What is a BEE RoI? Return on Investment (RoI) deals with the money you invest in a specific project, and the subsequent return you realise from that investment. In the case of BEE, most people will measure ‘BEE RoI’ in the form of BEE points, and eventually a BEE Level. No. Your costs should be reflected in relation to your business gains. You should always strive to spend less and earn more. An effective RoI model should clearly measure costs, and be portrayed in relation to revenue generation, client retention and overall organisational benefits. Case Study: Leading Construction Firm J.C Van Der Linde VenterPivot back to basics: Unpacking the underlying principles of BEE
Jacques du Preez, Executive at J.C Van der Linde Venter, explains the grudge purchase stigma surrounding BEE, resulting from companies lacking in pertinent knowledge and the adequate support structures (platforms) to execute BEE mechanisms across all BEE elements. BEE expenditure should lead to significant commercial benefits.
BEE expenditure is often allocated symptomatically as quick-fix measures to quickly improve a scorecard component before a BEE verification, or to accumulate sufficient points to comply to bare minimum regulation. This generally results in funds not being strategically allocated with sustainable longer term solutions in mind because BEE spending is used as a quick fix vehicle to score once off points with the purpose of landing a verification certificate in the nick of time.
Jacques believes that the formalised structure provided by BEE Analyst took the value outcomes of this partnership to the next level during the previous 12 months. It has led to real commercial benefits for our businesses, while reducing our BEE costs.
Writing a cheque to make the effort go away and delegate the entire BEE initiative to a third party is theoretically not a half-bad idea. However, the key to maximising your BEE RoI is by taking control of it through, first of all, understanding the basic principles of the BEE Codes, secondly, understanding the cost of BEE projects leading to BEE points, thirdly through successful implementations and, lastly, followed by accurate RoI measurement.
The BEE Codes are based on five main principles:
- a procurement incentive to businesses: a higher BEE level should lead to increased revenue
- an equity drive: getting black people to earn shares
- people development: skills development should feed employment equity with black talent
- supply chain development: enterprise and supplier development funding should feed new Black-owned suppliers into your supply chain
- and a strong community outreach principle
These principles should cascade into the foundation of your BEE strategy. They are feeding channels to strengthen the main BEE elements, and eventually you earn BEE points without incurring direct BEE costs. This strategy will satiate scorecard compliance sustainably, increase economies of scale, and significantly improve RoI for the long haul.Tipping the scale
If you do it right, you can earn 73 BEE points (BEE Level 6) without spending money on BEE specific projects. And this is a fact.Follow the nifty BEE Weighted Scale Model as developed by BEE Analyst.
In essence, you have Ordinary and Extraordinary Expenses (BEE) in the Weighted Scale RoI model. On the one side you ‘Earn BEE points without spending money’, as opposed to the other side; where you have direct BEE expenditure, year on year, to earn BEE points.Conclusion:
BEE is here to stay, regardless of our economy being in ICU, in junk status or Covid-19. The South African economy must become more inclusive.
A mind-shift should occur from implementation focused (scorecard elements) to a strategically aligned (four pillar) approach. Equity transfer, people development, supply chain optimisation and community outreach.
Simply follow the key principles to BEE success: Understand the basic principles of the BEE Codes, understand your costs, plan your investments, implement your projects, and measure your RoI.Choose Smart, BEE Smart
BEE Analyst has a proven track record, and digital solution, to navigate the byzantine BEE legislative environment, achieve desired BEE levels, and reduce BEE costs