There has been much debate about how much good - or lack thereof - government's BBBEE policy is doing for the South African economy. Critics see it as simply exchanging one elite for another; a way to make a small number of politically connected people rich (without requiring much in the way of leadership skills and/or job creation from them), while leaving unemployment and the wage gap untouched. They argue that it is simply a sop to political correctness that in 20 years has made the rich richer and done nothing to lessen income inequality.
However, if that is the current situation, SA business itself must shoulder a portion of the blame. Even today, many companies - from small businesses to large corporations - are only as concerned with the letter and spirit of BBBEE as their customers are. "In the retail sector, especially, that's quite easy to see," says Brett Bowes, co-founder of the SA the Good News project. "Businesses that rely on the government as a big buyer or as licence provider have taken the transformation process much more seriously than those which cater to the general public. Banks and mining companies for example, are under much greater pressure to attain acceptable BBBEE levels than supermarket chains."
There is another aspect that he believes contributes to the problem: instead of attempting to spread skills, jobs and wealth equitably, some companies adopt a "tick box" approach. "Some claim to have achieved BBBEE, but all they've done is take a few black shareholders on board. Sometimes these individuals bring real value, and sometimes they're just there to make up the numbers, but that's not the point. If big business is to help to drive real empowerment, they have to use their equity-power where it has the most effect."
There is another approach to BBBEE, however, that receives much less publicity. "For a start," says Taddy Blecher, well-known social entrepreneur, "companies need to accept that this policy exists - and it's not going to go away, so there's no point in trying to 'wait it out'. The sooner they find a way to create real empowerment while remaining competitive and successful, the sooner we can start to improve the state of the nation. And there are ways to improve your BBBEE ratings without going the 'tick box' route - ways that can create both growth and sustainability."
As a case study, he points to Humanity Search & Select, a company his Community Investment and Development Trust has just concluded an equity, ED and SED deal with. Humanity, a South African executive search company has just improved its BBBEE compliance rating from Level 4 to Level 2 giving it real competitive advantage. "Instead of appointing and enriching a few individual shareholders, Humanity chose to form its BBBEE partnership via an educational trust dedicated to improving the accessibility of tertiary education to talented previously disadvantaged matriculants," says Blecher.
The idea that South African companies can satisfy their BBBEE requirements and help to solve the nation's educational bottleneck, whilst assuring themselves of access to the brightest young graduates is appealing. It is something that multinationals seeking lower risk but higher impact solutions will be drawn to, insists Blecher.
"The fact is that talented black individuals are more excited about companies who regard transformation as both positive and necessary," says Georgina Barrick, CEO of Humanity Search & Select. "They want to work in environments that are excited about what they bring to the party, and who engage actively to heal the country. And the proof of the pudding is in the eating - over the past 18 months, 75% of our placements in middle management, 50% of those in senior management and 60% of those in executive leadership have been talented equity placements."
This turns into a "virtuous circle", Barrick maintains: "Humanity's success in finding highly qualified BBBEE candidates who appreciate that a portion of the Humanity return is reinvested in growing smart black students at CIDT creates a loyalty factor in both its client base and in the candidates it places. It's a win-win way of doing business. It seems that the old adage - one reaps what one sows - still holds."
Many business leaders acknowledge that BBBEE has to work, if we want to see long-term economic sustainability. For those genuinely looking for new ways to engineer BBBEE solutions, the CIDT/Humanity methodology may be something worth emulating. The sooner more companies follow suit, the sooner "tick box" BBBEE can be consigned to the scrapheap.
For more information, go to www.humanitysa.co.za.
