BLACK economic empowerment is all about transformation and one of the key transformations over the past 18 months has been the growing emphasis on broad-based empowerment.

Broad-based empowerment looks beyond ownership to wider benefits expected to cascade down to marginalised groups as a result of social investment and more inclusive deal structures. These groups would typically include women, the disabled and the rural poor.

Other components of broad-based empowerment include developing people through education and training, the promotion of black staff to positions of real managerial influence, enterprise development through preferential procurement and other forms of assistance to small, black-owned businesses.

In part, this broadening of the focus is a response to growing public concern about empowerment deals that seem to “empower” the same group of people. This prompted public debate on the subject of empowerment versus enrichment and alerted policy-makers to the need for more inclusive structures.

Government guidelines and the balanced empowerment scorecard today support a much broader vision of empowerment. The process is about fundamental transformation from the bottom up, rather than a single-minded focus on equity transfer to a favoured few.

Even so, celebrity or VIP empowerment has not exactly tapered off. The “usual suspects” continue to make headlines when major empowerment transactions are concluded.

Why is this?

It all comes down to supply and demand. There is a limited supply of black business leaders with strong political connections and high levels of access. At the same time, white business owners demand these qualities (access, influence and stature) when looking for prospective empowerment partners.

This limited supply and perhaps a philosophical preference for “true” black empowerment have led some businesses to empower their own workers by forming trusts and transferring equity into these vehicles.

In this way, workers take a share in the business and are incentivised to remain with the company and contribute to its growth. Low-income earners from disadvantaged communities then become the primary beneficiaries of economic empowerment.

It takes time for the employee’s shares to vest and trust rules usually stipulate that a worker selling a stake must sell the shares back to the trust. But in time, significant wealth transfer is fostered by this approach.

There is good anecdotal evidence that these initiatives are well received and contribute to worker loyalty and motivation. Such schemes sometimes form part of talent retention strategies, creating savings in training and recruitment costs. However, practical experience suggests there are also some shortcomings to employee empowerment on this pattern.

As far as broad-based scorecards are concerned, this model enables the business to put a tick in the empowerment ownership box. But a problem is created by the passive nature of this type of equity participation.

Ordinary workers are not invited to join presidential task teams. They don’t have the ear of policymakers. They don’t maintain networks among officials, regional and national political figures and business leaders.

In short, they are not in a position to make an active contribution when major tenders are submitted or contracts are renegotiated.

When high-profile intervention is called for or lobbying needed, there is no substitute for VIP empowerment.

To get the best of both — community credibility and celebrity engagement — a merger of VIP and broad-based empowerment is needed.

Some “celebrity” empowerment figures are taking the lead in the creation of these balanced models. These individuals create a consortium comprising black business figures and representatives of marginalised community groups. The employees’ trust can then join this broader grouping.

The VIP individual and his colleagues are in place to take on a dynamic role in the quest for new business. The other groupings enjoy a stake in the business and are primary beneficiaries when wealth is created and distributed.

All indications are that broad-based and employee empowerment will not eclipse VIP black economic empowerment. These models will co-exist and collaborate.

Therefore, the private business owner should not be thinking in terms of one versus the other. An inclusive structure is to be preferred.

This may mean more preparatory work — more time and planning may be needed to put together a well balanced empowerment platform.

This can be frustrating for a lean and agile private business that usually gets things done at pace. However, black economic empowerment is not meant to be a quick fix. It is a strategic issue. It is important to get the balance right, even if it takes time.

Horney is a director of corporate and structured finance service providers Spirit Capital.