The Role Of The BEE Consultant And Getting Transformation Right

Having worked with hundreds of multinationals over the past 15 years, Transcend understands that in order to obtain BEE compliance, get transformation right and use BEE as an enabler for business growth, the BEE portfolio needs time and attention and needs to be managed by a BEE champion and/or BEE consultant.

What is BEE and how does it lead to sustainable transformation?

BEE is an essential part of a business strategy for any corporate operating within South Africa. A company’s BEE rating is crucial when dealing in the public sector space and very often the private sector as well.

A strong BEE score can position a company competitively against its weaker rated counterparts. Obtaining a strong BEE scorecard is not a simple, nor a quick process and requires dedicated focus, capacity, time, and budget to ensure the desired rating.

Over and above BEE compliance, one cannot forget, that a BEE consultant can show you how BEE is the vehicle for true and sustainable transformation for South Africa.

BEE legislation is complex and continually updated

The BEE Codes are complex and continually being updated. If one is not kept abreast of the changes in the legislation, this could cause a risk to the BEE plan and overall business strategy.

Often updates to the Revised Codes of Good Practice and Sector Codes are gazetted with immediate effect. If a company is not aware of the potential changes to the Codes, the BEE plan could be jeopardised if it hasn’t taken the amendments into account.

As a BEE consultant is also part of many industry bodies, the BEE consultant should be aware of any forthcoming changes to the legislation/new BEE Codes and can pre-emptively prepare the company to incorporate and plan for them accordingly.

The Codes also obtain complex calculations which are sometimes open to interpretation. If these interpretations and calculations are not regularly thought through with, discussed with, and signed off by the appropriate stakeholders, the BEE scorecard becomes very difficult to manage.

BEE advisors would ensure that any interpretive greyness is optimally discussed with appropriate stakeholders and signed off before it places the business at risk.

If not carefully managed, B-BBEE can become a compliance exercise at the cost of real transformation

If the BEE legislation is comprehensively understood and BEE is implemented as a tickbox against the legislation, BEE points and compliance will be achieved, however this often becomes a high cost, low value-add exercise, to both the company and country.

It is the BEE advisor’s responsibility, together with the organisation, to drive an agenda of real transformation and move beyond BEE for the sake of compliance only.

Implementing BEE in a non-strategic manner is costly

It would be fair to say that most people have viewed the process of empowering or transforming their business, as coming at a cost and impeding the performance and growth of the business.

It is true that transformation does have immediate costs associated with it, but in this view, transformation tends to decrease performance, which in turn leads to slower or negative growth, which in turn makes transformation more difficult to sustain.

If transformation is viewed as just another necessary evil of doing business in South Africa (like death or taxes), it will simply not happen, as a manager’s function is to increase performance and reduce costs. This prevailing and dominant management logic is the biggest, single obstacle to sustainable transformation.

The first hurdle to transformation starts in the mind of the company and its employees, as transformation can not only be a ‘ticket to the game’ but can also become a ticket to an emerging growth market. If it becomes only a ticket to the game, the cost could be so high that many will be unable to afford to play the game!

The big question is: How can transformation be used to increase performance in the business while also contributing to society?

This question is strategic in nature, and so to explore possible answers in a substantive manner in the business, a common understanding of transformation must be developed, along with some simple strategic frameworks, and a common strategic toolkit.

A significant role of the BEE advisor would be to create this common understanding, and understand the business and BEE desired outcomes in order to provide these strategic toolkits and frameworks.

If the BEE portfolio is not owned, often the BEE strategy is “re-developed” every year

In many instances, the job description of an employee only accounts for a small percentage of the description of their day-to-day role. Insights, lessons learnt, processes followed, are often left out of the person's job description and leave the business altogether when the person leaves.

Transcend often sees this occur, especially with the portfolio of the BEE champion. If the BEE champion leaves, so does the BEE plan, compliance, effort and costs that got the business to that BEE level.

The BEE consultant’s responsibility is to ensure in-house knowledge is captured, documented, and preserved in an in-house repository.

The consultant would also ensure continuity and high-level progress from one year to the next, preserving knowledge and improving the BEE strategy for continuity and optimisation.

Why is transformation strategic and what is a BEE strategy?

Becoming a B-BBEE compliant company is simply not good enough for any organisation, as soon as all its competitors have achieved similar status. Every company will need to do better than the competition.

Those who have undertaken the transformation process in a way that adds the most value will be the winners, not those who have ‘dressed up’ numbers on a scorecard. The key lies in transforming the business to become compliant, while simultaneously creating a sustainable competitive advantage.

True sustainable transformation affects HOW the company does business, WHO it does business with, and WHAT type of business it should do. These are all components of competitive strategy and the answers to these questions require a clear and simple view of the strategy of the business. The diagram below helps to sketch this strategic context:

In the above, one can see that the ideal strategic position to be in is (B) i.e. highly compliant and in a strong competitive position. Being in position (A) i.e. not compliant but in a strong competitive position, puts the organisation’s strong competitive position at risk and potentially undermines its strategic efforts.

Companies in position (D) are not compliant and not in a strong competitive position and are likely to be out of business soon. Lastly, companies in position (C) that are highly compliant but in a weak competitive position, may find there is little value in its compliance efforts and may also be out of business soon.

What is a BEE strategy and how does sustainable transformation affect the core business?

Strategy is a very broad term: we often have marketing strategies, operational strategies, etc. that (if they are re-designed to be more specific) can translate our overarching competitive strategy into specific operational terms.

Why should transformation be any different? Functional strategies should be aligned to the competitive strategy and are essentially the re-translation of the competitive strategy into functional terms. This logic does not seem to apply to transformation as a business requirement.

Transformation is not limited to human resources alone (or any other single functional area of business) as it has an impact across all the areas of business.

The other concern about a transformation strategy forming a sub-set of the competitive strategy is that the organisation is then not forced to look at how it can conduct its business, so that both transformation and the growth of the business are enhanced.

Most businesses would have already looked at the growth of their business in its competitive strategy, and thus that creative tension is not there. Transformation requires a fundamental shift in the way:

• the business is structured,
• the business strives for customer attention, and
• individuals in the company collectively think and behave.

Sustainable transformation affects the very core of every aspect of the business, and the decisions made today can easily affect the survival of the company into the future, which is the function of strategy. So a different view of the current strategy of the business is required.

The role of a BEE consultant would be to deeply understand the business and assist in developing a BEE strategy that leverages the overall goal and strategy of the business.

A BEE consultant deeply understands the business and is a trusted advisor to the business, to get transformation right

Over and above the roles mentioned, Transcend believes that a BEE consultant is a trusted advisor to the business and essential in the business strategy and competitiveness.

A BEE consultant should assist the company in achieving their desired BEE level in the most efficient, cost-effective way, but also assist in getting transformation right.

The BEE consultant should assist in developing and implementing the BEE plan, stay abreast of all legislation and updates, train the organisation from a compliance and transformative point of view, ensure the organisation is ready for the BEE verification and act as a flexible resource to provide advice along the journey.

What is the difference between a BEE consultant and a verification analyst?

On an annual basis, a company needs to renew its BEE certificate. A BEE verification needs to be performed by a SANAS accredited verification agent. The verification agent will work closely with the BEE consultant in impartially validating the BEE information that has been gathered throughout the year.

The BEE consultant and BEE verification agent or analyst cannot be the same person/company as this would impair independence.