A SMART MOVE – Reduce BEE costs and ACCELERATE sales by doubling down on TRAINING

Are you throwing money at the BEE issue for the sake of accumulating points (pun intended)? With the recently published unemployment rate of 34% (yeah, we top the list of 83 countries surveyed), the positive impact of a reignited Skills Development focus on our economy is undeniable.

However, for most companies, the Skills Development Pillar is more of a Black Hole where funds vanish into with no tangible result from funds spent, apart from perhaps ticking the scorecard minimum every year.

DOUBLE DOWN – FACT OR FLUFF?

The clever people out there, tell us that increased profits may be achieved in one of two ways:

  • Decrease Costs and Expenses
  • Increase Sales

 What if you can double down on this principle? Reduce BEE Costs AND Generate Sales (and for good measure bumping up a level on your BEE Rating to keep the Government happy?)

 This is how: Incorporating stealthy training mechanisms for Skills Development and Mentoring of Sales Interns

Sounds too good to be true? You may want to scroll further down this write-up to learn more.

 

“BEE”ING SMART ABOUT TRAINING

If the return on investment (RoI) is a priority outcome for BEE funds spent, a robust strategy is required to balance ordinary operational expenses with extra-ordinary, in this case, BEE expenses. (Btw BEE Analyst offers a nifty RoI Analytics tool to do this calculation).

In essence, this approach entails reducing the extra-ordinary expenses (skills development) by absorbing them as part of your ordinary operational expenses (sales training)

 For example: Hire interns, train them to sell, generate sales = increased profits, improved BEE rating, satisfied shareholders, get more business

TARGETED TRAINING SPENDING

Sales is a vital component in every business, and your sales employees’ aptitudes directly impact their ability to generate revenue (via existing client bases and development of new client revenue streams).

Reallocating funds to the right training initiatives (like the Sales Accelerator solution) enables one to gain from the cheapest points with reference to the Skills Development Element.

For example: Disability training and learnerships both form part of Skills Development, but the one requires significantly more investment than the other even though the points achieved remain the same.

 

MATH IT OUT: MULTIPLYING AND COMPOUNDING

Use RoI Multipliers to raise the Skills Development score, by spending less.

If training strategies are targeted to generating sales, conducting Sales Internships, Category C (minimal cost), and equipping trainees with the appropriate sales skills and knowledge will

  • Firstly, reduce BEE input costs when intern salaries are banked as part of BEE skills spend
  • Secondly, add much-needed points to the scorecard
  • Thirdly offer a capable sales “ninja” at the end of the training program, ready to jump in and generate sales, thus increasing your revenue

A well-crafted BEE Training Strategy will lead to compounding gains and open up additional return on investment reach in the targeted areas, such as sales and business development.

This approach results in benefit stacking of sorts for the organisation and the intern, reaching far beyond merely accumulating skills development points to achieve a desired BEE Rating.

 

BENEFIT STACKING – TRAINING AND BEE FOR SALES

Implementing the appropriate training strategy ultimately results in a domino effect of business wins and benefits:

  • Adequate training empowers interns by improving knowledge, productivity, and competency
  • Fully trained interns can be hired off the bat after completing the Sales Accelerator Program, avoiding pricey recruitment expenses
  • Providing these interns with permanent employment will almost guarantee their engagement, loyalty, and commitment to their job, which will improve sales retention levels (vital as sales have the highest staff turnover out of all major operational business areas)
  • The quality of sales services and standards is bound to escalate as a direct result from appropriate training
  • Due to elevated standards, customer service and consumer demand will increase
  • Revenue performance will improve, in turn posing a positive impact on profit and shareholder value

With the challenges of gaining points in the Ownership and Management Control elements, zoning in on the skills development element is a smart approach to boost points.

Therefore, with a bit of savvy maneuvering, most organisations can benefit from repurposing funds towards skills development via targeting training initiatives and score maximum points.

 

WHY THE SALES ACCELERATOR?

Type the words “sales training solutions South Africa” into Google and BOOM!, 404 000 000 results are rendered in 0.77 seconds.

Or….You may just opt into our Sales Accelerator offering:

  • It’s Affordable

The pricing of training solutions is out of range for most businesses. We offer the most cost-effective solution.

  • It’s Convenient

Learners can conduct training on the go, on ANY DEVICE, ANY TIME, ANYWHERE, and most importantly, during their daily workflow.

  • It’s Tried & Tested

The content & courses we offer are derived from our globally recognised faculty members, with our South African accreditation stamp of approval.

Not trying to sound like a Homemark ad, ‘’but that’s not all’’ LOL….

Apart from the sales courses, students also have access to more than 80 additional tools and resources which they may use to implement hands-on what they learn in their day-to-day work.

 

VALUABLE AND OF GREAT VALUE

Our mission is to assist businesses with optimal revenue growth with training deliverables that make a quantifiable difference to the bottom line!

Our courses are fully accredited, allowing you to claim on your Workplace Skills Plan (WSP), Annual Training Report (ATR), and Black Economic Empowerment (BEE) Scorecard.

For businesses who want peace of mind, knowing that their sales training is taken care of, our Sales Accelerator Programme is a cost-effective solution, delivered online and grants the business recognition on both Skills Development and staff growth.

Contact us TODAY!!

 

 

 

 

 

Gazette Guzzle – Discretionary Collective Enterprises

Quick Synopsis of the Rules for BEE Discretionary Collective Enterprises

Swipe or Scroll?

Latest Government BEE Practise Notes expressly recognizes Discretionary Collective Enterprises as valid “Special Purpose Vehicles” (SPV’s) for BEE purposes. WOW, this broadens the range of BEE Ownership options enormously, whether you opt for a direct ownership solution, or an indirect ownership structure (non-intrusive), your choices are much broader and much easier.

Let’s call a “spade a spade”; your biggest concern in considering BEE Ownership is the potential threat that someone else will tell you how to run your business. Your main concern is not necessary to participate in the concept of BEE ownership, as a principle, it is all about costs and management control.

Should any of these be relevant to your organization, it would be wise to continue reading…..

BEE Shareholding does NOT mean you need to release control.

So what is different you may ask? This is where the concept of “Collective Enterprises” makes BEE ownership much easier, and much more flexible, and much more shareholder-friendly, by applying collective enterprise concepts.

In essence, collective enterprises include well-known concepts such as Employee Share Ownership Schemes (ESOP’s), Broad-Based Black Ownership Schemes (BBOS’s), Not-For-Profit Companies (NPC’s), Co-Operatives, Trusts, and Trade Unions, to name a few.

The important factor is, via your selected entity, such as a trust, benefits may be paid in “cash” or “in-kind”, to a clearly defined range of black people (called a defined group of natural people), which could change year on year.

For example, a group such as “Bursary Students”, is now accepted as part of your ownership structures. However, the fact is still; it must still be “paid”, and the new guidelines should not be seen as a means to circumvent the BEE Codes. If this is your thinking, you are on the wrong track, start over.

Purpose – Transparency & Clarity 

The recently published Practice Note serves as an explanatory memorandum regarding the rules for Discretionary Collective Enterprises in terms of the B-BBEE Act. The primary aim here is to provide clarity on how to structure your black ownership scheme to meet BEE criteria, under the B-BBEE Codes of Good Practice.

Outcome – Align the Misalignment

As a direct result of the complexity of potential ownerships structures, and the clever use (and abuse) of ownership structures allowed under the Companies Act, it has lead to great confusion on what is allowed under the Ownership criteria of the BEE Act and BEE Codes. Various ownership criteria, such as A Positive Oversight for a Class Definition of Black Beneficiaries, must form part of your BEE verification pack.

So what the heck does that mean? It simply means that you need to be able to provide clear evidence on who are your beneficiaries of the legal entity you have chosen to use for BEE Ownership purposes, such as an NPO, Trust, BBOS, etc. Simply put: Who will get the money and who did get the money/benefits?

Expansion of Black Ownership Encouraged

The Minister of Trade and Industry affirms that the expansive and purposeful participation of black citizens in the South African economy by means of business ownership, should be exasperated by on-point and fast-tracked implementation of B-BBEE legislation.

In this matter, an ideal B-BBEE ownership transaction has three distinguishing features:

  • Empowerment of Black People, Black Women, Black Designated Groups, Black Participants in an ESOP, BBOS, Employee Trust, Ordinary Trust, NPO, and/or Co-operatives.
  • Empowerment and inclusivity of Entrepreneurs and Investors, SMMEs and Suppliers, Employees, Communities, and other Marginalised Groups.
  • The Practice Note states that if an individual at one point in time was selected to partake in a distribution of the scheme, that it not necessarily entitles that individual to partake in future distributions. You may keep it flexible.
  • Your BEE Ownership Scheme must meet the true spirit and objectives of the BEE Codes – real and sustainable empowerment, as outlined in Paragraph 2 of the Broad-Based Black Economic Empowerment Act 53 of 2003.

Granted, the improbability of accommodating all of the above group classifications in a singular transaction remains a valid obstacle to empowerment and will be unlikely to achieve.

The Minister recognizes this challenge but unequivocally calls for broader participation of black participants in Collective Enterprises (and sub-categories) and active, passive, and operational participation of black SMME’s Investors and entrepreneurs.

Validation of BBOS, ESOP, and various types of Trusts

The Practice Note recognizes that when structuring a BBOS, ESOP, or trust, a defined class of black beneficiaries is now fully compliant with ownership provisions as called for by the Codes. This entails that the particulars of individual beneficiaries do not have to be named or identified separately, and upfront, but must be available on request. In essence, it means that you may refer to an Educational Fund as your main beneficiary, but when benefits are being paid, you need to be able to provide factual detail on your beneficiaries once benefits were paid.

According to the Minister’s statement, meaningful broad-based ownership by black individuals, communities, and employees are most appropriately served when identified by a naturally defined class instead of documenting participants with vested rights separately.

A critical concept: Defined Class of Natural People

Inherent in the new guidelines lies the concept of “Defined Class of Natural People”, and in laymen’s terms, it means you need to ‘be able to identify the group of beneficiaries. Typical examples will be African Disabled People, Bursary Students at Universities, Independent and Contractor Based Truck Drivers as registered vendors at your business, and Black Homeless Children.

Fiduciary Matters Explained

A pungent point of misinterpretation falls within the realm of discretionary issues posed onto the fiduciaries of a scheme in one of two ways:

  • To identify individuals from the defined class of beneficiaries who would benefit most from distributions of the scheme. Example: Truck drivers in a Logistics company.
  • To calculate the proportion of entitlement bestowed onto a beneficiary, once he/she has been chosen from the ”defined class of natural person” category. Example: Equal distribution of benefits between all approved beneficiaries

As a point of further clarification, the Practice Notes confirm that in the situation of fiduciaries without the discretion to distribute less than a set percentage to beneficiaries, the “no discretion” requirement will be deemed as achieved.  

Furthermore, the formula that calculates the proportion of claim values of a defined class of persons or the entitlement (rights) of individuals selected from the defined class in question, now complies with the regulation that applicable fiduciaries “may have no discretion” on the terms of the ruling scheme. Only relevant, however, if these fiduciaries are not awarded a discretion to deviate from the formula. It simply means that your typical Trust Deed, or Constitution, must allow limited discretion to fiduciaries.

Distribution Options

The nature of distributions by Collective Enterprises and its sub-category entities may be affected “in cash” or “in kind.” For instance, it makes provision for benefits such as granting of bursaries, providing accommodation, covering of transport costs, on behalf of the defined class of natural person beneficiaries, as opposed to providing monetary distributions (cash).

Take into consideration, that these distribution strategies should not detract from the overall Economic Interest Points that may be claimed via these schemes.

Measurement of Voting Rights

Voting rights at constitutional and beneficiary levels within Collective Enterprises and its sub-category entities, have participants rarely casting their voting rights at scheme meetings. This is due to their rights being represented by those fiduciaries nominated to vote on their behalf.

Hence, the Minister confirms the scheme participants’ voting rights are attributed to the race and gender of such participants, regardless of the fiduciary exercising the physical vote on the participant’s behalf. Voting may be executed through the constitution or by a competent person’s report.

Reporting Requirements 

Regarding reporting modus operandi of a company, it may very well be that a discretionary Collective Enterprise (including its sub-category entities) and other juristic vehicles in the affected chain of ownership are unable to report on the black participants.

More likely in the scenario of number, location, age data collection, mainly due to non-distinguishing between categories, or lack of verification required by the Codes which complicates the reporting process.

In such circumstances, the requirement for the measured entity is to report on only black people participation figures, and not on the other categories.

However, take note that reporting should be done in line with any additional information that the Collective Enterprise can produce, for example, provinces, demographic breakdown, or economic status regardless of proof of validity.

In these cases, unverified data may not be included in the Ownership Scorecard.

Need Assistance?

BEE Analyst offers competent solutions and advice regarding BEE related ownership schemes by:

  • Evaluating your current scheme and ensure compliance with the new Practise Notes.
  • Set guidelines to rectify any matters of non-compliance
  • Determine the feasibility, and sustainability of BBOS and ESOP options for your company
  • Facilitate all consultation processes before and during the implementation of a BBOS and/or ESOP entity as your preferred option.
  • Handle, manage and perform all legal related aspects to set up and register your BEE Ownership Scheme

We offer customized solutions geared for small, medium, and large South African companies.

Contact:

Gerhard at +27 12 997 0037

eMail: gerhard@beeanalyst.co.za

Download this article here.

BEE RoI: Spending money for the sake of BEE points only?

Are you part of the “begrudging camp”, the laissez-fair group, or the “how much – give me my BEE points” brigade?

What is a BEE RoI?

Return on Investment (RoI) deals with the money you invest in a specific project, and the subsequent return you realize from that investment. In the case of BEE, most people will measure “BEE RoI” in the form of BEE points, and eventually a BEE Level. No. Your costs should be reflected in relation to your business gains. You should always strive to spend less and earn more. An effective RoI model should clearly measure costs, and be portrayed in relation to revenue generation, client retention, and overall organizational benefits.

Pivot back to basics: Unpacking the Underlying Principles of BEE

Writing a cheque to make the effort go away and delegate the entire BEE initiative to a third party is theoretically not a half-bad idea. However, the key to maximizing your BEE RoI is by taking control of it through, first of all, understanding the basic principles of the BEE Codes, secondly, understanding the cost of BEE projects leading to BEE points, thirdly through successful implementations, and lastly, followed by accurate RoI measurement.

The BEE Codes are based on five main principles;

  • a procurement incentive to businesses: a higher BEE level should lead to increased revenue
  • an equity drive: getting black people to earn shares
  • people development: skills development should feed employment equity with black talent
  • supply chain development: enterprise and supplier development funding should feed new black owned suppliers into your supply chain
  • and a strong community outreach principle.

These principles should cascade into the foundation of your BEE strategy. They are feeding channels to strengthen the main BEE elements, and eventually you earn BEE points without incurring direct BEE costs. This strategy will satiate scorecard compliance sustainably, increase economies of scale, and significantly improve RoI for the long haul.

Tipping the Scale

If you do it right, you can earn 71 BEE points (BEE Level 6) without spending money on BEE specific projects. And this is a fact.

Follow the nifty BEE Weighted Scale Model as developed by BEE Analyst.

In essence, you have Ordinary and Extraordinary Expenses (BEE) in the Weighted Scale RoI model. On the one side you “Earn BEE points without spending money”, as opposed to the other side; where you have direct BEE expenditure, year on year, to earn BEE points.

Conclusion:

BEE is here to stay, regardless of our economy being in ICU, in junk status or Covid-19. The South African economy must become more inclusive.

A mind-shift should occur from implementation focused (scorecard elements) to a strategically aligned (four pillar) approach. Equity transfer, people development, supply chain optimization and community outreach.

Simply follow the key principles to BEE success: Understand the basic principles of the BEE Codes, understand your costs, plan your investments, implement your projects, and measure your RoI.

Choose Smart, BEE Smart

BEE Analyst has a proven track record, and digital solution, to navigate the byzantine BEE legislative environment, achieve desired BEE levels, and reduce BEE costs.

Contact: gerhard@beeanalyst.co.za;

Commission releases annual report on B-BBEE trends

The Broad-Based Black Economic Empowerment (B-BBEE) Commission has released its annual report on the national status and trends on B-BBEE for the 2019 calendar year.

The Commission said that the report shows a 1% (43%: 2018 – 42%: 2019) decrease in the number of submitted compliance reports by JSE listed entities.

Click here to read more.

In the News: Employment Equity Amendment Bill to bring about real transformation

On Tuesday, 18 February 2020, Cabinet announced its approval of the Employment Equity Amendment Bill 2020, to be submitted to Parliament. As the Bill makes its way to Parliament for deliberation, the Department of Employment and Labour has set the ball in motion for the introduction of sector-specific Employment Equity numerical targets. Read the full article in SA News.

Click here for Government Gazette Notice. Download the Draft Public Procurement Bill here.