The net value calculation is broken down into two formulae and draws from the deemed net value result above. The first, Formula A, calculates the debt-free ownership as calculated above, as a percentage of the targeted debt-free ownership for the year, measured as a pro-rata score against the allocated points. Read the rest of this entry »
The net value is determined by calculating the current market value of the asset in relation to the current market value of the acquisition debt. Where the value of the asset increases in relation to the debt, the net value points will increase. Read the rest of this entry »
Since large residual white populations remained in southern Africa after independence, a considerable degree of accommodation has been required to reduce conflict between the owners of the resources and the new majority “owners” of the state. South Africa’s 4.5 million whites continue to dominate industry, commercial agriculture, the financial sector, mining, and the vast majority of agricultural lands and resources. Read the rest of this entry »
The parties involved in the structuring of a deal vary according to the size of the deal. The professional fees for listed deals can reach as high as R10 million rand just for the opinion of the various parties involved in the structure. Put in context with the size of the deals, however, this is not as extreme as it appears. QSE deals will need fewer and leis expensive professionals and the costs will be reduced to a fraction this amount. 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 »
This represents the amount of remuneration after deducting the following:
Medical aid scheme contributions in the case of persons aged 65 or older. 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 skills development levy was designed to force entities to invest in skills development by paying money to a SETA. This money is recoverable from that SETA when the company invests in skills development. A large majority interpreted the skills development levy as a pure tax, paid the money to the SETA and never reclaimed it. This approach results in zero return and becomes, as mentioned, a straight tax.
The objective of BEE is to stimulate growth, not to invoke taxes. If the skills development initiative is not going to result in a return for the business then it is likely to result in unsubstantial skills training. If it is unsubstantial, then the trainee is not going to be any closer to participating in the mainstream economy and the exercise lacks substance. Strictly speaking, BEE contributions that lack substance are not measurable.
An investment implies that the employee will return from training with the ability to make more money for the company than prior to the training. Whether that training entails operating a computer programme more efficiently or part-time study for a university degree is particular to each business. But it must result in a return for the company greater than the initial investment. 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 »
Sun Tzu’s advice to make one’s position unassailable assumes critical proportions for an emerging nation like South Africa, faced with stiff global competition not only from the well-established and First World nations of the world, but also from other developing countries. The world’s more advanced and wealthy nations are deeply entrenched in the global system, and manipulate it for their own benefit. They virtually control it, and have often come under intense criticism for practising double standards, particularly in their application of such issues as, for example, international trade.’
Other emerging nations, as well as the poorer countries of the world, also want their slice of the global pie and their share of global resources. They too possess a desire to improve the standard of living of their citizens, thereby improving their position in the global (or at least their region’s) economic rankings. For any emerging nation to successfully play the globalisation game, there are a number of strategic principles, identified by Sun Tzu, that should be followed. Read the rest of this entry »
Given that Strategy is the process of putting an organisation into a more favourable position in the marketplace relative to its competitors by integrating customer needs, competitive realities and its own internal capabilities, proactive executive development will improve the chances of strategic success. This is because properly trained executives can design and deliver more effective strategies.
It is imperative that the talent pipeline delivers both the quantity and quality of managers who can guide the future strategic thinkingof the organisation. This prevents the planning process from getting too far ahead of the executive development process. It also means that the organisation does not rely on outside talent to fill key management positions. Read the rest of this entry »
Any South African firm today is really an emerging globaliser. Therefore, it has to ensure that it can develop great leaders and, indeed, a succession of them. There is always the temptation for a senior executive or an executive team to focus on building a legacy based on their own policies and achievements, rather than establishing a pipeline of leaders. Establishing a leadership pipeline is a strategic activity built over the long term and is the result of a cumulative process. Read the rest of this entry »
This does not necessarily mean having business representation in multiple geographies, but it does mean treating the world globally and not multi-domestically. South African business organisations need to take a global view of their business and understand the global dynamics of their industries, especially in relation to the development and implementation of company strategy and the search for competitive advantage. Even companies that are operating purely in the domestic business environment have to take this approach, as globalisation will impact on the way they do business. Part of this global viewpoint is being realistic. Read the rest of this entry »
One of the major problems facing strategic thinkers is the whole issue of competitive advantage. According to strategy guru Richard D’Aveni, in most industries the days of permanent competitive advantages are long gone, because of the nature of what he calls `hypercompetition’.2 D’Aveni contends that the best one can hope for is an ongoing series of temporary advantages, and that that is whatstrategists should be aiming at. This has led many organisations to move from seeking immediate competitive advantage to the development of long-term relationships with customers in the belief that opportunities for the creation of advantage will arise within the relationship. Allied to this is the belief that customers are company assets that need nurturing, rather than income sources that are there to be exploited. Also, more organisations are beginning to place greater value on customer advocates than on powerful management teams. In terms of customer loyalty, greater emphasis is being placed on moving customers up the loyalty ladder, until they become advocates of the company and its products.’ Read the rest of this entry »
South African business organisations now find themselves in a global environment that is characterised by a number of trends, which increasingly shape strategic thinking. Given that the object of business strategy is to continually place a company and its products in a more favourable position In themarket place relative to its competitors, and to do so where it matters most, namely in the mind of the customer, it follows that these trends should be considered by any South African strategist. Over the past decade, the global business environment has witnessed a major shift from mass markets, and even mass customisation, to micro-markets. This has had major ramifications for strategists, as many organisations either have had to reinvent themselves, or, at the very least, revisit the fundamentals of their business to take cognisance of this shift. McDonald’s is a good example.’ Read the rest of this entry »
A company’s supply chain should reflect the strategic initiative it takes in its attempts to outmanoeuvre its opposition. Because the supply chain impacts heavily on costs, customer service, asset productivity and revenue, it must play a key role in company efforts at creating an ongoing, seamless transition of responsibilities. This means that customers should perceive a ‘business-as-usual’ focus. Essentially, the supply chain should be assisting the company in searching for competitive advantage, and sustaining it for as long as realistically possible. Read the rest of this entry »
The problem in most organisations seems to be that value innovation is kept at the corporate level and does not permeate the entire organisation. Employees need to see themselves as a critical resource in the job that they do, not just for the organisation, but also for themselves. Put simply, if an organisation creates an environment in which value innovation is encouraged and rewarded, the participating individual’s self-worth will improve, which in turn will have a positive spin-off on job satisfaction, job involvement, and, ultimately, customer satisfaction and loyalty. Read the rest of this entry »
One of the most powerful tools of innovative thinking in the South African workplace is that of diversity. In South Africa, with its apartheid past, the temptation is to focus on cultural diversity in order to try to forge a clearer understanding between the various cultures of South Africa. The Rainbow Nation is well represented in business organisations, thereby presenting our companies with a great opportunity for the generation of ideas. However, the prudent manager will appreciate that workplace diversity also covers age, ethnicity, ancestry, gender, physical abilities and qualities, race, sexual orientation, educational background, geographical location, income, marital status, military experience, religious beliefs, parental status and work experience, amongst others. Read the rest of this entry »
