BEE report card is in

Independent BEE audit reveals ECOSERV is traveling the right road

As a company that held fair employment practices at its core long before black economic empowerment (BEE) became a government objective, ECOSERV jumped at the opportunity to rate themselves in a recent BEE audit.

DRG Outsourcing awarded ECOSERV a balanced scorecard rating of 60% and an overall classification as a satisfactory contributor to BEE in July 2005, making ECOSERV MD Quentin Hurt a very happy man.

“We consider 60% to be a very good start,” says Quentin. “We were keen to measure ourselves against a benchmark and see how we stack up against what is expected nationally. The results enable us to do strategic planning and prioritize areas for improvement. We aim to be recognized as an excellent contributor.”

Tony Kruger, DRG Outsourcing's HR General Manager, says ECOSERV compares favourably against other companies that DRG Outsourcing has audited over the last 18 months.

“The average score over more than 20 audits that we have performed is 47,3%,” says Tony. “ECOSERV's score of 60% is comfortably above the average. It should be noted that a quarter of the scorecards were for "black-owned” businesses (defined as Indian, African and Coloured) which score very highly on the ownership, management and employment equity elements on the scorecard. This has the effect of raising the overall average score to 67,4%. The average for dominantly "white-owned” businesses is 41,6%.”

More and more businesses are obtaining ratings on their BEE status as a result of the Broad-based Black Economic Empowerment Act (2003), and the draft BEE Codes of Good Practice (December 2004). Key objectives here are to promote economic transformation to enable meaningful participation of black people in the economy, achieve a substantial change in the racial and gender composition of ownership and management structures of existing and new businesses, and to increase access to skills training for black persons .

ECOSERV achieved ratings in excess of BEE targets in a number of categories. One of these was spending on Skills Development for black employees, where ECOSERV achieved a 15% rating compared to a 3% target. “Spending here is probably at its ceiling,” says Quentin. “Education is a critical component of our developing skills base but we must balance this carefully with our performance objectives.”

But in corporate social investment, where ECOSERV has already attained 10% where 3% was the target, the company plans to keep on climbing. “We intend to become even more involved with the community and will be implementing more targeted approaches. In addition to projects that are already up and running, such as the schools recycling programme, we will be sponsoring more functions. An example of this is the Merewent 10km road race on 18 September - aimed at promoting a healthy lifestyle in the areas in which we do much of our work.”

In the discretionary category of Preferential Procurement, ECOSERV scored 30% with a target of 50%. “We consider this reasonable at this stage of our development. It is to a company's advantage to use suppliers that follow BEE codes of good practice. We use a number of laboratories that are BEE organizations and as a result we received a fairly high score in this area.”

Scoring 0% out of 25% in Equity Ownership, Quentin said this category represented a challenge for ECOSERV. “It is crucial for us to address this. We don't want to leap into anything but are pursuing a number of options both internally and externally to resolve some of the shareholding issues.” Nevertheless, employment equity, representative of company diversity, stands at 62% in comparison with the current target of 50%.

In other categories, ECOSERV had even bigger scores to chase. With the target for management diversity standing at 40%, ECOSERV scored 25%. Quentin believes that over time, this target will be met. “It will be a part-natural part fast-tracked progression,” he says. “We have good demographics and in keeping with our development policies, winners will become leaders.”

The focus of employment equity has been an intrinsic part of ECOSERV from very early on. “We have never felt comfortable with equity alone as a model for empowerment. Our company is about the people we employ and the way they conduct business. It is gratifying for us to see that this approach is working to our advantage in terms of government objectives.”

BEE is a voluntary process and the BEE Act does not impose any absolute requirement on businesses to transform their shareholding base to black persons nor to obtain BEE ratings.

“However, Codes of Good Practice will be used by government to bring pressures on non-participants,” says Tony. “Exclusion from access to licenses, state tenders, and preferential procurement policies will limit the allocation of work to those businesses who are not acting in terms of the intent and spirit of the Act. It is safe to say that a chieving authentic BEE changes is fast becoming an economic imperative.”

For more information about BEE ratings, contact DRG Outsourcing on tel (031) 767 0625 or e-mail Tony at tony@drgoutsourcing.com