Posts Tagged BEE Scorecard Rating
In SA amongst the many policies aimed at the further development and sustenance of the economy, one policy that is pivotal but remains misconceived, is Broad-Based Black Economic Empowerment. It has faced and still continues to face resistance from some sections of the South African community largely due to the misconception tag it carries. People have interpreted BEE in so many different ways stretching from the creation of an elite individual business people to an uneven ground regarding job prospects. All this has aggravated to the existing misunderstanding, which is surely a huge setback for the prosperity of the country at large.
All countries across the globe have empowerment-oriented policies including those relating to empowering women, the youth, the disabled and more. There are various policies for various country specific challenges and so is BEE in SA. Its intensity is in empowering the historically disadvantaged. Each time I come across the word “Empowerment”, words like participation, involvement, networking, equity, engagement, representation, equality, representativeness, transformation (the list is endless), spring out of my mind. Empowerment applies not to everyone, but to a particular segment of society. In line with this thinking, it makes sense therefore that BEE is only targeted to a specific segment of the SA society (the previously disadvantaged).
The BEE scorecard provides a rock-solid approach to empowerment. The 7 elements comprehensively cover significant areas of empowerment and the weighting thereof, points to the significance of one element over another. Empowerment must be woven around people and not the other way round and more importantly it must benefit those in need of it.
A client called yesterday. He is a land surveyor with a turnover of less than R5 million. That makes him an EME? No, not so fast. He, as a land surveyor falls within the construction sector.
The construction sector codes define a land surveyor as a BEP (built environment professional) and the EME threshold is R1.5 million.
The land surveyor’s annual income is more than R1.5, but less than R5 million. He therefore has to fill in a scorecard based on the BEP section of the construction charter.
At the same time there are no verification agencies to verify the construction scorecard. He really is in a difficult situation because as from the 1st August, only verified scorecards are valid.
What should he do? Consider himself an EME based on the codes of good practice? No one, least of all his customers will question it. It is wrong to use the wrong codes though, so we cannot rcommend that. He is “stuck between a rock and a hard place”
I’ve just seen a generic scorecard, verified by an accredited agency that shows:
Ownership: 20.54 points (35.4% black ownership)
Employment equity: 1.83
Skills Development: 1.19
Enterprise Development: 7.22
Socio Economic Development: 0.00
They are a level 8.
There can be many interpretations but this looks very suspect.
35% black ownership and almost zero management!
They earned 20.54 points so by definition the black partner (or ownership scheme) has earned full net value their shares . Why would someone invest and pay some proportion for their shares and not ask for more than one non-executive seat on the board? Why would they not make some effort to get the board to transform? Why would they not make an effort to improve employment equity.
It is possible that the company is not fronting, and has made an effort to involve staff, but even then level 8 for a 35% black owned company is not very good.
Many companies in South Africa are working towards getting BEE scorecards in place. They have realised that having a scorecard in place is one easy way of winning business over competitors. As a result, even more companies are enquiring about the scorecard after realising they are lagging behind as each day passes. Time has now passed for cheap bickering and complaining about BEE.
Since many companies now have a scorecard in place what determines who wins business over who is no-more just a scorecard. Rather it is a scorecard with good points. This is for the simple reason that customers will always prefer a scorecard with the highest number of points where they are faced with more than one company with scorecards. In response, cleverer companies have realized the importance of going through a consultation process with a recognized BEE consultancy before they think of the verification process. By so doing these clever companies have put themselves way ahead of their competitors. Going through consultation and working on your own scorecard before verification results in the most desirable scorecard for any company.
The collapse of BEE deals and the recent notice by the minister of trade and industry on verification is definitely a sign that companies need to acquire knowledge and properly implement BBBEE. “Knowledge will forever govern ignorance; and a people who mean to be their own governors must arm themselves with the power which knowledge gives.” (James Madison the fourth president of USA)
Many companies have tended to focus on a quick fix to transformation or on the ownership element leaving the other elements of BBBEE.
All this points to the importance of acquiring BBBEE knowledge. For instance enterprises can earn points by incorporating black women into the mainstream economic development. However a snap shot of the top companies shows management, employment equity and skills development elements still needs improvement. Black women have enhanced recognition through the Adjusted Recognition for Gender calculations. If an enterprise has black women that make up at least 50% of the overall set targets for black people they increase their points on management, employment equity and skills development elements. According to a recent report by the Business Women Association (BWA) in The Star Business report, there is a general increase in the employment of women in top executive positions. The increase is still minimal and not representative of the large pool of women available to take up these positions and black women fill fewer leadership roles.
It is time for companies to arm themselves with the power of BBBEE knowledge. Our conferences/seminars/workshops and the BEE scorecard methodology to help you carry out initiatives that will make you earn the points you deserve and also accurately calculate your points.
The National Treasury has refuted news reports that the FSC no longer exists. Please read.
I am dumbfounded. It is patently obvious that National Treasury is either totally confused or deliberately trying to sabotage B-BBEE.
For the information of National Treasury, any charter comes into force when the dti gazettes it as a sector code in terms of the Codes of good practice. Until then it is a DRAFT charter and carries no force of law, is not considered a charter or code of good practice and no one may use it in calculating their BEE status as per the B-BBEE Act.
National Treasury may not give any special dispensation to the financial industry to use the FSC, as they do not control the B-BBEE act – the dti does.
Much as I have respect for minister Trevor Manuel, there have been numerous reports of him condeming BEE. Is this another strategy of his to discredit B-BBEE and the dti?
The first batch of verification agencies has now been accredited but at the same time there are a number of verification agencies who have not been accredited.
SANAS/The Dti and ABVA are clear that all certificates will be valid but I think some agencies are going to selectively accept the scorecards they want.
I can also imagine the accredited agencies will allow their clients to ask for only accredited certificates – which implies even fellow verification agencies will be unfairly discriminated against.
The BEE Codes are clear with what is acceptable – the competition commissions report we received in 2007 stating that the verification agency does not have the right to choose which scorecards are acceptable, is still valid.
What are the unaccredited agencies going to do when their fellow accredited agencies stop accepting their scorecards – well we will soon find out.