Because BEE compliance can differ dramatically between companies, it is essential to know what your approach to BEE verification should be. Many people in business assume that becoming BEE compliant requires making dramatic changes to their organisation’s infrastructure. While this may sometimes be the case, a business often already possesses some of the important attributes of BEE compliance, which can simplify the BEE verification process. The fundamental principle for measuring B-BBEE compliance is that a business possesses significant enough attributes in 5 key areas of the enterprise. However, smaller businesses may not be required to qualify in all 5 areas. Furthermore, those with an annual turnover of less than R10 million (a micro-enterprise) only require an exemption certificate. Note: Some organisations still ask for full verification, even from exempted enterprises. It’s best to first check with your customers before you apply for an exemption certificate.
The Five elements that determine an organisation’s BEE score:
- Ownership – measures participation in profits (or distributed profits) and voting rights.
- Management Control – measures participation in the control of an enterprise at board or board-equivalent level and employment equity in workplace.
- Skills Development – covers initiatives that seek to develop black people’s competencies.
- Enterprise and Supplier Development – addresses the extent to which an enterprise favours other enterprise with respectable BEE compliance levels in product or service procurement and further considers initiatives directed at facilitating the commercial development of other enterprises.
- Socio-Economic Development and sector-specific contributions – initiatives that promote black people’s access to the economy.
Each of these 5 elements is scored and then aggregated to formulate your BEE scorecard. This will determine your BEE rating. Because each enterprise is different, a number of factors determine what your overall score will be. This is why we offer an initial free assessment – so you can judge what work you need to do prior to your B-BBEE verification; we then devise an approach to deliver the most favourable BEE rating.
- Your clients will know that you are doing whatever it takes to stay ahead in your business – that you mean business and that you look to them to support your efforts.
- By being rated, you will have a good overview of how you are performing with regard to national requirements, how to plan and change in future to increase sustainability.
- You will have a clear picture of what types of supplier you have. A rating would give you leverage to be able to negotiate better discounts, etc. Supplier analysis will assist with your procurement policy development.
- Your image will be enhanced by your demonstration of leadership in your industry – be perceived as in step with development initiatives.
- By focusing on HR development, enterprise development and BEE, you will demonstrate commitment towards the social, educational and economic developments in the community in which you operate.
- Attempt to increase and develop your employees’ skills and potential development as well as your BEE ratings to enhance fair and progressive employment practices.
- Your staff will see what you are doing, which will boost their morale.
- The sooner your business is rated, the sooner you will understand how to develop a BEE strategy to increase your annual BEE rating. Your BEE strategy should form part of your company’s overall strategy plan