Mere compliance or meaningful change? Rethinking transformation indicators

In January 1998, I landed my dream job as an internal sales engineer at Hewlett Packard (HP) SA. I had responded to a job advert in the Sunday Times Career section, after turning 21 the previous year. 

Before I even earned my first salary at HP, I was sent to San Francisco, California, for training as part of the then HP’s global sales development programme for sales engineers. The impression of that programme is something that I have carried with me throughout my 24-year career. 

Long before the 2007 generic codes scorecard report system was introduced, there were already many companies that had been implementing transformation measures in the ICT sector and other industries. 

With this in mind, I believe we need to rethink how we define transformation, and perhaps also the compliance scorecard systems, with a transformation indicator that reports impact and awards recognition for those who exceed targets.

The scorecard used today does not report impact, nor does it award points for exceeding targets. 

There must be a distinction between implementing programmes motivated by a need to comply rather than do the right thing. This should be the difference between transformation and compliance. 

A step in the right direction

To this end, we should, for example, regard a level four broad-based BEE (BBBEE) contributor status as an indicator of compliance, while anything above level four as an indicator of transformation. A company should not be able to achieve a contributor status above level four unless it has exceeded targets and has tangibly measured impact.

In August 2004, the ICT Charter Working Group concluded negotiations with the American Chamber of Commerce (AmCham), an organisation that had introduced one of the most successful equity equivalent investment programmes (EEIPs).

EEIPs are an innovation for multinationals that cannot sell ownership due to restrictions and global policies. They include a combination of high-impact programmes on skills development, entrepreneurship development, IP transfer and a commitment to job creation.

The current scorecard does not report the impact of EEIPs, and the department of trade, industry & competition (DTIC) has only recently started an initiative to measure impact from EEIPs, something which should be welcomed as a step in the right direction.

While there is merit for the “stick” approach for non-compliance and not meeting targets, the transformation indicator would work differently. It would award recognition to those programmes that have measurable impact, those that perform beyond the targets set by each sector in their codes, and those that exceed a specific BBBEE contribution level.

Along these lines, sector councils should be expected to report transformation within their respective sectors with the aim of moving their sectors from mere compliance to meaningful transformation.

The DTIC will soon be publishing a number of sector codes for public comment to align the sector codes to the 2013 amended generic codes scorecard recognition system.

This is a perfect opportunity to introduce the transformation indicator as a way to measure impact and award recognition for exceeding targets.

Download the 2022 Sanlam Gauge Report

Sanlam, together with the Sunday Times Business Times, recently shared the results of the 2022 Sanlam Gauge report.

The first consolidated research report of its kind, the Sanlam Gauge provides a holistic measurement of economic transformation in the SA, accounting for all elements of BBBEE. Click here to download it.

This article was paid for by Sanlam Gauge.