SA’s top management is set for at least another decade of slow transformation, with very few new faces representing diversity in terms of race and gender expected until at least 2015.

 

“While top companies are increasingly ensuring that their general workforce reflects the country’s demographics – in line with both ethical and legal requirements - the faces at the very top will continue to look the same for many years and, more likely, even the next decade,” says Debbie Goodman-Bhyat, MD of Jack Hammer Executive Headhunters.

 

Employment Equity plays a pivotal role in transformation in the workplace in South Africa, and while a large number of South African organisations are required to report annually to the Department of Labour, they fail to comply. The Employment Equity Act can’t be effective unless it’s applied, and Employment Equity training in the workplace is a vital part of implementing it.

I was recently following a conversation on LinkedIn about BEE and whether it has failed or succeeded and found it to be such an interesting conversation - more so because all of the participants of different gender, races and ages, were fundamentally agreeing with each other.

Unfortunately they were so quick to argue that they didn’t realise their agreement until much later on in the discussion, and their argument made me realise that South Africa as a nation seems to be doing exactly the same thing.

The issue of empowerment needs to be about increasing the number, value and size of opportunities in South Africa. The principles of BEE are about including all South Africans in the ability to access the economy. This means equal education, equal rights, and equal access to entrepreneurial, corporate or informal employment. Most importantly though, it means choices and economic freedom that is directly related to how hard you work and how committed you are.

All of this is achieved remarkably well in a growth economy, but less so in a struggling economy. South Africa is identified as an investment risk by so many countries in the world due to various factors, but mostly skills shortages, the perception of restrictive regulation and lack of clarity around the leadership of the country.

Many South African companies are downsizing or shutting their doors due to poor economic growth and decreasing profits. How does one focus on anything other than survival when the world faces recession? The recent mining strikes are a classic example of how the poor need more than the back-breaking challenges of employment opportunities just above the poverty line. However, to negotiate better working conditions for our poor we need to showcase South Africa as a politically stable, economically robust, attractive investment destination.

On the back of increased interest in investing in SA and a willingness to negotiate the terms of investment in order to access an attractive market, so too lies our ability to negotiate empowerment commitments, investment in skills development and training and increased social and developmental investment.

So many multinationals are competing with South African businesses globally, so many countries in the world are supporting their SMME markets to export globally as a means to reduce the impact of global recession. By contrast, in South Africa, we seem to be so internally focused on pointing fingers at our inadequacies and frantically trying to grab at the crumbs that are left of the economic pie that we have stopped trying to increase the size of the pie. We seem to have turned on each other when, in these economic times, we should be supporting each other as a united collective, to survive economic turmoil.

Where is the growth strategy? Where are the commercially-linked educational programmes? Where is the commitment to mentorship and skills development in critical skills shortage areas such as energy, renewables, nuclear, mining, construction, engineering and medicine? There needs to be a structured strategy, but the key issue of BEE is fundamentally one of economic and social transformation. Therefore, it should consider all South Africans.

How do we ensure that all South Africans participate in an environment of growth, stability and opportunity? How do we ensure that the majority of South Africans have access to the mainstream economy and all that comes with it? It requires collaboration. It requires us to seek solutions, to be proudly South African and part of rebuilding not only our reputation but our national pride.

Minister Rob Davies announced the Draft Codes of Good Practise which have been discussed extensively in recent weeks but not actually published to the general public. A well attended session, it provided the much-needed clarity on the proposed changes to BEE.

The key emphasis it seems is that the new Codes are a more aggressive version of the BEE Codes of Good Practise. The reduction in the number of elements from seven to five for all measured entities (including QSEs) suggests that the emphasis is on ensuring that companies move away from ticking the boxes and rather implement strong programmes underpinned by connectivity to their stakeholders.

The first issue is that of classification. An Exempted Micro Enterprise is now one whose turnover falls below R10 million per annum (previously R5 million per annum). Black-Owned EMEs are automatically a Level One Contributor and EMEs are targeted for procurement expenditure and Development programmes.

Qualifying Small Enterprises (QSEs) are now classified as those businesses with turnover that is higher than R10 million and less than R50 million but they too, will be required to comply with five elements versus the previous expectation of four of the seven elements.

Ownership becomes a compulsory element for all organisations including the Qualifying Small Enterprises that were previously excluded from having to comply with reporting on this element. Ownership now counts for 25 points on the scorecard (against a previous allocation of 20 points), Management Control which includes the previous MC and Employment Equity representation is given 15 points and Skills Development now receives far greater emphasis with 20 points on the scorecard and a compliance requirement of six percent of the value of one’s payroll invested in the development of black skill within an organisations (against a previous target of three percent).

The elements of Procurement and Enterprise Development are now combined to form Enterprise and Supplier Development and account for a whopping 40 points on the scorecard making them the single most important element. The requirements include investment in supplier development programmes and industry specific programmes to achieve long-term transformation of the supply chain. These factors are achieved in combination with the emphasis on procurement from BEE compliant businesses, EME’s and QSE’s and black-owned and black women-owned entities.

The focus of SED becomes about sector specific initiatives to facilitate income generating activities, sustainable access to economy, and increase the capacity to work.

The draft will be published today for a 60 day commentary period and a transitional period has been allowed for but the emphasis has definitely shifted towards more focused emphasis on black ownership, more emphasis on local business being prioritised in supply chain activities and greater emphasis on skills development and training.

We are pleased to have a document that we can now work with, says Dionne Kerr of Siyakha Consulting. There has been much speculation around the changes and it is good for us to understand what that means to our customers in South Africa and what that means to the multinational businesses that we advise on investing in South Africa. As always, we need to ensure that the compliance with legislation links back to the organisational strategy and in these times, companies are grappling with so many socio-economic issues that it becomes even more important to ensure that transformation is achieved through a commitment to how we do business as opposed to just trying to tick the boxes.

The commentary period allows us time to understand and comment on issues of conflict and we will work actively to ensure that the best interests of South Africa’s development are served in applying the changes.

For more information contact Siyakha Consulting’s COO Dionne Kerr at This email address is being protected from spambots. You need JavaScript enabled to view it. or /