We are all probably tired of the words Covid-19 and pandemic. But we have to come to terms with the fact that these terms are now part of our daily vocabulary, as they are a part of our reality. This situation has brought some level of uncertainty for all of us, including the future of our businesses. It has forced business operations to recalculate forecasted revenues together with the costs that were anticipated to be incurred. Cost-cutting has become a non-negotiable exercise, carried out through different departments, from the core and strategic, to the least supportive functions of operations.
Broad-Based Black Economic Empowerment (B-BBEE) has somehow landed at the bottom of the priority list. Perhaps businesses anticipated that this was going to be put on hold due to the lockdown, or there was concern about whether businesses’ doors would still be open, post-lockdown. The situation that this pandemic has placed all of us in has been overwhelming, and unprecedented. While companies do their level best to keep their heads above water in an almost non-existent economy, some have seen opportunities. However, the overall effect across all industries has not been a positive one.
This where B-BBEE compliance, and software in particular, has become questionable, in terms of its contribution to companies’ sustainability. Most companies have started asking themselves if they should continue with the BEE tool’s expenses, or to kill it altogether.
There’s no doubt that some companies believed that there would be an announcement about how the lockdown would affect their BEE scorecards. What was communicated, was the Skills Development Levy (SDL) payment holiday, which was granted to companies for a few months. And somehow, people believed that this would mean that the skills development expenditure target would drastically decrease, since the SDL amounts paid over to the South African Revenue Services (SARS) for those months were R0.00. This proves that people still do not understand what a leviable amount is, and because it is very close to the SDL, they confuse the two. Just in case you are also confused, let me explain it quickly: a leviable amount is the amount on which 1% would be paid over as the SDL to SARS. So, the leviable amount is more or less your total salary bill.
A lot of companies questioned the treatment of the payment holiday periods in terms of planning and implementing the required training for the year. The Department of Trade and Industry confirmed that the payment holiday did not necessarily mean that there are no leviable amounts during those months, unless no salaries were paid to staff. Therefore, although the lockdown affected a lot of things, BEE compliance is still a must.
The importance of BEE tools
Despite the temptation to cut costs, businesses should know that some costs are important when it comes to keeping the business running. BEE software is one such cost, which management can easily think is a ‘can-do-without’ type of expenditure, when it really can have a negative effect on the business’ overall performance. Some companies measure BEE performance because their customers put pressure on them, some do it for the purpose of government tender requirements, and some do it just for the sake of being good citizens, and wanting to see true transformation across the economic realm. It could be that the prioritisation of BEE depends on the reasons for doing it, so some businesses don’t think twice about continuing to invest in it, while others don’t see the need.
It might seem easy to manage BEE when an entity has already reached its desired target, and only needs to work at maintaining it. But it could be difficult to manage when there are curve balls like the current pandemic that influence how businesses are run. Budgets, forecasts and contingency plans could easily be missed as a result. This was evident when sanitisers and handwashes suddenly became super scarce on shelves when the pandemic initially broke out. Pharmaceutical and chemical companies clearly did not anticipate the drastic jump in revenues when budgeting for the year. That is where the importance of keeping track of business performance comes in.
Companies that chose to pause all BEE-related activities found themselves in a predicament soon as the lockdown levels were eased. For some, it might have worked to their advantage. For example, entities that could easily have jumped the generic revenue threshold could have forfeited the revenues that would have gotten them to that size. In such cases, the BEE targets became less stringent and a little easier to achieve. For other companies though, there was a period of no action, where planned and unplanned training could not take place. These companies fell behind with reaching their set targets for the year. It is in such cases that the importance of B-BBEE tracking stood out.
How can Mpowered tools empower you?
At Mpowered, we offer software tools that allow entities to keep continuous track of (their scores), and self-measure based on transactions that take place throughout the financial period. While verification is an annual process mostly audited on past events, the Mpowered BEEToolkit allows you to have an idea of what the results might be.
The BEEToolkit allows you to capture data, which is then translated into information using the back-end calculation processes. It is a user-friendly, web-based system that only requires internet access and a browser. Although optimised for Google Chrome, it works just as well with Microsoft Edge. This tool can calculate your entire B-BBEE scorecard, giving you a breakdown of how each element has been measured against compliance targets. Over and above the generic scorecard, there are a number of other sector charters available in the system. The Toolkit is capable of instantly calculating your gap from the maximum points available for each element indicator, breaking it down in terms of compliance, as a percentage or figure, in either headcount or spend, as well as points.
One of the most interesting features of the BEEToolkit is the Scenario Planner, where one can view the Gap Analysis. This feature allows entities to have an indication of how far they are from reaching either full points or a specific goal, which can be set in the Target Scorecards section. The Scenario feature can use the budgeted forecasts to see how they will impact the overall scorecard. It can be used to proactively adjust budgets when it comes to B-BBEE expenditure, when what has been allocated is not enough to get the entity to where it wants to be. This exercise can be tremendously helpful in assisting with proper planning, and the implementation of initiatives that lead to a successful BEE scorecard performance.
Now you understand!
Going back to the original question: do you think that BEE tools should be kitted or killed? I am pretty sure that most of you will agree with me when I say that BEE tools play a big role when it comes to B-BBEE compliance and transformation. Those who chose not to continue with embracing the tools could easily have fallen into the, ‘Oh no’ trap, when they realised that it was too late to make up for lost time. This is the reason I personally encourage the use of BEE software, to make sure that everything is on track, while taking unforeseen circumstances into account.
Author – Ofentse Maduse, 25 February 2021