17 minute read
When, why, who, and how to retrench
On 29 July, CHRO South Africa hosted a webinar that examined the challenges HR leaders face when their organisations take the tough decision to retrench workers, especially during the Covid-19 crisis.
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BY CAYLYNNE FOURIE
Johan Botes
“According to the National Income Dynamics Coronavirus Rapid Mobile Survey, approximately three million people have lost their jobs due to the economic decline as a result of Covid-19,” CHRO South Africa managing editor Sungula Nkabinda said as he introduced a webinar discussion about the right to handle retrenchments, which was hosted on Wednesday 29 July.
“This represents an 18 percent decline in employment from 17 million people employed in February to 14 million people employed in April 2020.”
He then introduced Baker McKenzie’s Employment Practice Group head Johan Botes, who provided some context around the legislative environment both locally and abroad when it comes to the way companies are responding to the pandemic.
“Prior to the pandemic, South Africa had an official unemployment rate of 27 percent,” Johan said. “It has since gone up to 31 percent, with the Minister of Labour predicting a jump to 45 percent at the end of the pandemic, unless we do something dramatic.” However, he pointed out that, while there are concerns about protecting jobs, businesses are also faced with protecting and positioning their companies in a way that they are able to survive the pandemic.
“Businesses are looking at restructuring their organisations in light of what’s happening around them,” he said. “Many are coming to the conclusion that they don’t need the same headcount as they had before the pandemic.”
From a legal perspective, Johan said that South African law does not prohibit staff redundancies during the lockdown and Covid-19 period. “An employer can still legitimately, lawfully and fairly, terminate staff because of redundancies or operational requirements.”
However, employers do have a duty to consider all alternatives short of termination when it makes staff redundant, like the availability of government funding that has been made available. Sungula then played a video interview with National Union of Mineworkers president Joseph Montisetse, who has been dealing with companies initiating Section 189A processes of retrenching employees en masse, as well as continuing negotiations around salary increases. “We are currently engaging with several companies in the diamond and coal industries regarding salary increases in compliance with the Labour Relations Act,” he said. However, the union has been getting pushback from the companies within this industry, saying that their cash flows and revenues have been under pressure due to Covid-19. “But, as a trade union, our main objective is to ensure our members are getting what they are due and we do not budge.”
The guidelines of a restructuring process
Joseph advised that, when engaging with unions like NUM around retrenchments, companies should be transparent. Sungula then introduced Mercedes-Benz South Africa executive director of HR Abey Kgotle, who said that, in any restructuring exercise, you will have different interests from the various parties you engage with. “You have unions, whose primary interest is securing the livelihood and jobs of their members. In mining, for example, you have the DMR, which assists unions in their processes. You also have the community, because most of the mines operate within spaces where there is a very close interface with the communities,” he explained. Abey added that the crux of any restructuring exercise is to find a way to balance all these separate interests and to get everyone to appreciate why it’s critical to undertake the exercise and how to minimise its impact. He echoed Joseph’s advice that transparency is critical during restructuring exercises. “Being transparent about the challenges you are facing makes it easier for people to understand where you are coming from and why it is so crucial for you to undertake the restructuring process.” He stressed that it is important to have an open mind when going through a restructuring process, because the more you engage with the different parties involved, the easier it is to find a solution that you might not have thought of. “With South Africa having all these structural problems, it also becomes critical for your business to play a part in helping to resolve some of these challenges, as they can have an impact on the sustainability of your business.”
Abey Kgotle
Impact of retrenching
Johan said that one of the things leaders of organisations often don’t think about is the intangible effect of redundancy and restructuring on the staff that are left behind.
“Research has shown that 76 percent of the staff that remain behind said that they were less productive following such an exercise,” he said. “The psychological impact is very difficult to show on a spreadsheet.” He explained that organisations who have gone through this process usually see an increase in absenteeism and presenteeism as employees are less motivated and aren’t as loyal as they used to be. Abey concluded that, when companies are considering restructuring, they need to ensure that they do it quickly and with empathy and ensure the safety and wellbeing of the employees that are left behind, as you will need them to help you carry the business through the restructuring.
CUSTODIANS OF ETHICS
Revelations from the Zondo commission and transgressions from companies such as KPMG and Steinhoff have highlighted the reality that there is an ethics problem in South African government and business. In this article, Servest Group HR director Lungile Langa shares her views on the subject of HR’s role in driving ethical leadership.
BY PUSELETSO POMPEI
Lungile Langa, HR director at Servest, says that corruption and wrongdoing often seep into organisations because a lot of people look away or do not raise the alarm when they encounter concerning activities. She emphasises that, “as an HR professional, your voice is important and if you don’t raise a concern as soon as you are aware of something out of place, it raises questions about your credibility and in the long-term, can negatively impact the integrity of your organisation.”
Lungile notes that a lapse in ethical judgement happens both in the public and private sector.
Cases of transgressions from companies such as KPMG and Steinhoff illustrate that unethical behaviour cannot be restricted to any one sector.
Cases have illustrated that, whenever misconduct is uncovered, the fallout can be considerable given breach of trust with stakeholders. The damage to an organisation’s reputation can be difficult to repair.
Beauraucracy the culprit.
Lungile notes that in the private sector, speed is often a priority, so approving budgets and signing off spend in the private sector is tied down with less bureaucracy. She notes, however, that in public entities, there tends to be a much longer, more cumbersome procurement process. “For example, when selecting vendors, you undergo a tender process that involves a panel. There are also checks and balances in the private sector, but ethics can be compromised by the need for speed. The risk in that arena arises when you have an HR professional with no integrity bending the rules at the expense of the company,” she says. In the public sector, cases of ethical transgression have evoked anger and demands for accountability. Public Service and Administration Minister Senzo Mchunu recently established the Public Administration Ethics, Integrity and Disciplinary Technical Assistance Unit, which will conduct ethics profiles on all employees in the public administration.
The unit was created to support and provide technical assistance for the management of ethics, integrity and disciplinary matters relating to misconduct in the public administration; Develop norms and standards for the above; build capacity around the disciplining of misconduct; strengthen oversight of ethics, integrity and discipline; and to intervene in cases where systemic weaknesses are identified; promote ethics and integrity; and cooperate with other institutions and organs of state. The Minister indicated that precautionary suspensions related to unethical behaviour stood at 444 cases on 31 December 2018.
Sometimes a matter of self-preservation
Reflecting on cases where HR professionals allowed unethical activities to take place in the workplace, Lungile suggests that, when it comes to things like irregular appointments, HR’s choice to turn a blind eye can be a move of self-preservation. “In these instances, HR casts aside their conviction in favour of going along or wanting to please the CEO or COO. This can happen when the HR professional is invested in avoiding any confrontation or maintaining the peace by not being firm or pushing back on unethical behaviour.” She says it is important for HR to set boundaries, especially in issues that fall in their scope of responsibility. “Even if line management controls the budget, you must understand that you are an expert in employee behaviour and competencies, and should not defer a decision as pivotal as hiring, without expressing your professional opinion. You must ensure that your advice is taken seriously, and not succumb to pressure from above to go with certain decisions that are wrong.”
Strong leaders are required
Lungile adds that HR professionals can sometimes be too focused on keeping the peace. That said, they do need to take up their rightful place and prioritise doing the right thing over pleasing others.
“You have to realise that, if you don’t put your views forward, your passivity can compromise the entire organisation.” The role of whistle-blowers in exposing wrongdoing has come to the fore in many of the prominent cases presented at the Zondo Commission and beyond. High-profile cases have ranged from questionable recruitment to wrongful dismissal at organisations such as SAA and SABC after whistle-blowers stepped forward to expose activities, and HR has a key role in protecting them. “As the keepers of culture,” says Lungile, “HR practitioners should lead the charge in creating an environment where staff have safe avenues for reporting wrongdoing.” This includes setting up channels or facilities that enable employees to reliably make safe disclosures of unethical conduct.
Protect whistleblowers
According to the South African Board for People Practices, HR should take the lead when it comes to whistleblowing, especially in cases where there is reluctance to investigate. Some of the foot-dragging is based on internal politics and bias, for example when a high performer or senior executive is implicated. HR needs to ensure that those involved in an investigation are able to act impartially so as to not compromise the investigation process. Additionally, they should ensure that investigative practices do not breach ethical and legal requirements and continually monitor the investigation for signs of blind adherence to initial assumptions, which may have been inaccurate as they were of necessity based on incomplete evidence and preconceived theories. Workplace whistleblowers can rely on the protection afforded by the South African Protected Disclosures Act (PDA), and the Whistleblowers Act, provided that they made a protected disclosure.
The act encourages employees to raise alarm where they are aware of criminal or other irregular conduct in the workplace, whether this is in the public or private sector. It seeks to create a culture of disclosure of information on unlawful or wrongful conduct by providing protection against reprisals. The aim is to eradicate criminal
Lungile Langa Group HR Director, Servest
Work: Lungile’s 20-year career has included serving in executive roles at various JSE-listed companies. She has experience as an HR leader, including 12 years at executive management level. She served as an HR executive for Telkom. Prior to that, she was the head of HR at Momentum Retail. She also has her own industrial psychology consultancy. Education: BA, Psychology (University of Johannesburg), M Phil, Industrial Psychology (University of Johannesburg)
and irregular conduct by organs of the state and private bodies.
HR needs to ensure that whistleblowing is also reflected in the organisation’s policies and ensure implementation of Protected Disclosures Act, which states that employers should authorise appropriate internal procedures for receiving and dealing with information about improprieties, and take reasonable steps to bring the internal procedures to the attention of every employee and worker.
Integrity is instilled from the top
In terms of whether integrity is inherent or learnt, Lungile says some people are naturally inclined to view the world a certain way, or they can be taught as they progress in life. “In HR, everything we do leans on integrity; in this field if you don’t have honour you won’t last. As a leader in this role, you are expected to set the tone for the rest of the organisation. You have to be an example, walk the walk, safeguard the integrity of the organisation and make sure that policies and issues of discipline are upheld.” Codes of corporate governance (such as King IV), the Company’s Act and similar around the
world are putting ethics management at the top of the leadership agenda, Lungile says, adding that accountability circles back to you as an HR leader. “You are ultimately responsible for providing procedures and guidelines for discipline in the organisation, which can make you unpopular, but is part and parcel of the job."
Embedding ethics and integrity in the formal sense requires a concerted effort which entails having a strong code of ethics in place which sets professional standards and expectations of behaviour for everyone in the organisation. Additionally, ethical conduct has to be led from the top. Lungile emphasises that setting standards and creating a culture where ethics are respected, depends not only on the leaders of the organisation, but also on the reputation and standing of the HR professionals in the organisation. “Ideally, you want your organisation to view HR as a critical function. In some organisations, HR is still perceived only as a support function, rather than a strategic partner. A highly respected HR office is often hard-wearing and therefore the professionals in that division have to be empowered to act on behaviours that don’t meet the organisation’s ethical standards.”
L&D OVER A GLASS OF VINO
Learning and development (L&D) budgets are often the first to be cut when companies attempt to survive harsh economic conditions. But Skillogical is working with Winetech to redefine return on investment of L&D to ensure it continues to build its people capacity despite the current economic reality.
The SA Wine Industry has to survive in such harsh conditions, initially brought The four stakeholders about by the ongoing drought and recentTo get them right, Kachné says skills development inily by the implications of the lockdowntiatives are dependent on buy-in and support of four related regulations. Winetech learning stakeholder groups, namely, providers, employers, and development manager Kachné Ross learners/employees, and sponsors and industry bodies. is responsible for promoting competence in the industry by making sure L&D initiatives ad“Each of these stakeholders has a different perspecdress the needs of the industry. They enlisted the help tive on what they ‘invest’ in addressing competency of HCM Solutions provider Skillogical to enable their needs and what is perceived to be the ‘return’ on the workforce to be more resilient. investment made,” she says.
Kachné is a qualified viticulturist but because of her passion for people development, she spent most of her career educating the wine industry. She lectured at the Agricultural College Elsenburg for six years and focused on farmworker development for two years thereafter at Vinpro. Her dream is for her department to provide development opportunities, through L&D systems, for the entire industry.
“A fresh look at defining return on investment (ROI) of L&D seems to be vital for ensuring the industry continues to build its people’s capacity despite the adverse economic realities,” says Kachné. Understanding and addressing these perspectives is vital in ensuring the four stakeholder groups remain committed to building or enhancing competence in the industry.
1Providers
Kachné says the learning offered by providers should be cognisant of workplace needs. This implies a concerted effort to ensure the learning programmes being offered are not only focussed on filling seats and generating revenue but also on impacting the critical knowledge, skills and attitudinal aspects of
practitioners. Providers’ initial investment in developing programmes needs to be followed up with an ongoing confirmation that their programmes address workplace needs.
2Employers
Workplace support in identifying and addressing competency gaps and encouraging the integration of newly developed skillsets is a vital component in promoting productivity and reaping benefits from time and resources spent on people development.
“Besides encouraging employees to pursue lifelong learning principles, workplaces are indispensable for entrenching newly developed skill sets,” says Jurie van Zyl, Skillogical’s people development advisor, adding that workplaces will only be willing to support and participate in the development of people if there is a clear link between the time supervisors and employees are expected to devote to skills development and productivity and profitability. Furthermore, direct financial support and sponsorship to minimise direct training cost is not enough motivation to encourage employers to participate in skills development initiatives. Employers will only invest if their return is articulated in terms of measurable cost saving and an increase in productivity.
3Learners/employees
Kachné says the effort expected of people to actively participate in learning and development initiatives goes beyond financial cost. Family time, extra workplace effort to complete portfolios of evidence and dedicated time to study requires sacrifice.
Says Kachné: “These mentioned sacrifices or ‘investments’ need to be outweighed by an increase in workplace confidence and employability brought about by a curriculum vitae that not only contains formal qualifications but also testimonials of workplaces vouching for competence and ability to contribute to healthy workplace interaction, cost-saving and productivity. Increased employability is the
only return that justifies the investment made by employees and learners.”
4Sponsors and industry bodies
Employer interest in skills development pivots on productivity as the driving consideration and for employees it is employability. National socio-economic imperatives form the third set of drivers for skills development.
“The emphasis on achieving targets should balance work placement with the traditional learner throughput focus. Financial aid from sponsors is important, but the impact of creating employment opportunities and supporting work-integrated learning as additional ‘investment’ seems to be the vital aspect that could support the investment made by the other three stakeholder groups," says Kachné.
ROI metrics
Jurie emphasises that the key to developing a process for recording and reporting on L&D ROI is the development of metrics that can be quantified by stakeholders. Metrics are defined as standards of measurement by which efficiency, performance, progress, or quality of a plan, process, or product can be assessed.
“Winetech is proposing a process and a system that will allow stakeholders to record their specific ‘units of measure’ before, during and after learning interventions. The following table suggests the units of measure for the four stakeholder groups,” says Jurie.
STAKEHOLDER
Providers
Employers
Employees
Sponsors & industry bodies
UNITS OF MEASURE
Cost of training
Various units that could ultimately be related to monetary value
Applicability to work Personal benefit
Learner targets & cost
CALCULATION METRICS
Time and cost to develop learning programmes Man-days to facilitate and assess learning Cost of supporting infrastructure such as e-learning platform
Workdays allocated to learning & development Wastage Breakages Work procedure turnaround time Applicability of outcomes to workplace requirements Manager/supervisor support time
Satisfaction with the learning programme Worktime used Personal time used Application to workplace Employability
Number of learners completing the course & employed after a year Cost per programme
