Corporates need to drop their BEE standards if this process is to survive

Let’s say that the acceptable time to run 100 metres is 15 seconds.  This is the entry level if you want to compete.  The world has now become obsessed with 15 seconds and not paying attention to the distance associated with 15 seconds.  Our larger corporates, state-owned entities and municipalities are obsessed with these 15 seconds. Not quite 15 seconds but BEE levels.  They are used to levels.  So many companies have been told to retain their level under the new codes or not slip below a certain level at the first verification.  This is rather like saying that we expect 15 seconds but the distance is now 150m.  We’ve come to expect this from large corporates who are unsympathetic to the issues that smaller companies face in their day-to-day survival.  A lot of this has to do with procurement departments in these large corporates who are staffed up with militant empowerists who have no idea about business and standards.  I’m hearing many stories about how a service provider develops a good relationship with a buyer and hits a brick wall with procurement who refuse to use the company.

It’s an age-old problem.  I would imagine that the big corporate would say – we are able to retain our levels, hence you should too.  As an aside I have heard that our esteemed chief empowerist, the BEE Commissioner, is getting rather pissed off that certain companies have actually improved or retained their rating under the revised codes.  However when you have a company with very established departments to handle each element then you’re going to see results.  Smaller companies don’t have these and are taken by surprise when it comes to the ridiculousness of rating.

Contribution Level	2007 Codes	2013 Codes	ICT Code	Recognition level
Level One	≥ 100 points	≥ 100 points	≥ 120 points	135%
Level Two	≥ 85 points but < 100 points	≥ 95 points but < 100 points	≥ 115 points but < 120 points	125%
Level Three	≥ 75 points but < 85 points	≥ 90 points but < 95 points	≥ 110 points but < 115 points	110%
Level Four	≥ 65 points but < 75 points	≥ 80 points but < 90 points	≥ 100 points but < 110 points	100%
Level Five	≥ 55 points but < 65 points	≥ 75 points but < 80 points	≥ 95 points but < 100 points	80%
Level Six	≥ 45 points but < 55 points	≥ 70 points but < 75 points	≥ 90 points but < 95 points	60%
Level Seven	≥ 40 points but < 45 points	≥ 55 points but < 70 points	≥ 75 points but < 90 points	50%
Level Eight	≥ 30 points but < 40 points	≥ 40 points but < 55 points	≥ 55 points but < 75 points	10%
Non-Compliant Contributor	< 30 points	< 40 points	< 55 points	0%

What those large corporates don’t understand is that levels are dropping,  in some cases dramatically.  They may score well under procurement now because you still have old codes scorecards floating around.  These scorecards will soon expire and will be replaced with revised codes scorecards and procurement scores will suffer as a result.  Possibly even resulting in dropped levels.  Can you see the commissioner dabbing when this happens.

This is all counterproductive.  We don’t need to debate the importance of economic empowerment.  Using a sjambok to drive it will result in its death.  When a donkey doesn’t want to move you can whip it as much as you like.  Both business and civil society have little or no faith or trust in this government.  If this empowerment process dies, that’s it. It won’t be resuscitated, there’ll be no desire to get it back. It hangs now by a thread and a government that wishes it to fail to blame white monopoly capital for its failures. 

This is what I think we need to do.

1. Drop the priority elements. Getting to 40 points (in the case of the dti scorecard) is hard enough.  Dropping a level to non-compliant is just plain stupid.  Allocate points on the basis of performance.
2. Corporates must drop their level demands. It took seven years for companies to improve under a lenient scorecard.  They can’t be expected to suddenly comply at the highest level at the first verification.  As I mentioned earlier scores will start higher and then drop as supplier scores drop.  This is a process and it takes a lot of getting used to.  It doesn’t help that the codes,  SANAS and the commissioner have frighteningly different perspectives and interpretations.
3. We need skills development leniency. I’ll post something at some stage about how I think we can sort out skills development.  6% of payroll and what appears to be accredited, SAQA this and unit standards that training is not reasonable, neither is it feasible.  Most emphasis needs to be placed on quality on-the-job training.  This is how most of us learn our jobs.  An educated workforce (which is not feasible – that horse has long bolted) with no practical application of what they do is not helpful.  What company would agree to this, wait Eskom and SAA would, so would the ANC –the educated bit is not really a requirement in those circumstances.
4. Supplier development should be extend to supply chain development. 
5. SANAS must stop behaving like nazis. Stick to the intention of the act and reward initiatives that empower. 

Great wishlist – perhaps it’ll end up on Cyril’s desk after he’s booted zuma out of office.  I doubt that anything will happen until zuma has been fired.  If they don’t do something about these codes then we can expect fronting to become an even greater art than it currently is. Perhaps it won’t quite be fronting, it will probably be empowerment of sorts with few results and fantastic scores.

As it stands right now broad-based black economic empowerment is out of reach of most companies operating in this country.

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