While training budgets are some of the first to be cut when times are tough and the bottom line dips, new legislation will penalise companies quashing spend that could ultimately support economic growth.

Introduced on 1 May 2015, the revised B-BBEE scorecard stipulates that companies double their spend on training – from the current 3% to 6% of payroll – in order to meet the mandatory eight out of 118 points on the scorecard. The top-down enforcement style of this blanket solution has many business owners up in arms.

Intake of learnerships by South Africa’s transport and logistics sector has never been higher, and demand for Supply Chain Management (SCM) MBAs has skyrocketed. The sector, contributing nearly 13% to South Africa’s GPD, is well positioned to remedy the country’s unemployment rate.

“The demands of the scorecard can be achieved most cost-effectively by uplifting the skills of those same unemployed youngsters,” explains SCM expert and training provider Charles Dey. “By spending the same rands on the right people in the right programmes, 25 B-BBEE scorecard points can be attained.”

Dey, alongside industry training doyens Tholsia Naidoo and Dave Walls of the Institute of Quality (IQ), spoke during the 37th Annual SAPICS Conference for supply chain professionals on the revised scorecard and its likely bearing on business.

Balancing act

While these changes could bolster SCM talent development and are in line with South Africa’s National Development Plan to create 11 million jobs over two decades, Dey admits that from a greater economic growth standpoint, the implementation could have been timed better.

“Where SA business needs to be extremely robust, placing such a huge emphasis on skills development without linking it to the capabilities needed in reality, might be seen by some as ill-considered, especially in terms of timing, as there are so many variables currently making business in South Africa very hard,” he explains.

Dey, Naidoo and Walls explained that undeveloped companies could have it easier than older companies established on pre-BEE criteria. “It is immensely important for these companies to remain aware of the changes in BEE legislation and match rate of transformation with rate of growth. Spend 2.4% of payroll to avoid being penalised, or just focus your training efforts on learnerships.”

Administering learnerships is traditionally very complex, a fact that isn’t likely to change soon. “Until a change happens, no matter the size of your payroll, skills development is more an imperative now than it has ever been,” says Dey.

“SCM undoubtedly has enough to pay attention to, and should partner with experts that can help navigate current complexities,” adds Naidoo. “Team up with training providers that can develop initiatives that will not only give you all the possible B-BBEE points and benefit from all the incentives available, such as those from SETAs, but also help you to build a robust business.”

“Businesses should not relegate training to an operational level. It should remain a strategic imperative at board level. Skills development should change into talent development and make it one of the strategic pillars of a business,” closes Walls.