Client preferential procurement benefits

Three interviewees confirmed that their clients had asked for their BEE credentials because of preferential procurement.

Table 6.30: Prerequisite for government or big business benefits

Category Responses

18.5 “When it comes to pitching for new business, for example if you look at government entities, BEE will count more for you.”

“I think it was, a lot of the big companies you deal with it is mandatory. We do have local clients and felt this was very important.”

“In Cape Town we don’t really have government business and probably one of the reasons why there has not been that much pressure, and the biggest clients will be the JSE listed ones so there’s a requirement on them.”

Category 18.5 – Prerequisite for government or big business benefits

Three interviewees disclosed that BEE credentials were important in order to retain and acquire government business or big companies.

Table 6.31: BEE training received from big clients

Category Responses

18.6 “So for us the biggest factor has been that our big client has been the greatest teacher and we can see a knock on effect. It’s that bigness of thinking that’s helped us understand it.”

Category 18.6 – BEE training received from big clients

One interviewee maintained that the greatest benefit that they received from their then-poor BEE credentials, was BEE training from their largest client.

Table 6.32: True value of BEE credentials debate

Category Responses

19 “Does a difference between a scoring of 5 and one of 8 make a difference to whether I get the job or contract or not? So there’s a bit of a gap in understanding how much does it really count. I know you have to have a certain minimum score before they’ll even look at you, but how much does that count in relation to other things? It becomes a numbers game for procurement people, but if you look at tenders over R500 000 they work on the 90/10 principle or 80/20, and the truth is that the BEE component of that is only 10, which in the greater scheme of things is not really counting much. So does it matter if I’m BBB or AAA?”

“… there will always be people that push the law as opposed to the spirit of the law so there’ll always be people that try use the system to their advantage, but even if that’s the case it has to have an overall positive effect for the country.”

Category 19 – True value of BEE credentials debate

One interviewee pondered over the value of having good BEE credentials in terms of whether they would really make a difference in acquiring new business. Another added that there would always be individuals that attempted to use BEE to their advantage as opposed to real transformation, nevertheless, it would still benefit South Africans.

Summary of responses

Advertising agencies listed multiple benefits and generally the greater their BEE credentials, the more benefits were highlighted. Two advertising agencies were not aware of receiving any benefits from their BEE credentials (which were amongst the lowest). The diversity of staff benefit was a fulfilling finding, as this was one of the problems raised at the parliamentary hearings, while it is positive that nearly half of the interviewees view this reality as a major benefit of BEE. Good BEE credentials have numerous benefits that aim to uplift Black staff, which is one of the primary reasons for development of BEE. There were varied and similar opinions concerning the benefits of BEE credentials in terms of retaining existing clients and acquiring new business. Most thought that it was necessary to have some level of BEE credentials, either to retain existing clients or to be granted access to pitch for new business. However, these were not seen as reasons why advertising agencies should be awarded new business, but rather factors such as creativity or because they empowered Black PDIs.

A third of the advertising agencies recognised that BEE credentials were important to their clients because of preferential procurement and consequently kept their clients satisfied, although it was disappointing that only a small number of clients requested BEE credentials. A quarter of the respondents acknowledged that having BEE credentials was essential if their advertising agencies desired to pitch or retain big clients (such JSE listed companies) and lucrative government business. The advertising agency that received BEE training from their client resulted in this advertising agency climbing four BEE contribution levels in the last couple of years, as well as passing on this benefit by, in turn, educating and training their top suppliers in terms of BEE. This is beyond a doubt what real transformation is about. The fact that some advertising agencies only view BEE in terms of acquiring new business or whatever they can get out of it, is disappointing, as this indicates that they do not fully understand the true value of having a transformed company.

6.2.10 Incidence of ACA membership

92%

8%

Yes No

Figure 6.5: ACA membership

Eleven interviewees confirmed that their advertising agencies were members of the ACA and one added that they personally served on the ACA board. One interviewee disclosed that their advertising agency was not a member of the ACA.

Summary of responses

It is an encouraging finding that a vast majority (eleven) of the advertising agencies are members of the ACA, since they have been the driving force of transformation in the advertising industry. The single advertising agency that did not hold ACA membership believed that costs were not worth the benefits, while they also did not regard themselves as an advertising agency, but as marketing optimisers.

6.2.11 Awareness of MAC Transformation Charter scorecard targets

83%

17%

Yes No

Figure 6.6: Awareness of targets in the MAC Transformation Charter scorecard

Ten interviewees acknowledged that they were aware of the targets in the MAC Transformation Charter, while the other two were not aware of them.

Summary of responses

A vast majority of advertising agencies (ten) were aware of the MAC Transformation Charter’s scorecard targets and two were not, since they were either not a member of the ACA or the interviewee had recently been employed by the advertising agency.

6.2.12 Attainability of MAC transformation targets

Three interviewees clarified that they had already achieved the 2009 targets, while five implied that it was their intention to comply, and two stated that they were uncertain as to whether they would be able to attain the targets and, as already mentioned, two were not aware of the targets.

Category 20 – Issues or uncertainties relating to the MAC Transformation Charter and/or targets All interviewees that were aware of the targets mentioned hindrances in attaining them, as well as uncertainties pertaining to the MAC Transformation Charter and other related reservations.

Table 6.33: MAC Transformation Charter has not been ratified

Category Responses

20.1 “I have, if it is not gazetted as in this case, there is really not much the agencies can do.”

“… until it is ratified I don’t know which companies will be motivated other than bragging rights…”

“… once it is published and ratified we will evaluate to see whether, how close we are to this industry charter.”

“We’re trying to comply with the industry charter, but it hasn’t been formalised yet.”

“Waiting on the MAC Transformation Charter to be approved…”

Category 20.1 – The MAC Transformation Charter has not been ratified

Five interviewees observed that the MAC Transformation Charter had not yet been gazetted.

Table 6.34: International ownership constraints inhibit MAC Transformation Charter targets

Category Responses

20.2 “In some instances we can’t because we’re part of a global network and there are restrictions primarily around ownership and our issues are particularly stringent, it’s more of a challenge in our network.”

“… I think the interesting discussion will be about ownership based on what I’ve already told you, because it will be a pain in the butt.”

“… it’s a very difficult one because we live more and more in a global world and our mother company wants bigger ownership because Africa is a huge opportunity for everyone. Under huge pressure for them to buy back ownership.”

“If you have an international partner that owns 50% and you are aiming for 40% according to the charter then what is left for anyone else who started the agency and that’s the difficulty of the charter.”

Category 20.2 – International ownership constraints inhibit MAC Transformation Charter targets Four interviewees stressed that international ownership constraints made it difficult for the local advertising agencies to attain charter targets in terms of ownership.

Table 6.35: Differences between MAC Transformation Charter and DTI’s generic scorecards

Category Responses

20.3 “It varies, some things are weaker. I know previously on the BBBEE scorecard there was a lot more differentiation for Black women as opposed to the charter that will probably affect what they want to improve and are adding towards.”

“Waiting on the MAC Transformation Charter to be approved and I think there is 5 pillars not 4 for the industry between 5 - 35 million...”

Category 20.3 – Differences between MAC Transformation Charter and DTI’s generic scorecards Two interviewees revealed that there were differences between the MAC Transformation Charter and DTI’s scorecards.

Table 6.36: MAC Transformation Charter versus DTI’s generic scorecard

Category Responses

20.4 “The ACA has its own charter, so there’s been debate about whether we look at the charter or the scorecard. The charter was developed prior to the government publishing what they believe was important and with the industry felt what they felt the government would find important. So now I think the one developed by the government is the one to follow, but having said that you don’t want to have an attitude once we’ve achieved that we okay. I think the charter is an important consideration in the long-term, because I would imagine, pure speculation that as everyone starts to use the scorecard and as they progress they will look to develop it further and various measurements will change and be approved.”