association of b-bbee professionals (abp) · 2018-03-27 · – enterprise & supplier...

Association of B-BBEE Professionals (ABP)

MANAGEMENT CONTROL &

SKILLS DEVELOPMENT WEBINAR

(GENERIC CODES)

Tuesday, 27 March, 2018

10h00 –12h00

1

Association of B-BBEE Professionals

Webinar Training Session

Management Control and Skills Development

Property of Association of B-BBEE Professionals (ABP), not for outside distribution or third party use without ABP’s permission

2

Contributors

Compilers:

NAME ORGANIZATION

Mrs. Kate Moloto Moloto BEE and Moloto Solutions

Mrs. Julia Nzimande Siyakha

Mr. Zamo Mkhwanazi Inkomba Verification Agency

Mr. Peter Ross ActivPro Business Solutions

Property of Association of B-BBEE Professionals (ABP), not for outside distribution or third party use without ABP’s permission 3

Agenda

4

Management Control and Skills Development Training

09h30 – 10h00 Logging In to Webinar All

10h00 – 10h05 Welcome and Introduction Presenter

10h05 – 10h25

10h25 – 11h15

Some Basic Concepts

Management Control session

Presenter

Presenter

11h15 – 12h00

12h00 – 12h30

Skills Development session

Questions

Presenter

All

INTRODUCTION

5Property of Association of B-BBEE Professionals (ABP), not for outside distribution or third party use without ABP’s permission

•ABVA & NABC merged into ABP•ABP & SAIPA formed a formal working relationship via a MoU

•ABP caters for all industry players: ◦BEE Verification Professionals – VAs ◦BEE Consulting Professionals – Consultants ◦BEE Practising Professionals – Private and Public sector

managers and experts

1 B-BBEE Commission Report 1998

2 B-BBEE Strategy 2003

3 B-BBEE Act No. 53 of 2003

4 Codes of Good Practice 2007

5 Amended – B-BBEE Bill 2012

6 Revised B-BBEE Codes 2012

7 Amended B-BBEE Codes 2013 (1st Phase)

8 B-BBEE Amendment Act 2013Amended B-BBEE Codes 2014 (2015) (2nd Phase)

B-BBEE Strategy/Policy Development History


Objectives of B-BBEEper the dti

o To change SA culture to be supportive of entrepreneurship and diversification of value chains

o Concerted effort in linking B-BBBE with other government economic development strategies such as IPAP, CSDP, New Growth Path, NDP,etc. (the real economy)

o Focus on Businesses and industries that result in significant job creation and addressing of socio-economic challenges

o Empowerment efforts should result in the promotion of a culture of venturing into new territories, operational excellence and risk taking

o Symbiotic relationship between the public and the private sector and amongst private sector players, and large and small enterprises to unlock opportunities


ObjectivesEnvisaged modus operandi / whirl – wind effect

Objectives:

To eradicate:

Poverty, Inequality,

Unemployment

Trade Deficit

Recession &

Downgrade

Favored Strategies

Supplier development,

Localization,

Entrepreneurship

promotion Symbiotic

relationships

Job creation

Key Means /

Policy Emphasis:

Good governance,

Economic growth,

Operational

excellence,

Competitiveness,

Development,

Productivity &

Industrialization

Government

Policy

Documents:

ASGI_SA, NIPF,

IPAP, CSDP,

NIPP/NDP?


SANAS Verifications

EDUCATIONAL REQUIREMENTS FOR BEE PRACTITIONERS

For Signatories:

- B-BBEE Capacity Development Programme (replaces MDP)

- Min 3 years relevant technical experience on practical implementation

verification

- Min 1-year Managerial experience on B-BBEE implementation verification

- Technical Exam set by the Regulator

For B-BBEE Verification Professionals:

- B-BBEE Capacity Development Programme


BASIC CONCEPTS AND DEFINITIONS



Definition of Black People:

Generic term which means Africans, Coloureds and Indians:• Who are RSA citizens by birth or descent, OR• Who became citizens of RSA by naturalisation –o Before 27 April, 1994o On or after 27 April, 1994 and who would have been

entitled to acquire citizenship by naturalisation prior to that date.



Categories of Organisations

• Exempted Micro Enterprise (EME)

• Start-up Enterprise

• Qualifying Small Enterprise (QSE)

• Generic Enterprise



Exempted Micro Enterprise (EME)

• Annual turnover of less than R10m

• Deemed status as follows:• 100% black owned = Level 1 status• 51% or more but less than 100% black owned = Level 2

status• Less than 51% black owned (or white owned) = Level 4

statusEMEs wanting a better status can elect to have a QSE rating.EMEs prove their BEE status by obtaining a sworn affidavit confirming their annual turnover and black ownership



Start Up Enterprise

• For the first year following formation or incorporation a

Start-Up Enterprise will be measured as an EME

• Their deemed status will be determined based on their black ownership – same as an EME

• To prove their BEE status - an affidavit confirming first year of existence and black ownership level



Qualifying Small Enterprise (QSE)

• Annual turnover of between R10m and R50m

• If majority black owned they receive a deemed status as follows:• 100% black owned = Level 1 status• 51% or more but less than 100% black owned = Level 2

status

• If less than 51% black owned (or white owned) = Need to rated against the QSE scorecard



Generic Enterprise (“Large Enterprise”)

• Organisation with annual turnover of more than R50m

• Regardless of the percentage of black ownership all Generic Enterprises are required to be rated against Generic scorecard


THE GENERIC SCORECARD


GENERIC SCORECARD COMPARISONS (OLD &NEW)

WITHOUT BONUS POINTS

OVERALL SCORECARD

WITH BONUS POINTS

OVERALL SCORECARD

Preferential Procurement 2044

Enterprise Development 15

Socio-Economic Development 5 5

Total score: including bonus points 107 118

Skills Development 15 25

OLD GENERIC L NEW GENERIC LBEE category: Element weighting: Element weighting:

Ownership 23 25

Management Control 1119

Employment Equity 18

Socio-Economic Development 5 5

Total score: excluding bonus points 100 109

Skills Development 15 20

Preferential Procurement 2040

Enterprise Development 15

Ownership 20 25

Management Control 1019

Employment Equity 15

SCORECARD COMPARISON - OLD GENERIC VS NEW GENERIC

OLD GENERIC L NEW GENERIC LBEE category: Element weighting: Element weighting:

18

QUALIFYING SMALL ENTERPRISE SCORECARD


RECOGNITION LEVEL / QUALIFICATION CRITERIA

BEE Status Original Codes

Qualification

Revised Codes

Qualification

Recognition Level

Level 1 ≥100 points ≥100 points 135%

Level 2 ≥85 but <100 points ≥95 but <100 points 125%







Non-Compliant <30 points <40 points 0%


DISCOUNTING PRINCIPLE

Introduction of Priority Elements:

– Ownership (O)

– Skills Development (SD)

– Enterprise & Supplier Development (ESD)

Discounting of BBBEE status by 1 level if the entity fails to achieve the minimum 40% threshold of the targets for the above Priority elements

The minimum 40% of the target thresholds applied as follows:

O - 40% of Annual NET Value points

SD- 40% of the Skills Development points

ESD – 40% of each of the targets of the following sub elements:

Procurement

Supplier Development

Enterprise Development21


SECTOR CODES

There are Nine sector codes – Transport, Construction, Forestry, AgriBEE, ICT, Finance, Accounting and Tourism, MAC

• Sector codes have been brought into alignment with the Amended codes.

• All the codes have been gazetted in final amended form except the Transport Sector Code which has only been gazetted in draft form


Management Control

MANAGEMENT CONTROL


MANAGEMENT CONTROL SCORECARD


MANAGEMENT CONTROL - KEY ISSUES

Combines previous Management Control & Employment Equity elements

Management Control highlights:

– Executive management includes Chief Executive Officer, Chief Operations Officer, Chief Financial Officer and other Executive managers

– Other Executive Management represents other top management positions in the entity other than those listed above

– If no distinction made between Other Executive management and senior Management then these two sub elements may be combined as a single indicator

– Senior, Middle & Junior management : compliance targets based on the demographic representation of Black people ((A/C/I), also referred to as Economically Active Population (EAP) Targets

– National or regional EAP targets are applied depending on the operational areas of the measured entity

– EAP statistics are issued quarterly by the Department of Statistics or annually in the Commission for Employment Equity Report


MANAGEMENT CONTROL - KEY ISSUES

In addition:

– Only persons who are included in the current payroll data may be used for scorecard assessments

– The measured entity must be Employment Equity compliant ieshould the entity have 50 or staff members or have exceeded the annual turnover thresholds indicated in Schedule 4 of the Employment Equity Act they must have lodged their EEA2 and EEA4 returns to the Department of Labour


MANAGEMENT CONTROL CALCULATION STEPS

FORMULA 1 – Calculating points for Black People in senior, middle & junior mgt

STEP 1 – Calculate the percentage Black employees in senior, middle or junior management as a percentage of all senior, middle or management

STEP 2 – Adjust the EAP to remove white people (adjusted EAP)

STEP 3 - Proportional EAP Split Target (SCT)

STEP 4 - Maximum Allowable Points Formula (MAP)

STEP 5 - Score per race group

FORMULA 2 - Calculating points for Black Females in senior, middle & junior mgt

STEP 1 – Calculate the percentage Black females in senior, middle or junior management as a percentage of all senior, middle or management

STEP 2 – Adjust the EAP to remove white people (adjusted EAP)

STEP 3 - Proportional EAP Split Target (SCT)

STEP 4 - Maximum Allowable Points Formula (MAP)

STEP 5 - Score per race group


MC CALCULATIONS

National Economically Active Population (EAP)

Percentages:

Male Female

AMAfrican Male

42.80% AF African Female 35.10%

CMColoured Male

5.30% CFColoured Female

4.50%

IMIndian Male

1.80% IF Indian Female 1.00%

WMWhite Male

5.30% WF White Female 4.20%

Total 55.20% Total 44.80%28


Economical Active Population Provincial


MC CALCULATIONS

Male Female

Afr

ican

India

n

Colo

ure

d

White

Su

b-

To

tal

Afr

ican

India

n

Colo

ure

d

White

Su

b-

To

tal

To

tal

Senior management (excluding those

counted as top management) 1 1 3 5 2 1 3 8

Professionally qualified and experienced specialists and mid-management

1 1 2 4 1 1 3 5 9

Skilled technical and academically qualified

workers, junior management, supervisors, foremen and superintendents

3 2 2 7 1 1 2 4 11

Semi-skilled and discretionary decision

making 4 1 3 2 10 5 2 2 9 19

Unskilled and defined decision making 3 4 7 5 1 6 13

TOTAL 12 2 10 9 33 12 6 1 8 27 60

Disabled Employees included above: 1 1 0 1


MC CALCULATIONS BLACK PEOPLE

Formula 1- Black people in Senior Management

STEP 1 – Calculate the percentage black employees in senior management as a percentage of all senior management

AM CM IM AF CF IF

Total Black employees in SM 1 1 0 0 0 2

Total employees in SM 8

% of Black employees 12.50% 12.50% 0.00% 0.00% 0.00% 25.00%

31



STEP 2 – Adjusted EAP to remove white population

A The total population EAP target as per the CEE Report

AM CM IM WM AF CF IF WF 100%

EAP Target 42.10% 5.40% 1.70% 5.60% 35.30% 4.60% 1.00% 4.30%

B The total Black population EAP target as per the CEE Report

AM CM IM AF CF IF 90.10%

EAP Target 42.10% 5.40% 1.70% 35.30% 4.60% 1.00%

C The averaging of the total Black population EAP target excluding the White percentages

AM CM IM AF CF IF

EAP Target 42.10% 5.40% 1.70% 35.30% 4.60% 1.00%

Divided by EAP Sum 90.10%

Adjusted EAP 46.73% 6.00% 1.90% 39.18% 5.11% 1.11%



STEP 3 – Proportional EAP Split Target

AM CM IM AF CF IF

Adjusted EAP 46.73% 6.00% 1.90% 39.18% 5.11% 1.11%

Multiplied by the target 60.00%

Split Compliance Target 28.04% 3.60% 1.14% 23.51% 3.01% 0.67%

STEP 4 – Maximum Allowable Points Formula

AM CM IM AF CF IF

Adjusted EAP 46.73% 6.00% 1.90% 39.18% 5.11% 1.11%

Multiplied by the points 2

Max Points 0.93 0.12 0.04 0.78 0.10 0.02



STEP 5 – Score per race group

AM CM IM AF CF IF

Actual % of Black employees

(Step 1) 12.50% 12.50% 0.00% 0.00% 0.00% 25.00%

Divided Split Compliance

Target (Step 3) 28.04% 3.60% 1.14% 23.51% 3.01% 0.54%

Multiplied by Max Allowable

Points (Step 4) 0.93 0.12 0.04 0.78 0.10 0.02

Total Score 0.41 0.12 0.00 0.00 0.00 0.02


THE MC QSE SCORECARD

INDICATOR DESCRIPTION WEIGHT TARGET

1.1 Executive

Management

1.1.1 Black representation at

Executive Management 5 50%

1.1.2 Black female representation at

Executive Management 2 25%

1.2 Senior,

Middle and

Junior

Management

1.2.1 Black representation at

Senior, Middle and Junior

Management

6 60%

1.2.2 Black female representation at

Senior, Middle and Junior

Management

2 30%

TOTAL 15

DEMOGRAPHIC (EAP) CALCULATIONS NOT APPLICABLE TO QSEs35


Document Checklists used by Rating Agencies

Issue/Document Details

OrganogramOrganogram of Top Management structure (Directors, Senior Executive and OtherExecutive Management).

ID Clear certified ID copies of all board members.

COR 39 Notice of Change of Directors

Signed confirmation letter (from auditor or company secretary) of director status type

Nameso Race,o Gender,o ID Number,o Nationality,o Director status (exec/non-exec or independent non-exec)o Voting Rights held by each. (1 vote per board member or specify votesapplicable to each.)

Signed copies of the minutes of the last 2 board and executive management meetings.

Minutes and the accompanying signed attendance registers.

EEA2 and EEA4 reports

Signed Employment contracts, promotion letters etco Payslip (most recent)

o Job descriptions,

EEA1For disabled employees, the relevant signed EEA1, accompanied bythe supporting documentation as issued by a medical practitioner


Skills Development

SKILLS DEVELOPMENT


SKILLS DEVELOPMENT SCORECARD


KEY MEASUREMENT PRINCIPLES

Skills Development is a Priority Element – entity must achieve 40%

subminimum of overall SD points to avoid being discounted by one level

Compliance targets based on the EAP demographic representation

(Africans/Coloureds/Indians)

Focus of training of Black people (not only Black employees);

Introduced learner absorption target for learnerships, internships and

apprenticeships

Targeted spend is 6% of leviable payroll (previously 3%)

Current category F and G (work based and informal training) is capped at 15%

Non-core training costs like travel & accommodation also included in above 15% cap


KEY MEASUREMENT PRINCIPLES (CTD)

International training will be recognised if the training meets SAQA requirements

There is a new Learning Programme Matrix

Sectoral mandatory training such as Health and Safety is excluded

EAP demographic targets not applicable to:

Skills Development Expenditure on Black people with disabilities

Learnership absorption bonus points

Salaries and wages paid to a Learner, Intern or Apprentice contributes toward the

overall spend target if the Learning Programme can be classified as a Category A, B

or C programme in the Learning Programme Matrix


Learning Programme Matrix – Summary

• Category A: Bursaries – Full-time study. Degree: University, college, school or ABET provider

• Category B: Internships – Mixed mode institutional instruction and supervised workplace learning. Degree: University, college, school or ABET provider

• Category C: Learnership – Registered structural experiential learning in the workplace after achievement of a qualification

• Category D: Apprenticeship: Work based learning that requires formal contract. SAQA registered qualification

LEARNING PROGRAMME MATRIX


Learning Programme Matrix – Summary (CTD)

• Category E: Work-integrated learning: Work based learning that does not require formal contract but is formally assessed. Credits for unit standards, CPD, Performance Development Programme

• Category F: Informal Training – Informal instructional progammes. Workshops, seminars, conferences and short courses.

• Category G: Informal Training – Work based informal progammes in the workplace. On the job training.

Category A to E programmes are recognised in full.

Category F and G are capped at 15% of total SD expenditure

LEARNING PROGRAMME MATRIX (CTD)


Following pre-requisites need to be complied with in order for a Measured Entity to receive points for Skills Development:

– Workplace Skills Plans, Annual Training Reports and PIVOTAL Reports must be developed and submitted before being approved by the SETA. Once the entity has received a notification from the SETA that these have been approved, they are then in compliance with this requirement.

– Implementation of Priority Skills (scarce & critical) programme generally, and more specifically for Black people.

BONUS POINTS for absorption - This measures the organisation’s ability to secure permanent or long term contract employment for the learner(s)

KEY MEASUREMENT PRINCIPLES


SD Calculations

Entity A’s leviable payroll for the measurement period under review is R 5 250 000.00. At the end of the Measurement Period, the entity had 66 employees. The company employed the 2 African female unemployed learners upon completion of their programme.

They spent the following on training Black employees and unemployed Black people:

PROGRAMME AM CM IM AF CF IF

Skills Programmes:

First Aid R 44 500 R 25 000 R 40 500

MS Office R 14 500 R 14 500 R 14 500

Pastel (African disabled employee)

R 19 000

Forklift Training R 100 500 R 18 500

MS Excel (Indian disabled employee)

R 16 750

Total R 145 000 R 18 500

R 41 750

R 74 000 R 14 500 R 14 500

% of Leviable pay

Total Black Spend as a percentage of Leviable payroll:

Learnerships/ Internships/ Apprenticeships:

Employed 1 1 1 1

Unemployed 1 2

% Representation (out of 66)

3.03% 1.52% 4.55% 1.52%


SD Calculations


Step 1: Calculate the percentage spend on black people as a percentage of

leviable payroll

AM CM IM AF CF IF

Skills Development Spend R145 000 R18 500 R41 750 R74 000 R14 500 R14 500

Annual Leviable Payroll R5 250 000

Percentage of Leviable Payroll 2,76% 0,35% 0,80% 1,41% 0,28% 0,28%

Same 5 Step EAP demographic calculation methodology applicable as used in Management Control

QSE Scorecard

INDICATOR WEIGHT TARGET

1.1 Skills development expenditure on learning

programmes specified on the learning programme

matrix for black people as a % of leviable amount

15 3%



matrix for black women as a % of leviable amount

7 1%



matrix for black people with disabilities as a % of

leviable amount

3 0.15%

BONUS POINTS

1.4 No. of black people absorbed by the measured

entity and industry at the end of the learning

programme

5 100%

TOTAL 25


ABP Webinar – MC & SD

We Thank You for attending the ABP Webinar on Management Control and Skills Development and look forward to you joining

us in future webinars

ABP Office Tel: (010) 003-7768

ABP E-mail [email protected]

ABP Website www.abp.org.za

mailto:[email protected]

http://www.abp.org.za/


Presenters Contact Details:

Peter Ross ActivPro Business Solutions

E-mail: [email protected]

Cell Number: 083 302 3791