BEE Partner, South Africa Economy Watch

Job hopping by Black people

Job hopping by Black people is increasingly being seen as a problem. Businesses train Black people into positions only to find that they leave the position for a new company. Understanding the reason for job hopping becomes a staff retention strategy to prevent this practice.

The primary reason driving job hopping is culture. Some company cultures do not accept Black people’s cultures and backgrounds, resulting in their being forced to assimilate Western business culture to gain access to the mainstream economy. This can be uncomfortable for a Black person. 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 »

The Practical Application of Preferential Procurement

The practical application of preferential procurement is better discussed in conjunction with the practical application of enterprise development. The two elements should work together. Where a business chooses to contribute to and therefore be measured on the preferential procurement element, it should also choose the enterprise development element. By choosing the elements together it can capitalise on the enhanced recognition offered to purchasing from enterprise development beneficiaries and, more importantly, try to create a stronger BEE strategy. Read the rest of this entry »

High risk indicators

High risk indicators include the following:

• An enterprise claims that Black people are shareholders, executives or management, but the Black people are unaware or uncertain of their roles in the enterprise. If Black people are not given responsibility in keeping with their titles then there is unlikely to be any substance behind the claim.
• Black people who serve in executive management positions are paid significantly lower rates than the market standard. Unless all salaries in that enterprise are lower than market standards they are probably empty titles with no responsibility and further investigation will be conducted. Read the rest of this entry »

Tax law is dynamic. Any tax commentary could be outdated After the final Codes have been approved as law, time will reveal inconsistencies with the application of BEE and the Tax Act.

Private parties will probably make submissions to National Treasury on amending tax law to accommodate BEE. The point is that it is too early to give conclusive advice on BEE and tax. Further, the nature of tax advice varies according to the base of the company, making it a difficult topic to discuss conclusively in this format. Read the rest of this entry »

It is common practice for your BBBEE rating to coincide with your financial year end. As your BBBEE rating is only valid for 1 year, this is the opportune time to seriously consider your BBBEE rating.As the leading empowerment consultancy in the industry we have the deepest experience in interpreting what qualifies, and what supporting evidence is needed, for your BBBEE scorecard. We have the knowledge to be able to provide you with the tools and information needed to build a comprehensive Pre-Audit pack for the rating process.

The Pre-Audit pack will help you to put together the qualifying data that will be needed for the auditing process. We will help you to understand what supporting evidence is needed for the rating agencies check list. By doing this you will understand what qualifies and what doesn’t qualify for rating. Read the rest of this entry »

Investment No. 3: Spend resources to secure your leadership pipeline

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 »

Investment No.1: Invest in time and resources that take a global viewpoint

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 wh_atstrategists 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 becom_e 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 »

11. Be prepared to adapt the supply chain

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 »

8. Share wealth

According to holistic health guru Deepak Chopra, one of the fundamental universal principles is that of giving.” This principle works through a form of universal reciprocity, whereby the act of giving, in whatever form it may take, is returned to the giver. This reciprocity may not come from the recipient, but may find its way to the original giver via another source. In a business context, sharing wealth, particularly with one’s employees, in whatever form that may take, is a form of giving. The new breed of South African manager will find it particularly beneficial to enhance the talents, willpower and motivation of his or her employees by sharing the company’s wealth with them. South African companies have to have as many of their people as possible feel part of the company’s strategic initiative if it is going to be successful in tackling the opposition. Sharing the wealth of the company with employees rewards them for their endeavours and spurs them on to achieve even greater feats. Read the rest of this entry »

5. Leverage diversity

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 »

3. Support meritocracy

Local companies coming from a previously isolated and uncompetitive economy that now find themselves competing with the world’s best need to develop a culture of recruiting and retaining the best brains available. They also have to consistently reinvest in their human capital. Global players such as Unilever, Shell, Toyota, SABMiller and the Fortune 500-listed organisations, which are pretty well entrenched in the global arena, have a larger pool of talent available to them because of the size of their operations and global reach. For home-grown South African organisations, the competition for human capital intensifies, as the brightest stars either emigrate or join the global players, who can give them access to their new employer’s global network. Read the rest of this entry »

2. Create a high-engagement workplace

Because modern business competition is more about a battle between rival workforces than it is about technology, innovation and strategies,companies coming from emerging market economies need all the intellectual input they can get in order to have a chance of becoming a serious player in the global marketplace. For that reason, the new breed of South African manager will have to find ways of harnessing the energy and intellectual capability of all the company’s employees and focus these on innovatively growing the organisation. Read the rest of this entry »

These are but two examples of a process that was repeated throughout the entire company with stunningly positive results. However, the key to success in an exercise of this nature lies in the extent to which management rethinks the view it has of its business, as well as the extent to which it is prepared to bring its people into the process. In the above examples, subsequent organisational climate surveys indicated a greater feeling of achievement and job-fulfilment in this organisation. Job satisfaction improved, as did customer loyalty. Ceteris paribus, a contribution was being made to the maximisation of shareholder value and a win—win relationship created between these two elements of modern-day capitalism. Read the rest of this entry »

Fortunately, management realised that if things continued in the _way they had for decades, the company would be vulnerable to attack by global predators. This was of particular concern, as foreign competitors were beginning to eye South Africa’s small but potentially good pickings. In addition to this, global customers such as Johnson & Johnson were beginning to demand justification for their local _subsidiary retaining its South African supplier, instead of plugging into the global supply network.

Essentially, it took threats from major customers to bring home to this company the gravity of the situation. Persuading management to think carefully on how they saw themselves, the company and its role in the marketplace, solved the problem. After careful thought, management reached the conclusion that its company was more than simply a manufacturer and distributor of packaging. Read the rest of this entry »

In addition to all of this, the development and application of strategic thinking is dependent not only on the manner in which the manager views his or her company, industry and competition, but also on how he or she actually views business per se, and the world in general. All organisations function within the greater universe. How a manager views our universe will have an impact on how a strategy is developed. For example, if business is seen purely as a means of making money, then one’s overall thinking will reflect that view. If, on the other hand, a broader context is applied, such as a business as a means of providing employment and/or making a contribution to the development of one’s community or country, then broader-based thinking will result. Read the rest of this entry »

Much strategic thinking in this country is also one-dimensional in nature. Many managers often go ahead and develop what they term a ‘strategy‘ from one perspective only — usually their own, and in terms of what they would like to achieve. The result is often a set of glorified objectives, or a vision established in emotive terms with scant regard for the opposition. Managers may take into accou_ntcertain aspects of the business environment, but few know how togather and utilise the information required to move their organisatio_ninto a position of superiority. The result is strategic myopia. Read the rest of this entry »