Seeking equality by keeping score

Marketplace Staff Apr 17, 2008

Seeking equality by keeping score

Marketplace Staff Apr 17, 2008


TESS VIGELAND: Apartheid ended in South Africa more than a decade ago. But whites still control 90 percent of businesses. So the country recently launched an affirmative-action-style program to force whites to bring black workers into all levels of their companies. The larger goal is to create more wealth for everyone. But getting things started required a new type of racial auditing in the workplace. Terry FitzPatrick reports from Cape Town.

Terry FitzPatrick: There are hundreds of black workers at John Lewis’ factory. Crews build metal frames and pour cement into molds to make concrete building components.

John Lewis: This is heavy, heavy work.

Despite the large number of black workers on the factory floor, what worries Lewis is what’s happening in the front office. He runs the company’s affirmative-action program.

Lewis: This is your mound of paper that you need to plow through.

Lewis needs to build a better rating for his company under South Africa’s BEE regulations. That stands for Black Economic Empowerment. It requires companies to do more than hire black workers. They must make annual scorecards to track black ownership, management, training and suppliers.

Lewis: I suppose the word is it’s somewhat daunting. It takes a lot of time to get your head around it. And then you also have to create a proper database so you can track exactly where you are going.

The scorecard system is more carrot than stick. There’s no fine for a bad score, but businesses with a good rating are first in line for government contracts.

Keith Levenstein: OK, so let’s get started . . .

The complicated BEE rules have spawned a new industry of consultants who teach companies how to improve their ratings.

Levenstein: OK, so let’s take a look at the scorecard. Ownership is worth 23 points, 20 for procurement, 5 for socio-economic development.

Consultant Keith Levenstein leads this class through a sample scorecard. Each category has a target. Companies should have 25 percent black ownership. Junior management should be 68 percent black. Levenstein says business owners worry if their scores are poor, their bottom line will suffer.

Levenstein: It’s a fear of change and the fear of not knowing what they really need to do. It’s our job to help our clients understand the codes and to find the points that they can earn and to be sure that they do earn the points.

Some observers complain the scorecard forces whites to recruit unqualified black partners just to score ownership points. Paul Hoffman is an attorney at a think-tank called the Center for Constitutional Rights.

Paul Hoffman: You do not promote the achievement of equality by doing a one-off BEE deal with somebody who does not have a clue as to how to bring any value to the deal.

But Mbulelo Bikwani from South Africa’s Black Management Forum says businesses, white or black, need to develop a nation where consumers have money in their pockets.

Mbulelo Bikwani: Those companies that are regarded as white companies must not panic. There is no way that they can function and really make money out of a country where the majority of the people are poor.

Back at the cement factory, John Lewis likes the scorecard because it suggested things he wouldn’t have thought of himself. He earns points with a scholarship program to train black engineers.

Lewis: As you get into the process you actually begin to realize that this is not just something that government is imposing, that in fact it makes a hell of a lot of sense.

Lewis says the scholarships aren’t a cost, but an investment. And proponents of BEE say that’s the goal. Until white companies invest in uplifting the black majority, South Africa will remain a land of economic Apartheid.

In Cape Town, I’m Terry FitzPatrick for Marketplace.

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