Does international evidence suggest who the best empowerment partner might be? The answer is that the present employees of the company are in many cases the best bet. After all, from CEO down to the gatekeeper, they run the company every working day. Read the rest of this entry »
A common misperception of ownership is that it relates to economic return exclusively. When ownership is broken down it includes two primary rights. The one is economic return and the other is control, or influence, over decision making, which is exercised through voting rights. Read the rest of this entry »
A broad-based group that meets the definition of a general broad-based ownership scheme, but wants recognition as a special broad-based ownership scheme may do so where it meets the additional criteria as per Section 5 of Annexure 100B of Statement 100. The primary difference between a special and general broad-based ownership scheme is that there is no limitation on recognition of percentage owned by the special scheme. Read the rest of this entry »
This section is technical, which is one of the reasons why I mentioned earlier that they must be set up by someone specialising in employee benefit scheme structures. For an employee ownership scheme to obtain recognition as Black owned, it must comply with the requirements of Section 2 of Annexure 100B of Statement 100, which are as follows: Read the rest of this entry »
How much credit does the seller warrant in terms of ownership? It is not real ownership but amounts to quasi, or representative, ownership. This is addressed in Section 4 of Statement 102.
The Codes term the measured business that sells the asset as the “Seller” and the BEE entity that buys the asset as the “Associated Enterprise“. They do not refer to the BEE party because often the sale is made to a business that is not exclusively owned by a Black party. I will use these terms to explain the calculation. Read the rest of this entry »
Section 3.2 of Statement 102 provides the criteria for the sale of assets to qualify for recognition as an ownership alternative and achieve ownership points. The transaction must adhere to all the following criteria:
Welcome to 2009. We are very much looking forward to this coming year. We have many new projects planned, great ideas that are set to work extremely well and fantastic prospects for 2009.
In addition to all the exciting plans we have, we believe this year is going to be a very exciting BEE year with many aspects changing, not to mention all the political action.
BEE Implementation in 2009
If you are in sales, you know how important it is to give your customers what they want – a good reliable, quality, cost effective product or service. Customers can be difficult – if they ask you to jump, then the only way you are going to get the sale is to ask “How high?”
Many customers are asking for your BEE score. The only profitable response is to give them the right answer – “Yes, I do have a BEE scorecard – here it is”. Further your customer is no longer interested in knowing whether you have a BEE certificate – they want a high BEE score – the higher the better. Read the rest of this entry »
Depending on the size of a business, the management control provision presents an interesting challenge in the QSE environment. Many QSEs have a single owner who retains sole management control over the entity. The size of the business does not warrant a second top manager. In practical terms, the business also does not have the cash flow to employ a Black person of the calibre comparable to corporate business. Read the rest of this entry »
| Management control criteria | Weighting points | Compliance target |
| Black representation at top management level | 25 | 50,1% top manager representation |
| Bonus points: Black women representation at top management level | 2 | 25% |
To understand the management control scorecard, the definition of top management needs deciphering. Although the Codes do not define the term, they do define “top manager” so one can assume that a top manager represents top management. A top manager is: Read the rest of this entry »
| Management control criteria | Weighting points | Compliance target |
| Black representation at top management level | 25 | 50,1% top manager representation |
| Bonus points: Black women representation at top management level | 2 | 25% |
To understand the management control scorecard, the definition of top management needs deciphering. Although the Codes do not define the term, they do define “top manager” so one can assume that a top manager represents top management. A top manager is: Read the rest of this entry »
The employment equity scorecard splits the compliance targets between 0 to 5 years and 6 to 10 years. The Codes acknowledge that transformation is not going to be an overnight phenomenon and that businesses will take a while to establish Black people in relevant employment positions. They have provided moderate targets for the first five years in consideration of this. Overnight transformation strategies are unlikely to result in sustainable development.
The majority of points, 15, are allocated to this indicator. The management indicator is subject to the gender adjustor and full points will only be scored where 50% of the management targets for Black people are held by Black women. The targets are split. The target for 0 to 5 years is 40% of total management and the target for 6 to 10 years is 60% of total management positions that should be held by Black people. Read the rest of this entry »
| Skills development element | Weighting points | Compliance target |
| Adjusted skills development spend on learning programmes for Black employees as a percentage of the leviable amount | 25 | 2% |
The QSE skills development scorecard only contains one indicator. It is significantly simpler than skills development of non-QSE businesses and easier to obtain a higher score. Unfortunately, because the target is based on terms and calculations used in the Skills Development Levies Act, the SDLA, this is a technical section.
The leviable amount is derived from the SDLA. It the amount that the levy that must be paid to the SETA is calculated on. BEE uses the same calculation and therefore terminology, but sets a target over and above that payable to the SETA. The scorecard sets the target for the indicator as 2% of the leviable amount for QSEs. Essentially, the leviable amount is the annual total net salaries and wages payable by the entity. Read the rest of this entry »
The indicator specifies skills development spent on learning programmes. What constitutes a learning programme? If the money is not spent on a learning programme as defined, the measured entity may not include the expense in measuring skills development contributions. Statement 401 defines a learning programme as, “any of the learning programme types described in the Learning Programme Matrix“.
The Learning Programme Matrix is provided as Annexure 400A of Statement 400. It provides a broad spectrum of training that it considers a learning programme. Any of the following may be included as measurable for QSE contributions to skills development: Read the rest of this entry »
The calculations of skills development spend includes expenditure on learning programmes and in-service training programmes. The following calculation assumes the indicator is subject to adjusted recognition for gender.
The calculation of the adjusted recognition for gender is as follows:
A = B/C + C
A = the adjusted recognition for gender
B = the skills development spend on Black employees divided by the leviable amount
C = the skills development spend on Black women employees divided by the leviable amount Read the rest of this entry »
The trickle-down effect of preferential procurement is the only reason that private companies not dealing directly with public entities or organs of state have a reason to contribute to broad-based BEE. To qualify as a supplier to upstream customers, a business requires a high BEE status and, more specifically, a favourable BEE procurement recognition level.
Preferential procurement turns BEE into a competitive policy. Suppliers will be assessed on their BEE procurement recognition level in conjunction with standard drivers such as cost, quality and service. The more a business contributes to BEE, the greater it will be rewarded through customers wishing to buy from them to leverage off the business’s high BEE score. Read the rest of this entry »
Section 6 of Statement 500 excludes the following items from procurement in the calculation of the total measured procurement spend:
Schedule 1 entities include constitutional entities such as the Public Protector, the Human Sciences Research Council, national government, provincial and local government. The intention is not to require Schedule 1 entities to obtain BEE verification. However, Schedule 2 and 3 entities will require BEE verification. Read the rest of this entry »
The procurement recognition level refers to each supplier’s BEE procurement recognition level as determined by that supplier’s BEE status level. The table below is sourced from Statement 000. Suppliers should be able to provide the purchasing business with a BEE certificate from a verification agent. The certificate will contain the BEE status level and probably the BEE procurement recognition level. Read the rest of this entry »
Achievement of the allocated points is based on the measured entity reaching the compliance targets. The compliance targets in this element are fairly ambitious because very few suppliers will have a decent BEE status level, particularly in the early stages of this policy. The Codes accounted for this by splitting the compliance targets from years 0 to 5 with a target of 40% and years 6 to 10 with a target of 50%. The QSE targets are substantially lower than those provided in the generic scorecard. Read the rest of this entry »
All capital expenditure, including fixed property, is included in the total measured procurement spend.
Fixed property was predominantly white owned at the effective date of the Codes. Unless fixed property is part of normal trade, buying a property is going to result in an abnormal total measured procurement spend for that year. The purchase will distort the real procurement intentions of a business, which it may perceive as being unfair. However, because procurement is only measured on an annual basis, it will not have a prolonged impact on the measured entity’s preferential procurement scorecard. Read the rest of this entry »
