Posts Tagged bee
Socio-economic Development and Publicity
Posted by MPUMULO MAPHOSA in Marketing, Socio-economic development on May 26th, 2009
One of the simplest and effective ways of earning BBBEE points is to increase the level of spending on Socio-Economic Development (SED). SED is one of the seven elements of a BEE scorecard focusing on the extent to which an organization carries out initiatives intended to uplift the South African society. It is worth 25 points for a Qualifying Small Enterprise and 5 points for a Generic company.
Publicity is the deliberate attempt to manage the public’s perception of a company and its products. From a marketing perspective, publicity is one of the variables that comprise the promotional mix where as promotion is one of the variables that comprise the marketing mix.
Therefore, without a shade of doubt, companies stand to gain immensely by channeling significant investment levels towards SED initiatives not only by earning valuable BEE points, but also from a marketing perspective. Investing in SED builds a superb image and an explosive reputation for an organization.
Needless to say, it is of paramount importance for companies to note that modern consumers are incredibly well informed and educated. They identify themselves with reputable organizations. They recognize and appreciate the active involvement of a company in uplifting the society.
It makes sense therefore for companies to engage on those SED projects, which relate to their field of expertise. Amongst other issues, such projects may be targeted towards education, HIV/AIDS, projects for the disabled and other community building initiatives.
However, engaging in SED for the purpose of earning BEE points and building a good image is a misfired and twisted approach. The bottom line is, it does not support the ideal transformation of the society and certainly it is not good enough to create a meaningful and sustainable improvement. Such entities will enjoy in the short-term and definitely not in the long-term. A company’s SED policy should be based on the commitment to contribute to the constructive transformation of the South African society. In this way, an organization gains an enormous amount of publicity at the same time earning priceless BEE points.
To put this into perspective, let us take a company that identifies an orphanage whose walls are an eye’s nightmare. It then invests in painting those walls giving them a fresh and stunning look. Such an initiative does not give back anything physical like money to that particular organization. If those involved in such a project are doing it based on the commitment to make a positive difference, that instant improvement of the orphanage’s walls may be emotionally rewarding but moreover, the community recognizes and appreciates that effort. Through such an investment a company builds a respectable and sustainable image and an explosive reputation whilst at the same time improving on its BEE points.
Financial BEE Charter Collapses
Posted by Keith in Charters, Verification on April 2nd, 2009
So, the Financial Services BEE charter has now collapsed. This is one case where I can say “I told you so”. For years I have been promoting BEE, but stating that the charters are a total waste of time – the only people who benefited were the lawyers and consultants. I have previously disclosed that I was asked to comment on the legal charter for the department of justice and constitutional development and earned a couple of thousand rands before they listened to me and decided to abandon it as a sector code.
In the case of the financial charter, many banking people criticised me when I stated that the FSC was not following the law, was using incorrect definitions etc. They promised that it would be brought in line with the codes. It did not.
What is more interesting is that the financial sector still seem to have absolutely no understanding on BEE or what a charter, and sector code is all about. The news report is that the banks and government could not reach consensus on the ownership issue. Apparently the banks wanted the ownership target to be 10% and the dti 15%.
I wonder if the banks actually understand what the BEE codes really say and mean? The truth is that they have always had to produce a BEE scorecard. They HAD to use the codes of good practice unless the FSC had become a sector code. In the event Nedbank has actually produced a BEE scorecard based no the codes, while ABSA and Standard Bank have a ridiculous looking FSC scorecard showing that they are level 2s. Seriously, this is not April 1st!
The sad thing is that many verification agencies have chosen to ACCEPT those FSC scorecards even though they carried no legal weight. From now on, all banks – the entire financial sector – must use the Codes of Good Practice scorecard. They have never had any discretion previously and certainly do not have any longer. I personally am going to make sure that the NCR and other financial regulators follow government law and demand a scorecard from the banks.
Now what do those codes say about ownership:
Target = 25% plus one vote.
What did dti want: 15%.
What did the banks offer: 10%.
What are they now going to have to follow: 25% plus one vote!!!!!!
Is the financial sector mad not to have gone along with the dti’s request for 15% ownership? Don’t they see their stupidity?
Fronting
Fronting has and probably always will be a big issue. Unfortunately when money is involved you will always get someone at some point in time willing to step over a few boundaries to get rich quick.
Fronting in BEE terms is a misrepresentation of your BEE status and a company in Cape Town has done just this according to a recent article. This business tendered for a job worth R40 million in the name of a BEE front. An investigation then occurred. He later plead guilty and was fined R1 million.
I find this particularly interesting and should serve as a warning to all companies fronting. The time will come where a rival bidder will catch you out. On a positive note (talking to the masses) if you suspect a company of misrepresenting their BEE score, report them.
“I want my company rated”
Posted by Keith in General, Verification on March 17th, 2009
We often get a call like the above. The client wants a BEE rating or certificate. We always explain that we are not a rating agency and ask if the client already has a scorecard. Invariably the client will say they have no scorecard, which is why they are phoning us! It is quite confusing.
We then have to explain you don’t get your company rated, as many people perceive a rating – it is getting your existing scorecard verified.
As much as they might want it, a company can unfortunately not ask someone to come in and give them a rating – they have to work towards building up the scorecard. With our help we can identify those business activities that earn points, and calculate the points the company has earned. We can also help the company identify strategies to increase and optimize those points. However, in the end, the points are a reflection of the company’s own activities and decisions.
A burger at McDonalds
We have always said that our clients are more BEE compliant they realise. I consulted for a client yesterday. They are generic and hoped to be at level 5. In the end, we discovered that they had undertaken a lot more activities that earned them points. In many cases people say that they undertook a project because it made sense to do so, not for points. That doesn’t matter – your reason for doing something does not disqualify you from earning points for that project. At the end of my consulting I said to the financial director. “If I can get you to 80 points – level 3, will you take me to McDonalds and buy me a burger?? He smiled and nodded his head “.. in Mauritius.” I continued.
“BEE” Companies
I always get amused/annoyed when I read in the media of XYZ (Pty) Ltd, a BEE company. What exactly does a “BEE company” mean?
I take it literally to mean that the company is BEE compliant, i.e. maybe it is level 4 or 3, or even 2.
Of course this is nonsense, a “BEE” company in the eyes of the media is simply one that is black owned.
There is a definition in the codes “BEE controlled company”. This is a company that has more than 50% voting rights in the hands of black people.
A “BEE owned company” on the other hand is one that has more than 50% economic interest in the hands of black people.
In the interests of accuracy I’d like to see the press refer to these companies by their true categorisations.
Accredited vs not accredited verification – confusion reigns again
Posted by Keith in Verification on March 9th, 2009
We wrote recently that some verification agencies have been accredited and some not yet. We wondered if this will cause a rift amongst those verification agencies who are accredited and those who are not.
Well, ABVA have issued a letter to their members confirming that they will hang their members out to dry if they do not get accredited, or at least get a pre-assessment letter by 30 June 2009.
The letter from ABVA states that the dti has reached a position which will be communicated to the marketplace shortly.
This letter has already caused a stir in the marketplace.
Our position has always been to follow the codes – to date accreditation has been encouraged, but is not mandatory. As at today the BEE codes and verification guidelines still allow for both self-rating and independent rating.
We await with interest the dti’s response and whether it will corroborate the ABVA statement.
Differences in interpretation
Posted by Keith in Verification on February 24th, 2009
There are now 11 SANAS accredited verification agencies, and there are about 25 different interpretations. Not only do agencies differ amongst themselves, but consultants within agencies have differing opinions.
If a business has an income of R1000, and has costs of R900, then all accountants will calculate the same profit figure – R100. Yet when it comes to verification, or even calculation of the scorecard everyone has a different way of doing things. Today, we spoke to the dti over their own method of calculation. They recognised they had made a mistake but said we were the first company ever to identify the error and complain.
The same goes for an accredited agency with whom we had a difference of interpretation. They asked us to supply a ruling from the dti, which we duly did. They also said that they had never been asked about this issue ever before.
It would be laughable if it did not involve a miscalculation of 15 points on the scorecard. Could it be that your company has received 15 points less than you deserved because your agency made a mistake/interpreted the codes differently? How come no company, other than ourselves has challenged a scorecard? Or have you challenged a score you were given? Let me know.
Where are the black businesses?
The codes allocate extra points for black owned (50%) or black women owned businesses (30%) for procurement. Also you can earn enterprise development points by supporting those types of businesses. Yet so many people I see cannot find these businesses. I visited a client two days ago, and recommended that they do something fast – their year-end is 28 February – one week away. The easiest way to earn extra points is by supporting black owned (50%) or even 25% black owned businesses, and paying their invoices COD! However many businesses do not have back owned suppliers or do not know that some of theirs suppliers fall into that category.
It’s a shame that too few black owned businesses exist and too few advertise their competitive advantage – what they can do for their own customers.
Is there a database of black, and especially black women owned businesses that we can all refer to? Should we start such a database?
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