There are number of deals that involve employees as BEE partners.

Theoretically this trend could stem from the reasoning that says that employees have a better knowledge of the business and would therefore be in a better position to contribute to the strategy of the company. Being owners of the business will also make employees more motivated to ensure that the business is sustainable because they would have a vested interest in the business. However some of the reasons that are behind the use of employees as BEE partners stems from the revolt staged by some employees in earlier BEE deals. These deals involved external BEE personalities and the senior and experienced employees felt vexed by this because they felt they could add more value than the external people, so some of them left the companies. This was the case with some deals in the advertising industry, where the creative black people started a mass exodus from some of the agencies where they were not part of any ownership structure. Therefore in order to avoid these types of exodus companies now involve their employees in their BEE deals. Some few deals that come into mind from 2003 to date such as the Investec BEE transaction which involved a combination of external parties, employees and development trust in its deal. This really did set the trend of using a balanced approach to structuring BEE consortiums in the financial services sector. This balanced approach ensured that there was buy-in at the different levels within and outside the company. The Investec deal did not result in any major criticism from any quarters. A similar approach was taken by the rest of the banks. The trend also started shifting further due to the debates around the deals done by other banks mainly around the trend of individuals getting a higher share in the deals than employees and the communities. This raised concern about the enrichment of a few individuals at the expense of a broader base of beneficiaries. Therefore in order to avoid the accusation of enriching a few individuals, companies started going very broad-based. The downside to the employee share schemes is that they may be used to circumvent true transformation from taking place, especially when management has the sole power to appoint trustees in the employees share trust and also determines which trustees get representation on the companys board. In essence there would not be any real change in the decision-making structure of the company. Furthermore some commentators submit that it is difficult for employees representative to go against the decisions that management makes because of the Master-servant relationship that exists between management and the employees. To a certain extent management has the power to determine the fate of the employees in the workplace, therefore the employees would not want to bite the hand that feed them as the saying goes. The remedy to the downside is to make sure that there is appropriate representation by employees in the governing structure of the employees share trust and also make sure that the trustee who will represent on the companys board will be strong enough to take decisions that are in the best interest of the employees even if it means going against management wishes. This reminds me of a black investor who said that he is not interested in going into deals that would not give him the control required to fire the chief executive officer if the need arose. This type of comment does send chills through management spines however if the employees are not given the power to make economic

decisions that are in their best interest, then economic empowerment will always be a pipedream. The recent deals that come to mind that exclusively involved employees in their BEE deal include ABIL and Edcon. In unpacking the Edcon deal one sees more transparency than was forthcoming in previous BEE deals about the value creation that accrues to the black employees within an employee share scheme. There is also clarity about the accrual of voting rights and economic interest to the employees. This is cemented by the fact that there will be 5 trustees elected from the ranks of employees and Edcon may appoint two independent trustees. Edcon has hit the nail in head by doing this, as it sends a clear message that the employees will have a majority voice in the trust because those trustees will be elected by them and would be employees themselves. There is nothing that prevents the employees from electing some people in top management to be trustees, the critical issue is that employees are given power to choose who they want and through that they can be able to influence their economic destiny in the workplace.