Broad
Based Black Economic Empowerment Plan and
Code of
Good practice for
A.R.S
PERSONELLE
Member
Message
A.R.S PERSONELLE
acknowledges
the importance of Broad-Based Black Economic Empowerment in both the
transformation of
A.R.S PERSONELLE
is
proud of its achievements to date which started as a pioneer in (YEAR OF
ESTABLISHMENT)
with the introduction of affordable services, ensuring a safer workplace and our
Code of Good Practice embodies our desire to remain in the forefront of change
in
This
Code of Good practice aims to communicate our targets and maps out our path over
the next 10 years. I am privileged to commit A.R.S PERSONELLE
to
it.
Approach
This
Code of Good practice is a dynamic document, which will be adjusted in line with
the changing imperatives of Broad-Based Black Economic Empowerment (B-BBEE)
policy strategy and legislation. Its A.R.S
PERSONELLE objective
to communicate targets and measure the achievement of the targets
set.
This
Code of Good practice is not a legally binding document. It is however the
intention to A.R.S
PERSONELLE to
explore the possibilities and implications for the Company of registering the
Code of Good practice as an enterprise Code of Good practice with the Department of Trade and
Industry (DTI)..
The
Code of Good practice timeframe is to 2016;
however, internally this will be translated into short-term objectives aligned
to A.R.S PERSONELLE
strategic
planning horizon, which will be reviewed and audited by CenFed BEE Verification
Agency on an annual basis as part of the strategic planning
process.
Preamble
On
28
September 2006,
Helen
committed (him/herself)
to the development of a Broad-Based Black Economic Empowerment Code of Good
Practice.
The
Code of Good practice was developed noting that:
·
Despite
significant progress since the establishment of a democratic government in 1994,
South African society remains characterized by racially based socio-economic
disparities.
·
B-BBEE
is a mechanism aimed at addressing inequalities and mobilizing the energy of
South Africans. It will contribute towards sustained economic growth,
development and social transformation in
B-BBEE
is viewed by government as an integrated and coherent socio-economic process
that directly contributes to the economic transformation of
A.R.S PERSONELLE
management
and staff acknowledges the importance of B-BBEE in the need for transformation
of South Africa and has adopted a broad-based strategy that will secure and
potentially increase A.R.S PERSONELLE
competitive
advantage into the future, A.R.S PERSONELLE
has
adopted a scorecard approach with a 5 factor enabling framework, based broadly
on the DTI approach, in order to both set objectives and track progress, an
annual audit by CenFed BEE Verification Agency will monitor and certify the
progress made.
The
factors with their applicable weightings are:
|
|
Element |
Generic
Scorecard |
Qualifying
Small Scorecard |
|
1. |
Ownership |
20 |
25 |
|
2. |
Management
and Control |
10 |
25 |
|
3. |
Employment
Equity |
15 |
25 |
|
4. |
Affirmative
Procurement |
15 |
25 |
|
5. |
Skills
Development |
20 |
25 |
|
6. |
|
15 |
25 |
|
7. |
Socio-Economic
Development |
5 |
25 |
|
|
Select 4 out of the
7 Elements | ||
A.R.S PERSONELLE
has
developed an internal scorecard against which B-BBEE contribution can be
measured. It is the intention, however, to use CenFed BEE Verification Agency to
provide an independent assessment of A.R.S PERSONELLE
and
its major suppliers.
Interpretation
BEE
Strategy
BEE Act 53
of 2003
The
strategy laid the foundation for the B-BBEE Act
Why the
need for the Codes
o
lack of understanding leading to
inconsistent application and appreciation of B-BBEE
o
lack of clarity resulting in delays
in the implementation of B-BBEE initiatives
o
disparity in Charter definitions and
targets between various sectors of the economy
o
lack of implementation guidelines
resulting in ‘Most going to few’, ‘Fronting’ or ‘Sham’
transactions
o
Lack of underlying economic
substance to many B-BBEE transactions
o
Focus on narrow based B-BBEE leading
to a narrow base of beneficiaries
Key
Principles
o
B-BBEE must be measured and reported
according to economic reality rather than legal form
o
B-BBEE is measured based on seven
core elements: ownership, management, employment equity, skills development,
preferential procurement, enterprise development and socio-economic
development
o
All companies measure B-BBEE based
on a score system, and receive higher recognition for higher B-BBEE
compliance
§
Foster competition among companies
and industries
§
Encourage all companies to implement
and monitor B-BBEE
§
compliance in all its economic
interactions
General
Principles
o
Beneficiaries should
compromise:
o
Black women: 40 –50
%
o
Black people with disabilities,
black youth, black people living in rural areas and black unemployed people: 2
–3 % (“Black Designated Groups”)
o
12 Months transitional period to
allow for conversion from narrow-based to scorecard
approach
o
Provide mechanism to facilitate the
adoption of scorecard in reporting and decision-making
o
Further confirms the principles of
Economic Substance over Legal Form
Guide
lines for the Development and Gazetting of Transformation Charters and Sector
Codes
Challenges
Facing Company Business
A.R.S
PERSONELLE,
like other companies, faces the challenges of producing more cost effectively
and delivering superb service to its Customers in the face of growing global
competition, through committed and competent Staff. B-BBEE is a mechanism that
can assist the South African businesses in this regard and should be seen in
this context.
The
diversity that B-BBEE brings to Companies introduces a creativity component that
will assist in the reduction of risk associated with business
decision-making.
Application
of the Code of Good practice
This
Code of Good practice belongs to A.R.S
PERSONELLE
The
targets in this Code of Good practice will be applied from 28 September
2006
until 2016.
Progress
against the targets will be tracked and recorded quarterly, reviewing the
ongoing applicability of such targets and will be audited by CenFed BEE
Verification Agency.
A.R.S PERSONELLE
acknowledges
that the principles contained in the Code of Good practice will be relevant
beyond 2016.
Ownership
o
Ownership is measured as an
entitlement to both voting rights and economic interest.
o
Net Equity Value –measures economic
substance vs. legal form
o
Excluded Equity
Principle
o
§
Any financing structure that passes
the test will be able to obtain ownership points
§
Entities encouraged to facilitate
the funding of B-BBEE transactions
§
Allows for the exclusion of
shareholding by managed investments, government owners, s21 companies, etc. when
determining B-BBEE ownership targets
§
Set out conditions under which the
sale of assets, equity instruments and other businesses will be
recognised
o
Equity Equivalent contributions are
measured against the ownership element of the scorecard
o
Measurable against the compliance
target of 25.1% of the South African operation
o
Interest persons may make written
submission to the Minister of Trade and Industry requesting approval of equity
equivalents
o
Approval to participate in an Equity
Equivalent is subject to qualification criteria (i.e. Global practice,
etc.)
§
Multinationals are able to claim
ownership points on the scorecard based on their equity equivalent programmes
§
Promotion of initiatives that will
further advance B-BBEE objectives
o
Encourage full participation of
beneficiaries in all structures of the scheme
o
Encourage accountability by
fiduciaries to the intended beneficiaries
o
Specific governance
requirements
o
A maximum of 40% of the total points
on the ownership scorecard of the measured entity is allowed if the BB scheme is
unable to meet some of the requirements
§
Accrual of benefits tends to be
conditional and vest after a long period of time
§
Discourages a practice where no real
powers of ownership accrue to employees or beneficiaries
§
Discourages a practice where shares
remain unallocated perpetually resulting in control still being retained by the
traditional shareholders
§
Discourages the use of broad based
schemes as employee retention strategies – master/ servant
relationship
§
Avoid the sole inclusion of ESOPS to
the exclusion of new entrants (i.e. entrepreneurs)
§
Encourages the structuring of deals
made up of a combination of black women, black designated groups black new
entrepreneurs (i.e. black new entrants), and broad based
schemes
o
The extent to which ownership points
can be maintained after the exit of black partners will be based on both the net
value created in black hands as well as the level of transformation in the
measured entity
o
Black shareholders must have their
equity stake for at least 3 years prior to exit
o
There must be demonstrative net
value created in the hands of black people
o
There must be a level of B-BBEE
transformation within the measured entity
o
BEE shareholding arising from the
sale or loss of shares by black people cannot contribute more than 40% of the
points on the ownership scorecard
o
It allows for a limited amount of
B-BBEE ownership recognition after sale / loss of equity by black shareholders
(EXIT)
§
Linking a company’s performance on
the scorecard as well as wealth created in black hands to allow for recognition
for contributing towards the promotion of ownership by black people over a
limited period of time
§
To introduce liquidity in the hands
of Black investors after a reasonable period of time
§
To encourage enterprises not to lock
in B-BBEE partners for a long time in order to maintain B-BBEE ownership
status
§
To provide enterprises with enough
time to enter into another BEE ownership transaction in order to retain their
B-BBEE status
§
To encourage the retention of black
direct investment of at least 15% on a continuing basis
o
Involvement in the ownership of the
enterprise of black new entrants
§
Encourage entities to include new
entrepreneurs in ownership transactions thereby broadening the base of
beneficiaries
o
Measured enterprise may treat any of
its ownership arising from private equity funds as black owned and controlled if
it meets the following criteria:
o
More than 50% of exercisable voting
rights are in the hands of black people
o
More than 50% of profits accrue to
black people
o
Private Equity Fund manager must be
a black owned company
o
More than 50% of the value of funds
invested by private equity fund must at all times be invested in black owned
enterprises
§
To encourage the emergence of
Private Equity Funds owned and controlled by Black People.
§
To encourage Private Equity Funds to
drive investment in black owned enterprises.
A.R.S PERSONELLE
will
increase the number of black people who not only have ownership of equity in the
Company group but can via their ownership, contribute to the sustainable
competitive advantage of the Company, and will give preference to broad-based
organizations where practically possible.
A.R.S PERSONELLE
is to be
regarded as a (LEVEL OF
CONTRIBUTION) to Black Empowered
Companies, from a BEE Perspective, as measured by CenFed
A.R.S PERSONELLE
acknowledges the
complexity around ownership measurement and will take its lead from best
practice.
When structuring
ownership transactions A.R.S PERSONELLE
will look
to mechanisms that balance the businesses need for sustainable black ownership
and the requirement of black ownership to unlock appropriate value from their
investment.
A.R.S PERSONELLE
will
recognize indirect ownership by black companies, black empowered companies and
black shareholdings in assessing overall black ownership credentials. It
acknowledges that indirect ownership comes with limited Management and Control
and therefore does not classify ownership in the same terms as direct ownership.
A.R.S PERSONELLE
will take
its lead from best practice in measuring indirect
ownership.
A.R.S PERSONELLE
will:
·
Maintain an
appropriate B-BBEE structure for A.R.S PERSONELLE
that
balances the leader-Ship role that the Company needs to assume as one of
·
Identify and pursue
B-BBEE opportunities at an appropriate level that will either unlock value for
A.R.S
PERSONELLE or preserve current
value into the future.
·
Choose B-BBEE partners
who, where practically possible, have both a Broad Based ownership structure and
can play an appropriate value-adding role in A.R.S
PERSONELLE.
The principles of
B-BBEE transactions:
·
B-BBEE ownership
initiatives should be aimed at promoting the productive and sustainable
Participation of black companies and black people in A.R.S
PERSONELLE
·
Ownership will be
particularly encouraged if it adds value to the Company / divisions Involved and
includes meaningful participation in management and
control.
·
The funding structures
should facilitate the transfer of full economic interest to the B-BBEE partner
and longer-term shareholder-type relationships, as opposed to short-term
portfolio investments (especially where the transaction has been
facilitated).
·
The retention of the
shareholding as a B-BBEE share should be promoted to the greatest extent
possible.
·
Initiatives aimed at
progressing in the area of B-B BEE will be promoted.
·
Joint ventures or
partnership arrangements should be meaningfully structured with equitable
portions of the responsibility and benefit to each party.
·
B-BBEE ownership
initiatives will be aimed at improving the competitive advantage of the
Company
Management
Control & Employment Equity
o
Setting Targets for Board
Representation and Executive Involvement of black people
o
Targets from Junior management up to
senior management level
o
Alignment with existing
legislation
o
Alignment with EAP
targets
o
Minimum targets set at 40% of
overall targets
§
Encourage a proper representation of
black people on company boards in an executive and non-executive
capacity
§
Counters market trend in appointing
black non-executives rather than executives
§
Encourage advancement of black
people in areas where there is a lack of representation
§
Prevents contradiction in
terminology and efforts in the implementation of EE initiatives in both the EE
Act and the B-BBEE Act
§
Measured entities will only claim
full points once they have met the EAP targets
A.R.S PERSONELLE
will
focus on increasing the number of black people in positions that have authority
and power to manage the company's assets, determine policy and the direction of
business operations. This would include certain key corporate positions that
participate in decision-making at board and executive management
level.
The Company will
strive to achieve the following targets by 2016.
|
Management
Grouping |
%
Black Current 2006 |
%
Black Target 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disparities in the
South African workplace resulting from past discriminatory practices and laws
are not only unjust, but also have direct negative implication for economic
efficiency, competitiveness and productivity. It is therefore in the country's
long-term national interests that a broad-based and diverse pool of skills is
developed for the sector to unleash the potential of all South
Africans.
Consequently,
A.R.S PERSONELLE
undertakes to
continually redress the inequalities present with regards to race, gender and
disability in its employee base and to accelerate the normalisation of this position
through structured skills development programs and the injection of talent,
through its ongoing commitment to:
·
Ensuring that its
workforce represents South African demographics in terms of race, gender and
disability at all levels and that structured development plans are in place to
achieve this.
·
Actively driving
internal promotion opportunities through structured development programs and
career planning.
·
Encouraging the
recruitment of black talent into Incentive and rewarding senior divisional
managers to achieve the targets set.
The Employment Equity
and Skills Development Committees will assess and define policies to address the
employment of people with disabilities. A.R.S PERSONELLE
commits
to ensuring that, where practically possible, its site is adapted to accommodate
people with disabilities.
Skills
Development
o
Alignment with Skills Development
Act
o
Parity
principle
o
Use of Learning programme
matrix
§
Alignment of skills development
initiatives for both the SD Act and the B-BBEE Act
§
Ensure skilling of all targeted
beneficiaries
§
Measures both skills spend and
output through clearly defined outcomes of skills development
programmes
A.R.S PERSONELLE
acknowledges the
involvement of black people in operational, professional and executive decision
making as a critical aspect of B-BBEE and will accelerate this process via a
focused skills development programs.
Employment Equity and
Skills Development committees exist at all operation to drive skills development
at an operational level.
A.R.S PERSONELLE
classifies its skills
development into the following broad categories:
|
Leadership
Development |
%
Representation |
|
Management
Development Program |
0%
Black |
|
The program
focuses on leadership development of high potentials at a senior
operational management level. |
|
|
|
|
|
Tomorrow's
Leader Program (TOM) |
0%
black |
|
The program
focuses on skilled staffs that have the potential to fill an operational
management role. |
|
|
|
|
|
Skills
Development Program (SDP) |
0%
black |
|
The program
focuses on developing skilled employees with Leadership potential who may
not have had the educational Opportunities in the
past |
|
|
|
|
|
Graduate
Development Program (GDP)
|
0%
black |
|
The program runs
for 2 years and focuses on introducing New graduates to the
Company |
0% black
women |
|
Bursaries
and Grants |
%
Representation |
|
Bursary Scheme
and Tertiary Grants |
0%
Black |
|
Draws bursars,
in appropriate fields, with an emphasis on schools and communities, to
provide a feed into the Graduate Development
Program. |
0% black
women |
|
Technical
and Operational |
Target |
%
Representation |
|
|
|
|
|
Learnerships |
0% of
Payroll |
0%
black |
|
The program
covers technical trades Involved in the company's
industry. |
|
|
|
|
|
|
|
Technical and
Operational Training |
0% of
Payroll |
0%
black |
|
Covers the
technical skills required to Run Inspections |
|
|
|
|
|
|
|
Support
Training |
0% of
Payroll |
0%
black |
|
Training outside
of operational |
|
|
Preferential
Procurement
o
Promotes BEE Compliance by all
entities
o
Specific Targets for Procurement
from Micro’s and QSE’s
o
Specific Targets for Procurement
from Black Owned and Black Women Owned Enterprises
o
Enhanced recognition for procurement
from value adding suppliers
o
Enhanced recognition for procurement
from ED beneficiaries
§
Encourages transformation throughout
the entire economy
§
Specific incentive to procure from
small and micro business creates new and sustainable
entities
§
Encourage the creation of
sustainable black women owned, black owned and controlled
enterprises
§
Encourages procurement of locally
produced goods and services
§
Encouragers the sustainable income
streams to new entities ensuring their sustainability
A.R.S PERSONELLE
will
implement a targeted procurement strategy to increase its procurement from
companies that have made significant progress in the area of B-BBEE and are
rated as
(LEVEL OF CONTRIBTION) to BEE based on a
broad-based evaluation methodology.
A.R.S PERSONELLE
target of
purchasing from BEE compliant vendors will be between 80% and 100% of the value
of Companies core procurement by 2016.
Should a supplier's
business not be run on sound and sustainable business practices, its B-BBEE
credentials will be discounted, irrespective of its B-BBEE
rating.
In procuring products
and services from a B-BBEE Enterprise, A.R.S PERSONELLE
will take
a broad-based assessment approach and will not focus on Management and control.
It will however require the vendor to start addressing Ownership and the other
legs as it grows.
A.R.S PERSONELLE
will also
focus on Enterprise Development as a means to increasing its Empowerment
supplier base where appropriate. In this regard, it will:
·
Actively support
existing businesses and the creation of new businesses that are owned by black
people and encourage these new suppliers and existing suppliers to improve their
B-B BEE credentials, through the leverage it has on its
suppliers.
·
Assist in the creation
of new businesses by facilitating access to finance and skills Transfer, where
appropriate.
·
Provide support to
B-BBEE Enterprises to enable them to benefit from targeted procurement programs.
Such support will include programs designed to assist B-BBEE Enterprises in
tendering for business, setting aside areas of procurement reserved or preferred
for B-BBEE Enterprises only.
A.R.S PERSONELLE
will:
·
Actively pursue
purchases from B-BBEE compliant companies in terms of a DTI accredited Rating by
SANAS as a division of the DTI
·
Increase the level of
tracking with the roll out of the B-BBEE verification Act and or system in the
medium term. Encourage existing suppliers to address B-BBEE and become B-BBEE
compliant.
·
Report on all spends
in terms of the categories that fall within the definition of B-BBEE
compliancy.
It is the intention to
use the DTI Approved, independent rating done by CenFed B-BBEE Verification
Agency to rate the Companies key suppliers' empowerment
status.
o
Measurement
of:
o
o
Industry Specific
Contributions
§
Encourage entities to
implement/support initiatives in:
§
Access to finance: Loans, equity,
seed capital, etc.
§
Non-financial assistance: Training
and mentoring; preferential credit facilities; capacity-building programmes for
QSE’s; Access to infrastructure at low or no cost; Business linkages (i.e.
procurement opportunities)
§
Enterprises are encouraged to make
either monetary or non-monetary contributions
o
Measurement
of:
o
Social Development
Contributions
o
The key principle is for these
initiatives to result in the beneficiaries having sustainable access to the
economy
§
Encourage entities to
implement/support initiatives in:
§
Public programmes meant to
facilitate further socio-economic development
A.R.S PERSONELLE
acknowledges
Socio-Economic Development (SED) as an important component of its corporate
citizenship. It will take a developmental and transformational approach to
Initiatives that are linked to the upliftment of
The Company is to set
aside 3% of its profit after tax for SED in
The underlying
principle is that the majority of the SED spend goes toward the intended purpose
and not on administration costs.
The focus areas for
SED spend will vary over the Code of Good practice timeframe, however those
identified to date are:
·
Collaborating with
selected schools in industrial areas that provide education for black
communities that have a leadership structure that is committed to and has
demonstrated its desire to provide superior education to their
learners.
·
Continuing with the
fundamental sponsorship of PATSAAD’s (Pigeons Against Teenage Sex Alcohol Abuse
and Satanism)
·
Providing the funding
for the launch of PATSAADs Project in conjunction with The World Wildlife Fund, aimed at
educating the youth on relevant environmental Issues and how they can 'make a
difference' on their environment.
·
Supporting
organizations that are aligned to the objectives contained within this code of
Good practice.
·
PATSAAD’s is part of
the Lets Play drive of M-net
Implementation
Besides Ownership,
which is a shareholder issue, an independent, non-executive manager will be
appointed to chair a sub-committee to review progress
made.
The Executive director
of A.R.S PERSONELLE
has been
appointed to manage and coordinate the B-BBEE process for the
Company.
Each division will
submit a scorecard biannually, commencing 28 September
2006,
reporting on its progress against targets and adherence to the Code of Good
practice.
Employment Equity and
Skills Development Committees have been established to specifically focus on the
Employment Equity targets and the achievement thereof.
Delivery on the Code
of Good practice objectives will be set as a key performance area for senior
staff, particularly in areas under their influence, e.g. Employment
Equity.
The
Scorecard
The scorecard provides
a broad-based set of measurement indicators for measuring B-BBEE progress. It is
applied by The East Rand Chamber Of Commerce and will act as a guide and
scorecard to divisions and suppliers. Specific terms used are defined in the
scorecard explanation and practical examples have been included.
The total score
achieved, indicated as a percentage, was rated according to the following
scale:
|
BEE
Status |
Qualification
|
BEE
procurement recognition level |
|
Level One
Contributor |
≥100 points on
the Generic Scorecard |
135% |
|
Level Two
Contributor |
≥85 but <100
points on the Generic Scorecard |
125% |
|
Level Three
Contributor |
≥75 but <85
on the Generic Scorecard |
110% |
|
Level Four
Contributor |
≥65 but <75
on the Generic Scorecard |
100% |
|
Level Five
Contributor |
≥55 but <65
on the Generic Scorecard |
80% |
|
Level Six
Contributor |
≥45 but <55
on the Generic Scorecard |
60% |
|
Level Seven
Contributor |
≥40 but <45
on the Generic Scorecard |
50% |
|
Level Eight
Contributor |
≥30 but <40
on the Generic Scorecard |
10% |
|
Limited
Compliant Contributor |
<30 on the
Generic Scorecard |
0% |
The Company will
strive to be classified as a Level One Contributor by 2016 and preference in
Procurement will be given to suppliers that fall into the higher levels, based
on the same Broad-Based evaluation methodology of other
companies.
|
(Owner) |
|
(B-BBEE
Representative) |
|
(JOB
FUNCTION, FULL NAME AND SURNAME) |
|
(JOB
FUNCTION, FULL NAME AND SURNAME) |