• B-BBEE vs Real Transformation

B-BBEE vs Real Transformation

09 September 2016

By Patricia Stock, Audit Partner & Head of Transformation at BDO and Gcina Mahlaba, Transformation Manager at BDO

The Broad Based Black Economic Empowerment (B-BBEE) policy was developed with the intention to create more businesses, train more people, create more jobs and include previously excluded sections of society into the mainstream economy. This development involves a progressive transformation of the economy and society, and it might not be a sustainable development if only a small population of the economy is benefiting. B-BBEE is not perfect since it might not solve all our problems, however, it is a model that can work if properly executed. Meaningful and sustainable growth can only be achieved by ensuring that all industries within government and the private sector implement the B-BBEE codes correctly, and in good faith.

We need to realise that transformation is much wider than just B-BBEE codes; and that B-BBEE codes form part of the pillars of transformation. B-BBEE is also only one aspect of the government’s economic transformation strategy.

The B-BBEE process includes elements of human resource development, employment equity, enterprise development, preferential procurement, as well as investment, ownership and control of enterprises and economic assets. However, to attain these elements, organisations need to ensure that there is adequate diversity awareness for staff through their company’s values and culture, and alignment of the communication strategy, change management strategy, procurement processes, and human resource processes (including learning and development programmes and staff personal development plans).

The purpose of the B-BBEE Codes of Good Practice is to help guide both the public and private sectors in the implementation of the objectives of the B-BBEE Act, which contributes to economic transformation and diversity in the workplace.

You will find that the discussion on transformation is often translated to what B-BBEE level a company has, which is an indication that there is still a gap in understanding the difference between transformation and B-BBEE. In order for companies to view transformation as being more than simply B-BBEE compliant, they need to understand the overall objectives of the B-BBEE Act as well as the B-BBEE Codes and go beyond compliance to embrace the true spirit of the B-BBEE Codes.

A survey conducted by the South African Institute of Chartered Accountants (SAICA), in October 2015, reveals that transformation in the CA (SA) profession contributes positively to the transformation of listed company directors under the age of 40. It also indicated that 475 JSE-listed South African company directors, CEOs and CFOs are still predominantly white males – but indicates hopeful signs of transformation within the younger generation. Specifically, this is as a result of young black CAs (SA), below the age of 40, being appointed as directors.

Tsakani Ratsela, former chairperson of the CA Charter Council, in a CA-Charter progress report released May 2012 to the Minister of Trade and Industry and the B-BBEE Advisory Council, stated that the “CA profession was “out of the starting blocks” and well on its way towards achieving the CA Charter’s long term objectives”. At the same time, she cautioned that “there is no magic wand”; that “change comes with continuous and consistent effort and never taking one’s eye off the ball.” The old CA Charter was repealed by the DTI on the on the 17th of February and is currently under review with the objective to ensure its targets address the areas that requires increased priority in terms of the B-BBEE elements.

BDO’s transformation strategy is designed to also address, amongst others, B-BBEE requirements and diversity, including gender awareness, talent management etc. The compliance targets for Employment Equity are based on the overall demographic representation (EAP Targets) as set out in the regulations of the Employment Equity Act and the Commission on Employment Equity Report as amended from time to time. BDO utilises these as it is in our view a reasonable benchmark since it takes into account our country’s demographic race representation for the individuals that are active in the economy. To do this, BDO has implemented introductory diversity awareness sessions which are held as part of the staff transformation discussion sessions. The diversity workshops, and the integration of transformational diversity management in the induction process, is done on an ongoing basis.

The transformation strategy has been cascaded down to each staff member’s Key Performance Areas (KPAs) to ensure that all staff members are aligned and contribute to the attainment of transformation. The processes and key messages of each support function i.e. HR, Marketing and Finance, have been reviewed and revised, where necessary, to ensure alignment and to enable the firm to meet its transformation objectives.

As a company with a heritage that dates back to 1916, BDO is committed to actively embracing transformation. Transformation is a key strategic imperative to what we do in every aspect of our business. It is fundamental in the way we conduct business, the manner in which we interact with our external and internal stakeholders and it is embraced by the Firm’s leadership.