How management strategies impact business and the country

The thought behind Broad-Based Black Economic Empowerment (B-BBEE), was to enable stakeholders in all sectors to be enablers of economic transformation through the elements within the scorecard. While many corporate companies have made B-BBEE, and in particular Skills Development, part of their business strategy, there are those companies who have not. LEAP looks at why these corporates should reconsider their standpoint.

In May 2015 the amended B-BBEE Codes of Good Practice came into effect, and one of the biggest changes was the reduction in elements. The five elements are: Ownership, Management Control, Skills Development, Enterprise and Supplier Development, and Socio-Economic Development.

Focus was taken away from Ownership and precedence was set through target percentages to be reached within the Employment Equity and Management Control scorecards. However, over the years we have noted that while Employment Equity has been a catalyst for junior and middle management within the corporate sector, there is a lack of development of black senior and top management levels.

The central idea was to identify a Previously Disadvantaged Individual (PDI) and, over a period of time, work them through a system of formalised structures. This process would enable them to reach senior management on merit. As more PDIs were brought through this system it would create a workforce with greater skills, enabling a more economically sound system that would benefit the individuals, the company, the community and ultimately the country.

The current Economically Active Population (EAP) targets, however, are a clear indication that corporates were not achieving this. Today you find PDIs in senior management positions still reporting to people at the same level and not being legitimately fed into the structure of the organisation. This is a direct result of skills development not being accomplished within organisations, and instead companies leverage off their skilled staff and remunerate them more, creating an even bigger imbalance.

The solution is to identify two or three individuals who have potential, create development plans for them and work them through the established structures and formal processes. In this way you are legitimately creating sustainable organisational transformation, and the individuals gain valuable experience at the same time. It’s not a quick fix, but the company ultimately benefits from this and the remuneration gap decreases by virtue of merit.

The problem with the concept is corporates believe that once the PDI gains skills, they will choose to leave the company, which is 60% true. The battle for black educated talent in the current market is real, but this should not discourage corporates from completing the cycle. The knock-on effect of this is real and extensive. For example, if a corporate educates three PDIs, they will be able to earn more money, which in turn allows them to educate three siblings and feed nine to ten mouths.

What does this ultimately mean for your long-term plans as a business and for us as a country?

Failure to develop skills will compound South Africa’s unemployment problem and will result in the Department of Labour’s EAP targets being altered in the 2017/2018 annual report. However, through Skills Development, as a tool of economic empowerment, we are decreasing crime, feeding unskilled people, and creating a sustainable lifestyle for more PDIs.

LEAP has qualified and trained B-BBEE consultants who provide advisory services on all elements of the existing and revised Codes of Good Practice, as well as sector specific codes. For more information and to see how we can help you, call LEAP today on 011 449 7974 or visit www.leapco.co.za.

We would love to hear your thoughts. Join the discussion now!

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