Features
South Africa’s Black Economic Empowerment Policies
Andries Fourie, 05-10-2009
When Westerners think of South Africa they aren’t always aware of the major transition it has undergone since apartheid ended. The government has made sweeping diversity mandates to move the country forward and quiet the echoes of past discrimination.
South Africa has 11 official languages, a population of 46.9 million and a land mass larger than Texas and slightly smaller than Alaska. Apartheid ended in 1994 with the country’s first democratic elections, but they didn’t bring equality. After apartheid, whites, who comprised 10 percent of the population, still controlled the vast majority of businesses through ownership, managerial status and held more power by every other measure.
To change this, the government looked at several areas in which discrimination had disadvantaged black men and women: standards of education, policies associated with black-owned businesses and managerial representation. The result was the Black Economic Empowerment Act of 2003 (BEE), a broad package of policies and reforms designed to rapidly create an even playing field in multiple areas. The BEE’s ultimate goal is raising blacks, Africans, Indians and other people who had been South African citizens, as of 1994, to the same standard of living and the same opportunities as whites.
BEE uses a points-based scorecard to incent businesses that hire and promote black men and women to managerial and executive-level positions in specific ways. For example, companies that can demonstrate a percentage of black people in their workforces, and beyond that, a percentage holding manager-level or higher positions, earn a certain number of points. Points are assigned qualitatively. To address the even greater obstacles black women historically encounter, the BEE assigns the highest number of points for black females in manager-level or higher roles.
Companies achieving a high point count earn preference in winning government contracts. Further, the BEE point system extends to companies that do business with those that hold government contracts. Essentially, companies win lucrative government procurement contracts not only for their own BEE scores, but also for points held by suppliers and channel partners.
On paper, the BEE seems like a bridge between past discrimination and future equality. Practically, high-speed changes brought challenges, along with some unintended consequences and omissions.
First, tracking and correlating ethnic origin and gender by job title and authority moved to the forefront of corporate priorities and created lots of paperwork. Many companies, particularly those with a large seasonal workforces, were without means to quickly assess their changing BEE points beyond Excel spreadsheets. Org charting software was one solution that offered C-level executives and HR managers clear, dynamic visuals of diversity levels, gender and skill sets, and BEE scores, speeding up the RFP (request for proposal) process, future recruiting efforts and strategic hiring and promotion decisions.
The early years of BEE benefited a select few black individuals because promotions were spurred more by the company’s desire to score points than by the individual’s contribution, insight or abilities. Anecdotes abound about clerk or mine worker titles and roles transformed to director status on the eve of government contract pitch meetings. The new black director would be brought to a linchpin meeting to serve as the face of the company and demonstrate his or her role. That person was often unqualified or underqualified and aware that his or her presence was needed for BEE points, rather than valued for merit and skill.
In the absence of real performance expectations, the new director would have little motivation to obtain the skills needed to earn the elevated title and did not achieve salary on par with other white directors.
Further, South African white male executives over age 35 do not earn BEE points and are therefore expendable or subject to immediate and drastic salary reductions. For every black person promoted to manager, there are two 35-year-old white people out of a job. The effect is a brain drain in certain mission-critical sectors such as IT and medicine from South Africa to the U.S., the U.K. and Australia.
The future, however, is bright for equality in South Africa. College graduates come armed with high-quality educations that align with the demands of the country’s technology-driven industries. Large companies such as Vodacom and Merrill Lynch South Africa have instituted equality programs that take the promise of BEE and amplify it with training initiatives, policies promoting and supporting corporate ownership, stock holding rights and other forms of corporate control that deliver the potential for lasting power, influence and wealth to all races. «
Andries Fourie is the general manager of Kimru IT Logix (Pty.) Ltd. South Africa Region. He can be reached at editor@diversity-executive.com.
