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Transformation as a strategic imperative

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Organisations are increasingly redirecting their attention and focus on transformation as they prepare to be evaluated according to the new B-BBEE Codes later this year.
The revised codes of good practice around BEE come with relatively steep demands. Traditionally, the transformation role within an organisation will predominantly fall within the HR environment, but a new trend is emerging where this is becoming a standalone role, reporting directly to the CEO or managing director.
This is the view of Sydwell Shikweni, transformation director at Merchants, who says: “I think there’s a realisation from a number of organisations that they need to have a dedicated focus in terms of how they structure their organisation. While in some organisations the transformation role still resides with the HR department, we are seeing this role evolving to be more of an executive role.”
While the new generic BEE codes are already in the public domain for implementation, there are some specific sectoral codes that are yet to be concluded.
Shikweni adds that the verification manual is also still in draft format. “There are still some grey areas which need to be clarified for BEE verification agencies, to ensure that there are no interpretation issues once they start measuring organisations against the new codes,” he says.
“Remember, the verification agencies have been accredited to do the verification, so they need to have a certain level of understanding and interpretation of the codes which is deemed to be consistent across all the agencies.”

What is the impact of the new codes?
“It is a complex process in the sense that it takes organisations out of their comfort zones,” says Shikweni. “They have to do things, which ordinarily they would not have necessarily done, in order for them to comply with the codes unless, of course, the organisation has that consciousness of needing to do the right thing irrespective of the codes.”
He adds that the different elements will require changes within organisations for them to comply. “For example, for you to score points on ownership, you will have to restructure your organisation to have a BEE component. Similarly, to score points on management control, you will have to intensify your drive for employment equity and representation across different operational levels, something which has been a challenge over the years. The codes do, however, force organisations to purposefully direct their efforts in terms of initiatives to address those challenges.”
Shikweni says skills development is an element that has probably seen the most success over the years. “It is possible that this is as a result of the Skills Development Act, which was promulgated even earlier than the BEE Act and the subsequent codes, which incentivises companies on training imperatives, encouraging them to do training, learnerships and internships,” he says.
The challenge now is that, while a lot of people have been trained and continue to be trained, as part of this process, the absorption rate of those people has not been adequate.
“We are now seeing the Department of Trade and Industry and the SETAs closing the loop, by not only focusing on training, but actual absorption into the workplace as well. So, those companies that are absorbing the people they have trained into their organisations, stand to earn additional points.”

It requires a long-term commitment
According to Shikweni, these initiatives will only bear fruit if a long-term view is adopted. “I think we, as corporate South Africa, get trapped by a short-term view and the need for immediate results. While these are important, real transformation requires a commitment and a realisation that whatever initiatives you put in place will come at a cost.
Companies will have to be prepared for that, particularly as we are facing slow economic growth at the moment. Competition is also increasing and profit margins are tightening and, yet, there is more which is expected in terms of empowerment.”
He adds that if companies took a long-term view of transformation, they would better understand the benefit which can be derived out of these initiatives and consequently better demonstrate value for investment.
“What is important is a renewed commitment from companies to purposefully make a difference and an understanding that transformation is a strategic agenda. Post-1994, we have seen a number of different laws promulgated, many of which address similar or related issues. They are all about empowerment and the BEE codes are bringing all of these together in a holistic and integrated manner,” he concludes.