April 2011 â€˘ Vol 29 No. 4
Labour relations and labour law Journal of the South African Institute of People Management www.ipm.co.za
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CONTENTS EDITOR’S LETTER
‘Old school’ versus ‘new school’ – a different perspective on change and performance management By Angela James THE BUDGET AND HR
Balanced budget speech also emphasises employment and job creation By Sumay Dippenaar SKILLS DEVELOPMENT
Woolworths develops much-needed local retail industry skills PAYROLL TECHNOLOGY
Benefits of HR and payroll over the cloud outweigh perceived threat By Dave Philp HR OUTSOURCING
Outsourcing: an option that carries many advantages By Grant Lloyd TRAINING
Good leaders – born or made? By Ken Blanchard MENTOR MATTERS
Moonlight serenade By Gary Taylor LEGISLATION
New company car legislation results in increased taxation and is an administration nightmare BUSINESS DEVELOPMENT
Five building blocks crucial to a solid small business By Pavlo Phitidis ADVERTORIAL
LexisNexis provides customised solutions for HR practitioners CASE STUDY
Organisational change through management development By Ivan Horner and Caryn Conidaris NEWS AND REVIEWS
HR in brief LABOUR LAW
Victory for mineworkers By John Grogan TALENT DEVELOPMENT
Results on demand using Talent 2.0 By Irwin van Stavel GABRIEL’S HORN
A new South African word to become worldspeak? By Gabriel Mofekeng
FORTHCOMING ISSUES FEATURES MAY 2011 – Labour relations, Labour Law, Skills Management and Organisational Culture JUNE 2011 – Leadership, Individual Development Planning and HR sustainability
hy is it that our efforts at improving performance, ours and those around us, are not always as effective as we had hoped? I am not only talking about in business but in our families and social circles too. How do we expect to get our employees to change if we canâ€™t even get our husbands to hand over the remote control? Performance improvement is definitely a two-way street. You need to be persuasive in your motivation for change and have enough insight into the targeted person. The target then needs to recognise and accept to work towards the change for the sake of themselves and that of the relationship. Funny, this suddenly seems more manageable in a work environment. Performance improvement involves constant reassurance and reinforcement of the learned concepts and practice. Right, so my husband should then be weaned off the remote, little-by-little each day, and introduced to programmes that do not involve a referee, a ball of some description, and many men running around a field. In doing this I should be able to persuade him that there are other programmes on TV that we can enjoy together and the more nights we manage to get this right, the easier it will become? It is a nice concept but I think I will have more luck with a change management and performance improvement plan for a staff of 20 people. To find out more on the new school approach to change management read our leading article on the topic on page 4. Enjoy April as we start the change to autumn.
Editorial Alex Bouche E-mail: email@example.com Advertising Bookings Helen Bennetts Tel: 011 326 0303 Fax: 011 501 2878 E-mail: firstname.lastname@example.org Publisher The Eagle Publishing Company Tel: 011 326 0303 Fax: 011 501 2878 E-mail: email@example.com www.eaglepub.co.za Rob Furney Tel: 011 326 0303 Fax: 011 501 2878 E-mail: firstname.lastname@example.org Tony Proudlock Tel: 011 326 0303 Fax: 011 501 2878 E-mail: email@example.com Design Margie Carter Tel: 011 326 0303 E-mail: firstname.lastname@example.org IPM Central Office 287 Kent & Harley Street, Randburg PO Box 3436, Randburg 2125 Switchboard: 011 329 3760 Keith Pietersen Tel: 011 329 3760 Fax: 011 329 3765 e-mail:email@example.com www.ipm.co.za
People Dynamics is the monthly journal of the South Africa Institute of People Management (IPM). The IPM is dedicated to the effective development of human potential. In terms of fast emerging global challenges, it is critical to champion the strategic role of human resources and to acknowledge that both development and management are catalysts for growth. In the spirit of progress and support, the IPM provides members with effective leadership and access to appropriate knowledge, information and the opportunity to network with key local and international players. People Dynamics provide a forum for debate and discussion on all issues affecting people managers in South Africa, the African continent and beyond. People Dynamics is distributed to all members of the South African Institute of People Management (IPM), and to other key decision-makers in the industry. To receive People Dynamics regularly and enjoy additional benefits, including discounts on HR-related services, professional networking events and HR vacancy postings on the IPM web-site, contact the membership manager of the IPM.
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ISSN 0261-2399 The views expressed in this publication do not necessarily reflect the values of the IPM.
‘Old school’ versus ‘new school’ – a different perspective on change and performance management By Angela James
e live in a world of constant change, the speed of which is accelerating owing to the influences exerted by communications, technology and social networking. Thought leaders have for many years espoused the importance of the need for organisations to be agile, flexible and adaptable in the manner in which they engage with their world. This has become more and more critical as the rules of the new economy emerge as to how businesses will be successful as they move forward into the 21st century. Yet, most organisations are plagued by corporate and organisational inertia induced by ‘old school’ thinking that has been dominated by power struggles, ‘silo and chimney stacked’ thinking all of which have a negative impact on the people within the organisation and the service that is delivered to the end user of the business, the customer. ‘Old school’ determines the terms and conditions of engagement. ‘Old school’ says that businesses dictate to their customers what they think, they, the customers need and how their products and services are delivered. Further, they command what their staff can and cannot do, should and shouldn’t think. ‘Old school’ bases most of their premises on competitor models, the ‘us’ versus ‘them’. This line of thinking permeates through the very fabric of the organisation as competition for budgets, resources and people polarizes organisations into camps and silos.
People Dynamics April 2011
Many ‘old school’ change management processes that are typically seen as the field of play of the HR department have some impact, however, the sustainability of this change is often questioned. Very often the HR team is distanced from the direct impact of change from the external environment, in particular in the domain of the customer. HR delivery within ‘old school’ thinking is inwardly focused, repetitively reductionist and silo’ed into HR functional roles. Change management is often times reactive, transactional, the domain of a management paradigm and a response to an external stimulus such as a change in legislation. A reality within the change management domain is that ‘the change’ is not always contextualized for those required to implement the change within the business strategy and forward focus. Within the external landscape of business, there is a subtle yet increasing voice for change that is being instigated by customers – both internal and external.Whilst the Consumer Protection Act has induced a very real need for organisations to take into account fairness and good business practice when it comes to how it engages with the consumer, this is not what is driving the changing consciousness of the new consumer who is changing the rules of the game. What does this have to do with change management? Everything.The 21st century consumer is placing demands on organisations to be authentic
CHANGE MANAGEMENT in the delivery of their products and services. Authenticity means that they deliver what their brand says they deliver, that they satisfy the expectations that have been created in the minds of the very people they serve. And what’s more that this is done internally as well as externally.The brand and its statement is as much an authentic part of the internal culture and staff reality as it is the external messaging that is sent out into the market place. This requires adaptable, flexible and ‘transformational’ change within an organisation that is both agile and customer-centric. So what if change management was viewed as mobilizing effort, energy and resources to align all elements of the organisation to enable authentic service experiences to BOTH staff and customers.What if change management truly did what it purports to do and that is transforming the organisation inside and out. This definition and application of change management principles and processes ushers in ‘new school’ thinking. ‘New school’ seeks to scan the environment and information resources, ‘new school’ looks for cues that cut across, through and outside of its industry to enhance its offering and service culture. It seeks to collaborate across functional areas; operates off a role base rather than a task base; integrates all that it does at every effecting interface; aligns the individual and the organisation with a common set of values; drives everything that it does through a culture of authentic expression of the self and the offering that is tailored to meet the customers interpretation of authenticity.‘New school’ listens, really listens to those people with whom it engages and builds its experiences from the outside in at the same time as ensuring that it is authentic to the structures and requirements that speak to governance and governance related issues. ‘New school’ embraces what James Collins in “Built to Last” terms “The Genius of the AND instead of the tyranny of the OR”. Change management is facilitated through alignment with the business strategy and the creation of context for those that are required to make the change come to life. ‘New school’ fundamentally understands that the organisation is nothing without the people that drive and engage in it at the same time as being able to change the organisation’s course in response to the environment in which it operates, as it is flexible, agile and adaptable. So what does this mean for HR practitioners and other disciplines within organisations? Integration and more integration. Real sustainable value is created for customers and staff in engaging in process driven assimilation of cross-functional teams that are able to provide holistic views of typically functional areas of expertise. This requires a leadership driven paradigm that supports, recognises and rewards collaborative effort. Service is then a common thread that drives change – service to self, one another within the organisation that impacts positively on the external paying customer’s experience of the organisation. Messaging is simple and context created is easy to understand. Further integration then is mirrored into performance management systems in their design, development and implementation that reflect this amalgamation and authenticity that is demanded through the touch-points of engagement. Fundamentally the ‘why’ of the change is communicated and implemented at every interface. Within the context of ‘new school’, this is a given. Self-examination is key. ‘Old school’ and ‘new school’ are not mutually exclusive. Again the “Genius of the AND” should be borne in mind.What is suggested is the combination of the Wisdom of ‘old school’ AND innovation and integration of ‘new school’ to be able to operate effectively in the changing nature of the world and the new economy. How does your organisation manage change? ‘Old school’, ‘new school’ or embracing ‘the genius’ that can be found in both. For the expression of true genius, wisdom of the old that provides foundational thinking and the innovation of the new, within the rules of the ‘new economy’, creates a culture that keeps agility, flexibility, responsiveness, leadership, and authenticity top of mind.The powerful combination of old and new within this context creates the platform for sustainable relevant and meaningful change.
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JHB +27 11 304 4100 | CT +27 21 680 9000 | DBN +27 31 537 7100 www.pastelpayroll.co.za | firstname.lastname@example.org Twitter: www.twitter.com/PayrollNews Facebook: www.facebook.com/PastelPayroll *R1.50 p/SMS. Premium Rates Apply. Free and bundle SMSs do not apply. Softline Pastel Payroll Helpline (011) 304 4290 (VAS rates apply). Errors billed. Network charges extra. All prices include VAT. T&C @ www.pastelpayroll.co.za/terms.asp
Angela James, Service Warriors, 082 566 4236, email@example.com April 2011 People Dynamics
THE BUDGET AND HR
Balanced budget speech also emphasises employment and job creation By Sumay Dippenaar inister of Finance Pravin Gordhan delivered a balanced budget speech on Wednesday 23 February 2011 in which individual tax rates remain unchanged but tax brackets have been increased.
Raising employment levels and job creation The Minister also placed considerable emphasis on raising employment levels and job creation, saying: “We cannot view the fact that 42 percent of young people between the ages of 18 and 19 are unemployed as merely a statistic. Young men and women in cities, informal settlements, towns and villages may not have jobs, but have skills in life.They possess the awareness and the ability to learn, they drive fashion and inspire with their music, yet they know their local traditions. And they have hope, and look to us to give meaning to that hope.” Gordhan added that measures must be taken to ensure that young people can look forward to decent work in productive, competitive enterprises. “It means that we will continue to strengthen social expenditure, enabling families to commit to participating in education and community activities, while supporting the old and sick.” The aim is to put development first and not dependence on welfare and Gordhan said that the Budget was therefore proposing a range of measures to accelerate employment creation.
He also referred to the R9-billion that President Jacob Zuma announced recently as having been set aside over the next three years for a jobs fund to “co-finance innovative public and private sector employment projects.” An amount of R14-billion for further education and training colleges and student financial assistance has also been allocated. Over R20billion has been allocated to Sector Education and Training Authorities (SETAs) and R5-billion to the National Skills Fund, both of which have key responsibilities for training work-seekers. Personal income tax relief and medical aid deductions For individual taxpayers, the good news was personal income tax relief totalling R8.1- billion, a third income tax rebate of R2 000 for individuals older than 75 and an increase in the monthly limits for medical aid deductions from R670 to R720 for principal members and first dependants and from R410 to R440 for each additional dependant. Company car and travel allowance A significant change is the manner in which the value of company cars will be determined. In the new tax year the value will be the cost of the car, excluding finance and interest charges. This means that VAT and any maintenance plan purchased is included in the original cost and company car values will have to be recalculated from 1 March. The fringe benefit value of a company car is calculated at 3.5% if the vehicle was not subject to a maintenance plan at the time it was acquired by the employer and at 3.25% if there was a maintenance plan.The fringe benefit that is calculated must be reduced by any payment made to the employer by the employee other than the cost of licences, insurance, maintenance and fuel, which can no longer be deducted. SARS has now moved to ensure that use of company cars and claiming of travel costs by employees using a company vehicle is more accurately represented by implementing the new requirement. While the car tax benefit used to be taxed at 100%, the onus is now on employers to apply either an 80% or a 20% tax rate when including the new fringe benefit value of a company car into an employee’s remuneration for the calculation of PAYE in the payroll. This means that the responsibility rests with the employer to indicate what percentage of the mileage the car will travel will be for business purposes. If 80% of the total kilometres travelled are for business purposes, then the employer is permitted to subject only 20% of the allowance to the employee’s tax. Only one taxable percentage may be used during the assessment year. Any change means that the fringe benefit amounts for previous periods must be re-calculated. To assist SME businesses with the changes outlined in the new Budget, Softline Pastel Payroll will incorporate all of the changes to tax bracket values, travel allowances, tax relief rebates and medical aid. To find out how the budget speech affects your pocket, visit www.pastelpayroll.co.za and enter your current monthly salary and allowances in the online Pastel Payroll salary tax calculator. Sumay Dippenaar, Softline Pastel Payroll, +27 11 304-4190, Sumay.Dippenaar@pastelpayroll.co.za, www.pastelpayroll.co.za
People Dynamics April 2011
Woolworths develops much-needed local retail industry skills C
ape Town – 39 previously unemployed and underemployed youths graduated from Woolworths Growth Academy at a special function on the evening of Wednesday, 9 March 2011. Launched in 2010, the project is a 12-18 month career development initiative aimed at previously disadvantaged graduates (internal and external candidates). Those selected for the programme are given the opportunity to gain wide-ranging work experience at Woolworths and an executive education certificate from the highly regarded University of Stellenbosch Business School Executive Development Ltd (USB-ED). The project is cofunded by Woolworths and the Wholesale and Retail SETA. Growth Academy trainees are mentored by leading industry experts; and are empowered to develop solutions to real-life business challenges. While spending time at Woolies Supply Chain division, trainee Siyabulela Godwana was part of a group, for example, that investigated water conservation opportunities at the retailer’s Montague Gardens Distribution Centre. Siyabulela’s team presented recommendations that included the introduction of water efficient toilet facilities – which the distribution centre is strongly considering. He says: “I was intimidated by the prospect of working across a range of business units. Especially because I didn’t know anything about retail and I had no corporate work experience. However with the help of our mentors and fellow trainees, I ended up thoroughly enjoying my time in the Growth Academy. I’ve grown in confidence as a person and I truly believe I can achieve my career goals. “
A successful debut At the graduation, Woolworths Group Director for Human Resources Matt Keogh praised the quality of the academy’s inaugural class. Chantal Butler Head of Organisational Effectiveness at Woolworths echoed his view: “Woolworths congratulates this Growth Academy class for making the most of this opportunity. You represent a very bright future for South African retail.” Partner Pride Joel Dikgole, CEO of the Wholesale and Retail SETA explained that: “This is one of the most successful projects that we have been a part of. The quality of the project coupled with the 95%+ completion rate makes it exceptional. Woolworths Growth Academy proves that public-private partnerships can help to tackle South Africa’s skills shortage. Furthermore we’re very happy with the achievements of the young people here today.” Heilet Bertrand, Executive: Corporate Partnerships USB Executive Development Ltd (USB-ED): “Our institution is proud to be associated with this programme. Of course, we’re delighted with the superb performance of this Growth Academy class.” Woolworths plans to offer some (if not all) of the candidates selected for the academy, full-time employment. For information on the Growth Academy class please visit: www.woolworthsholdings.co.za
Benefits of HR and payroll over the cloud outweigh perceived threat By Dave Philp
espite the fact that we use cloud computing on a daily basis in our personal lives, companies remain reticent to entrust their core functions, such as HR and payroll to companies offering Software as a Service (SaaS) functionality. Before we examine the doubts business owners may have, let’s have a look at the benefits of using hosted services delivered over the cloud. Cloud computing is cost effective. Your IT provider will host services for multiple companies, allowing you to benefit from economies of scale. Sharing complex infrastructure allows you to pay only for what you actually use – effectively a pay-as-you-go model. Cloud computing is quick and easy to implement and upscale. Cloud computing allows you to skip the hardware procurement and capital expenditure phase and is ready to go – perfect for companies of any size. Cloud computing allows you to be completely up-to-date. Updating software and adding new features on the fly is important in the HR and payroll space. SARS and the Department of Labour changes can be incorporated immediately, ensuring compliance and reducing operational risk. Cloud computing is infinitely scalable. If your business is growing fast or has seasonal spikes, you can go large quickly because cloud systems
People Dynamics April 2011
are built to cope with sharp increases in workload. Obviously this is also true in the reverse, and together with the pay-as-you-go model, makes Software as a Service in the HR and payroll particularly compelling for companies who deal with season staffing spikes and casual labour. Cloud computing enables a truly mobile workforce. If you have a mobile workforce, your staff will have access to most of your systems on the go. For companies looking to expand into other regions, this is also compelling because it means they can ensure ubiquitous services across all their offices, delivered by a single service provider. However, security is listed as the number one concern when it comes to SaaS. It is important to remember that providers of virtual services have some of the most stringent and complex service level agreements. From the moment your data leaves your desktop, it is securely encrypted, delivered over managed networks and stored in remote server farms with some of the most advanced security protocols in the world. From a logical point of view, it would seem the benefits of cloud services far outweigh the perceived drawbacks and companies would be foolish not to have HR and Payroll software delivered over the cloud firmly on their radar. Dave Philp, Chief Operating Officer, CRS Technologies, firstname.lastname@example.org
Outsourcing: an option that carries many advantages By Grant Lloyd
unning a legally compliant payroll department has become an increasingly difficult and time-consuming task for SME companies as mushrooming legislative requirements have resulted in a confusing heap of legal requirements contained in six acts governing tax, HR and payroll. Business owners face a decision: Do they devote time and energy to developing manpower and know-how to keep up with payroll legislative changes and all the administration and queries that go with it, or do they focus on managing their businesses, generating sales and achieving revenue growth? Outsourcing payroll administration is a feasible alternative that Pastel Payroll offers to SME businesses, allowing them to achieve compliant payroll administration without diverting resources and focus away from the core business to run a fulltime payroll department. Payroll administrators can no longer just be on top of changes from a payroll software and legislation point of view, but also have to keep up with changes that are implemented in the SARS e@syfile and eFiling electronic submission systems. The outsourced payroll solution typically offers customised payslips, in any official language, printed on security-sealed paper. In addition, Pastel Payroll can email password protected PDF payslips either directly to the company’s employees or, if the company has branches located throughout South Africa, the password-protected payslips can be emailed to the respective branch managers for circulation to staff members. Leave management is also offered which allows companies to capture all leave dates and maintain leave balances to ensure all employee leave statistics are correct and current. Leave types, such as annual leave, sick leave, family responsibility leave and religious leave are recorded. We will also advise our customers on the leave cycles – sick leave for example works on a 3-year cycle – so that they can keep employees updated on the status of the their sick leave. Businesses can then focus on their strengths, knowing that for a set monthly fee, their payroll is efficiently, confidentially and legally managed by an experienced partner with the required knowledge base and expertise. It is a cost-effective and hassle-free solution. Companies considering the outsourcing route should ensure that they approach reputable payroll companies for proposals on a solution.
It pays to see what the market has to offer and ensures an outcome focused on professional and reliable services. The outsourcing service guarantees that the various employee payroll returns required by legislation are done accurately and submitted on time, every time, and that employees receive correct remuneration. The outsourced service provider supplies the company with valuable executive input and ensures that all branches or outlets produce legitimate payrolls that meet all of the legal obligations regarding income tax, basic conditions of employment, UIF, PAYE, SDL and other legal requirements. Customers are kept updated on all legislative changes and this is particularly important after the annual budget speech which this year has a significant impact on travel allowances and the use of company cars. Outsourcing customers frequently ask for advice on HR-related matters.These queries often relate to disputes and disciplinary actions, the issue of formal warnings or retrenchment procedures and ensuring that these are tackled within the appropriate legislation. A partial outsourcing solution is also offered so that companies can outsource selected components of their payrolls, such as the executive payroll (Directors’ payroll), with complete confidence. The ongoing drive by the South African Revenue Service to ensure that businesses comply with legislation means that payroll outsourcing services have to ensure that all the mandatory data is obtained from the client so that submissions to e@syFile and e-filing are always accepted. PAYE reconciliations used to be done annually, now it is bi-annually and eventually it will become monthly.This will place more pressure on the lives of payroll administrators and outsourcing is likely to become an even more attractive proposition. The fact that SARS has embarked on the appointment of companies as agents to collect outstanding tax owed to SARS by individuals in their employ, is another looming pressure for companies. Our outsourcing solution offers help if customers receive ITA88 Agent Notifications from SARS and we can advise on what steps to take and explain the implications of the short and long term payment plans. Grant Lloyd, managing director, Pastel Payroll, part of the Softline Group and Sage Group plc. April 2011 People Dynamics
Good leaders – born or made? By Ken Blanchard
he truth is that it is probably a bit of both, says Ken Blanchard, although he knows where he believes the balance lies… My view of leadership is that it is a journey, one in which we realise we are here to serve, rather than be served. This is why I believe more leaders are made than born. For most of us, how to lead at a higher level, how to be a great leader, is something that has to be taught and learned. For me, as I have said often enough in these pages, being a great leader means being a servant leader, and this means getting our egos out of the way. We all come into this world self-serving; babies don’t come home from the hospital and say, “Is there any way I can help around the house?” They cry and get everyone running around after them! Some people realise early on in life that we’re here to give, not get, but for most people, this is a truth that’s learned over time. My first and greatest leadership teacher was my father, an admiral in the Navy. He was one of those people for whom this kind of leadership is a gift. He did have natural leadership capabilities. I’ll never forget the day I came home from school and told him I’d been elected the president of the seventh grade; my
father congratulated me, then sat me down and said, “Now that you have that position, don’t ever use it. Great leaders are great because people trust and respect them because they don’t use their power.” I’ve always thought the saying “As a man thinketh, a man becomes” is the key to much of life, including our problems. If we really want to make a difference in people’s behaviour, we first have to focus on what they’re thinking and believing, and start where they are, rather than just tell them in a dictatorial way. This lies at the heart of our Situational Leadership® II programme, which teaches four distinct leadership styles, all used inter-dependently depending on the skills, competencies, experience and enthusiasm of the person you’re leading. Most people only use one, maybe two leadership styles, all the time, irrespective of the state of mind or competency level of the person they are working with. This is a recipe for leadership disaster. For instance, a ‘hands off ’ leader who naturally gives orders and then let’s people get on with their job is a dream leader for someone who knows exactly what they are doing, has all the skills they need to do the job, and is happy to go it alone. This leadership style, however, is a nightmare for someone tackling a brand new, unfamiliar task they’re not feeling too sure about. Under these circumstances, people will only thrive under a leader who gives them clear directions and plenty of encouragement and support. It never ceases to amaze us at The Ken Blanchard Companies how even experienced, senior leaders continually get it wrong, and don’t see the leadership ‘mis-match’ between how they lead and how people need to be lead. And if you’re not giving people the leadership they need at any given time, on any given task, you’re not being a servant leader because you will be jeopardising desired outcomes, as well as their personal development. People don’t get up in the morning and say, “how can I go to work and screw up?” I think the reason we have so many disengaged people in our organisations is because nobody pays any attention to them, and the kind of leadership they really want. I remember, many years ago, when I took over a university department, there were two professors everyone considered deadwood. But they both had all kinds of energy and skills they were using outside the university – in fact, one had his own real estate company on the side. I went to see each individually and said, “I’ve heard about your skills. What can I do to get you back, because I could really use you back on our team, we can’t make it by ourselves.” Nobody had ever talked to them like that. As leaders, we must never stop focusing on what we can do to get our people back into the game. Great leaders will want to be servant and situational Leaders because they realise that the only reason they’re in a leadership position is to help other people win. They realise it’s not about them. They realise they don’t own anything – that everything is on loan - and their job is to be a good steward of resources. They also realise that every human being is important. They genuinely want to be there for others so that others can be their very best. The Ken Blanchard Companies next open-enrolment Situational Leadership® II workshop will be held in Johannesburg 27/28 June. Special rates apply for IPM members. For more information contact email@example.com , call 0800 980 814 or visit our website www.kenblanchard.co.za © The Ken Blanchard Companies, 2011
People Dynamics April 2011
Moonlight serenade By Gary Taylor
or many employers, discovering that an employee has earned extra income from some form of moonlighting is a dismissible offence. The rationale is that the professional skills and responsiveness of staff belong to employers 24/7, especially with the advent of smart phones. Labour legislation is pretty supportive of the employer’s right to demand undivided loyalties from fulltime employees, especially if this is enshrined in clear and unambiguous company policy.The purpose of this discussion is not to interpret the law, but to explore whether we SHOULD consider allowing moonlighting of some sort. Perhaps our current aversion to moonlighting points to a culture of mistrust, a restricted definition of loyalty and a narrow view of work-life balance. Let’s examine why we generally impose a ban on moonlighting. It is primarily based on employer concerns regarding: Conflict of interest, in that the employees might have their attention diverted towards the interests of another employer or, worse, a competitor. Reasonable enough. Diversion of effort/energies away from that of the employer, whereby work time or resources might be used for other jobs, which would be a mental distraction, let alone the employee not working a full pace for their employer if they are not getting adequate rest. Also a legitimate concern. The question then exists as to whether an environment can be created whereby the person can pursue some acceptable forms of alternate work (remunerated or not) within certain bounds, which can work for both parties. Some work environments, such as universities, tolerate and even facilitate external work. Most academics get to consult for up to 20% of their time to the private sector, which keeps them current with the real world, and retains their skills in the poorer-paid educational sector. It is generally disclosed (sometimes with shared revenues) and the benefits for both parties are harnessed. Many freelance jobs are designed to allow multiple income sources for consultants, journalists, programmers, etc. and this is frequently
the staple form of employment in the huge outsourcing industry both here and worldwide. Consider some advantages of allowing limited moonlighting: Employees can supplement their income (in a regulated manner) without having to leave the employer to earn more money. Arguably, the relief from financial stress offsets the impact of working additional hours. Exposure to other work environments can deliver breadth of experience to the employee, which can then be transferred to the employer, without the staff member having to resign to get that specific experience they desire. Intellectual property can actually be enhanced for the employer, while genuine confidentiality issues can be better protected through a transparent process.Arguably, IP is really only lost when disgruntled employees resign. Retention of skilled talent is made easier when the individual is not prevented from participating in entrepreneurial ventures, lecturing at a university, community projects or even playing in a band. Only if the core business of the employer is directly threatened by moonlighting would legitimate concerns be justified. Having a “private work” policy (with frank disclosure and approvals) creates a climate of transparency and trust. This, in turn, creates a better framework for discussing the employer’s reservations and achieving a solution than implementing a paper ban which might just drive the inevitable behavior underground. Assumptions that “employees will be too tired in the morning” are paternalistic and naïve. Employers pay for part-time studies without questioning sleep patterns, and never query the impact of unremunerated hobbies. Surely the litmus test must be the individual’s performance on the job. Perhaps the changing world of work implies that employers might want to rethink some of their historical approaches to a practice which is happening anyway, but which could be surfaced and governed in a mutually beneficial manner. PS I didn’t get paid for this article…
Gary Taylor has written several articles for People Dynamics over the years. His Mentor Matters is a regular column in which he addresses topical HR issues from the perspective of a career HR practitioner (and mentor) and offers some new perspectives on regular issues that HR practitioners face daily. Gary has been in HR for 25 years, in National Mutual and Unilever, HR director at Medscheme for 14 years, and three years as Executive Director: HR at Wits University.Two years ago, he was appointed to start up HR for a new university in Saudi Arabia, where he is now Director of the Policy Office. He is registered as a Master HR Practitioner and Mentor with the SABPP, served as vice president for the IPM for two years, and received the IPM President’s Award in 2008. He has written a chapter for an HR book, been published in People Dynamics and HR Future, and was the SA correspondent for the UK magazine, People Management, for a year.
New company car legislation results in increased taxation and is an administration nightmare A
mended legislation has resulted in an increase in the percentage rate used to calculate the monthly fringe benefit for all company cars and a radical change in the taxation of company cars from 1st March 2011, making the keeping of a log book essential, if employees are to see any tax benefit. This is according to Ron Warren, Executive Chairman of payroll software company, NuQ, who says that new tax regulations for company cars which fall under the recently legislated Taxation Laws Amendment Act, 2010 and the Taxation Laws Second Amendment Act, 2010, represent administration headaches for businesses. In the 2011 tax year the deemed business kilometres travelled concession for travel allowances (those exceeding 18 000 but not exceeding 32 000 kilometres) was repealed, and taxpayers seeking to claim expenses against a travel allowance had to maintain travel log books showing actual business use. Similar changes are now required for the employer company car fringe benefit and Warren says that both sets of rules must roughly reach the same tax outcome so as to prevent ‘arbitrage’, according to the explanatory memorandum on the Acts. “In the past, company cars were viewed as being beneficial because employees did not have to record the kilometres they travelled for business,” he says.“The new legislation changes this making them a more troublesome fringe benefit.Tax deductions allowed on both the travel allowance and the
People Dynamics April 2011
company car will now be calculated in the same way, and employees have to keep a log book to show their business travel and their fringe benefit will be adjusted in line with what the log book says.” He explains that the business kilometres actually travelled as evidenced by a log book are now valued in exactly the same way for a company car as they are for a travel allowance, using the same cost table published by the Minister. Under the new legislation, Warren says that another major change is that the percentage rate used to calculate the monthly fringe benefit for all company cars (including the first) has been raised to 3,5% per month of the vehicle’s determined value (instead of 2,5% for the first car in terms of the previous legislation). This rate is reduced to 3,25% per month if a maintenance plan was purchased at the same time as the car was purchased. He says that under the amended law, the cost of a maintenance plan,VAT and any other taxes, such as the carbon emissions tax (which were excluded in the past ) will have to be included in the “determined value” of the car on which the 3,5% or 3,25% is calculated. Under the new legislation, Warren says that SARS has also changed the percentage of the company car fringe benefit that is to be subjected to PAYE. Now, 80% of the benefit (of the full fixed 3,5% or 3,25% determined value of the vehicle) will be taxed per month, on the assumption that the employee will submit a log book at the end of the year. This also assumes that the
business usage of the car will be only 20%, so that the remaining 80% must be subjected to employees’ tax, as is also the case with travel allowances. Having said this,Warren points out that if employers are satisfied that at least 80% of the use of the car for a year of assessment will be for business purposes, then only 20% of the value of the calculated fringe benefit will be subject to PAYE. (A similar change has been made to the percentage of a travel allowance to be subjected to PAYE.) Final adjustments for actual business kilometres and private payment of expenses will occur on assessment and Warren warns that employees could find themselves having to cough up at the end of the year if their log books don’t prove business use. The challenge for businesses is that the the Act states employers must use either 20% or 80% for the whole year.“This is problematic because this does not cover situations where certain employees’ circumstances may change during the year and they move from one category to the other,” he says. “These employees would therefore be over or under taxed and would have to recover or pay the difference at the end of the tax year.” However, SARS have verbally advised that they will accept changes from 80% to 20% for a part of the year, even though the Act itself does not permit this. The new legislation also requires that if employees receive a travel allowance and they have a company car the 100% of the allowance must be subjected to PAYE, and no deductions will be permitted on assessment. Another problem which Warren says will arise, is that of some top executives driving company cars who may not want to fill in travel logs. “These executives who do not keep travel logs will end up paying tax on 100% of this fringe benefit.” “The tax assessment is based on the presumption that all employee use is deemed to be private unless the contrary is proved,” says Warren. “This presumption matches the current travel allowance rules, which require a log book to prove business use.” On assessment employees can claim certain employee paid operating expenses against the company car fringe benefit according to the specified formula.
Five building blocks crucial to a solid small business By Pavlo Phitidis
uilding the foundations of a successful business is similar to building the foundations of a house. Whether you are building a home or a business, what you lay down at the very beginning will determine whether the fruits of your labour will be deliciously sweet or decidedly sour. Because what you put in depends on what you get out, in any endeavour, let’s take a look at five inputs a founding entrepreneur would be well advised to implement right at the beginning of the business lifecycle. The five inputs listed below are the ones that most commonly come up when we ask founding entrepreneurs “What inputs are you most pleased that you implemented at the very start of your business because they were fundamental to the successful eventual sale of the business?” Before we continue, allow me to quickly elaborate on what has just been mentioned.The goal of any entrepreneur should be to start with the end in mind.There is nothing quite as important as allowing your business to be fuelled by passion. However, at the same time, founding entrepreneurs cannot allow emotion to get in the way of building an enterprise that should eventually be sold as an asset of value. Let’s now take a look at the five building blocks fundamental to laying the foundations of a solid eventual asset of value. Proper systems As crucial to the early stage of business as the original founding entrepreneur, who should, from day one, be actively working to divorce himself from the intricacies of the daily operation of the business. If a business is wholly dependent on the skills and talents of one person, it will never grow beyond that person and it will never be able to be sold as a self-contained and sustainable asset of value. The only way for an entrepreneur to divorce himself from the day-to-day operation of the
business, is to put proper systems in place that ensure the business can function as a self-sustaining entity. Specialist advice Right from the beginning, the right advice will prevent costly mistakes being made. It may seem a luxury to retain the services of a business incubator, aimed at growing the business, however any number of wise old adages from “penny wise, pound foolish” to “it takes money to make money” will indicate the value of doing things properly from the word go. The founding entrepreneur cannot and needn’t be a specialist in all areas. The entrepreneur’s gift is vision and he should recognise that the ability to harness the talents of others is what will build a successful business. Diligent record keeping Prospective buyers look at past performance as an indicator of future value. This makes the ability to produce proper records that indicate a traceable corporate history absolutely fundamental to the eventual sale of the business. Right from the start, accounting and other back office support should be outsourced in favour of stashing paperwork in cardboard boxes scattered around the office.The entrepreneur should be focusing his energies on growing the core business and not on trying to sort out an administrative mess several years down the line. Proactive marketing Many founding entrepreneurs go into business after picking up contacts from many years of working for other people. The danger here is that they tend to rely forever more on this small core of corporate customers which is one of the best illustrations of putting all your eggs in one basket. The entrepreneur needs to get out there and proactively market his goods and services or run the risk of the business folding when an anchor customer unexpectedly goes out of business one day. Buying the building While this last input may not be suited to all types of businesses, I have never heard of an entrepreneur who owns his business premises complaining of ruthless landlords whose extortionist rent is threatening to render the business unprofitable. Where possible, entrepreneurs should offer to purchase their premises, raise a bond and rather pay off an additional asset.This is infinitely wiser that lining the pockets of landlords who are very adept at skimming the profits off successful tenants. Pavlo Phitidis, CEO, Aurik Business Incubator
People Dynamics April 2011
LexisNexis provides customised solutions for HR practitioners H
uman Resources (HR) is continually juggling an organisation’s needs. From keeping abreast with trends and case studies in labour relations, to managing health and safety and other compliance issues, access to up to date knowledge is critical for HR managers. LexisNexis’s unique portfolio of offerings is designed to help organisations succeed in transforming environments. Across the globe, LexisNexis provides customers with access to 5-billion searchable documents from more than 40 000 legal, news and business sources, which makes the company one of the world’s most forward-thinking organisations in the information provision industry. Publications For easy-to-understand labour law regulations and the impact of the Constitution, every line manager will find the pocket-sized “Labour Law Library Easy Reference Guide” an essential. These six reference guides will provide labour law information in a clear and accessible format. Specialising in the areas of law, tax, accounting and financial services, LexisNexis publications are highly regarded as sources of accurate, current and reliable information. LexisNexis’s list of publications includes corporate, practitioner and student titles, law reports, statues and legislative material available in both print and online formats. Seminars and conferences HR directors and managers need to be in touch with the latest development in labour industries, which is why LexisNexis brings experts in the legal and labour industries to events and conferences. One such respected expert in labour law is Mike Beaumont, who can help solve everyday labour problems with the 4-part Beaumont’s Service.This includes: Beaumont’s Express: a monthly commentary on topical issues and key court decisions Beaumont’s Solutions: a step-by-step guide to fair decisions and practical solutions Beaumont’s Workshops: a FREE annual HR workshop Beaumont’s Helpdesk: a phone-in helpline for quick answers to urgent questions and a sounding-board for decisions LexisNexis Professional Events is a facilitation service, qualified to manage and facilitate every facet of even the most complex events, including: critical path and committee management; complete financial management, including budget and pricing, invoicing and debt collection; scientific programme direction and speaker management; sales and marketing; venue, travel and accommodation management; registration and onsite event management; as well as the publishing of papers in printed and electronic format. LexisNexis works with experts and authors on various topics in these fields.Through this network LexisNexis can offer presenters who are leaders in the law, tax, accounting and financial services sectors. The seminars and conferences presented by LexisNexis are topical, practical and give delegates the opportunity to interact with one another and with speakers. Some of the well recognised LexisNexis professional seminars and conferences include the Payroll Manager’s Refresher Seminar, FPI Annual Convention, Annual Labour Law Conference and VAT Update Seminar. Online Portals LexisNexis is rapidly transforming itself to stay abreast of the changes in technology and to fulfil their customers’ needs by way of its customisable online solutions. HR practitioners can now also benefit from these adaptable solutions. Human resource managers can now benefit from access to online labour
law information, step-by-step procedural advice and templates for HR legal documents with LexisNexis’s online website, LexisNexis Labour Relations Management. The content is compiled by specialist labour consultants to ensure that users are 100% compliant with labour law. LexisNexis Labour Relations Management also provides templates of all the legal and other relevant documents that are commonly needed for managing staff, including a variety of service contracts and information records required by law. For a solution that finds you rather than you having to search for it, the IR Network delivers updated case-law and legislation to your inbox daily. The IR Network gives you practical information and solutions to labour related queries and provides downloadable forms that you can print and use in everyday labour situations. Posters As an employer, one is required to make key legislation available to employees, and the quickest, easiest and most cost-effective way to ensure all are familiar with labour laws, is to make them visible. One effective product that can easily be used to communicate key messages to management and employees is the LexisNexis labour law display posters.These posters can be used at conferences, exhibitions, and most importantly, the workplace. Some examples of these posters: Occupational Health & Safety Act 85 of 1993 with Regulations Skills Development Act 97 of 1988 Labour Relations Act 66 of 1995 Employment Equity Act 55 of 1998 For more information on LexisNexis’s product offerings, please call the LexisNexis head office on +27 (0)31 268 3111, or visit www.lexisnexis.co.za. April 2011 People Dynamics
Organisational change through management development By Ivan Horner and Caryn Conidaris
he South African Blood Services (SANBS), South Africa’s largest supplier of blood and blood services, is rated amongst the best worldwide – renowned for their contribution to research, technical training, and high quality blood which saves lives. A number of their technical experts have climbed management ranks, regrettably not always paired with leadership skills. SANBS was formed from a merger of several regional blood services and created a vision of excellence. Organisational surveys highlighted the need to develop the impact between management and their people, so the three-year design and implementation of a multifaceted management development programme began.The Human Resource Practice was chosen as a partner in this journey – to align organisational needs, design programmes, as well as deliver and assess delegates against unit standards. The intervention was aimed at creating ‘discomfort’ in management levels, as there were various levels of engagement in the organisation. In its third year, over 195 first line supervisors/managers and nearly 30 senior managers have spent three blocks of a week being exposed to leading managerial concepts, and in turn developing themselves.The programme was aligned to the organisation’s competency model and values, or “Principles of Excellence”, consisting of courses on, for example, mindset or emotional intelligence, leadership and coaching. The delegates were from across all regions and functions. They have since completed portfolios of evidences (POEs) related to the programme content and outcomes – a demanding and stimulating programme, but responses from participants have been remarkable.“I find that the staff who attended the course had a much better understanding of their supervisory / management roles and a much better understanding of the reasons underlying my expectations of their management performance”, said one line manager. As one delegate said years later, “I would like to motivate for all SANBS employees to have the emotional intelligence training as I benefited so much from this when I did the MLP course. It served to help me in my day to day activities be it at home, work, or while I was socialising.”
People Dynamics April 2011
The programme has challenged ‘old’ organisational ways and enabled delegates to immerse themselves in the learning process, even when back at work. The programme evaluation was done along Fitzpatrick’s four levels: Level one, how participants reacted, was measured at the end of each course.The programme was constituently evaluated as good, or even better. Level two, the extent to which participants changed (attitude, knowledge, skill, etc.), was measured by the number of people found competent on their POEs, and an annual online evaluation of the programme. Over 100 people have been found competent in one or more POEs – a rate that could be improved.The annual evaluation by managers of delegates showed a strong indication of learning. Level three, change in behaviour/skill at work, was measured by a process of pre/post-self delegates’ manager’s competency evaluation (180 degree), and the annual online evaluation, which has proved an excellent application at SANBS. Level four, impact of intervention on business performance, is also evaluated by the 180 degree and annual evaluations, which have shown a desire for change in the organisation. The process of evaluation has improved over time, resulting in change within the programme, including reduced assignments, additional support, and at a higher level the restructuring of the programme. Work pressures affected people’s ability to complete POEs, although this showed in the process. The assignments forced delegates to think of improvements in their working environments from a management perspective in addition to the ‘worker’ perspective. Initiatives are being implemented to improve the rate of POE submission, and The Human Resource Practice now has a learner support person.Another initiative is to use YouTube videos as tools for additional support. Organisations are in constant flux. To become an organisation of excellence, change must happen at all levels; the management development programmes have set out to achieve these principles. Ivan Horner and Caryn Conidaris,The Human Resource Practice
NEWS AND REVIEWS
HR in brief Tangled Toes, Pins & Needles Possibly South Africa’s most inspirational light read of 2011. Paralysed in a terrible car crash at the age of 19, Richard Pike found the will to walk again, and ultimately climbed to the top of South Africa’s corporate ladder. About the book En route to a rowing regatta in East London, Richard Pike and his fellow crewmates experienced a horrific car accident. A crash that would change his life forever. Richard, a promising oarsman about to embark on a degree at Wits University in 1981, was cut down in the prime of his youth. Told he would never walk again. Everything seemed lost. In the motivational spirit of Tuesdays with Morrie and The Monk Who Sold His Ferrari, this book is an inspirational and true account of a young man who found the strength to overcome adversity against all odds, learning many invaluable lessons about life along the way. Today, as CEO of Adcorp Holdings Limited, Richard tells the story of his harrowing experience with candid, quintessentially South African humour. His journey teaches us that the trials of life are lessons that have the power to make us stronger and smarter individuals in the business world. About the author Richard Pike, a Chartered Accountant, is the CEO of JSE-listed Adcorp Holdings Limited. Author of numerous business articles, he is also the coauthor of The New Divide, a provocative new book suggesting that a radical change in mindset is needed to solve South Africa’s pressing unemployment challenges. Richard is an experienced public speaker and is a prominent member of various special interest business groups. Softline VIP extends African footprint into Zimbabwe A landmark agreement with Omni Africa, based in Harare, sees Softline VIP, part of Softline and Sage Group plc, increasing its footprint into Sub-Saharan Africa by establishing a partner network in Zimbabwe. Omni Africa is well represented in Zimbabwe, making the partnership with Softline VIP a logical next step in giving the payroll operators in Zimbabwe the security of a familiar and established operator that can be approached with confidence. Softline VIP, recognised as a leader in the Payroll and HR management industry in Africa, released Premier Payroll, an innovative software solution that caters for the African market. It is customised to be country specific taking into account the legislation and required statutory reports that are needed to run payroll and HR management software with confidence. The Zimbabwean suite of products includes regulatory requirements from the Zimbabwean Revenue Services (ZIMRA) as well as the National Social Security Authority (NSSA) that makes the implementation of the product much easier. Omni Africa is extremely confident of the product. The implementation process facilitated a smooth transition from the current software to the new management solution. The new system came into effect at the end of February 2011, carrying the stamp of approval from Omni Africa. The feedback has been very positive with clients finding Softline VIP’s payroll programme easily customised and stable with easy navigation and a logical layout. They are currently training users to familiarise them with the product in order to optimise utilisation and aid the transition process. Economic growth in Africa makes the Softline VIP payroll system the ideal solution for small to large corporations that require flexible software with ease of use and stability. Softline VIP is currently operating and expanding services in Botswana, Namibia, Zambia, DRC, Egypt, Ethiopia, Gabon, Nigeria, Rwanda, Sierra Leone, Swaziland, Tanzania, Uganda, Zambia, Mauritius, Mozambique, Ghana, Kenya, Lesotho, Madagascar and Malawi, with Zimbabwe being the newest addition to the operation. For further information, you can direct an e-mail to SageVIP-Africa@vippayroll.co.za or contact the Africa sales desk on 0027 420 7241.
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April 2011 People Dynamics
Victory for mineworkers By John Grogan Victory for mineworkers Mr Mankayi was but one of countless mineworkers who have contracted tuberculosis and other respiratory ailments while toiling underground. As a mineworker, he was covered by the Occupational Diseases in Mines and Works Act 78 of 1973 (ODIMWA), the social legislation that regulates claims by mineworkers who have contracted specified occupational illnesses. Mankayi lodged a claim under that Act. He was paid out a paltry R16 320, small consolation for a man without a job and with a chronic disease, and for his dependants. Not content with the amount he received from the ODIMWA fund, Mankayi sued AngloGold Ashanti, his former employer, for R2,6m.This time, he based his claim on the company’s general common law and statutory duty to ensure a safe working environment. The company attempted to shield itself behind a technicality. Its legal team argued in the High Court that because Mankayi was covered by ODIMWA, he could not also claim for damages by civil action. This argument was problematic. Unlike the Compensation for Occupational Injuries and Diseases Act 130 of 1993 (COIDA), ODIMWA contains no provision precluding those covered by the statute from instituting civil claims as well as claims against the statutory fund. But the lawyers were not fazed by that omission.They argued that, since both ODIMWA and COIDA served the same objective, if for different sectors of the national workforce, the prohibition in the one Act must have been intended to apply to the other. Both the High Court and the Supreme Court of Appeal ruled that Mankayi’s right to pursue an action under the common law was excluded by ODIMWA, as read with COIDA. The courts reasoned, essentially, that ODIMWA and COIDA create an all-encompassing statutory compensatory regime, and that the two Acts must be read together. The SAC could see little sense in allowing mineworkers to claim against the statutory fund and sue their employers for more, while limiting the claims of all other employees to the amounts provided by statute.
The case proceeded to the Constitutional Court. In Mankayi v Anglogold Ashanti Limited (Constitutional Court case no. CCT40/10 dated 03/03/2011, unreported), unanimous court overruled the SCA. The CC held that the case turned essentially on whether the word “employee” in section 35(1) of COIDA (the provision which excludes civil actions) includes employees covered by ODIMWA. The judgment begins with the history of the respective statutes. ODIMWA repealed and consolidated all earlier mining legislation, and was amended in 1993. All health-related legislation for the non-mining sector was also repealed and consolidated by COIDA. The court accepted that the general definition of “employee” in COIDA is wide enough to include workers covered by ODIMWA. But this did not mean that section 35(1) of COIDA refers to “employees” covered by ODIMWA. That section had to be read in context. Furthermore, ODIMWA expressly excludes employees falling within its scope from COIDA. The two Acts therefore provide separate systems of compensation. Persons covered by COIDA are treated more favourably than those covered by ODIMWA. Had the legislature wished to include mineworkers in the statutory bar to civil claims, it would have done so expressly. The court found that section 35(1) of COIDA serves two related functions. The first is to indemnify employers from common law claims by employees. The second is to limit employers’ liability to pay compensation except as provided for by the Act.This indicated to the court that both parts of the provision apply only to those employees covered by “the provisions of this Act”, namely, COIDA.The contrary interpretation favoured by the SCA not only treated the two functions of section 35(1) as if they were one, but also ignored its plain language, as fortified by the context. The fact is that although some provisions of ODIMWA and COIDA intermesh, the two statutes remain distinct. ODIMWA and its parent legislation focus specifically on infectious diseases contracted in mines. The court found it neither surprising nor anomalous that mineworkers are treated differently from their counterparts in other sectors. Nor was the court surprised that COIDA and ODIMWA each deal distinctly with the claims for compensation by employees falling within their scope. Mining diseases have not only exacted their toll on the health of mineworkers and their families; they have also posed and continue to pose a danger to the health and welfare of the general public. To the court, the history of mining in South Africa, with its massive contribution to the country’s wealth and corresponding heavy toll on mineworkers’ health, justifies the different treatment. That toll explains why section 35(1) does not apply to mineworkers with diseases that qualify for compensation under ODIMWA. The appeal was upheld, and the company’s exception was dismissed. Sadly, however, the bell had tolled for Mr Mankayi. He died shortly before the judgment. The solace of the compensation to which he may be entitled will be experienced by his dependants, if any, and by the present and future generations of mineworkers. Unauthorised possession The respondent employee in Rainbow Farms (Pty) Ltd v CCMA & others had left the company premises carrying a bottle of milk.It turned out that the milk had been issued to the employee free of charge to drink while on duty. He had saved it to take home.The employee’s problem was that Rainbow Farms
LABOUR LAW did not permit employees to remove “free issue” items from the premises. He was dismissed. A CCMA commissioner was not satisfied that the employee had been aware of that rule. On this basis, he ruled the dismissal unfair. On review, the Labour Court agreed that the employee had indeed been unfairly dismissed, but for different reasons. The judge found him not guilty of the charge of “unauthorised removal” because he had not yet left the premises when he was apprehended. Surprisingly, in the light of that finding, the judge also ruled that a lesser sanction than dismissal would have been more appropriate. On appeal, the Labour Appeal Court (LAC) noted that the employee’s argument during the arbitration hearing was that the rule prohibiting removing of company property did not cover “free issue” milk. This was clearly inconsistent with the arbitrator’s finding that the employee was ignorant of the rule. Apart from that, the reason the commissioner gave for his finding that the employee had not known of the rule was that he had not tried to conceal the bottle of milk when he had left the premises. This, said the court, was equally consistent with brazen defiance of the rule. The court found that the review judgment had muddled the issues still further. The finding that the employee could not be guilty of “unauthorised removal of company property” because he had not yet left the premises was incorrect. Apart from the fact that it was common cause that the employee had intended removing the milk from the premises, the offence of “unauthorised” removal had commenced when he had removed the milk from the canteen with that intention. The test for distinguishing between complete and incomplete acts of appropriation is whether the owner has lost possession and the appropriator acquired possession. This had occurred when the employee had removed the milk from the kitchen. As to the judge’s finding that dismissal was too harsh, the LAC noted that this was not part of the employee’s case during the arbitration or on review. The court found that when all was said and done, the employee had dishonestly contravened a rule of which he had been fully aware. The commissioner’s conclusion that the dismissal was unfair was accordingly not a conclusion a reasonable commissioner would have reached.The award was set aside. The award was substituted with a ruling that the employee’s dismissal was fair. Double-barrelled The Constitution gives all workers the right to strike, but the Labour Relations Act 66 of 1995 (LRA) requires those engaged in essential services to resolve all their disputes by arbitration.What happens when an employer engaged in an essential service employs both “essential” and “inessential” employees? The Cape Town municipality found itself confronted with this question when SAMWU referred a dispute concerning the municipality’s alleged refusal to bargain over restructuring. As with all municipalities, some of the city’s employees are classified as essential service employees, and others not. Only the former may not strike. The problem reared its head after the bargaining council commissioner certified the dispute unresolved. SAMWU called its “inessential” employees out on strike, as it was entitled to do. But at the same time, the union referred the dispute for arbitration on behalf of its essential service members. This was a first.The strikers had to sit it out until the city complied with their demand.Their “essential” colleagues, for their part, had to persuade an arbitrator to make a ruling in their favour. At the arbitration, the city raised a host of technical points.Their thrust, however,was that SAMWU could not refer a dispute for “interest” arbitration on behalf of its “essential” members while its “inessential” members were on strike. In other words, the union had to choose between the two forms of dispute resolution.
The arbitrating commissioner dismissed this point, as well as the others, and ruled that the council had jurisdiction to entertain the merits of the claim (see SAMWU / City of Cape Town (1)  11 BALR 1071 (SALGBC)). The municipality took his ruling on review. In City of Cape Town v SALGBC & others (Labour Court case no. C654/2009 dated 12/01/2010, unreported (A C Basson J)), the court could find nothing in the LRA to suggest that employees lose their right to strike simply because some of their colleagues are classified “essential”. Conversely, said the judge, essential service workers do not lose their right to refer disputes for compulsory arbitration in terms of section 74(3) because some of their colleagues are classified inessential. But the court added that, where a union refers a dispute for conciliation involving essential service workers and others, the employer should at least be informed whether the union intends referring the dispute for arbitration. The practical effects of this judgment will never be known. By the time it was handed down, the dispute had long since blown over. But the court’s ruling means that employers who employ both “essential” and “inessential” workers may find themselves having to defend their position both in the streets as well as before an arbitrator. And this in turn raises the intriguing possibility that the employer may convince the arbitrator that the union’s demand cannot be met, but the employer is nonetheless forced to comply with the strikers’ demand(s) through industrial action. Just Desserts The City of Cape Town found itself with further problems when it dismissed a senior employee for having an invalid driver’s licence. It was not so much the status of the licence that offended the municipality. Management was upset because the employee had obtained her licence by presenting a fake Namibian licence for conversion to a South African licence, and because that scam had been uncovered by the erstwhile Scorpions. A bargaining council arbitrator did not see the offence in the same light. He reasoned that, while the employee should have been disciplined, dismissal was too harsh because the fraud had been committed outside the workplace, because the employer had not considered whether a lesser sanction might be appropriate, and because the offence had been committed nine years earlier. But on review in City of Cape Town v SALGBC & others (Labour Court case no. C490/2009 dated 04/02/2011, unreported (AC Basson J)), the judge did not see the matter so charitably. The court accepted that,when it comes to deciding on the appropriateness of a sanction, arbitrators must not merely rubberstamp employers’ decisions. But, on the other hand, arbitrators are not required to decide afresh what should be done with the employee. The judge assessed the employee’s actions for what they were. She had obtained her licence by fraud and corruption, and had continued using that licence for nine years until exposed. The true question was whether this conduct impacted on the relationship with her employer. It was obvious to the court that it had done so. Mutual trust is an essential element of the employment relationship, even in the public sector. The employee, who held a position of trust, had been grossly dishonest, and had committed a criminal offence. She had deceived the State, and had persisted with her false claims during the investigation, the disciplinary hearing and, under oath, the arbitration.And she had shown no remorse. That the fraud had been perpetrated a long time before did not serve as a mitigating factor, because the employee had continued to benefit from her fraud. The award was set aside and the employee’s dismissal ruled fair. John Grogan, BA (Hons)(RU) B Iuris LLB (SA) LLM PhD (RU), Advocate of the High Court of South Africa. Published with permission from Siber Ink CC April 2011 People Dynamics
Results on demand using Talent 2.0 By Irwin van Stavel
RMG, a leading South African performance agency, and SumTotal, a global provider of proven talent development solutions that automate and integrate learning, performance, and compensation to drive business results, have partnered to launch the world-leading, results-on-demand SaaS solution,Talent 2.0 to South Africa and Africa. Integration has become a cross-industry buzzword, and applies to the talent development industry too. Many organisations have already learned the value of centralising the management of diverse business functions to simplify administration, cut costs, and boost efficiency. Talent development, through its cyclical stages, seems to lend itself naturally to integration as a single, comprehensive solution. In fact, some companies have already found that effectively centralising talent development components through a common technology can build real competitive advantage. Talent development typically combines five key elements into a single, unified solution. These elements include measuring employee performance and planning for succession; delivering learning that expands or fills gaps in performance or competency; offering community, content management, and informal learning capabilities; compensating people appropriately for their performance and finally, providing for delivery of information both online and offline via mobile and disconnected modes. Unified talent development suites can offer greater overall visibility into workforce capabilities, making it easier to fill skill gaps and identify avenues for continued growth and innovation. The reality is that today recruiting the correct talent is just not that easy. Demographic shifts and disappointing skills shortages are squeezing talent acquisition out of the equation for many businesses and they are realising that competency challenges can no longer be solved by the acquisition of new blood or by simply trying to ‘recruit ones way out of a problem’. At the same time, employees themselves are demanding that businesses establish more comprehensive talent development strategies. The younger generation, in particular, impress upon companies how important it is to offer faster and more aligned pathways for growth. Employees want detailed plans for how a company will help them manage their careers in the long-
term. In order to grow and retain the most talented individuals, companies are rapidly realising the necessity to present an integrated approach to the employee lifecycle. This demand has, in turn, spurred some vendors to quickly work on rounding out their isolated talent offerings into full talent development suites. Many organisations are however still struggling and while many see the value in integrating talent development, the reality is that most were built to manage these categories separately. Many have distinct departments with distinct groups of personnel for each component, and unifying them all efficiently can be extremely challenging. Additionally, each of these silo departments might have made significant investments over time in heterogeneous legacy systems. Simply casting those systems aside in favour of a new centralised talent development suite might not be feasible. It is imperative for businesses to create a long-term talent development technology strategy driven by someone who is empowered to make strategic decisions regarding technology. Ideally one should aim to build cross-functional participation between all related talent development departments. After all, talent development is not about learning, performance or compensation alone — it’s really about managing an integrated lifecycle. The next step is to evaluate leading talent development vendors to find the broadest functional fit. Because talent development suites are still largely under construction, avoid looking for the best-of-breed in all five components. Instead, seek out a vendor that meets your functional requirements across the broadest possible spectrum. It’s easier in the long run to work with a single vendor to build a comprehensive solution than it is to attempt to expand on non-integrated applications from separate vendors. Solutions should then be deployed in a phased manner.Talent development is complex, involving a number of people and processes and it is dangerous to over extend resources by tackling all areas at once. Ultimately this type of solution makes a business better by improving employee performance through combining the power of learning, performance, and compensation management systems. A product like Talent 2:0 can assist a company in aligning its organisational strategies, engage employees through coaching and development, identify and retain critical employees, and ultimately improve the performance of the entire workforce. It provides managers with a tool for not only assessing employees, but also translating those assessments into actionable talent development plans. At the same time, you can ensure fair, merit-based compensation based on employee performance ratings. Talent 2:0 is on-demand, web-based software, available on a SaaS platform, providing comprehensive software applications through a secure Internet browser. It is an alternative solution to buying the software, which requires up-front capital, in-house IT resources and maintenance. It is an ideal solution for any size company, and with the data stored and protected by a secure, remote host, organisations can free up their IT teams to focus more on their core business. It also offers the added benefit of much shorter implementation cycles than are typical with behind-the-firewall software. Unified talent development software not only improves employee productivity by aligning its workforce with business goals, it also helps reduce turnover at critical positions, manages succession plans, minimises business disruptions, and reduces the risk of non-compliance, litigation, and lost business reputation. Irwin van Stavel, Senior Partner and Managing Executive, LRMG
People Dynamics April 2011
2011 IPM ANNUAL CONVENTION
o acknowledge the support of our members and delegates for making an effort to register early for the 2011 IPM Annual Convention, IPM would like to make a substantial concession by allowing them to register on the 2011 early bird registration rates on condition that they register and pay on or before the 30th April 2011. The convention committee has already started planning for the hosting of yet another intellectually stimulating convention. Some of the issues that the convention committee has started deliberating on because of their impact on business and the economy in general are the following: • The impact of the global economic environment on business operations locally. • People management issues emanating from both the presidential address and the budget speech. • Complexities of the South African labour market, including the shortage of critical skills and talent. In the same manner that global leaders both from public and private sectors converge under the umbrella of the World Economic Forum to find solutions to major global economic, political, and social problems, so is the tradition of HR professionals and business executives in South Africa and neighbouring countries to converge annually under the umbrella of IPM Annual Convention to find growth oriented solutions confronting organisations locally. In a study conducted by the Boston Consulting Group (BCG) in 2008, IPM Convention has been identified as the conference that attracts most delegates compared to similar conferences globally.This is due to the fact that the IPM Convention Committee takes the job of organising and hosting the convention seriously and high quality speakers both locally and globally are always keen to participate in this premier HR and business leadership event. Take advantage of the ‘early bird’ registration discount and act now. Rre. Elijah Litheko Chief Executive Officer email@example.com
65th Anniversary feature June 2011
People Dynamics is the official journal of the South African Institute of People Management (IPM)
65 YEARS OF THE IPM - A STORY OF FAITH, FORTITUDE AND FULFILLMENT The IPM recently celebrated its 65th anniversary. This milestone will be commemorated in the June 2011 issue of “People Dynamics”. IPM members are recognised as a highly qualified group of people who have taken their rightful place as part of the decision making team in 21st century organisations. There is little doubt that the IPM has played a vast role in empowering HR professionals. The June issue of “People Dynamics” will be a celebration of the success story that is the IPM. From the tough early years of the “founders” to today’s position of pre-eminence, the growth of the Institute has been a fascinating odyssey. The 65th Anniversary issue of “People Dynamics” will be a fitting tribute to all those who have been part of the exciting history of the IPM. We trust that all those involved with the profession will support this very special issue. It’s the perfect time to market your products and services.
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For further information or queries please contact Helen Bennetts +27 11 326 0303 or e-mail firstname.lastname@example.org April 2011 People Dynamics
IPM 55 ANNUAL CONVENTION & EXHIBITION - SUN CITY, TH ND NORTH WEST PROVINCE, SOUTH AFRICA, 30 OCTOBER TO 2 NOVEMBER 2011 TERMS AND CONDITIONS:
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2011 IPM AWARDS
Please submit 2 weeks before the event as IPM cannot be held responsible for dietary requirements that have been submitted late. (eg. Vegetarian, Kosher, Halaal)
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People Dynamics April 2011
IPM 55 ANNUAL CONVENTION & EXHIBITION - SUN CITY, TH ND NORTH WEST PROVINCE, SOUTH AFRICA, 30 OCTOBER TO 2 NOVEMBER 2011 EXHIBITOR DETAILS: Name: Industry: Physical address: Code: Postal address: Code: Contact numbers: Email address: Website address: Contact Person: Name of stand representative (for badges):
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Visit IPM online at: www.ipm.co.za April 2011 People Dynamics
A new South African word to become worldspeak? T
raditional South African words like “trek” unfortunately “apartheid” and most recently “eish” have become part and parcel of the international dictionary. Now I fear that a new South Africanism is destined to take its place on the lips of the world. And it will come as no shock to us residents of Jozi and its suburbs who have suffered under the catastrophic new billing system which has made all our lives a misery for over a year. I do not need to go into the full horrors that all of us have suffered – it has been well documented repeatedly in the press. In a nutshell the new billing system, called Programme Phakama, has been a pure and unmitigated disaster despite Johannesburg City Council’s assurances that its introduction “would make billing woes a thing of the past”. Phakama was a monumental cock-up . I am a firm believer that the word Phakama will now become entrenched as a superb expression to describe exactly that. Oh what a Phakama. you can shout with feeling when you drop a litre of paint on the carpet or blow up the mains with a badly wired plug. Come to think of it,“Phakama” is very descriptive. Why fix it? The Phakama debacle is another example of what is becoming a South African national trait – fixing something which isn’t broken. For years most residents of Johannesburg regularly received and paid their accounts for water, rates and electricity with no trouble at all. But that
People Dynamics April 2011
wasn’t good enough. No, at a cost of millions of Rand some bright spark decided we needed a whole new system which turned out not to work. There are reports that we are shortly going to be told to get new ID documents, once again at a cost of countless millions. Even worse all and sundry will probably be forced to spend hours queuing at Home Affairs. What on earth is wrong with the existing green ID book? And what fiendish mind decided it needs to be replaced? But worst of all are the antics of my bank. For many months I, along with many thousands of their clients, have been happily using their internet banking site for all our transactions. But that glorious status quo could not remain. Some genius in the bank’s IT department must have decided that it was high time that the internet banking site was upgraded.What resulted was the most un-user friendly product since the penny farthing. I now spend literally hours doing transactions that used to take seconds. Worse, the site is so badly constructed that it is almost impossible to make head or tail of what is being displayed. What a Phakama! If my bank manager doesn’t get me first, I’ll see you next month. All the best, Gabriel
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Published on Jun 14, 2012
Dynamics Labour relations and labour law Journal of the South African Institute of People Management www.ipm.co.za April 2011 • Vol 29 No. 4...