BEE: not so bad, after all

Thu, 5 February 2009

Black Economic Empowerment is a hotly contested topic. All too often, its transformation benefits are overshadowed by misunderstandings. It’s easy to forget that BEE is about empowerment across the spectrum of business and society. GreaterGood SA’s new writer, Carey Finn, explains what it’s really about and how it works, arguing that it’s a positive, holistic approach to development in South Africa.

Black Economic Empowerment, or more accurately, Broad-Based Economic Empowerment (B-BBEE) has gained a bad reputation in South Africa, without much opportunity to mount a defence. The term is often used interchangeably with Affirmative Action, though they are two different things. Affirmative Action is the government’s broader policy towards transformation in the country, while B-BBEE is focused on transformation within companies. Sure, they’re both about redressing the imbalances of the past, but B-BBEE goes beyond simply changing the complexion of your CEO. It’s not called broad-based for nothing.

Settling the score

Companies with an annual turnover of over R5 million are required to become B-BBEE-complaint, as are any private companies that want to do business with government enterprises or organs of state. Compliance is measured by a scorecard and regulated by the BEE Codes of Good Practice. The scorecard evaluates seven elements: ownership, management, employment equity, skills development, procurement (suppliers and their scorecards), enterprise development and socio-economic development.

These elements add up to a holistic, sustainable approach to transformation. By taking into account the different levels of business, the scorecard ensures that transformation occurs throughout. For example, investing in skills development expands the capacity of employees, creating new leaders. At the same time, supporting emerging businesses allows them to grow, creating more jobs for unemployed South Africans and boosting the income of local communities. These communities, in turn, are further supported by the company’s socio-economic development projects – creating a sustainable pattern of growth and development in the country. B-BBEE goes much further than simply replacing people at the top; it produces a ripple effect across society as a whole.

SASIX gives you socio-economic points

Companies get points for their transformation in each of the seven elements. For example, investing in a social development project that benefits mostly black people can generate points for the scorecard. Using your Corporate Social Investment budget to benefit local non-profit organisations is a great way of integrating transformation into business processes, while uplifting the community at the same time. In this way, B-BBEE has led to more focused investment into black communities – gone are the days when the corporate social investment budget is spent on the CEO’s wife’s favourite charity.

The majority of GreaterGood SA’s SASIX projects are B-BBEE-compliant, as well as many causes registered on our giving marketplace, which means that more than 75 percent of the contribution value benefits black people. We’ve introduced a B-BEE check into our registration process to help our corporate donors claim scorecard points.

Feeling the effects

The ownership and employment equity elements of the scorecard are often what cause controversy – people feel that a small white elite has simply been replaced by a black one, without any real change in the lives of ordinary South Africans. But remember, the scorecard looks at the whole picture: it awards points not just for the transformation of ownership or management but also for a company’s investment in building skills, boosting enterprise and developing local communities.

B-BBEE has already had a positive effect on South African society. Black enterprise development projects have given many unskilled people in informal areas the opportunity to start and grow their own businesses. And in the workplace, exclusion on the grounds of race, gender and disability has been replaced with an inclusive approach to disadvantaged groups, giving people who have never had the chance, the opportunity to shine.

Here to stay

Despite complaints that qualified white jobseekers are overlooked in favour of unqualified black people, B-BBEE does not call for the hiring of unskilled people simply because they fulfil equity targets; and being black does not mean being unqualified.

What is clear is that B-BBEE is here to stay and we need to embrace it for what it is: a transformation policy for growth, development and equality.