Arguably one of the most significant changes from the ‘old’ to the ‘new’ B-BBEE codes is the fact that a company now will have to address each and every one of the five scorecard areas in order to achieve one of the eight possible B-BBEE status levels.
Under the ‘old’ codes, a ‘good’ level could be achieved by simply doing business as usual and seeing what the company’s level was after the annual renewal of the B-BBEE certificate. B-BBEE was therefore very much a compliance issue for most companies – one that was, generally speaking, not very difficult to comply with.
In terms of the ‘new’ amended codes, there are five scorecard elements that require attention. The more stringent targets and the changes to the weighting points on each of these elements are proving challenging for many.
If optimal points are not scored on each of the five elements, the result can very easily be that the total score out of 100 points will not even fall within the 40 to 55 points bracket in order to be rated as a Level 8 contributor.
Only by addressing the entire scorecard can enough points be scored to achieve a decent status level.
Three of the five scorecard elements are what is called ‘priority elements’ and not achieving specified sub-minimum criteria in any one of these will result in the overall B-BBEE level being discounted by an entire level.
So what is the solution to these and other challenges when it comes to your B-BBEE strategy?
It starts with gaining as much knowledge of the codes as possible. In time the requirements will become common knowledge in the business and things should go easier. Obtaining expert guidance can quicken this process.
Once a company understands how the B-BBEE requirements can be aligned to its existing business strategies, B-BBEE can be successfully integrated into most areas within the business. Business owners are often surprised to find out to what extent B-BBEE impacts on the different functions within the business.
It is therefore vital that different managers within the company understand their and their team’s required contribution to the company’s larger transformation goals. Regular B-BBEE meetings is a must in order to monitor progress made and the gaps that still need attention.
At this time of the year, it becomes vital that companies realise that the B-BBEE measurement period in terms of the amended codes will be the company’s official financial year. In practice, this means that a company with a February 2017 financial year-end has only four months remaining to implement the best initiatives it is able to.
This applies primarily to the scorecard elements that require a target spending to take place. Such spend must take place within the measurement period.
Author: Anton de Wet CA(SA) is Managing Director of Net Value Holdings