How to make BEE an enabler during Covid-19
Rajan Naidoo CEO of EduPower says, if used well, BEE can be a tool for business recovery post-Covid-19.
B-BBEE is often a tick-box expense for large corporates that want to ensure their compliance in order to secure public contracts. However, I encourage business to look beyond this and see B-BBEE is an enabler that is heavily focused on job creation through skills development, job opportunities and small business development and support.
These mechanisms were very important in a pre-Covid-19 world, but as the pandemic rages on and our unemployment rates reach critical levels, these B-BBEE drivers are now essential to our economic recovery.
Experts are predicting that over the next 12 months, B-BBEE efforts will focus on strengthening the codes that request large corporates to “protect” the SMEs in their supply chains. B-BBEE enterprise and supplier development and procurement in general, places the responsibility on large companies to support the development or sustainability of smaller companies, including those in their supply chains. The codes that refer to these elements may deepen emphasis especially with the damage caused to small and medium businesses during the lockdown.
This protection may include early invoice payment, training, upskilling, consulting, loans or loan guarantee, wage or overhead support, and assisting SMEs with cash flow. Much of this protection is already in place, but to provide the stimulation that SMEs need, we are expecting that the weighting of points under preferential procurement and skills development will change to further incentivise larger corporates to action.
Seeing B-BBEE as an enabler
If South Africa’s businesses invest in skills development as well as the other priority elements on the B-BBEE scorecard, we will see the establishment of more black-owned businesses and an increase in disability inclusion and overall employment.
Yes, this is asking a lot in the current economic climate, but by acting through human solidarity now, large corporates will be able to protect their long-term interest in a sustainable, stable democracy and economy.
Proactive response to retrenchments
HR must fully embrace skills development and adapt the training needs for reskilling so that affected people can take up other job opportunities.
B-BBEE skills development is calculated according to SDL and staff complement. Retrenchments or lowering of company payrolls implies lower skills spend and fewer people trained in a way that supports B-BBEE compliance. Furthermore, companies in cash flow crunches often cut training budgets, as non-essential but this is short-sighted and could weaken companies even more as skills are the foundation upon which great companies are built.
Even though large companies retrench they are still required to comply with B-BBEE to maintain current contracts and obtain new ones. These companies should use their B-BBEE strategy to fund learnerships for the affected employees, which provides them with skills and an income while they try to rebuild their lives.
Big corporates may assist some of their affected staff to start their own businesses and become part of the supply chain and perhaps offer B-BBEE enterprise and supplier development grants to assist in this regard.
HR must also ensure that they don’t worsen their management control B-BBEE position by losing valuable black management.
In South Africa a good B-BBEE score is a passport to doing business with the government and the private sector and if B-BBEE is compromised or sacrificed, the company could lose further business and its current contracts, worsening their overall position.
How HR leaders should approach employment equity and skills development initiatives
Employment equity should continue as we need to empower the masses (90+ percent) of our population. Despite EE we still have major imbalances in the private sector, particularly at higher levels of management.
Very often HR departments and recruiters cite skills and experience for the deficiency in appointing people of colour or women to positions of power and decision-making. HR departments are often responsible for talent management and people development. HR therefore needs to accelerate the development through targeted skills development of designated groups to fill vacancies in management positions.
HR should focus bursaries toward the development of chosen individuals from designated groups at higher education institutions and create a pipeline into their business of this talent. In addition, HR talent search outside the company may look to find future talent and develop it through appropriate training.
Skills development is now more important than ever as many people face lockdown-related job losses and need re-skilling to take up other job opportunities within the same business or in the overall market. Skills development needs to be refocussed to match market demands rather than academic programmes of higher education institutions, and HR leaders must communicate this need strongly to academia.
Skills development needs to create more job-ready people rather than unemployed graduates. Employers must be more confident of graduates so that they can offer them that first job, and for this there needs to be a meeting of the minds of higher education institutions and corporate HR practitioners.
There is a trend in developing nations toward self-employment and more people must acquire skills that they can readily trade in the marketplace rather than certificates that don’t have immediate economic currency.