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Broad-based Black Economic Empowerment as a form of Corporate Social Responsibility

Broad-based Black Economic Empowerment as a form of Corporate Social Responsibility

By Garth Mason who can be contacted at iscc@mweb.co.za;

1. To do or not to do –that is the question

Fifteen years ago the term ‘Corporate Social Responsibility’ may have sounded like a contradiction in terms. Now it is less an oxymoron than an emerging role in the market place. The role of corporations in rectifying social injustice and upholding ethical relationships in the community is changing dramatically. Companies are now seeing their public responsibilities more clearly. The challenge being posed in such initiatives as Broad-based Black Economic Empowerment is: can business take the lead in BEE as a form of Corporate Social Responsibility??

If the answer is yes, what must happen for that corporate body to become a BEE leader? Can organisations grow and contribute to the country’s economic growth by implementing BEE? Can they afford not to do their best by our society? Do they have any social responsibility to their communities beyond compliance with regulations? Can BEE strategies become a market position?

These questions mark a new beginning in the relationship between business and the social contract. This connection is however basic to our quality of life since early times: we depend on other’s well being for our own. In South Africa this means: an economy based on social injustice implies a depleted economy. An economy that is not equably managed will not service anybody in the long-term.

The growing awareness of the social history unfolding in countries like Zimbabwe is helping us to re-evaluate our approach to building a healthy non-racial society and economy. This task is increasingly being assumed by the corporate world. What we do in the next few years, as the Broad-based black economic empowerment legislation is implemented, to protect, maintain and develop our economy will make all the difference in the quality of life for ourselves and for future generations.


2. Stages of social systems change

Environmental movements are the forerunners of CSR. Jeremy Rifkin in Entropy: Into the Greenhouse world (1989) observes four stages of entropy that corporations go through until the system collapses if implementation of new policy flows unchecked. According to him changing systems go through 4 predictable stages:

# Stage 1: The pioneering Stage:

All energy is focused on getting systems in place, making things work, a period of high innovation during which employees are called to sacrifice for the common good.

# Stage 2: The systems up and working Stage:

Elaboration of systems begins. Refinements add to costs and sophistication. More and more people involved in receiving benefit and in maintaining the infrastructure.

# Stage 3: Systems failure

Long-maintained system begins to break down and needs repair:

More rules and regulations passed to keep systems working. More complications and elaborations are prescribed to hold the system together. People senses that this system no longer works, but do not yet have strong new ways or policies to take its place.

# Stage 4: System collapse

People suffer great privation as accustomed system fails them. Chaos may reign. Since it becomes evident the system cannot be repaired or rejuvenated, all energy focuses on regrouping and gathering resources to create new systems – and back we go to pioneering stage.

Do these stages seem familiar to you - particularly Stage 3? Look at your company, perhaps there is a proliferation in regulations? They show a response to the complexity of a system that has begun to fail. More regulations mean more regulations to follow and transgress. Are large corporations still making decisions about people’s lives and therefore are unable to implement policies that actually empower their employee’s and stakeholders?

3. BEE as a legislated reality

Broad-based Black Economic Empowerment is set to become legislation in the next few weeks. It will result in the business environment changing profoundly during the next 12 months. In terms of the entropy model of change, stages 1 and 2 will be most evident in companies. Will we be prepared for stage 3 when it arrives a year or two down the line?

Can companies be leaders in BEE and make money by doing well for society? The answer to this question is yes. Respect for human dignity is good reason for change, but it has to make good business sense for companies to make it work.

Respect for the dignity of employees and understanding the human need for security may prevent stages of entropy from encompassing a corporation. Change management can offer a smoother evolutionary transition. Evolutionary change can be divided into 5 phases. As companies change they go through 5 phases in their evolution towards a new socially responsible ethic. Check where your company may be at this point.


> Compliance issues predominate

> Existing corporate culture demands attention


> Obvious problems are dealt with

> Obsolete and inefficient systems are shut down

> Corporate culture buzzes with new words, new teamwork approaches


> Teams mature; corporate CSR policies are written or enforced

> Innovative solutions to problems researched

> Prototype products and processes are tested

> A new benign centred thinking takes hold

> A genuine CSR approach becomes a real challenge

> Employee reward programmes spur progress


> BEE products go on the market

> BEE processes work and both save and make money

> Companies take leadership through business and community outreach as well as in production

> Corporations develop CSR public images

# The Integration step: company culture transformation

> Old ways are lost in unexpected ways

> The corporate culture assimilates the new BEE culture and ethic and adjusts itself to it

> The company undergoes a long and continuous recycling of these phases until all old thinking is replaced with new approaches

> Employees are deeply trained and committed to this ethic

4. Conclusion

Companies can be engaged in several of these steps simultaneously on different products and processes. The point of doing case studies is to mark the shift in corporate awareness from regulation and control to transformation. Ten years ago many companies did not have CSR policies let alone BEE policies and strategies. Many companies now want to go beyond simply complying with regulations. This is a new concept for corporations. It has developed because of a growing national and international awareness of corporation’s responsibility to their stakeholders and larger society.

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Gary Watkins

Gary Watkins

Managing Director


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