True BBBEE Needs to Form Part of Embedded Business Strategy

Tsebo Outsourcing Group (Tsebo) is a company who long ago realised that empowerment doesn't end with black ownership and management.

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For Tsebo, transformation needs to impact all levels of the organisation and management strongly believe in continual promotion of BBBEE as part of their business strategy, as opposed to a parallel reporting or compliance requirement.

It is this thinking that has seen Tsebo become one of the first large corporates to be rated a level two BBBEE (broad based black economic empowerment) contributor, in line with the Department of Trade and Industry's (dti) scorecard.

CEO Clive Smith explains how the Group's emphasis on sustainability has shown dividends. "The key issue around BBBEE is for it to become part of the organisational strategy, often businesses view their BEE strategy as a peripheral, without understanding the details of BEE."

Tsebo took the decision many years ago to relook and realign their business strategy to achieve the objectives of BEE. Over the last ten years it has become part of how they do business, who they do business with and who benefits from the business that they do.

The result that this has had on Tsebo as an organisation and on their BEE score, has been very positive explains Smith. In 2007, Tsebo achieved a level three rating, with Smith stressing realistic targets have been set that are achievable and take cognisance of industry and economic prohibitors and led to their improved rating.

Having concluded a private equity deal in January with Absa Capital, existing equity empowerment partner Nozala Investments and new empowerment partner Lereko Investments, Smith reiterates the Group placed great emphasises on maintaining and improving their BBBEE credentials, throughout the deal process.

Despite the Group achieving a level two rating, it realises that there is much work still to be done, especially when factoring in growth strategy, both organic and through acquisition. In addition, with a short supply of experienced black management skills and empowered suppliers in the country, Tsebo understands that it has a role to play in mentoring and growing this pool of individuals and organisations.

He says their empowerment achievements have not happened over night, but over decades and remain a priority of the leadership team. "Together with buy-in and commitment from management, employees, shareholders and other stakeholders, this ongoing tenacity in rolling out the objectives have lead to the success of our BEE implementation as a critical strategic imperative."

The Group introduced affirmative action in 1981 and by 1996 was being recognised by the Black Management Forum as the most progressive unlisted company in the country. In 2005, it was given an AA Empowerdex rating, one of the first large corporates to attain the double A status.

Smith explains BEE has to be a board imperative and should not be seen as an audit or compliance requirement, but rather as a mechanism to drive increased performance.

"As with any other strategy, a BEE strategy is only as good as the organisation's ability to implement and deliver the strategy. Tsebo, as a Group, has a very aggressive approach to implementation. Issues agreed at the strategic level are introduced immediately, and the momentum gains as action is taken. A proactive approach by the Board has been critical to Tsebo's success."

According to the dti's scorecard, the level two rating means Tsebo achieved a BBBEE procurement recognition level of 125%, enabling Tsebo customers to claim R1.25 BEE spend for every R1.00 spent with the Group directly or any of its divisions.

Group Chairperson Dr. Lulu Gwagwa further explains how their effective 55,42% black shareholding demonstrates that BBBEE success is not based purely on shareholding but rather on integration within an entire organisation.

Of the Group's nearly 13 000 employees, 90% are black and of this, almost 35% are in management positions. Skills development, outcome-based training and learnerships are vital in the growth of the Group's employment equity plans.

Both Gwagwa and Smith agree management training programmes ensure that skills obtained are maintained and developed for the future, which are important to a company such as Tsebo, who pride themselves on always looking ahead and setting new goals.

"We have 143 learnership programmes active throughout the Group, showing our commitment to future growth, as well as promoting our country's growth, by converting the raw talent of South Africa's young and growing population into technical skills," says Gwagwa.

Of these learnerships, 43 are third year hotel school students who are completing their six-month practicals, while of the 100 new learnerships which started in August 2008, 72 were unemployed and now have a hopeful future. The programme participants go through a 12-month programme and upon completion, Tsebo will strive to employ as many as possible.

To continually monitor their progress and achievement against the deliverables set for that period, Smith meets with the transformation team on a monthly basis. If the results are not inline with the objectives set, these are dealt with at the highest level. While the Group has provided ongoing education and awareness for all employees and management, the objectives are a board level imperative and part of the key performance indicators for individuals and for the organisation.

Tsebo believe transformation becomes real when a company addresses all seven elements of the BEE scorecard, with equal attention to a step-by-step approach to ongoing transformation.

Furthermore, companies need to remember best practice BEE is not about perfect scores, rather it is about an inclusive approach to the intent of BEE to provide a platform for participation at all levels, and a transparent approach to reporting and compliance.

Gwagwa emphasises if more companies can focus on what they can do, as opposed to getting stuck in the challenges of what is difficult to achieve, South African can expect to see true transformation taking place, as sustainability and the future growth of South Africa and the hospitality industry are directly linked to black empowerment.