How to implement Broad-Based Black Economic Empowerment

Figure 1: BEE for business sustainability

Figure 1 shows phases of BEE implementation. 

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The first phase involves the identification of data sources, verification of data quality and identification of information gaps that may have a negative impact on the overall BEE score of the business. Once the information gaps have been closed, the services of a BEE verification agency can be secured.

The output from this first phase is the BEE verification report detailing, among other things the company’s current BEE scorecard/status and a detailed breakdown of performance in all elements that contribute to the scorecard. 

The second phase is aimed at the development of a BEE plan to implement initiatives that will result in the company achieving its desired BEE status.  The desired status is determined through the development of a sound business case for BEE.

The purpose of the business case is to:

  • Determine the impact of BEE status on company branding, market perception and stakeholder relationships.
  • Align the objectives of the BEE plan with the company’s vision, mission and business strategy.
  • Obtain a mandate which translates the company’s commitment to transformation into monetary and other resources required to develop and implement the BEE plan.
  • Identify and allocate the responsibility for achieving the objectives of the BEE plan to a Senior Manager in the organisation (“Project Sponsor”).  This person(s) controls the overall budget and scope of work in the plan and will therefore be held accountable for the outcome.  In most companies this person is the CEO, because the CEO takes full responsibility for business performance and growth.
  • Propose a BEE coordinating committee (usually a sub-committee of the company’s main board) from whom the Senior Manager:
  • Obtains approval for the strategy, policy, budget and scope of work.
  • Obtains approval for progress made and any changes to the scope of BEE implementation.
  • Proposes a BEE implementation team.  The team includes the BEE Manager (Project Manager) and supporting team members.  The team should include all resources required to implement the proposed scope of work.  A typical team consists of full-time and part-time members who report to the BEE Manager and includes representatives from:
    • Finance – procurement manager and various data providers
    • Human Resources – functional experts, such as skills development facilitator and employment equity manager
    • Business units – change agents
    • Support – logistical and administrative support required by the BEE manager
  • Identifies organisational risks (i.e. losing government tenders, reputation, lack of progress) and how these may be mitigated
  • Lessons from previous experience of BEE implementation and proposals for improvements

The business case should preferably be formally approved by the company Board, before the BEE plan activities commence.

Once BEE Plan approval is obtained, the third phase of BEE implementation commences.  The main objective of this phase is to build on and enhance the company’s BEE reputation in the market.  To achieve this, the organisation must increase the capacity of all stakeholders to implement BEE initiatives in the company.

The second area of implementation is communication.  It is critical that the company’s BEE status, intentions and progress is communicated at every level inside the organisation, but also to all identified external parties.  At the operational level, it is critical that the company’s client interface reflects the BEE status and ambitions properly.

During BEE implementation, the integration of BEE objectives with all current business activities should be prioritised.  For example, the current procurement strategy may be solely focused on the lowest cost providers.  This strategy may be good for the short-term profit objectives of the company, but for future growth and sustainability the organisation may need a more balanced approach to ensure a positive contribution to the company’s BEE scorecard.

To ensure that the objectives of the BEE plan are met, there is a need to introduce information systems which provide real time feedback in terms of the BEE scorecard implications of all the organisation’s operations.  This system should cover all BEE scorecard areas and translate operational transactions, such as the filling of vacancies, spending on enterprise development or procurement activities into feedback on BEE scorecard performance.  Such an information system will make it possible for the company to manage BEE implementation and to make decisions which satisfy both short-term operational requirements and long-term sustainability.

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