Broad-Based BEE. Jonathan Goldberg
assessment using the applicable scorecard;
•develop a broad-based BEE implementation plan to optimise the entity’s scorecard points;
•give priority to meeting the needs of the business and acting in its best interests;
•develop a creed or code of conduct for owners;
•owners and business leaders should meet informally/socially sometimes just to talk and get to know each other;
•embrace change and have a great attitude towards each other, ensuring it is constructive;
•have separate roles and areas of responsibility, within the context of transparency and accountability;
•measure successes and failures, ensure accountability and take decisive action;
•adopt a mentoring approach towards sharing knowledge and experiences;
•match new broad-based BEE participants to mentors, including senior executive managers and staff. Opportunities for team-building, job rotation, cross-training, information flow, involvement in business processes and special developmental opportunities should be sought;
•balance the need for stability and control with the need for change and innovation;
•it may be necessary to embark on a broad-based BEE journey that is less than perfect but nevertheless heading in the right direction – particularly where there is no clear and engaging workable future scenario.
Legally there are no requirements for a business to pursue black economic empowerment; in practice, however, there are strategic imperatives and influences driving the process, including market, social and political requirements, and ultimately because genuine empowerment initiatives make good business sense. The new Codes focus unashamedly on ownership and there is the temptation of entering into potentially adversarial short term deals to secure business; possibly leading to more failed ventures, and less long-term sustainable transformation.
Vukhuzakhe – wake up and rebuild yourself – is the message for both business and government as they wrestle with rolling out and implementing sustainable BEE! The transition will be difficult, and it is happening faster than many thought possible.
| 3 | THE NEED FOR CHANGE |
“The need for change bulldozed a road down the centre of my mind.” – Maya Angelou
Change is prevalent in every facet of our society, yet there is often a reluctance to embrace change processes in a business, particularly as regards ownership, in a broad-based BEE context. The typical development phases of start-up, “death valley”, high growth, maturity and inevitable decline should be superseded by renewal for sustainable growth.
Change is complex and the input required for BEE transformation is not necessarily proportional to the output that will be achieved, particularly in the short term. However, those entities that have embraced BEE and transformation in relation to the former Codes generally tell you that after a period of time (sometimes years) the benefits become tangible. These businesses have taken a leap of faith. Unfortunately, such leaps of faith are not the norm, because businesses prefer to move when the future is “known”, or at least when there is enough information to make an informed decision about the future. In the case of Amended BEE Codes we are dealing with an area in which there is a lack of precedents, experiences and information, and so making informed decisions is often difficult.
People don’t surrender their mental models easily. According to Boston-based sociologist, Diane Vaughan: “They puzzle over contradictory evidence but usually succeed in pushing it aside – until they come across a piece of evidence too fascinating to ignore, too clear to misperceive too painful to deny, which makes vivid still other signals they do not want to see, forcing them to alter and surrender the world view they have so meticulously constructed. That ‘piece of evidence’ can come too late. Operating in real time but not in the real world.”
This “piece of evidence” could, for example, be either BEE or some physical event involving the incumbent owner that happens without warning, such as having a heart attack, an accident or a sudden illness.
Complex business and ownership systems are capable of self-organisation but are creative processes that usually occur at the “edge of chaos” – a delicate balance between order and disorder. In essence, life is about continuous change and transformation, with boundaries changing and being permeable. According to psychologist Jane Hilburt Davies, “When you see order, look for complications. When you see chaos, look for patterns and structures.” She goes on to say: “Stability and order are only temporary and illusions.”
The world we live in requires businesses and people to change more rapidly as technology, globalisation and the world’s economies develop and become more advanced. The amount of change we have to embrace is not going to slow down – if anything, it will accelerate.
With broad-based BEE there is talk of “a new fragility” and a dawning realisation that businesses, according to Daniel Goleman, author of Primal Leadership, “have a life span, a natural history: they have an entrepreneurial beginning, followed by a mature phase, and then they pass on – they merge with another company, they’re taken over, or they otherwise morph.”
Individuals or groups experience a behavioural cycle in response to change, according to a University of Gloucestershire researcher, starting with contentment (with the existing situation), followed by denial immediately after the change is initiated (“this can’t be happening to me”), confusion (“what does the change mean to me”), renewal (acceptance and embracement of the change) and, finally, contentment (with the new situation). This cycle is illustrated below.
As people work through the Amended Codes of Good Practice, they experience some aspects of this behavioural cycle. The sooner family businesses move into the renewal phase of accepting, embracing the change and finding contentment in innovative broad-based BEE solutions, the better the prospects will be of their businesses thriving in the South African environment.
Change begets change; in the chaos we must find the unique broad-based BEE patterns, strategies, techniques and structures that work for the business, and take them to the next level.
CHANGING BELIEFS – IS BEE THE NEW CHEESE?
The book Who Moved My Cheese? by Dr Spencer Johnson is a brilliant parable about anticipating, adapting, responding and enjoying change. Relentless change is a reality in our daily business and personal lives. Recognising the need for change and transformation we as South Africans encounter daily, and responding in an appropriate manner, requires us to be ready to change quickly and to handle it again and again – not in the least in relation to BEE implementation.
The parable is about four little mice who ran through a maze looking for cheese to nourish them and make them happy. They had not been paying attention to the small changes taking place each day, and suddenly they found that the cheese was no longer in the place they had found it each day. “It’s not fair,” they shouted. This cry of “not fair” or “reverse discrimination” is often cited in opposing transformational legislation, and is the reason why many transformational pieces of legislation have not worked since 1994. The mice eventually change their beliefs, and find new cheese.
There is, however, a concern that the focus of the Amended Codes on black ownership (57 points), especially majority (51%) black ownership for 32 points, coupled with the substantially increases qualification requirements for the 8 BEE Recognition Levels and onerous Scorecared criteria that the cheese is too remote and not viable from a cost-benefit perspective.
Nevertheless the lessons that the “mice” record in Johnson’s parable include:
•Having cheese makes you happy. (A successful and profitable business?)
•The more important your cheese is to you, the more you want