Is your business BEE compliant?

learning trends
July 12, 2018

Here at OnRamp, we have a passion for empowering people in the workplace by developing their skills and knowledge. A business is only as strong as its people and every business owner wants their company to be at the top of its game.

In South Africa, a crucial element to boosting your business is BEE compliance. Your BEE rating marks you as a contributing member to the formal South African economy and comes with benefits and incentives. BEE compliance also has a priority focus on skills development, our favourite aspect. A skilled taskforce can only ever be an asset to any business. Is your company BEE compliant?

The basics of BEE compliance

Firstly, it’s important to understand what BEE is. Once you know the basics, you can set your sights on a BEE compliant company. BEE stands for Black Economic Empowerment and is now known as Broad-Based Black Empowerment Equity (B-BBEE). It’s a positive movement to upskill and empower previously disadvantaged groups in South Africa. A company aiming for BEE compliance must fulfil the required criteria, depending on it’s size. The size of your business contributes to the level of your compliance. There are three primary levels your company can fall under:

Exempted Micro Enterprises (EMEs)

An Exempted Micro Enterprise is a smaller business with a turnover that is less than ten million rand a year. A start-up company, one that has been running for less than twelve months will also fall under this category. These enterprises are not measured on the BEE scorecard.

Qualifying Small Enterprises (QSEs)

A business is classified as a Qualifying Small Enterprise if the annual turnover falls between ten and fifty million rand. If your business is in this category, it needs a rating for all five elements on the B-BBEE scorecard.

Medium to large enterprises (M&Ls)

If a business makes more than fifty million rand annually, it falls into the category of medium to large enterprises. These companies are required to comply with all five of the B-BBEE scorecard elements.

The B-BBEE scorecard

If your business is classified as a Qualifying Small Enterprise or Medium to large enterprise, it must comply with the B-BBEE scorecard. The B-BBEE scorecard highlights five key areas to calculate your company’s score. The level of your BEE compliance is determined by your rating. The higher your company scores within each criterion, the better you BEE level. We’ve highlighted each pillar below:

Ownership

Ownership is one of the priority elements on the scorecard, contributing 25 points. The score is based on the voting rights and economic interests within the enterprise’s shareholders. The scoring takes gender and age-groups into account.

Management Control

This element refers to the control of an organisation. It looks at the number of eligible participants holding top management and director positions. Management Control contributes a maximum of 19 points to your scorecard.

Skills Development

An enterprise can earn 25 points through skills development, five of which are bonus points. A business must reach the 40% minimum target, as this is a priority element. Skills Development measures the extent to which a company invests in employee training and growth of skills.

Enterprise and Supplier Development

Enterprise and Supplier Development is the largest priority element. It contributes a whopping 44 points to your scorecard. It measures the extent to which your company supports the development and sustainability of qualifying enterprises.

Socio-Economic Development

Socio-Economic Development contributes 5 points to your BEE compliance scorecard. It measures the company’s social contributions towards employees and communities. This element is aimed at encouraging access to economy and income.

The advantages of being BEE compliant

An enterprise which has received their BEE rating can participate in the formal South African economy. Regardless of the size of your business, BEE compliance can only ever be beneficial. While there are no penalties if you fail to comply, you will risk losing out to organisations that are BEE compliant. The higher your BEE score, the better your chance for securing business from other companies. The Public Sector favourably considers BEE compliant enterprises for procurement. You will also be able to bid for government tenders, apply for licenses and get permits. Additionally, a business can benefit from a number of tax incentives and financial grants.

Boost your BEE rating with OnRamp

Becoming BEE compliant doesn’t necessarily need drastic changes within your company. In fact, you may already be hitting the mark without realising. If you do want to boost your BEE rating, Skills Development is one of the easiest elements to target. Not only can you achieve the full 25 points, but you will also improve your bottom line. But how do you upskill your staff and capture all that data? With OnRamp, of course. Our online training platform provides your business with the tools to roll out training programmes with ease. And, because all your training data sits in the cloud, it is easy to gather and submit for BEE auditing. (Read our previous blog for the full details of how staff training can affect your BEE rating).

Do you want to develop skills in your business and boost your BEE compliance? Let one of our friendly consultants give you a hand. Complete the contact form on our BEE page, and we’ll be in touch as soon as possible.

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