An introduction to BEE in the advertising industry
by Jarred Cinman (@jarredcinman) Few topics cut to the heart of the South African soul as powerfully as black economic empowerment (BEE). While we have all become comfortable with the term, the idea that contemporary South Africans are charged with the redress of decades — even centuries — of inequality remains a difficult and divisive one.
Going back in time and removing prejudice from our laws and society is not an option we have. Therefore, we must systematically intervene in the lives of those who were disadvantaged and give them some kind of requisite advantage now. If this is done right, we should be able to look more like a society where racism did not artificially hold people back.
Since the end of apartheid in the mid-’90s, a series of BEE (sometimes called broad-based black economic empowerment or BBBEE) laws, charters, codes and other mechanisms have been introduced by successive ANC governments. The laws have become more sophisticated, with clear intention to distribute the gains more broadly, rather than simply handing the country’s wealth to a new, differently coloured elite. As a result of this evolution in the laws, BEE is now a very complex animal. In the advertising industry, the latest BEE code is called the MAC Charter (Marketing Advertising & Communications), which prescribes a set of practices aimed at the transformation of this industry in line with the country’s overall BEE plans.
Why is it important?
Before I talk about what the charter says and how to approach meeting these codes, I want to talk about why it is important to do so.
The first and simplest reason is that it’s going to become more and more difficult to do business in South Africa without the requisite BEE rating. The system is designed to reward bigger companies for awarding work to smaller companies with good BEE scores. This laddering model means that regulators really only have to worry about those at the top of the food chain.
The second reason is that being a representative company, with diversity woven into the fabric of your business, is what’s going to enable you to succeed in a diverse country. You cannot market to people you don’t know and never see and with whose lives you have no meaningful connection.
Thirdly, a more-equitable country is a more stable country. We are one of the most-unequal countries on earth, with black people disproportionately represented at the bottom of the economic pyramid. Of course, the issue of wealth is separate, and separately complex to that of race but, because black people are particularly disadvantaged and the majority of the population, BEE laws create upliftment of the poor at the same time.
Lastly, there is a moral imperative for those who own the economy, and have the means, to try and set the balance right. There is considerable anger — I see it in the advertising industry as sharply as anywhere — that, more than two decades after the end of apartheid, the predominant faces in boardrooms are white ones. White people still dominate and control the advertising business in ownership, management and employment equity. As with many other issues raised here, there is a deceptive complexity to this problem. Advertising is not equally regarded along with medicine, engineering or law as a suitable career by all cultural groups. But that ends up being a detail, not a core consideration.
There is a simple truth that sits at the heart of every industry and most businesses in our country: if you are white, you had an unfair chance of being in control, even if you were far too young to be complicit in the apartheid regime itself.
The MAC Charter in brief
Over the next few articles I will be addressing some of the aspects of the charter in more detail. This, however, is a brief overview.
There are six main areas that the charter asks all business to address. These are:
- Ownership (who owns the business)
- Management control (who runs the business)
- Skills development (what you are doing to advance the careers of youth, your staff and the community)
- Enterprise and supplier development (what you are doing to advance new and small businesses in your ecosystem)
- Socio-economic development (how your business is improving the society as a whole)
- Responsible social marketing (a little unclear at this stage but seems to be about the degree to which your business contributes to marketing practices that make society better)
Notice that the emphasis here is wide. Although not all of these are equally weighted, this charter (like many BEE codes) seeks to do more than simply change the colour of your workforce. At its most ambitious, it wants you to deeply transform your business both internally and as a citizen of the marketing industry, and the country.
There isn’t space here to go into all of these in much detail but here are the key facts you need to know about them.
Somewhat controversially, the MAC Charter expects all businesses in this sector to be 40% owned by black people by 2019 (at the moment the target is 25%). Ownership here means actual voting shares.
This poses severe problems for some of the global networks that have purchased South African agencies in recent years, and a lot of work will need to be done to meet this target in some cases.
2. Management control
This area of scorecard measures how much of the business is managed, day to day, by a diverse range of people. Bear in mind that the charter calls for representativeness — not simply colour. That means it rewards a mix of people matching the population makeup of the parts of the country you do business in (as well as gender).
Cleverly, the charter looks at all levels of the business for management diversity — from the board down. Simply employing lots of black interns is thus not a way to tilt the scorecard in your favour. (Bear in mind, these are scorecards — the higher your score, the better your “BEE level”. So for each of these measures, you can score between 0 and a maximum number of points, with a minimum acceptable level specified).
3. Skills development
One of the real focal points of the MAC Charter is the development of skills. More specifically, the government wants to create a glide path for young people, disabled people and other people with poor opportunities into the formal work sector.
A current problem with skills development is that most points are awarded for training with an accredited training provider, while only some points are set aside for informal or unaccredited training. Finding good accredited providers, particularly in the digital part of the industry, is not easy and I’m excited by the IAB SA initiative to create an industry accreditation system that will broaden the pool of providers if it succeeds.
4. Enterprise and supplier development
On par with the impact of getting young people employed is the impact of helping small, black-owned (particularly black-women-owned) businesses to start and become economically active. Points are awarded here for helping small businesses — with money or other assistance — to start. And points are also awarded for graduating these businesses to become suppliers of yours.
This area also included what is known as “preferential procurement” — the ladder mechanism referenced above, where you earn more points for giving business to suppliers with higher BEE ratings themselves.
5. Socio-economic development
Also known as “CSI”, this area is what most people will be familiar with: when business do outreach into communities. It is important to note that simply “doing good” is not enough to earn points here (helping out at an animal charity is not regarded as a BEE contribution). Any charities or organisations you assist should be aligned to helping people improve their lives.
6. Responsible social marketing
It remains to be seen what this part of the scorecard will evolve into. At the moment, the industry is interpreting this in two ways: either as doing “ethical advertising” [complying with the Advertising Standards Authority (ASA) of South Africa standards] or as contributing to the industry by being involved in industry bodies.
That, in a nutshell, is the MAC Charter. I want to emphasise that two things are needed to get to a good BEE level. One is a lot of painstaking, hard work in understanding the charter and meeting the points requirements across the board. The other is a deep and passionate belief that BEE represents transformation for the betterment of our society and our economy.
There are no tricks here. Either you embrace diversity at every level and in every aspect of your business, or you are operating at odds with the reigning desire to redress the imbalance. And, I would argue, at odds with what is right.
By the way, when I gaze around our mostly white management team, I am reminded that we still have a lot of work to do ourselves. But the contributions we have made in other areas are deep and real, and countless lives have been improved through them. And many more can be if we work in concert as an industry to breathe life into the codes.
- Jarred Cinman:
- Big Q Transformation series:
- Mxolisi Goodman Buthelezi: Transformation isn’t dancing for chicken, airtime or policies
- Monalisa Sibongile Zwambila: Transformation needs buy-in on the demand side
- Grant Sithole: Transformation — the proverbial workhorses have bolted
- Zibusiso Mkhwanazi: Transformation — clients must take road less travelled
- Masego Motsogi: What we need to achieve true transformation
- Sbu Sitole: Concept of transformation not embraced by our industry
- Ahmed Tilly: “Some” transformation is simply not good enough
- Ivan Moroke: Transformation apartheid plagues SA ad agencies
Jarred Cinman (@jarredcinman) is a longstanding member of the South African digital industry, having founded one of the first professional web service firms, VWV, in 1995 and the chair of the Interactive Advertising Bureau (IAB) South Africa until 2016. These days, Jarred is co-chief operating officer at VML Y&R Africa Group.
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