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Human Resources

How to Make Employment Equity Work for Your Business

Employment Equity is a legal imperative in South Africa, but it also makes smart business sense, with diverse employment companies outperforming competitors by up to 35%.
How to Make Employment Equity Work for Your Business
Image credit: Roxanne Da Mata
Entrepreneur Staff
Editor-in-Chief: Entrepreneur.com South Africa
6 min read

You're reading Entrepreneur South Africa, an international franchise of Entrepreneur Media.

Vital Stats

  • Player: Roxanne Da Mata
  • Company: Strata-g Labour Solutions
  • Visit: strata-g.co.za

Roxanne Da Mata is a Director at Strata-g Labour Solutions. She was educated as an Economist and subsequently developed a keen interest in B-BBEE and its related disciplines. Roxanne has 12 years’ experience in various industries and is a highly skilled and respected Transformation Specialist, heading up the transformation portfolio at Strata-g. 

Q. In what way are many business professionals and owners not getting B-BBEE right in their companies?

Unfortunately, there are a few businesses who are not getting B-BBEE right. That is to say that even those who submit their employment equity plans sometimes go about it erroneously. Unfortunately for these businesses, the Department of Labour has made all efforts to identify the companies that are not taking their duties as Designated Employers seriously. 

Employment Equity goes beyond simply ticking boxes and submitting employment equity plans. It’s about following due process and ensuring organisations transform not only on paper, but in the actual company by being inclusive of designated groups at all levels, including management.

Q. What is Broad-Based Black Economic Empowerment, or B-BBEE?

The Employment Equity Act No 55 of 1998, is a piece of legislation that aims to achieve equity in the workplace. It does this by promoting equal opportunity and fair treatment in employment through elimination of unfair discrimination and implementing affirmative action measures to redress the disadvantages in employment experienced by designated groups. This is to ensure equitable representation in all occupational categories and levels in the workforce.  

Related: How to Build Employees That Will Drive Company Growth

This Act provides for additional reporting requirements from employers with the additional burden of submitting an Employment Equity Report.

All designated employers must, in terms of Section 21 of the Employment Equity Act of 1998, submit an annual Employment Equity report annually.

Q. Who does B-BBEE impact? 

Legislation focuses on two requirements when establishing whether a business is required to report on employment equity or not: the first is the number of heads in the business (50 employees or more) and the second is annual turnover thresholds, which differ from one sector to the next and are stipulated in Schedule 4 of the EE Act.

Q. Why should businesses be paying attention to B-BBEE requirements in their sectors?

Organisations who have any business in South Africa ought to be aware of this country’s past and how certain groups have been sidelined. 

The EE Act promotes equal opportunity and fair treatment in employment through elimination of unfair discrimination, whilst redressing the disadvantages in employment experienced by designated groups. 

Companies should not be pleaded with to be more inclusive; they should from an ethical business acumen transform to be reflective of the varying demographics in which they operate. 

Failure to comply with the provisions laid out in the Employment Equity Act could lead to a company being fined – up to 10% of its annual turnover and being barred from doing business with government. 

Most companies get it wrong by simply only complying with the minimum requirements tabled in the EE Act and as a result lack true transformation or worse, make little progress in transforming as employees leave their employ before upper management levels realise the real benefits of transformation.  

Related: Why Forcing Employees Out Of Their Comfort Zones Achieves Greatness

Most companies simply submit what their current staff composition looks like and then submit the same report for their targeted goals going forward, meaning no change is projected. 

Companies fail to recognise that the burden lies on them to develop realistic and reasonable affirmative action measures, which will in turn benefit the company in the long run by retaining skill and expertise that they have spent years cultivating. 

Employment Equity is not only about appointing and promoting the correct designated groups, but also about what the company’s culture is perceived to be by its employees, the benefits the company can offer its employees, whether it be monetary or not and whether this is in fact enough to keep their employees from flocking to its competition.

Audits by the Department of Labour also found:  

  • Lack of communication strategies to inform employees of the EE Act and failure to keep records as required
  • Assigned EE managers are junior staff, who do not have the necessary authority or resources to execute their mandate
  • Lack of properly constituted consultative forums at workplaces
  • Employers preparing EE plans that are not informed by a proper audit and analysis
  • Employment equity plans prepared do not comply with requirements of the legislation

Q. What are the benefits of embracing Employment Equity in an organisation?

Diversity is key for any business that wishes to grow. Studies have shown that simply having women in top management increases productivity by up to 15%, and makes the company more likely to experience above-average profitability. 

Companies with a diverse ethnicity saw 35% likelihood of outperformance when compared to similar companies.

Then there’s the 10% annual turnover penalty for not complying with EE Act stipulations.  

Q. How can businesses leverage B-BBEE?

Implemented correctly, there are benefits to complying with the legislation. Strata-g has six clients who have received R10 million in skills development funding, thanks to its financial initiative and compliance exercises. 

Set up programmes that ensure a steady supply of individuals from designated groups; this could entail giving young people on-the-job training and absorb them into the company’s workforce. With adequate training, mentorship and coaching, these youngsters could move up the corporate ranks.  

Q. What should companies be aware of?

Compliance with the Employment Equity Act is more than ticking boxes and submitting a report. It’s a dynamic process that each company has to evaluate based on its own merits. And this is where most organisations get it wrong. 

Related: 4 Secrets to Hiring the Best Employees for Your Business

To conduct a successful employment equity exercise, consultative forums need to be properly constituted. 

Ideally, employers should involve a representative from each designated group (based on race, gender, disability and occupational level) in the consultative process and establish proper affirmative action measures that can address the ‘blind spots’ that are costing them valuable talent and ultimately sky-rocketing their recruitment and on-boarding costs. 

Instead, this doesn’t often happen because employers don’t want to disrupt the business operationally.

In these instances, the role of representative from designated groups is often doubled-up and short cuts are taken in terms of retrieving accurate feedback from employees and therefore affirmative actions are taken that do not effectively address the barriers that the companies experience.

Companies wishing to get EE right could outsource, leveraging on the expertise of transformation/equity experts who are specialists in the field.

Related: 4 Ways To Turn Normal Employees Into Super-Engaged Team Members

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