and help them to be the best they can be. These cannot be procedures, and turned into a

memo reading– “please empower each-other”, they rest in the very heart of you and your organisation.

5.3.6 Giving away to passion:

If you are not passionate about making this country work, and translating that into your business then your business is not going to

get it. Find creative ways of understanding and dealing with the fears of transformation. One client had a sheet on the back of their

toilet doors asking – “what do you really feel about empowerment”. Have you noticed how honest people can be on the back of toilet

doors? They consolidated this and reported the feelings into the monthly EXCO to read what was actually being felt at grass roots.

We all need to foam at the mouth about this stuff, in our own way. We are all passionate. Watch your child fall asleep, they fight

sleep to squeeze out that last giggle, to grasp that last moment before sleep engulfs them. Deep down we are still that child. Life is

short, and our country is precious, let’s give it all we have, let’s get real and be the champions for transformation in our businesses.

5.3.7 Igniting the spark:

I was at a client and she was chewing her pen and the black ink had leaked all over her mouth and she had not realized it, even her

gums where black. I smiled wiped my mouth and just carried on the conversation as if there was nothing wrong! Yet I had a unique

perspective on the situation and not the courage to address it with her. Don’t we all do this sometimes in our businesses?

We often have a unique perspective on the people we work with because of the nature of the environment and the interactions we

have on a daily basis. Do you use the perspective you have to give input into that person’s life, to help them to be the best they can

be, or do you just smile and talk about it behind the persons back? How are you igniting the spark in those around you?

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CHAPTER 6 CONCLUSION

In order to implement a sustainable value adding transformation strategy you should have the following aspects in place:

1. You should develop an “As-is” picture of your business which involves both developing a first draft B-BBEE scorecard

and a “value drivers” view of your B-BBEE strategy.

2. You should use the as-is view of your business to build actions that contribute both to the growth of your business and

contribute to the transformation of your business.

3. You should engage in communication with your employees to: inform them of what your transformation is about, to

establish what actions they can take to contribute to transformation, and most importantly to understand what you can do

to help them to be the best they can be (empower them).

4. You should sort the actions, develop a process for the approval of the actions, ensure the actions are integrated into the

key performance areas of your employees, and are reviewed in a 30-day cycle.

5. You should support the transformation process with the right change management and project management processes.

6. You should ensure that due attention is given to the cultural dimensions of this change process.

7. You should understand the B-BBEE legislation, codes of good practice or relevant charter and be tracking the changes in

B-BBEE as they evolve in the environment of business.

8. You should maintain a dynamic document recording all your transformation actions, strategy, transformational scorecard,

data, etc. with a covering executive summary drawing all the transformation actions together.

9. You should communicate your transformation efforts to the marketplace and particularly all the stakeholders in your

business (such as your clients).

10. Don’t allow the scorecard and its targets to overshadow your strategy and action items. Your strategy drives the

transformation of your business and not your scorecard.

To the B-BBEE team:

6. Who is going to be your customer in the next 5 – 10 years and what action needs to be taken that will help you

understand this future customer and what do they value? (answered by your top team)

7. Given the very purpose and nature of your business, what actions can you conceive that will enable transformation?

(answered by your top team)

8. How can I action transformation so that it enhances the value drivers and enables the goals of the business? (answered

on a high level by your top team)

To the rest of the company:

9. How can you contribute to enabling these action items? (answered specifically by your entire organisation)

10. How can I help you to be the best you can be? (asked of your entire organisation)

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Our closing advice on transformation would be:

1. Simplify everything – what actions add the most value?

2. Focus on the basics and get your employees understanding right.

3. Do a few right things rather than lots of wrong ones – we need to do it correctly NOW.

4. Craft and conduct a creative ongoing conversation with your people.

5. Tread carefully and honestly – these emotions are close to the surface.

6. Expect the exceptional of your team– and keep pushing!

South Africa is at a moment of truth and we need to have every South African engaged and clear on how they are contributing to a

transformed stable country which can be a great heritage for our children.

“I have walked that long road to freedom. I have tried not to falter;

I have made missteps along the way. But I have discovered the secret that after climbing a great hill one only finds that there are

many more hills to climb.

I have taken a moment here to rest, to steal a view of the glorious vista that surrounds me, to look back on the distance I have

come.

But I can rest only for a moment for with freedom come responsibilities and I dare not linger for my long walk is not yet ended.”

Nelson Mandela

Thank you and Good luck!

About the Authors:

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Dr Robin Woolley

Robin is a specialist in corporate strategy development, black economic empowerment implementation and scorecard development. His PHD is in empowerment. Robin has consulted in organisational empowerment initiatives to a great number of medium and large-sized South African and multinational businesses.

Robin is a visiting lecturer at the Gordon Institute of Business Science in the fields of strategy development and Designing and

Executing Your Black Economic Empowerment Strategy;

Robin was previously the director of executive programmes for one and a half years at GIBS;

Robin is a founding member and chairperson of the employee ownership association of South Africa (Inqolobane).

Education

BSc Mech Eng (UNP)

MBA (WITS)

PHD DemontFord University

Publications

Robin has written the first book in the country on empowerment called “Everyone’s Guide to BEE”.

Collin Smith

Collin Smith holds a BBA degree in marketing as well as an MBA in Strategic General Management. Collin’s management experience comes from years of Sales & Marketing Management roles before deciding to pursue a career in Management Consulting. He has spent the past seven year consulting to small, medium, and large companies across South Africa and is highly skilled in the implementation of sustainable transformation strategies.

He maintains a regular speaking and lecturing diary at a variety of industry forums, customer specific executive short courses and conferences. Other areas of interest include change management, generational theory, diversity, facilitation, group dynamics, talent management, and corporate strategy.

Collin is married to Gayle and they have two children named Tristan and Kyle.

Transcend Corporate Advisors, South Africa's leading Broad-Based BEE consulting and advisory firm offering social responsibility, transformation and economic empowerment solutions to corporate clients and multinationals in South Africa.

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Our focus and specialities aid our clients to develop and communicate a strategic, value-based view of social responsibility and black economic empowerment.

We have historically focused our services around Broad-Based BEE in South Africa. Our focus includes solutions that meet the challenges of carrying out successful and value-adding corporate strategy, empowerment, transformation, and sustainability programmes.

B-BBEE Strategy development that makes business sense B-BBEE Scorecard verification preparation - making sure you have identified all gaps on

your scorecard

In-House and Public training courses - on all the pillars of B-BBEE

B-BBEE Scorecard Software - allowing you to track and monitor your Scorecard on all dti gazetted B-BBEE codes

Scorecard Gap analysis and context briefings

Social and Ethics Committee services

Multinational services - Equity Equivalent programmes without the sale of Equity

Human Capital Services including Employment Equity

Supplier Verification and Supplier training on expectations regarding B-BBEE

Enterprise and Supplier Development - ED from a strategic perspective - empowering your suppliers

Tender preparation - PPPFA aligned to B-BBEE

Ownership Solutions including Equity Equivalent Programmes, Trusts, Trustee Training, Broad Based Ownership schemes

Our objective is to help our clients integrate B-BBEE, social responsibility and socio-economic empowerment into their strategic vision, with an objective of encouraging sustainable business growth and social development.

Contact Us:

Brian Hendrikz / Dr Robin Woolley

Phone: 011 442 2433

Web: www.transcend.co.za

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