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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
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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
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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
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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
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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?
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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
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BASIC CONCEPTS AND DEFINITIONS
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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.
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BASIC CONCEPTS AND DEFINITIONS
Categories of Organisations
• Exempted Micro Enterprise (EME)
• Start-up Enterprise
• Qualifying Small Enterprise (QSE)
• Generic Enterprise
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BASIC CONCEPTS AND DEFINITIONS
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
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BASIC CONCEPTS AND DEFINITIONS
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
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BASIC CONCEPTS AND DEFINITIONS
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
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BASIC CONCEPTS AND DEFINITIONS
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
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THE GENERIC SCORECARD
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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
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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%
Level 3 ≥75 but <85 points ≥90 but <95 points 110%
Level 4 ≥65 but <75 points ≥80 but <90 points 100%
Level 5 ≥55 but <65 points ≥75 but <80 points 80%
Level 6 ≥45 but <55 points ≥70 but <75 points 60%
Level 7 ≥40 but <45 points ≥55 but <70 points 50%
Level 8 ≥30 but <40 points ≥40 but <55 points 10%
Non-Compliant <30 points <40 points 0%
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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
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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
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Management Control
MANAGEMENT CONTROL
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MANAGEMENT CONTROL SCORECARD
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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
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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
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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
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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
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Economical Active Population Provincial
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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
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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
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MC CALCULATIONS BLACK PEOPLE
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%
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MC CALCULATIONS BLACK PEOPLE
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
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MC CALCULATIONS BLACK PEOPLE
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
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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
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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
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Skills Development
SKILLS DEVELOPMENT
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SKILLS DEVELOPMENT SCORECARD
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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
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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
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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
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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)
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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
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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%
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SD Calculations
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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%
1.2 Skills development expenditure on learning
programmes specified on the learning programme
matrix for black women as a % of leviable amount
7 1%
1.3 Skills development expenditure on learning
programmes specified on the learning programme
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
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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
ABP Webinar – MC & SD
Presenters Contact Details:
Peter Ross ActivPro Business Solutions
E-mail: [email protected]
Cell Number: 083 302 3791
ABP Webinar – MC & SD