BEE Success or Failure
In every facet of business life in South Africa, Broad Based Black Economic Empowerment plays a substantial role. Since BBBEE is so important for business in South Africa why then are so many falling short on their own targets, or becoming overwhelmingly frustrated at having to meet seemingly impossible legislative requirements?
Understanding some of the Reasons for failure
Perhaps the most pertinent reason for failure is a lack of understanding of the legislation. As Murphy’s law suggests – you don’t have time to do it right the first time, but you have plenty time to do it right the second time. BEE implementers tend to have an overview of the legislation but don’t know the over 100 pages in great detail. As a result of the knowledge they have, they will either not implement activities (not knowing that they can earn points) or not collect data relating to activities already implemented. The knock on effect becomes quite dramatic – as a result of a poor score BEE is perceived to have not benefited the company.
Many business owners/directors have been happy to delegate the responsibility to lower level staff. Although it is not unfair or unusual to delegate administrative tasks, those staff members commonly encounter the same primary issue with their level of authority. If a staff member isn’t able to make decisions relating to the scorecard – then they don’t – which results in poor points on the scorecard. Further more if staff don’t have the authority to make decisions they tend not to innovate or be willing to offer practical suggestions to help the business achieve its BEE objectives. Alternatively but equally as important the BEE process internally becomes a negative causing a loss in productivity and eventually it is out sourced to a verification agency.
Overly relying on a verification agency or consultant is a recipe for disaster. The agency knows the legislation but due to the nature of their appointment they are using retrospective data. Data from the past cannot be changed – the result is effectively already determined prior to the agency’s appointment. The company also only discovers how badly they have done after the agency has completed their work.
Past data cannot be changed and the verification result is a failure. Most companies stop at this point yet they should start preparing a plan from where they are to achieve a compliant score leading up to their next financial year end. Due to the date of the verification, it creates the illusion that you have a valid certificate for another year. In reality the certificate was issued half way through your next rating period effectively giving you half a year to take corrective action.
The lack of forward planning results in either the company making last minute decisions or no decisions at all. Elements on the scorecard take time to implement. Last minute decisions cannot work with Skills Development or Procurement (the supplier aspects of Enterprise and Supplier Development).
Elements have costs and ramifications. Rapid spend on Skills Development is absolutely impossible – the total cost is significant and the staff members will be away from work for a substantial period of time which will greatly affect productivity. Changing a supplier is pointless (excuse the pun) if they are changed at the end of the year once you discover they are non-compliant. You have already spent money with them which has already affected your BEE scorecard.
In-order to be successful…
Successful companies have the same good traits in common.
BEE implementation requires good methodologies for compliance which needs to be implemented throughout the year. Appointing an agency at the end of the year or trying to spend money to buy points is an extremely costly mistake.
Participate with your consultant to understand the legislation and what activities earn you points.
Daily, weekly and monthly monitoring and data capture of all BEE activities is the ideal way to keep up to date with the companies activities but also allows for more time to be spent on the more important future planning aspects. It is only possible to advise on where one wants to go once you know where they are at present.
Achievable objectives must be measured at regular intervals. All advice must be based on what you can still do or must do to achieve targets. It is no use calculating the costs of activities if it is impractical or impossible to implement.
Our clients success speaks volumes about our long term, sustainable approach. Contact us to gather more information about our Managed Service and begin your journey to BEE success.