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July 2012 • Vol 30 No. 7

People

Dynamics

ce? Our most important resource? Our most important resource? he future The way we think about the future

The way we think about the future

y, BHP Billiton As the world’s largest diversified resources company, BHP Billiton nt value.

recognizes that resourceful thinking adds significant value.

As the world’s largest diversified resources company, BHP Billiton orm opportunities, Our people that and their knowledge allow us to transformvalue. opportunities, able outcomes. recognizes resourceful thinking adds significant accept challenges of the future and provide sustainable outcomes. Our people and their knowledge allow us to transform opportunities, accept challenges of the future and provide sustainable outcomes. www.bhpbilliton.com


IPM Annual Convention 2012 11 - 14 November Sun City , NorthWest Province

Convention Theme: "HR Leading the Way" Sub-themes • • •

Lead Build Deliver Results

Focus Areas • Leading organisations successfully and sustaining the momentum within changing economic environments. • HR competencies for the future, following recent research conducted by the RBL Group in partnership with the University of Michigan as well as the research conducted by the Boston Consulting Group (BCG). • Building capacity for Africa • Business transformation and organisational culture • Building results driven organisations and embedding a culture of excellence For registration details please contact, Patricia or Lavern on: (011) 329 3760

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Editor’s letter

2

Leadership

3

As everything changes, so it stays the same. By Nene Molefi

LEADERSHIP

4

Strategic HR: Best practice capability building at AngloGold Ashanti

RETIREMENT FUNDS

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South Africa’s retirement fund industry faces higher standards of governance and regulation By Gert Kapp and Johannes Grové

TAXATION

7

Medical aid tax credits bring equality into the tax system By Grant Lloyd

EMPLOYEE BENEFITS

(Avalaible in hard copy and web based formats)

8

Got a total rewards package? You could be wasting it By Samantha Crous

HR SOLUTIONS

9

Employees’ expectations By Rob Bothma

leadership

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Kelly’s heroes

INCENTIVES

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The effectiveness of incentives By Karen Crous

Employee benefits

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The basics of employee benefits By Werner Van Wyk

Mentor matters

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13

Arbitration surprises a nightmare for HR/IR practitioners By Ivan Israelstam

Leadership

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Making the case for leadership development By Ken Blanchard

BUSINESS DEVELOPMENT

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The evolution of rainmakers in professional services By Jackie Mohale

TECHNOLOGY

16

The race for attention in a distracted economy By Vanessa Bluen

Gabriel’s Horn

17

Back on the right track

Institute news

P E Corporate Services General Staff Survey has built a reputation as the definitive work and one of the most authoritative sources of benchmark remuneration data available. With a participant base of over 700 organisations it is also one of the largest research publications of its type in the world. The survey contains basic salary, fringe benefit and annual cost of employment data for 550 different benchmark positions, from the most junior operative to middle management level – an essential aid to remuneration planning at all levels. The organisations contributing data to this survey employ in excess of 1,5 million staff. Positions are grouped by function (financial staff, artisans, sales and marketing, etc.)

Salary and benefits data includes:

Recession’s impact on HR By Gary Taylor

LABOUR LAW COLUMN

SURVEY OF GENERAL STAFF REMUNERATION IN SOUTH AFRICA

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The IPM’s journey and that of the hr profession in RSA By Rre Elijah Litheko: IPM CEO

Forthcoming ISSUEs features AUGUST 2012 – Women In Business, Women in recruitment, Women in training and Women in coaching and mentoring SEPTEMBER 2012 – Annual Conference, Payroll Admin.

GENERAL STAFF REMUNERATION

CONTENTS

Pay data for all regions in South Africa

Industry sector differentials Salaries by job evaluation grade Value of cash incentives and allowances and all non-cash fringe benefits Analyses of current and projected salary trends, including increases by sector, function and region For more information on these services please contact either of our offices in: Johannesburg Tel: (011) 442-4334 Durban Tel: (031) 700-1597 For more assistance in the Western or Eastern Cape please contact our agents: WORK DYNAMICS Cape Town Tel: (021) 913-8371 Port Elizabeth Tel: (041) 581-0150 or visit our web site

www.pecs.co.za


Editor’s letter

I

know that I may go on a lot about social media, but let’s face it, social media is the new pink, everyone who’s anyone is doing it and if you’re not then you are way behind. I have just read two interesting HR-related articles tackling different social media aspects.The first of which focused on using social media platforms to foster internal collaboration, be it within a single office or across branches or countries. More and more companies are turning to social media as a way to tap the innovation and talent that leaders know could blossom, if the right people could connect. How can your organisation use social media to solve problems and create a sense of community? The study: ‘How to Use Social Media to Build a Better Organisation’ is a long and in an American context but an interesting read, if any of our readers are interested I would be happy to share the article. The second article looked at companies in America using online wellness apps within the work environment to motivate their staff to take control of their health habits. They have embraced social media and added it to internal business processes to make them more fun and engaging and to work to their advantage. By getting everyone involved and competitive within the office environment to reach new health and lifestyle goals, not only does management look ‘with it and in the know’ but they are creating a healthier, smarter, more effective workforce in turn. Encouraging employees to adopt and maintain regular exercise and a healthy diet makes really good business sense. This can easily be incorporated and linked to company incentive programmes, the current benefits of which are questioned in two of our articles this month. In the words of Andrea Whitney from Workforce,“If a company is debating the merits of apps and games in the hopes of enabling employees to learn, track, measure, compete and possibly get healthy, get in the game before it’s game over.”

   

Editorial Alex Bouche E-mail: alexandra@eaglepub.co.za Advertising Bookings Helen Bennetts Tel: 011 326 0303 Fax: 011 501 2878 E-mail: helen@eaglepub.co.za Publisher The Eagle Publishing Company Tel: 011 326 0303 Fax: 011 501 2878 E-mail: rob@eaglepub.co.za www.eaglepub.co.za Rob Furney Tel: 011 326 0303 Fax: 011 501 2878 E-mail: rob@eaglepub.co.za Tony Proudlock Tel: 011 326 0303 Fax: 011 501 2878 E-mail: tony@eaglepub.co.za Design Margie Carter Tel: 011 326 0303 E-mail: studio@eaglepub.co.za IPM Central Office 288 Kent & Harley Street, Randburg PO Box 3436, Randburg 2125 Switchboard: 011 716 7508 Keith Pietersen Tel: 011 716 7508 Fax: 086 545 9723 e-mail:keith@ipm.co.za 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.

INTERNATIONAL FEDERATION OF TRAINING AND DEVELOPMENT ORGANISATIONS

WORLD FEDERATION OF PERSONNEL MANAGEMENT ASSOCIATIONS

No part of this publication may be reproduced without prior written approval from the IPM.

ISSN 0261-2399 The views expressed in this publication do not necessarily reflect the values of the IPM.


Leadership

As everything changes, so it stays the same. By Nene Molefi

W

e constantly hear that change is the only constant, that everything is changing. Yet, one of the most consistent issues staff have is that leadership promises change, implements vast transformation programmes or change management processes and yet, nothing changes. Despite the fact that we are told that employees are resistant to change, those same employees tend to be the ones asking for change. Of course, leadership and staff may not necessarily agree on what needs to change or how it needs to change. Even if we are all on the same page and we start our transformation journey with energy and determination, so often, things go wrong. One of the keys to successful transformation and change is the transformation of leaders. Not just leaders – in fact, every individual needs to change because organisations don’t transform. People do. It still needs to start with leadership though. The problem comes in that most leaders don’t see themselves as part of the problem. How many managers or executives do you know who would think of themselves as untrustworthy or bureaucratic? We all have a self-serving bias, a phenomenon described in behavioural psychology. We tend to believe we are better than we actually are. We believe our successes are due to internal or personal factors whereas we blame our failures on external factors. It is a protection of our own self-esteem. Just take a simple survey of couples asking the amount of housework each does – it invariably adds up to more than 100% (which is obviously impossible). We want to (and need to) believe the best about ourselves. Those who show a lowerthan-average self-serving bias were clinically depressed individuals. As a leader however, this creates a problem in that leading the change will require personal change. After all, it would mean first understanding what to change on a personal level. Leaders often lack honest feedback mechanisms. 360 degree reviews are one tool that can be used (such as the Leadership Development Assessment tool that Mandate Molefi utilises) or having a few key individuals whose feedback we trust – who aren’t afraid to give criticism and provide leaders with insight into themselves. Standard reviews however against HR competencies will not be sufficient. Leaders need to be assessed in terms of their behaviours. These can be checked against facts – eg. you say you are customer-focused yet spend less than 5% of your time reviewing customer data, meeting with customer-facing employees or customers themselves. Therefore, the behaviour contradicts the self-image and breaks down the self-serving bias. Leaders can then adjust their behaviour to better reflect their values. Focusing on specific behaviours also deals with the “how” part of change. If the environment is bureaucratic and there is a need to change this, the “how” can result in more paperwork and longer processes than before. By focusing on specific behaviours that are indicative of bureaucracy in the organisation (eg. having a meeting which results in three more meetings without any decision being made), these can be modified and addressed more easily. Of course, the first rule of change is that there needs to be a will to change – leaders need to want to change. Transformation won’t happen because the external consultants who have been hired to assist in the process want it to. The process of change needs to be driven by valuesdriven leaders. It will only happen when the individuals in the organisation – from leaders through to staff – want it to (and preferably want the same things).

Leadership Values Assessment

Copyright: Barrett’s Values Centre

A powerful coaching tool for promoting self- awareness, personal transformation, and an understanding of the actions a leader needs to take to realise his or her full potential. Compares a leader’s perception of his or her operating style with the perception of their superiors, peers and subordinates. Emphasis is placed on a leader’s strengths, areas for improvement, and opportunities for growth. Reveals the extent to which a leader’s behaviours help or hinder the performance of the organisation, and to what extent fear influences decision-making. Measures the personal entropy and authenticity of a leader. The values chosen by the leader and the assessors are mapped to the Seven Levels of Leadership Consciousness. The LVA feedback is given by a coach in a one-to-two hour feedback session. The leader and the coach together develop a detailed action plan to improve the performance of the leader. Contact us on: (011) 728-9585 (021) 434-9593 Info@mandatemolefi.co.za www.mandatemolefi.co.za


LEADERSHIP

Strategic HR: Best practice capability building at AngloGold Ashanti A

ngloGold Ashanti is the world’s third largest gold-mining company, the largest operating on the African continent and employs over 62,000 people. It has a portfolio of many assets and differing ore body types in strategic gold producing regions. The company’s 20 operations are located in ten countries (Argentina, Australia, Brazil, Ghana, Guinea, Mali, Namibia, South Africa, Tanzania and the United States of America), and are supported by extensive exploration activities. The operations are run as four distinct regions - Southern Africa, Continental Africa, Australasia and The Americas.The company is well positioned for future growth through substantial greenfields and brownfields exploration project pipelines. The business vision is “To be the leading mining company”. Inherent in achieving the vision and mission is the development of people, with the primary core strategy to recognise that ‘People are the Business’ is strategically important for the following reasons: First, it is testament to our conviction that the people working at AngloGold Ashanti are central to our success. In our operating environment and across the global mining industry, there are known practical and potential human capital risks. In general, these relate to acquiring and retaining key skills; training and developing people; and to industrial relations. These are identified and tracked each quarter as we seek to design and implement region-specific solutions. Second, it reflects our focus on practicing our values; to care for ourselves and each other, particularly with regards to our safety and health; to treat everyone with dignity and respect; to value our diverse cultures, ideas, experiences and skills; to be accountable for our actions and do what we say we will do; and to positively build up the communities, societies and natural environments in which we work. Third, it articulates our mission to create value safely and responsibly

Fig. 1: The Management Framework in AngloGold Ashanti

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People Dynamics July 2012

for all people. ‘People’ includes our employees; the local communities and societies in places where AGA has a presence; our shareholders; and our and other business and social partners. And fourth, it is aimed internally to draw attention to the fact that how we deliver on our vision is as important as the outcome. When the CEO Mark Cutifani joined AngloGold Ashanti (AGA) in 2007, the business was in a slow but steady decline. The business projections for the next three years showed the same inexorable trend. The CEO implemented a strategic change programme called Project ONE, which saw the projected results for 2008, 2009 and 2010 drastically improve. The broad strategic direction of AGA as it was defined in 2008 in our business framework compelled a new approach to leadership that supports people doing the right work. AngloGold Ashanti has adopted a Management Framework that sets the approach to how we conduct our business. It places the required emphasis on strong leadership, line ownership of the work, the bringing together of employees and technical systems, and the importance of continuous improvement through on-going measure and review. The Management Framework is not a change model – it is a total management system with a focus on strengthening both our people and our work systems (technical, commercial and operating) so that through our constantly changing business and risk contexts, we can always reflect an aligned and consistent working model to achieve results and engagement. Under Project One, we have rebuilt our business processes quite deliberately to change our working environment and the work of people through: The System for People (SP) based on the work of Elliott Jaques, The technical process reengineering called Business Process Framework (BPF) based on the combination of six Sigma principles and Demming’s model of Plan/Do/ Check/Act, and Employee engagement based on the work of Maurice Driscoll and Rob Evans. These ensure the integration of People and Systems of Work as in Figure 2 below: These three systems are integrated approaches to operating and together they give effect to all our core strategies but particularly to People are the Business. The System for People begins with organisation design to describe clear structures, hierarchies based on Levels of Work, roles and associated accountabilities and authorities that clarify exactly how we connect every part of the business. The System for People specifically is a top down implementation of Jacques’ Requisite Organisation and is aimed at ensuring AGA has the right people in the right roles doing the right work. The Business Process Framework details our business processes and how all tasks fit and flow together to explain exactly how people


LEADERSHIP

Fig. 2: The Management Framework – delivering results interact within the operating system and each other to get work done. And the Engagement system encourages line ownership and team work, as we each have to step up and engage, ask the right questions, listen and connect, thereby further enhancing, systemically, the way in which employees do their work. Traditional HR practices and strategies have their place but have to be supplemented by a more strategic approach. The company views all its employees as talent and will provide the opportunities to learn and develop to their maximum capability, and into higher level positions, should these match potential capabilities and personal aspirations. As a global mining company we offer opportunities to work in different countries and contexts. We value cultural adaptability. In addition to technical skills, we expect our current and prospective employees to mirror behaviours aligned to the six organisation values of AngloGold Ashanti. This requires embracing a zero harm culture which ensures the safety of all AngloGold Ashanti employees and treating each other with dignity and respect by promoting an environment of trust, openness, friendliness and equality; valuing the diversity of each of the individuals within the company from across the globe ensuring that our differences are understood and respected; being accountable for our actions and delivering on our commitments by acting in accordance with the AngloGold Ashanti Code of Business Principles and Ethics and respecting the environment in which we operate, ensuring that we build productive and mutually beneficial partnerships within the communities in which we operate. By understanding the strengths and aspirations of our people, we will be able to determine whether we have the talent necessary to deliver on our current and future strategic objectives and to develop our own pipeline of talent, through which candidates can be sourced internally for role vacancies. Line management, supported by, HR focus on: l The right organisational structures (organisation design and work complexity) l The right people in the right role (role accountabilities and individual capability) l Doing the right work in the right way (supported by BPF)

l In effective working relationships (supported by our engagement initiatives) l With the right processes (supported by SP subsystems such as talent management, performance management, etc.) and measures (standardised in the SAP IT system) The System for People is designed to adhere to the following principles: l Work for everyone at a level consistent with their level of current capability, values, and interests. l Opportunity for everyone to progress as his or her potential capability matures with opportunities available in the organisation. l Fair and just treatment for everyone, including fair pay based on equitable pay differentials for the level of work and merit recognition related to personal effectiveness appraisal. l Managerial leadership interaction between managers and subordinates, including shared context, personal appraisal, feedback and recognition, and coaching. l Clear articulation of accountability and authority to engender trust and confidence in working relationships. l Opportunity for everyone individually or through representatives to influence policy development. AGA has also invested increasing effort into defining its employee value proposition and building an employment brand. While this is work in progress, AGA considers it essential to defining what makes our company unique and what it stands for. In association, it communicates to potential employees what it is like to work for your organisation and why long-term employees are retained. There is no more fitting conclusion than the words of the AngloGold Ashanti’s Chief Executive Officer, Mark Cutifani, who said: “I live by a simple leadership philosophy: the business is ours to manage …the future is ours to create. Taking this starting point, the most important thing to understand about our business is that it is not grades, processing plants and headgears. It’s actually about people: People are the Business … Our Business is People. In recognition of the importance of our people to the success of the business,AngloGold Ashanti is committed to helping each and every employee to realise their full potential”. July 2012 People Dynamics

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RETIREMENT FUNDS

South Africa’s retirement fund industry faces higher standards of governance and regulation By Gert Kapp and Johannes Grové ‘Recent changes in regulation will lead to additional costs for members of funds.’ South Africa’s retirement fund industry has undergone significant regulatory changes, with higher standards of governance being imposed on trustees, according to PwC’s 2012 Retirement Fund Strategic Matters and Remuneration Survey released in May 2012. The majority of trustees (72%) believe that the South African retirement fund industry is appropriately regulated from the perspective of protecting members. Some participants emphasised the importance of the role played by the Regulator in the effective monitoring and supervision of compliance with legislation. However, a number of trustees also felt that the industry is possibly over regulated and that legislation is not focused sufficiently on the key risk areas from the perspective of protecting members. Trustees face more scrutiny and oversight than ever before, particularly in the wake of the recent economic uncertainty which has raised higher levels of governance and seen some significant regulatory changes in the industry. In South Africa, the most far-reaching changes have been the introduction of the revised Regulation 28. This imposes a much higher level of governance on trustees in relation to investments, which now needs to be monitored on a ‘look-through’ basis. Compliance is required not only at fund level but also at member level. There is a renewed focus on trustees’ obligations to take into account the members’ needs in deciding how to invest the assets to meet those needs. The PwC 2012 Retirement Fund Strategic Matters and Remuneration Survey collates the responses of 228 participants representing a total asset base of R708 billion across a wide range of funds from large to small. It offers a benchmark against which trustees can compare various aspects of their fund’s working and strategies with those of their peers. The aim of the survey is to identify trends in roles and remuneration of trustees and principal officers and shed light on the stance retirement funds currently take on trustee education and on various aspects of corporate governance and risk management. The study covers four focus areas: trustee remuneration; the education of trustees; principal officers and their remuneration; and aspects of regulation and risk management. It is not surprising to note that the majority of participants (73%) feel that

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the latest regulatory changes for funds and the industry as a whole will result in an additional cost for members of funds. The three top areas of regulatory changes expected to have the most additional cost for members of funds were compliance with Regulation 28; compliance with section 13B by investment and benefit administrators; and compliance with proposals contained in recent amendments to the income tax laws. The majority of participants (68%) felt that there was scope for simplification or a reduction in costs in the operation of their funds. This suggests that respondents believe that fund arrangements and operations are more complex than necessary or desirable and in our experience this is often the case. Following on from PwC’s previous Retirement Funds surveys in 2007 and 2010, adherence to sound principles of governance remains a high priority for trustee boards. Most participants fell into one of two evenly matched camps: one that saw the King III Report on Corporate Governance as valuable for funds and the other that felt Pension Fund (PF) Circular 130 provided sufficient guidance on fund governance. Remuneration of trustees and principal officers In the 2010 survey, less than half of South Africa’s retirement funds (45%) said they remunerated their trustees. Contrary to our expectation of seeing some increase, this percentage remained unchanged this year. Although the Pension Funds Act is silent on remuneration, the Trust Act states that a trustee is entitled to remuneration provided for in the trust deed or, where no provision is made, to a reasonable remuneration. The bulk of funds who remunerate trustees see the value in doing so in that they are expected to provide a higher level of care or be prepared to take on more responsibilities It is therefore not clear why certain of the large standalone retirement funds do not pursue this lead. The annual remuneration for the majority of chairpersons (57%) was in the range of R1 – R100 000. For standalone funds, 60% of trustees earned between R1 and R50 000, compared to 77% of specialist funds. The top earning trustees for both specialist funds and standalone funds (4%) earned an average remuneration of between R200 000 and R300 000 per annum.


RETIREMENT FUNDS The main board still appears to determine the level of trustee remuneration for standalone funds, according to 71% of the respondents. For specialist funds, the sponsor continues to be the main driver of the level of remuneration. Interestingly, the boards and board committees of umbrella funds determine the level of trustee remuneration for the majority of these funds. Both standalone and specialist funds are of the view that workload is the main factor in determining the level of remuneration. The study also showed that 58% of funds remunerated the principal officer, compared to 47% in the 2010 survey. Principal officers have a pivotal role to play in the day-to-day running of retirement funds. It was interesting to note that principal officers earned more remuneration annually than the chairpersons of boards. Standalone funds pay bigger cheques to principal officers with 63% of those that do remunerate paying more than R400 000 per annum. Specialist funds pay less than R250 000 per annum in 67% of cases, possibly indicating that sponsors are picking up the bulk of remuneration. Education of trustees The sheer scale of pension fund investments, coupled with the attendant economic,political and administrative risks,places an enormous responsibility on boards of trustees to govern these arrangements wisely. It is important that trustees equip themselves with the required skills and knowledge to enable them to discharge their obligation towards fund members in the best possible manner. It is positive to note that two-thirds of participants indicated that the training needs of trustees had been assessed. The majority of training provided to trustees focuses on the roles and responsibilities of trustees, fund governance, the requirements of the Pension Funds Act and an understanding of investment products.

It is worrying to note that three percent of respondents indicated that no training was provided to trustees. This may be less of a concern for professional trustees who see to their own continued education and training, but is alarming in relation to member trustees, who may well lack the experience and knowledge to deal with the complex issues that trustees need to face and take action on. Furthermore, 13% of member trustees had no tertiary education. Unless this is compensated for through long experience in the retirement fund industry, these trustees’ training needs require special attention. The results of the study indicate that, on average, trustees spend 27 hours annually in training and attending industry events. Whether this is enough is a question that can only be answered by each individual trustee after carefully considering his or her responsibility towards the fund members whose retirement benefits are being managed. Trustees should take care that enough time is set aside to equip them with the knowledge they may well lack. Risk management of funds It is positive to note that the majority of participants (81%) has completed a detailed annual review of the risks faced by the fund, as required by PF Circular 130. This represents a slight improvement on the responses to a similar question posed in PwC’s 2007 survey where only 75% of funds had a proper risk assessment in place. One of the most favoured ways to manage and monitor risks was to use external auditors to perform testing on specific focus areas. Gert Kapp, Retirement Fund Leader for PwC, Southern Africa, 012 429 0059, gert.kapp@za.pwc.com Johannes Grové, PwC Partner in the Retirement Division, 011 797 4044, Johannes.grove.@za.pwc.com

TAXATION

Medical aid tax credits bring equality into the tax system By Grant Lloyd

G

ood news for employees countrywide is that the new medical aid tax credit system that replaced the capping system from the beginning of March this year, will ensure that they all receive equal benefits. The greatest benefit goes to employees whose earnings fall within the lower income brackets because the medical aid capped amounts, deducted before calculating PAYE, were subject to the marginal income tax rate of each employee. Now the tax credit is applied after calculating PAYE. Here are two examples to illustrate how the medical aid tax credit helps employees: John earns R10 000 a month and contributes R1 000 towards his medical aid. He is 27 years old, single with no children. With the old capping system, John would qualify for a R720 medical aid cap applied as a deduction against his salary of R10 000, so his PAYE would be calculated on R9 280. His total annual remuneration value placed him in the lowest earnings bracket, meaning that his marginal tax rate was 18%. He would have received 18% of his R720 medical aid cap, a reduction of just R130 in his PAYE because of his medical aid contribution. But with the new tax credit system that is now in place, John’s PAYE reduction will amount to R230, putting an additional R100 in his pocket every month.

Mary earns R25 000 per month and contributes R1 000 towards her medical aid. She is 25 years old, single with no children. Under the old capping system she qualified for a R720 medical aid cap which meant her PAYE was calculated on R24 280. Her total annual remuneration was subject to a marginal tax rate of 30%, resulting in a PAYE reduction of R216 which is 30% of the R720 medical aid cap. These examples show how the old medical aid capping system can be considered unfair. Although both John and Mary contributed the same amount towards their respective medical aids, Mary enjoyed a greater benefit because her earnings were higher. With the tax credit system having taken effect from 1 March 2012, both John and Mary will receive the same reduction of R230 in their PAYE liability, regardless of their earnings, which is a more equitable situation. Companies need to ensure that they apply the new medical aid tax credit calculations on all payslips processed from the beginning of March this year.Those using automated payroll solutions should already have the parameters and calculations that apply to the medical aid tax credit in their systems. Grant Lloyd, managing director, Softline Pastel Payroll, 011 304 4190, Grant.Lloyd@pastelpayroll.co.za, www.pastelpayroll.co.za July 2012 People Dynamics

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EMPLOYEE BENEFITS

Got a total rewards package? You could be wasting it By Samantha Crous

M

ore and more companies are investing in total reward packages and mutually beneficial relationships with their staff, in the hope of increasing loyalty and productivity, and decreasing staff turnover. But, research shows, many of these investments are failing for one simple reason. A large percentage of companies are wasting the budgets they allocate to total rewards packages and employee engagement – because they fail to make employees aware of the benefits on offer. Recent research conducted by the Chartered Institute of Personnel and Development (CIPD) for its annual Reward Conference showed that the majority of employers in the UK could be wasting, entirely, the money they spent on salaries and benefits by leaving employees in the dark about the true value of the total package. Companies are realising more and more the importance of investing in their staff, since disengaged staff are less productive and a high staff turnover increases costs prohibitively. But if companies do not make employees aware of what is being invested in their wellbeing, they might as well not make that investment. According to the research, known as the 2012 CIPD/Benefex Reward Management Survey, eight in 10 organisations offer no financial education to help employees understand the value of their pensions and other financial benefits; and the majority does not adopt a transparent approach to pay scales, benefits and allowances, performance-related pay schemes or how pay decisions are made. Furthermore, over a third of companies plan to increase spend on employee benefits this year, but just 17.8% provide employees with “total reward statements”. In practice, that’s like giving your employee a diamond and leaving them to assume it’s a zirconia. Light bulb moment: the rewards can’t just be attractive. They have to be perceived as attractive. And perception rests on communication. It’s not surprising, then, that even companies with the best packages can still battle to retain talent. How can they, when the employees themselves don’t know the rewards they’re getting? Strong communication of employee benefits is a link that has enabled Old Mutual to take its place amongst the country’s certified Best Employers. They have been able to attract and retain talent by

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constantly communicating a single statement. The message is: ‘Old Mutual is a great place to work with people that do great things. It is a simple message, but one that constantly reinforces the mutually beneficial relationship between staff and company. Nestlé, also a certified Best Employer, adds that successful implementation of their total rewards programme has been all about transparency. HR Director Bright Nkosi says the global Nestlé remuneration philosophy is to pay for performance. But the key is that the employee is never just rewarded – he or she is made to understand what is being rewarded, so that through positive reinforcement, the reward becomes more motivating. Furthermore, the company ensures that each employee completely understands the reward package. Nestlé South Africa communicates annually to all employees regarding their total cost to company.Annual salary increases are based on performance evaluations and a salary increase matrix is communicated to all line managers and HR business partners. In addition, Nestlé is currently rolling out a Total Rewards Policy globally, aimed at ensuring that every Nestlé employee has a full understanding of the specific characteristics of total rewards and how they are established and maintained throughout the group. If your company is experiencing a higher-than-ideal staff turnover, you should begin by asking the right questions. Bottom line: don’t revamp your reward package before you’ve opened a meaningful twoway conversation with your staff. Do they know what you’re giving them at the moment? Do they understand how to benefit from investments you’ve made on their behalf? Do they know how to apply for courses, training or bursaries? Do they see eye-to-eye with you on why your company is a great place to work? And then – only once you’ve ensured everyone is on the same page – you can start taking feedback to heart and adjusting packages accordingly. * The Best Employers Certification audit is now running, with the results of the 2012 Best Employers index to be released on 29 August. Visit www.bestemployers.co.za for more information. Samantha Crous, South Africa manager, CRF Institute


HR SOLUTIONS

Employees’ expectations By Rob Bothma

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oming to work each day can be a satisfying and positive experience for your employees especially when their expectations of the work environment are being met. Employees generally have basic expectations that get them to work, those being their salary and any additional company benefits, however, getting an employee to want to come to work is a far greater challenge. There are a host of items that can provide job satisfaction to your employees that can be implemented by an organisation. Whether you as an employer, are considering a new hire or trying to retain your current employees, there are four key factors that can certainly help make your employees’ work experience a positive one. 1. work environment 2. work and life balance 3. freedom / trust ratio 4. opportunities for career development Work environment All employees expect a certain level of comfort in their workspace. Within this space opportunities should be made available to employees to: • recommend improvements for current processes • recommend new processes that will simplify onerous tasks • be able to interact with their colleagues and other teams especially when it comes to issues regarding resource availability, should they require these to perform their duties successfully • be given the latitude to be innovative and a forum to express their ideas. Work life balance Employees need to be given the opportunity to live a balanced life. It is unrealistic to expect a 24/7 commitment from employees. Just like an employee needs to understand that should a work crisis arise they would be required to be at the workplace for extended periods, so should the opposite be true, should an employee require time for personal issues, a mechanism needs to be in place to award this. Freedom/trust ratio This is an interesting one, one I have used in many of the management positions I have held. Basically an employee needs to be aware that their freedom to act is in direct proportion to the trust you have in them to getting the job done. Many employees are unhappy with the amount of latitude they are given by their managers to act, but do not see that the lack of the manager’s trust in them is the sole reason that little or no latitude is given, as this lack of trust is probably a direct consequence of their past behaviour. Basically employees should take responsibility for this, by building up the trust relationship with their manager which would then afford them the opportunity to have an equitable amount of freedom within which to act. On the other hand, managers need to make sure they are prepared to allow their employees the freedom to act when they exhibit the necessary work ethics, and as such can be trusted to get the job done. Opportunities for career development In surveys conducted internationally it is was found that Generation Y employees rate personal development, career progression, remuneration and benefits as their highest priorities, with all of these scoring significantly higher than issues such as stability and security in their jobs.This is in contrast with the baby boomers generation (those born between 1950-1964) which

ranked stability and security as their highest priority in a job while they rated the issues of career progression and personal development very low. Organisations need to recognise this and ensure that each employee has a documented path for career progression. Having this in place will probably be your biggest deterrent to losing staff to your opposition. In addition ensuring staff are happy in the workplace; a major concern for most organisations is the issue of staff retention. Irrespective of the employee’s generation, there are certain factors that play a major role when an employee reaches the crossroads of deciding should they stay or should they leave. Some of the more likely examples of these are: • When an employee has a lack of clarity about their manager’s expectations of them in their job • When an employee has little clarity about their earning potential within the organisation with regards to promotions, transfers, bonuses etc. • When employees are not given constructive (i.e. problem and resolution) feedback about their performance.Although most companies have some form of performance management process in place, it is usually ineffective and merely serves as a salary increase indicator rather than being a mechanism to develop staff • The failure of an employee’s manager to provide them with a framework where it is easy for them to perceive how they can succeed • When a lack of communication exists between management and employees. For communication to be effective it needs to be consistent and regular and not hap hazard, i.e. happening only when there is some form of crisis that hits the business. Having said all that, what should organisations do? Well, there is no time like the present to begin executing an action plan, so now is time to engage with both your employees and management. The first step should be to gauge how your employees currently rate your organisation in terms of how badly they want to stay or leave. Be bold, make sure that you ask the right questions, and provide enough latitude for employees to be both brutally honest and free from any threat of repercussions. Start this exercise off with an accurate set of expectations of what your organisation would see as an acceptable benchmark. This can then be used as a yardstick with which to measure the current state of your organisation as well as a means to measure any improvements you make during the next year. To be successful you will be required to get the buy-in of all your levels of management and staff, as their collective input would assist HR in ensuring that key aspects of the overall business are covered sufficiently. In summary, most employers aspire to provide an environment for their employees to be productive and happy i.e. meeting their employees’ expectations. Unfortunately, it is often different priorities and strategies that prevent the execution of the necessary actions to achieve this. It is time to look at what is preventing you from providing your employees with the optimal environment to ensure that they see you as their best option for employment. Rob Bothma is an Industry Specialist at Business Connexion and a nonexecutive director of the IPM, rob.bothma@bcx.co.za July 2012 People Dynamics

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leadership

Kelly’s heroes W

ith labour law uncertainty and tough trading conditions, the Kelly Group has been a poor performer in recent months with operating profit in 2011 down by 52%. Now a new management team has vowed to stop the downward spiral and set course for greater heights for one of the recruitment industry’s best known brands. And already it looks like they are succeeding. Last year Gareth Tindall was appointed Group CEO and shortly thereafter, Ferdi Pieterse became the COO for the Group. Their first target was to grow revenue, enhance profitability and cash flow, retain and grow the client base and retain good people. In January the powerful new management team was augmented by the appointment of Graham Bentley as MD of Kelly. He comes from the tough breed of entrepreneurs who seem to blossom in the challenging South African corporate landscape. As co-founder of JSE listed IT recruitment firm Paracon, he brings to Kelly a plethora of experience and talent. He talked to Tony Proudlock Bentley is unashamedly bullish about future prospects for Kelly. “Kelly as a brand is extremely strong”, he enthuses. “That brand equity and culture is still alive and well. In addition we have a strong and robust infrastructure still very much in place.”

Bentley is convinced that the way forward is to concentrate on sales and client service as opposed to an inward administrative focus. “My core focus going forward will be to streamline service delivery, inject a strategic sales focus back into the organisation and ensure the existing back office function supports our branch and sales network,” he stresses. Key accounts are already showing excellent growth, since January this year. “The good thing is that we have actually employed more people in recent months and have been able to avoid retrenchments. Just walking around the office you can tell that the focus is back. The bottom line is that my business ethos is to go out there and make as much profit as possible so that we can share it with our staff, our commitments to our shareholders notwithstanding,”says Bentley. Before taking up his present position, Bentley took a very unusual step. “I started Paracon when I was 28 years old. We listed in 1999 and I got to a point in 2009 when I realised the stress of the business was turning me into a different person,” he confides. My attitude to staff was not my true nature, I realised that something was fundamentally wrong and that it was time for a radical change. I needed a time out.” And so it was that he embarked on a two year sabbatical during which time he was able to re-connect with his family after the stress and working hours had put severe strain on a part of life that he regards as “incredibly important”. “Provided you have the financial resources,” says Bentley, “I would recommend a sabbatical to anyone. I have certainly returned with renewed vigour and a new perspective on life. My ‘time out’ had another benefit in that I now fully understand the problems of a working mother. Bonding with my kids I experienced picking them up from schools and sports as well as regular trips to doctors and dentists. We have a large female staff compliment at Kelly and it helps me to understand the rigours of being a working mum.” Graham Bentley the man: Family: Married to Trish with three children. Residence: River Club, Sandton. Person or persons who have influenced you most? My parents, my father-in-law and my history teacher, Mr Canova, who was also my boarding school housemaster. How do you unwind? Spending time with my kids. Pet hate? Indecisiveness Hobbies? Collecting sports statistics. Favourite food? A good steak. Favourite drink? White wine. Favourite holiday? Skiing in Austria.

We have moved Please note our new telephone number 011 716 7508 and address 288 Kent & Harley Street, Randburg

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INCENTIVES

The effectiveness of incentives By Karen Crous

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here is no doubt remuneration and incentive-based packages attract and retain the best talent and underpin a company’s performance. However, in light of the global financial crisis, underlying incentive models are somewhat ineffective, in driving the desired behaviours. The underlying model aims to drive shareholder value through greater alignment of managers’ behaviour with the interests and expectations of the shareholder and relies heavily on the use of incentives. The model is based on the principle that a conflict exists between managers and shareholders and that the role of the incentive is to create a long-term view among managers and shape decision-making behaviour. However, if we look at these reward mixes where there is a fixed salary and a variable portion, you would find the variable portion relates to a company’s and employees’ performance and is based on complex models. As changes in accounting policies and increased transparency requirements from shareholders influence remuneration models, so current structures and models, which are difficult to understand and complex, detract from the common-sense perspective. King III advocates transparency and simplicity, but current models operate counter intuitively to these guidelines. The model must change to allow fairness and achieve a balance between employees and shareholders. As a solution, there are a number of alternative models, one of which includes a significant increase in the employee’s salary with a requirement to use the increase to purchase shares rather than receiving options. This long-term incentive is aligned to the objectives

of shareholders and the employee. If equity markets suffer losses and impact shares, when economies recover and bulls enter the markets again, the employee’s performance will be rewarded by the value of shares over a number of years. A number of companies in the mining sector have adopted another model where a bonus is paid in shares and cash. The shares are vested for three years and the cash is received at the end of the financial year. A third option is a bonus bank, where employees defer their bonus over a number of years into a bank, from which they can subsequently claw back a bonus. If a company’s strong financial performance over a number of years is followed by one year of losses, employees have the opportunity of ensuring they can still receive a bonus from the years where the company performed well. However, the criticism here is that the longer people wait to get their bonus, the more it gets diluted. Even though the principles of King III advocate transparency and simplicity, it’s not a one-size-fits-all approach. Remuneration committees need to be practical and offer models that make sense in their industry. The key is to understand that complexity and ambiguity destroy value. Karen Crous, Associate Director, PwC, +27 11 797 4616, karen.crous@za.pwc.com

Employee benefits

The basics of employee benefits By Werner Van Wyk

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ttracting and retaining competent staff in a competitive employment market may be one of the most challenging problems facing any employer. If designed correctly, an employee benefit scheme can be a powerful tool in achieving this objective. A well structured benefit scheme should consist of retirement benefits in the form of contributions towards either a pension or provident fund; and risk benefits that provide financial assistance in the event of an employee’s death or disablement. The challenge to the employer is striking a balance between these two aspects. Unfortunately there is no perfect solution, but as a starting point employers should consider the following; What do employees want? What do employees need? What is currently being offered by competitors? What can the employer afford? As an example, employers should consider the differences between those employees that are financially sophisticated versus those with a lesser understanding of the principles of financial planning. Financially

sophisticated staff may understand the need to set aside portions of their income to provide for retirement and how to determine the amount thereof. However, the same cannot necessarily be said for staff that may not fully understand these financial principles. This then creates a greater need for compulsory retirement contributions for the second group. The role of financial advisors is to assist the employer in deciding on the most appropriate benefit structure for the scheme. This will ensure that the benefits offered by the scheme meet the expectations of the employees while minimising undue financial pressure on the sponsoring employer. Certain elements of a benefit scheme may result in tax relief for either the employer or employee, or both. This means that the provision of risk- and retirement benefits may also be a cost effective way of securing tax savings, thereby increasing the net income of both parties. Werner Van Wyk, Actuarial Specialist, Liberty Corporate July 2012 People Dynamics

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Mentor matters

Recession’s impact on HR By Gary Taylor

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f you are still reading textbooks about HR written before the global recession, you could be seriously out of touch with the appropriateness of your strategies. The best scenario we have to look forward to is what IMF chief, Christine Lagarde describes as the Lost Decade. Despite huge uncertainty regarding the specifics, we can pretty much count on several more years of tough times. Although our part of the world is less affected by the recession than most developed countries, we cannot hope to turn around and grow meaningfully for quite some while. So, have you planned how this will affect the way we manage our human capital? For a start, we can debunk some of the assumptions which created the wisdom from the pre-2008 boom years. All that talk about Generation X and Y being temporary sojourners at our workplaces as they flit from employer to employer is now clichéd and mostly plain wrong. Metlife’s 10th Annual Study of Employee benefits Trends revealed that 55% of Generation X and 60% of Generation Y workers claim that they are counting on EB for financial protection.The study shows a decreased appetite for risk, as 81% of Y staff now want guarantees at the expense of good returns: 64% of Gen Y are “very concerned” about liquidating their debt More than 50% of under-30s are “very concerned” about running out of money after retirement, compared to just 30% of them a decade ago. Reinforcing these findings, a Towers Watson Survey reflected that the retirement benefits component of a prospective employer’s offer was important to 63% of under-40s, compared to only 28% just 3 years ago. And here we were just recently gearing ourselves in HR to support a horde of migrant experts, and chasing the goal of flexibility at the cost of stability. This is a diametric shift, and I wonder if we have really grasped its consequences for our profession. When the bubble burst and banks collapsed, governments crumbled, people occupied Wall Street and trillions were lost, the employment scenario was jolted. Job security is now probably the single strongest attraction and retention factor, and one which is very difficult for HR to deliver upon, or to offer as a competitive incentive. So, it’s a buyer’s market for labour (sort of), but how do we as HR professionals deal with that shift? Do we get lazy, because people have few

alternatives? Do we still obsess with stealing and spoiling a handful of stars at the expense of the B players? Some of the interesting work being done by smart HR people includes optimizing the fact that we now have many Baby Boomers who want/ have to stay longer in the workforce. But, our strategy must be much more sophisticated than just extending retirement age. Can we create a way for experienced people in late career to continue to contribute, while not blocking career advancement for tomorrow’s leadership? Maybe moving out of management roles into advisory posts, with more flexible hours? What about young mothers who might have previously resigned for a few years, who now want to work but on a different basis? We bend over backwards to respond to client needs with product innovation, but are we as responsive to evolving employment needs? None of the HR basics go away, but our complexity sure is increasing. One further danger. A healthy economy normally means healthy turnover. People who are not happy would normally have left and gone elsewhere – they take their unhappiness with them, and are replaced by those who are keen and positive. In a recession, people hang on, but it doesn’t mean they are engaged and productive. Reluctant stayers probably don’t vocalize their dissatisfaction, so what do they do with it? Global recruitment site Monster.com asked visitors to their site “Are national or global economic troubles causing you to consider a complete career change?” A startling 55% of respondents answered Yes, but are we still assuming that all our accountants want to be senior accountants, and designing our HR strategies accordingly? How does your ERP system’s workforce planning module cope with all of this? In some ways, the boom years were almost simpler.Yes, the war on talent made us all shake our heads and complain at what everyone was demanding, and what the competitors were doing, but that was yesteryear. The world has changed, but not yet into a steady state, so it will take all our skill to read and respond to the dynamics you face in your region, country, industry and your own organisation. Who said that change is as good as a holiday?

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. Four 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 chapters for two HR books, been published in People Dynamics and HR Future, and was the SA correspondent for the UK magazine, People Management.

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LABOUR LAW COLUMN

Arbitration surprises a nightmare for HR/ IR practitioners By Ivan Israelstam

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he parties to a labour dispute have the option to agree to refer the dispute to private arbitration. However, where the employee prefers to refer the matter to the CCMA, the employer has no choice but to accept this. But if they go this route, neither the employee nor the employer has any say as to which CCMA arbitrator will preside over their case. This means that they are taking pot luck as to who arbitrates the matter. While the outcome of your case may vary depending on who your arbitrator is, all arbitrators are required to follow the same basic procedure during the arbitration hearing.The procedural guidelines laid down require the arbitrator to start off by explaining the arbitration process and rules. This entails explaining that: l opening statements are made by each party outlining what they intend to prove l the arbitrator could, for example, require the employer to present its case first. This will be done via witnesses, documents and other evidence l each time the employer’s representative is finished questioning one of his/her witnesses the employee has a right to cross examine that witness l the arbitrator has the right to ask the witness questions for clarity and the employer is allowed to re-examine the witness, but only regarding the issues raised during cross examination l once all the employer’s witnesses have been heard the employee presents his/her case according to the above listed steps. After the arbitrator has explained this process and has followed it he/she must: l hear closing statements l assess the evidence and make the award. While the above procedural steps must be covered there are other steps which some arbitrators like to add. For example, some arbitrators require the parties to provide formal papers containing the case arguments. lt is in any case advisable for the parties to prepare such papers and to utilise expert assistance in this preparation process. This is because such preparation not only helps the party to get ready for the arbitration but it also makes it far easier for the arbitrator to understand the party’s case. A few arbitrators, in the interests of ensuring fairness and understanding, assist parties with the comprehension of the contents of the Act or with carrying out their roles of leading evidence. On the other hand, most arbitrators interpret their role purely as a neutral arbiter who has no authority to assist the parties. As regards getting started with the process of opening arguments the arbitrator might logically be expected to require the referring party to present the first opening statement. However, the arbitrators may and do use their discretion in this regard. For example, where neither

party is keen to open argument, the arbitrator might call on the party whose statement he/she believes will help the arbitrator to obtain the best initial grasp of the dispute. Yet another area where arbitrators exercise discretion is that of representation of the parties by legal council or labour consultants. Some arbitrators appear to interpret the Act as limiting such representation whereas other arbitrators are comfortable with such representation and make positive use thereof in dealing with the more legalistic aspects of the dispute. Thus, while some arbitrators use up considerable time insisting that certain representatives leave the proceedings other arbitrators utilise such representation to facilitate the process. Whereas some arbitrators have the experience and confidence to deal with “difficult parties” other arbitrators are more likely to utilise their powers of finding troublesome parties in contempt of the CCMA. lt is clearly not in the interests of parties to push an arbitrator this far. Should a party feel certain that an arbitrator is being unreasonable he/she should formally object, allow the proceedings to continue and take the arbitrator on review to the Labour Court later on if the circumstances really merit this. The old lndustrial Court system developed substantial rules of evidence, now some arbitrators tend, in practice, to be flexible in this regard. For example, a court may refuse to admit hearsay evidence at all, while CCMA arbitrators appear to be willing to listen to all evidence. However, they do reserve and utilise the right to give less weight to evidence which is hearsay or which contravenes the rules of evidence. Turning to the way in which CCMA arbitrators deal with awards I have noted that, in most cases, they comply with the provisions of section 138(7) requiring that a signed copy of the arbitration award be sent to each party within 14 days of the commencement of the arbitration proceedings. However, there have been many cases where this provision has not been complied with. The fact that the outcome of arbitration hearings can be affected by the individual styles of arbitrators and/or their differing interpretations of the law often makes it more difficult for parties to represent themselves. This is because parties often do not have the legal knowledge, experience and skills to deal with unexpected decisions made by arbitrators. In such circumstances the use of expert representation becomes of paramount importance. To book for our Johannesburg seminar on DEFEATING THE DANGERS OF DISMISSAL please contact Ronni on ronni@labourlawadvice.co.za or 084 521 7492. Ivan Israelstam, chief executive, Labour Law Management Consulting, 011 888 7944 or 0828522973, ivan@labourlawadvice.co.za, www.labourlawadvice.co.za. July 2012 People Dynamics

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Leadership

Making the case for leadership development By Ken Blanchard

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nyone with HR or training responsibilities knows leadership development is a smart move, one that fuels economic value and bottom line results. But how do you get sceptical senior executives who hold the purse-strings on board? In my thirty-plus years running a training and development company, I’ve learnt how tough it can be to persuade organisations they really do need to invest in leadership programmes for their people. A few years ago, my son Scott Blanchard, our Principal and Executive Vice President at The Ken Blanchard Companies® found this out the hard way when we lost a critical long-term account. An on-going contract was terminated overnight when a new senior leader removed the entire learning and development department, presumably because he thought it was neither economically or practically necessary. “I’m shocked, I just can’t understand why such a decent company could behave so stupidly,” Scott told me at the time. However, the blow caused him to do a lot of soul-searching to make sense of what happened, and set him on a path to discovering how best to make a case for learning and development that would satisfy even the most hard-nosed executives. Scott and our colleague Dr. Drea Zigarmi poured over years of studies looking at the connections between leadership and organisational performance. The result was the publication of our white paper The Leadership Profit Chain, a paper that clearly established the link between the quality of an organisation’s strategic and operational leadership, its overall financial vitality, and the amount of discretionary effort people put into their work. As Scott says,“When leaders take the time to invest in a person it sends a signal to the employee that this is a place where they can build a long-term career. In addition to making a good living, they think:‘Working here is going to help me improve my skills, improve my marketability, and improve my life over time.’ Now, when Scott makes presentations to convince executives about the need to invest in their people, our Situational Leadership II® model is brought into play. It diagnoses where an individual employee is at with their career, task, job, or project. This is a key factor in creating the competence and commitment that people are looking for. Using the model, Scott illustrates how an employee’s level of competence and commitment develops over time any time they start a new role or a new task. They start as ‘Enthusiastic Beginners’ with low levels of competence but high levels of commitment and enthusiasm. This honeymoon period is followed by the ‘Disillusioned Learner’ stage, when commitment drops dramatically in the face of unexpected challenges. With proper amounts of direction and support, employees will then move into the ‘Capable but

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Cautious Performer’ stage, and finally on to becoming ‘Self-Reliant Achievers’, with high levels of both competence and commitment. “This final stage is when employees really impact the bottom line,” explains Scott.“And helping senior leaders understand the financial impact of moving people efficiently through the different development levels makes a real and lasting impression.” “Executives can see how, when they are Enthusiastic Beginners, their company is investing in the employee but not getting a lot in return except for enthusiasm.At the Disillusioned Learner stage, they still see that the net economic impact is still negative as the employee continues to learn their new role and at the same time battles low levels of morale.” “It’s only when employees become Capable but Cautious Performers that they see the positive impact on the company of their work, and then even the most cynical begin to see the point of developing people.They also see that real value happens when the employee develops to becoming a self-reliant achiever.” Scott then asks his audience to evaluate how many of their people fall into each of the different development categories.This is a sobering exerise, especially when they realise that just because someone has been with the company a long time doesn’t mean they are automatically an expert on any new role they take on, and could quickly become Disillusioned Learners. As another of our white papers,The High Cost of Doing Nothing says, in most organisations, 75% of people don’t get beyond the Capable but Cautious Performer stage, which means financial performance is anaemic and there are low levels of passion and engagement. The impact of this untapped potential costs the average US organisation over $1 million per year. The best companies invest in their employees, supervisors, managers, and senior executives alike.They know that people are the key to bringing plans to life and creating a sustainable advantage for your organisation. Take time to develop your people, and take time to convince the unconvinced – it will be one of the best investments you can make. For copies on The Ken Blanchard Companies’ white papers The Leadership Profit Chain and The High Cost of Doing Nothing, email southafrica@kenblanchard.com or call 0800 980 814. To download a recording of Scott Blanchard presenting on ‘The Many Applications of SLII®’ visit the News & Events section on www.kenblanchard.com A Situational Leadership® II Workshop will be held in Johannesburg 30-31 July – for more information visit www.kenblanchard.co.za Social Media Links: Twitter@kenblanchard, Facebook: www.facebook.com/ kenblanchardfanpage, Blog: www.HowWeLead.org, Business and Management forum: www.leaderchat.org. © The Ken Blanchard Companies, 2012


BUSINESS DEVELOPMENT

The evolution of rainmakers in professional services By Jackie Mohale

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perating in uncertain and fragile economic conditions, many professional services companies in the US are asking themselves one key question: Where will the next generation of rainmakers come from? A rainmaker is an employee in a company that brings in significant amounts of new business. Globally, the reality is that everyone is operating in markets that are significantly different from those of five, let alone 10 years ago, a factor that’s having a bearing on how companies in this arena do business and are structured. South Africa is no exception. The impact of the global financial squeeze aside, most professional services companies such as accounting and auditing firms were started by entrepreneurs whose responsibility it was to also source new business. However, with some getting less involved in this due to either age or the firm having grown substantially, increasingly the business growth responsibility is being shifted to someone else. This has led to the formation of separate business development units, which helps address the lack of desire or even expertise amongst employees to “sell” the firm – a function that used to be performed by the companies’ founders. But the business development function is evolving. Initially a unit that typically comprised sales, marketing and strategy, this division in a business has grown in recent years to also encompass other aspects such as branding, PR, and communication.These, in addition to being recognised as more than just support functions of organisations, have increasingly become critical tools to enable firms to compete. And across the corporate spectrum, competition for business has become fierce, so a firm’s relationships with key stakeholders are vital in gaining a competitive advantage in service delivery to clients. Business development managers need a thorough knowledge of clients and the market. They need to identify and seize opportunities for crossselling. They must also strive to promote a cohesive service ethos within

the firm, as well as alert the firm of any issues that pertain to the various accounts as and when they develop.This is in addition to the expected role of maintaining the company’s relationships throughout the client-development and delivery parts of the cycle. While there are those who continue to endorse the wisdom of separating these aspects of business into separate units, putting them under one umbrella has proven more effective. It prevents them operating in silos and improves efficiency as resources are pooled. The evolved business development unit also creates a hub for innovative thinking, as you have a wide variety of brains and capabilities working side by side towards a common goal. Medium-sized companies operate in a fiercely competitive space that’s dominated by international firms who have the records, resources and expertise to handle projects of just about any size on their own. In this industry, it is your reputation that is your passport into the big league, regardless of how small a firm is. It is also your reputation that ensures that you’re treated as a genuine and equal partner in any project that you’re roped into. In South Africa, though, small and medium-sized professional services entities need to be grateful for government’s insistence that big and established companies partner with the smaller operators in executing tendered projects. It is through such an approach that we gain tangible skills transfer and development, and companies get to grow and soar. After all, for the contribution of business development units and managers to be maximised, an enabling environment needs to prevail.And government, with the support of the big players, has laid the foundation. Jackie Mohale, business development manager, Xabiso Chartered Accountants

July 2012 People Dynamics

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TECHNOLOGY

The race for attention in a distracted economy By Vanessa Bluen

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ith the speed and scale of the world’s love affair with connectivity and iEverything — iPods, iTunes, iPhones, technology is so intimately woven into our lives. What does this mean for the way we need to connect to our audiences? How do you get people to tune into you and your message and tune out of the competitive noise; the distractions that come with the ‘smarter’ way of living? I was sitting in a conference the other day and decided to conduct some informal research on delegates’ response behaviours. I observed that at the beginning of a speaker’s talk, the audience appeared fullyfocused. As soon as a speaker meandered into the territory of the slightly-less-relevant, the delegates descended into email response and status update distraction. Similarly, when the speaker, who tended towards self-impressed wordiness, presented an overly complex sentiment without engaging his audience adequately, the delegates took to googling the sentiment, often never to return to the arduous business of attention-paying. We are living in an increasingly competitive environment. The focus of competition is attention.Whereas earlier, the greatest source of competition for attention was a neighbouring zealous whisperer, now, speakers, brands, products and people must compete with the universe of offerings from smartphones. This technology is also affecting the way we think and the way we respond. The information overload and the plethora of portable forums to obtain this information means that we think in soundbites. Our thinking is more dynamic, more fluid, more volatile, more distracted. People are changing their minds faster than they’re changing their internet tabs. The challenge becomes one of how to do business in this environment of the anarchical mind. Conventional wisdom suggests that the best option is to join the fray. Use social media as a business tool, market on Facebook, ensure that your CEO has a Twitter feed wittily and insightfully updated daily by a team of enthused support staff. This is of course, essential. However, this joining of the fray can only ensure you an opened tab on Google Chrome. It does not guarantee you competitiveness in the race for attention. It does not ensure retention. All it guarantees is a cursory glance on the part of interested consumers between status updates. What makes you stand apart is a focus on relevance. As consumers of information in a market of excessive supply, we don’t want to waste our time on anything that is not essential. We have also gotten used to hearing our own voices as we exploit social media as a platform to opine. As such, we want your business to listen to us. And to make

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us feel that we are making a contribution. More than ever, the need for self-affirmation of consumers becomes a critical competitive edge for businesses. Essentially then, information itself loses its value. What matters is how consumers engage with the information. And this applies to more than just online communication. In a challenge to the dominant logic of the information age, what people want is human contact. However convenient online forums are for information garnering, the place of human interaction is increasingly relevant. In fact, human interaction is what sets you apart from your pure techno competitors. In an October 2010 article in the Harvard Business Review, Larry Kramer argues astutely “you can’t let social media dominate communication because you can’t control it. So take back the control. Yes, I agree that you need some hi-tech interfaces to have a hi-reach however it needs to be delivered in a high touch way.” So, while your competitors are focusing on an increasingly comprehensive online strategy, it’s also valuable to focus on “high touch” and adapt this high touch to the elusive and dynamic thinking patterns of consumers. Make your clients feel a valuable part of the process, listen to them, ask them more than you tell them, listen to what they say, be sharp, be savvy and most of all, be relevant. Vanessa Bluen, managing director, The Consultant Powerhouse, 011 234 6127 or training@theconsultantpowerhouse.co.za, www.theconsultantpowerhouse.co.za


Back on the right track W

e all know that the stresses and strains of modern living seem to take an ever increasing toll on human emotions. In the workplace, particularly, difficult economic conditions have created even greater unnatural pressures. In the UK, for instance, the old nineto-five workday has given way to a seven-to-seven one. One of the most common side-effects of all this is substance abuse and dependencies which have become an all too common feature in the world of work. Fortunately, modern therapies have proved successful in getting victims to kick their habit. The problem is that once over the crisis, individuals have often lost the skills required to reintegrate into society and the world of work. Now help is at hand in the shape of Jo Clarence, a psychotherapist who specialises in substance addiction. Says Jo; “Addicts coming out of rehabilitation programmes have weathered a storm which often takes so much out of them that they find themselves unable to cope with what used to be a normal life.” Jo has initiated an intensive four-week course specifically designed to cope with this problem and from all accounts the first graduating group have been full of praise for the programme. Apparently the course takes a multi-disciplinary approach aimed at further building up people who have gone through the initial recovery process. One of its most important aspects is the re-establishment of balance in their lives – both in terms of social and work life. The course involves Jo’s own counselling which focuses largely on re-building self-esteem but also covers work readiness coaching, diet and fitness, meditation and personal financial advice.

Gabriel’s Horn

“The methodology is integrated and based on group therapy and themed lectures,” says Jo. She is quick to point out that although the programme was designed for recovering addicts and is all about rebalancing and focus it does have other applications. “We have been running it with newly graduated matriculants with great success,” she claims. “It helps them find their inner focus, get healthy and balanced and then tackle the next challenge of moving on to the next step in their lives.” “Anyone who is at a crossroads in their life and needs to stop and re-focus on where to go now will benefit from the all-round approach we take.” An important part of the programme for recovered addicts is to return them to a social/work setting. This is achieved by getting them to work as volunteers in organisations that need help. Jo stresses; “Remember that these people have been through their crisis and are clean now. They often have skills and experience that can be valuable and they have been through training aimed at reintegrating them. “What is required is to get them out there to mix with other people as just one step along the road to regaining their independence,” she concludes. Jo and her team are helping to solve a serious and sensitive problem with skill, determination and compassion. Jo can be contacted on 078 888 9027.

July 2012 People Dynamics

17


The IPM’s journey and that of the hr profession in RSA By Rre Elijah Litheko: IPM CEO

T

he Institute of People Management (IPM) dedicates its efforts to provide knowledge, expertise and tools for strategic people development and leadership. It is a professional non-profit association and offers membership and services to HR professionals and all those involved in people management and development. The IPM was established in 1945 as a networking and capacity-building forum for HR professionals. It has pioneered and been at the forefront of human capital development in South Africa and neighbouring countries for over 65 years. It has produced thousands of human resource professionals who competently managed the evolution of the HR profession in South Africa. Many South African organisations made the IPM’s Human Resources Management Diploma an essential requirement in their recruitment and selection process. IPM initiated and engineered the establishment of the South African Board of People Practice (SABPP) to provide a supporting role to IPM. IPM also played a significant role in the early stages of the processes which led to the establishment of the South African Qualifications Authority (SAQA).Like all living organisations, IPM has been through its stages of growth. It faced a series of challenges over the period preceeding the 1994 democratic elections. Some IPM office bearers, lecturers and board members who held strategic positions and were privy to IPM’s intellectual property, left to establish competitive organisations which worked from the same base as the IPM’s operating model. These developments led to a proliferation of organisations and forums targeting the market, previously the preserve of IPM. This resulted in a fragmentation in servicing the needs of the HR profession and the wider business community. In a climate and country founded on the spirit of reconciliation, this fragmentation was unhelpful and contributed to creating fiefdoms instead of cementing professional unity. Despite these unfortunate developments, successive IPM boards saw them as an opportunity to re-embrace the reconciliatory spirit that this country is founded on post 1994 and to focus their attention on re-inventing and repositioning the Institute. The support of major organisations, government departments, IPM members and associates in this process of repositioning IPM, has been amazing. The IPM Branches, the carriers of the IPM brand at local level, and operational committees, such as the Convention Committee, the Awards Committee and the Editorial Committee, have worked hand in hand with the CEO and the board to achieve this repositioning. To reinforce the strategic nature of its role, IPM has introduced the following committees: l IPM Membership and Professional Development Committee whose mandate is to work in consultation with SAQA to develop policies and procedures that would enable IPM to be recognised by SAQA as the professional body for HR professionals in South Africa. l IPM Volunteer Ambassadors whose special mission is to advance and promote IPM within their circle of influence and networks. l IPM Design Thinking Teams whose mandate is to develop a concept document for submission to the government that would contribute to addressing the education and training challenges facing our country in a holistic manner. Since its inception,IPM has been the professional home for HR professionals of all persuasions, including people managers at all levels in South Africa. It is an affiliate of the World Federation of People Management Associations

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People Dynamics July 2012

(WFPMA) through its membership of the African Human Resources Confederation (AHRC). Through this membership, IPM has strategic relationships with sister HR professional associations both within the African continent and abroad, such as the Chartered Institute of People Development (CIPD) in the UK, the Society for Human Resource Management (SHRM) in the USA, the Canadian Council of Human Resources Associations (CCHRA) and the Australian Human Resources Institute (AHRI). The Institute has a proud tradition and heritage and continues to add value to the HR profession both locally and globally. Below are some of the recent developments that confirm this: l Participation by IPM CEO at the Human Resource Development Council of South Africa chaired by the Deputy President of the country as a representative of the HR profession in this national forum. l Participation in the process of being recognised by SAQA as a professional body representing the HR profession in South Africa. l Participation in cutting edge research projects with the Boston Consulting Group (BCG) and the world renowned HR Guru Professor David Ulrich in collaboration with the Michigan University and the RBL Group. l Contribution by the IPM CEO to the writing of an African chapter of the Global HR Competency book authored by Professor Dave Ulrich and his team to be released before the end of 2012. l Establishment of new underpinning criteria and an assessment process for board selection, to enable the Institute to achieve its mission and strategic objectives l Development of a mentoring programme to connect aspiring practitioners with eminent leaders in HR. l Facilitation of a range of capacity building programmes for HR professionals and executives in partnership with leading organisations including Deloitte, UNISA,Transformation Partners, GIBS, l Emergence Group, Hay Group and others. l Hosting of strategic sessions and workshops for HR professionals and executives, including the HR Director’s Leadership Summit, HR Business Partner Master Class, Midterm HR Leadership Conference and a Women in Business Conference run in conjunction with GIBS. l Regular hosting and enhancement of the IPM premier annual event, the IPM Convention since 1956.This event has been ranked as falling amongst the best by the Boston Consulting Group (BCG) when compared with similar events globally. l Launch of a revised website with access to South African HR and organisational development journals for members, with more resources planned for addition throughout the year. l Partnership with the Southern African Society for Co-operative Education (SASCE) for the purpose of promoting work-based learning. l A new Twitter account streaming the latest thought leadership to followers across the globe. We invite all HR professionals and business executives to join us on this exciting journey. If you would like to join the Institute or to become involved in our work, join us here on LinkedIn: http://www.linkedin.com/pub/ipm-institute-ofpeople-management/42/519/944 You can also follow our new Twitter stream here: https://twitter.com/#!/ IPM4PEOPLE or connect with us through our website: www.ipm.co.za


56TH Annual IPM Conference 11 - 14 November 2012

ACCOMMODATION RESERVATION FORM How to make your reservation: Option 1

Phone Sun International Central Reservations on +27 (0) 11 780 7818 and quote your Group ID (found in rates table in this form) for the hotel of your choice and provide them with the relevant information. Option 2 Fax the form on the reverse of this page to Group Reservations on +27 (0) 11 780 7596. Option 3 E-mail the form on the reverse of this page to grpresv@za.suninternational.com • You will receive written confirmation of your booking within 24 hours

How to pay for your reservation: Please note that FULL PREPAYMENT for any accommodation booked is required within 10 days of making your booking, alternatively your booking will be released. Option 1: Credit Card • Fax or email the credit card form on the reverse of this page to Group Reservations on +27 (0) 11 780 7596 or to grpresv@za.suninternational.com. Option 2: Direct Deposit • If you do not have a credit card, you will be required to make a cash deposit into Sun International’s bank account within 10 days of making the reservation, alternatively your booking will be released. • Fax your deposit slip to the Advance Deposit Manager at +27 (0) 11 780 7168. • Please include your reservation number and contact telephone number on the deposit slip. Banking Details: • Sun International Limited c/o Local Advance Deposits Standard Bank, Sandton Branch, 019205, Current Account Account number: 02 267 1889 Terms and Conditions: • Accommodation will be allocated on a ‘first come, first served’ basis. • Please note that “split weekends” are not permitted. • On arrival at your hotel, you will be required to provide a credit card guarantee or cash deposit, to cover charges you may incur over and above your accommodation. • Please note the closing date, 26 October 2011 is the last day on which reservations will be accepted. • The rates quoted are net, per room, per night including Bed & Breakfast, tourism levy and 14% VAT. • These rates are valid for the period of the IPM 2012 Conference Only. Cancellations: • A cancellation made 7 days prior to arrival date will entitle you to a full refund of the money’s paid, upon written request faxed to the Advance Deposit Manager on +27 (0) 11 780 7168. • A cancellation made within 7 days of arrival date will result in the forfeit of one night’s accommodation including the relevant taxes. • In the event of a “no-show” the full package price will be retained. • For sub blocks please see terms and conditions on your proforma invoice. July 2012 People Dynamics

19


56TH Annual IPM Conference 11 - 14 November 2012

ACCOMMODATION RATE SCHEDULE Closing date for Accommodation Reservations: 26 October 2012 ROOM TYPE

LOCATION PALACE

GROUP ID

LUXURY TWIN ROOM LUXURY FAMILY ROOM

SUPERIOR LUXURY FAMILY SUPERIOR LUXURY WITH BALCONY LUXURY TWIN ROOM

56

LUXURY FAMILY ROOM

TH

Annual IPM Conference IPM1201

SUPERIOR LUXURY FAMILY ROOM

11 - 14 November GROUND FLOOR SUPERIOR LUXURY FAMILY

Single

R 3,545.00

R 3,295.00

R 2,210.00

R 2,045.00

R 2,375.00

R 2,210.00

R 2,600.00

R 2,435.00

R 2,765.00

R 2,600.00

R 2,755.00

R 2,590.00

R 2,120.00

R 1,955.00

R 2,285.00

R 2,120.00

R 2,635.00

R 2,470.00

R 2,815.00

R 2,650.00

IPM1203

SUPERIOR LUXURY ROOM

SUN CITY HOTEL

Double

IPM1204

LUXURY TWIN ROOM

CASCADES

MIDWEEK Sunday – Thursday Nights

2012

STANDARD TWIN ROOM RATE SCHEDULE ACCOMMODATION R 1,435.00

CABANAS

IPM1202

STANDARD FAMILY ROOM

R 1,860.00

UPSTAIRS FACING FAMILY ROOM Closing date forLAKEAccommodation Reservations: R 1,860.00 26 LAKE October 2012 GROUND FLOOR FACING FAMILY R 1,860.00

R 1,290.00 R 1,715.00 R 1,715.00 R 1,715.00

GUEST INFORMATION (Please Print) Please read the terms and conditions and sign in the space provided below in acceptance thereof Surname

Name

Title

Partner’s Surname

Partner’s Name

Title

Postal Address Postal Code Facsimile

Tel (H) / Cellphone

Tel (B)

Email Arrival Date

Departure Date

Group ID Special Requests / Instructions? Guest Signature

20

People Dynamics July 2012

Name


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