Over the last few years this rule has become more relevant. A while ago I wrote a piece on how an empowerment agenda could break a business, however there are real life examples. Eskom's "empowerment-at-all-costs" policy showed us that you can pretty much bring a country to its knees if you ignore business requirements and chase empowerment.
The overwhelming message is "BEE must make business sense otherwise don't bother". Always ask a few questions before you embark on any BEE programme.
- How many points do we need to remain competitive
- How much will it cost and how many points will it generate
- Is there any other way to generate the points without spending the money
- What are the positive business benefits of us doing this
The last question warrants a little more explanation, I'll do this by using a few examples
- If you are in the mining industry you need a percentage of black ownership – otherwise you don't operate (general rule)
- Training staff is always good for the business. However this training must be within an agreed budget. Going for the full 3% of payroll on black staff when the business doesn't need it doesn't make for a sound business practice
- Getting rid of a key supplier because they don't meet your empowerment requirements is plain stupid. An established supplier/customer relationship will probably yield preferential payment terms and discounts etc. Sacrificing that for BEE points is not advisable
- Setting up an ED project to sell your product is a fantastic idea. Both Nestlé and Pick 'n Pay have done this to great effect