BEE and Skills Development

The basics of the BEE scorecard.

by Keith Levenstein
Published by Institute of Credit Management magazine Dec 08.

Broad Based BEE covers a wide variety of elements: Ownership, management employment equity, skills development, procurement, enterprise development and soci economic development. Each of these are then broken down into their own sub-categories or indicators. In total there are 7 different elements and over 40 indicators that are used to rate a business’s BEE compliance.

This is the BEE scorecard. Each element is given a value in points. A company needs to try earn as many points as possible. There are a total of 100 points available – which is the target to be achieved in the next ten years.

For example: In order to gain another 15 points, a business can involve itself in developing the skills of its employees (Skills Development).

The entire scorecard lists all aspects of the various elements and shows the maximum points that can be earned, based on achieving specified targets.

The Act splits empowerment into four different sections and has three main types of entities:

1) Generic companies – refers to companies with an annual turnover of more than R35 million. Those entities must follow the generic scorecard as follows

Section

Subsection

Points

Direct Empowerment

 

 

 

Ownership

20

 

Management

10

Human Resources Development

 

 

 

Employment Equity

15

 

Skills Development

15

Indirect Empowerment

 

 

 

Preferential Procurement

20

 

Enterprise Development

15

Residual

 

 

 

Corporate Social Investment

5

Total

 

100

NB Bonus points are earned on certain elements

 

2) Qualifying Small Enterprises (QSEs) – companies with an annual turnover of less than R35 million

Component

Element

Points Available

Direct Empowerment

Ownership

25

 

Management

25

Human Resources

Employment Equity

25

 

Skills Development

25

Indirect Empowerment

Preferential Procurement

25

 

Enterprise Development

25

Residual

Corporate Social Investment

25

Total

 

175/100

 

 

 

 

 

 

 

 

3) Exempt Micro Enterprises – companies with an annual turnover of less than R5 million. These entities are automatically BEE compliant, just because they have a turnover of less than R5 million, and do not have to follow a scorecard.

 

One of the most important elements in the scorecard is skills development.

It constitutes 15 points (25 points for QSE’s) and covers all training/learning/skills development in a company.

I have often said that there is not an unemployment problem in South Africa – it is more an unemployable problem. Many millions of South Africans still cannot read or write, cannot apply to do various jobs, like credit management, because they do not even have the skills to apply, or cannot or do not have access to the Internet to send an email! This problem is intended to be addressed by skills development. Companies are encouraged to spend money, time and effort on training their staff.

 

The BEE scorecard asks companies to spend a percentage of the payroll on training black staff.

Generic companies need to spend 3% of payroll, while QSEs need to spend 2% of their annual payroll on training.

Points on skills development is earned as follows:

Using the generic scorecard

Indicator

Points

Target

Skills Development Expenditure on Learning Programmes for black employees as a percentage of Leviable Amount

6

3%

Adjusted Skills Development Expenditure on Learning Programmes for black employees with disabilities as a percentage of Leviable Amount.

3

0.30%

Adjusted number of black employees participating in Learning Programmes as a percentage of total employees

6

5%

Total

15

 

 

 

a)     “Skills Development Expenditure on Learning Programmes for black employees as a percentage of Leviable Amount”: This asks the company to record how much it spends on training for both male and female black employees. Points are earned on a pro-rata basis so if a company spends 2% on training black males and females it will earn 4 points. The target “leviable amount” refers to the company’s payroll, as defined by the skills development act. So, if  a company’s payroll is R10 million, the target skills spend is R300 000.

b)     “Adjusted Skills Development Expenditure on Learning Programmes for black employees with disabilities as a percentage of Leviable Amount.” This refers to training on black male and female disabled people. As can be seen a company can earn 3 points for spending 0.3% of its payroll on training black disabled employees.

c)      “Adjusted number of black employees participating in Learning Programmes as a percentage of total employees”. This indicator refers not to an amount of spend, but the number of black employees who are on an official learning program. See the skills matrix at the end of this article for definitions of “learning programmes” for this indicator. The target is 5% of all employees. So, if a company employs 2000 employees, then 100 black males and females should be on a learning program in any one year.

 

It should be clear than an ideal strategy is to have many employees on official learning programs, as opposed to short training course or conferences as both the spend on the training can be taken into account as well as the number of people on the learnership. In this way a company can achieve the full 15 points.

 

The QSE scorecard is far less complicated:

 

Indicator

Points

Target

Adjusted Skills Development Spend on Learning Programmes for black employees as a percentage of Leviable Amount

25

2%

 

Training spend should always be measured and recorded in order to earn points. Training includes traditional training courses, degrees, diplomas, conferences, but also includes in-house training. Therefore any in-house training should also be measured and recorded to maximize points. In-house training refers to informal/ad hoc training and even coaching and mentoring.

 

The BEE codes refer to a skills matrix which describe various categories of training:

 

Skills Development Category

Narrative Description

Delivery Mode

Learning site

Learning Achievement

Category A

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

Institutional instruction

A. 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

Category B

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

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

B. 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

Category C

Recognised or registered structure 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

C. Workplace – recognised qualification

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

Category D

Occupationally 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

D. 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

Category E

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

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

E. Institutions and meetings

Credits awarded for registering unit standards

Category F

Occupationally directed informal instructional programmes

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

F. Institutions, conferences and meetings

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

Category G

Work-based informal programme

Informal training

G. Workplace

Increased understanding of job or work context or improved performance of skills

 

Training in the form of Categories B, C and D are those that refer to learners and will earn extra points.

Keith Levenstein is CEO of EconoBEE, a BEE Consultancy. He can be contacted on 0861 11 3094 or keith@econobee.co.za or www.econbee.co.za

You may also like...