News & Updates
August 18, 2016
What Leadership needs to know about Human Capital
The first version of the B-BBEE Codes were designed and intended as Codes of Good Practice for Good Corporate Citizenship. They were specifically intended to drive corporate behavior towards becoming representative of the South African demographics and to participating in economic growth activities.
An unfortunate result was that Measured Entities had allocated the responsibility of B-BBEE to a support function
While there were dificulties faced it drove this bahaviour to a limited degree. On review of corporate South Africa’s implementation efforts it was found that Measured Entities had managed to achieve high B-BBEE Levels without fully meeting the original intention. An unfortunate result was that Measured Entities had allocated the responsibility of B-BBEE to a support function (usually under Human Resources or Supply Chain) who had managed to secure B-BBEE Points by initiating projects which did not require a material change to the business.
Many of the larger corporate’s BEE Managers had managed to secure more than 50 points from their existing Employment Equity figures and initiating Learnership projects, Enterprise Development projects and Socio-economic Development projects. While these projects did not involve or effect the majority of management or staff in the business their strategic alignment was often poorly considered if at all. This had a consequence of increased expenditure with often little to no return on investment and a negative view of B-BBEE by Leadership, who for all intents and purposes remained disconnected.
Transformation and the way that Measured Entities conduct business in South Africa requires change.
The rules have changed and the newly Amended B-BBEE Codes of Good Practice have been redesigned to achieve greater alignment to the original intention by learning from the first version of the Codes and changing the weightings and targets accordingly to drive the required behavior. While there will always be some teething problems and varying interpretations the intention is clear. Transformation and the way that Measured Entities conduct business in South Africa requires change. In some instances radical while in others less extreme. To drive B-BBEE successfully in the business there is a required shift in Leaderships involvement and oversight of B-BBEE activities to allow for more strategic direction and therfore greater return on investment potential.
This is evidenced in the Human Capital elements where new targets and requirements have been introduced. There has been a move away from a general definition of “Black”, which resulted in an over representation of Indian Males, to the adoption of the ‘Economically Active Population’ (EAP) targets. The EAP targets require that B-BBEE points are only awarded for a maximum of the percentage that each race and gender group is representative of all economically active South Africa citizens. This can have a material impact on how a company trains and recruits its staff.
The EAP being adopted by companies as a ‘fairness’ tool. For example it is only fair that a Colored Women be prioritized for a vacancy if there is an under representation of colored women in that area of the business. Additionally, it is not fair to spend 80% of the Company’s Skills Development budget on Indian Men when Indian Men represent only 1.9% of the economically active citizens.
This will include challenging the traditional way training has been conducted within the business.
This is potentially challenging as EAP targets will change the way businesses are run. To score well on future B-BBEE Scorecards, Recruiting Managers must strategise over how they will achieve and retain their EAP targets at Junior, Middle and Senior Management levels. This will include challenging the traditional way training has been conducted within the business. There will have to be a shift towards more targeted training, which supports the company’s need to achieve EAP targets while maintaining performance and productivity levels. There is an upside to this as it provides an opportunity to improve performance and productivity thourgh reviewed training principles that can be redesigned to support optimized performance.
For assistance with your Human Capital Elements contact BEESA here.
Andrew Bizzell – BEESA Transformation Director