WWW.IPM.CO.ZA FEBRUARY 2019 VOL38 NO.4
THE MIDDLE GENERATION
STRIKES! THE LOSE-LOSE EFFECT
ENTREPRENEURIAL MINDSET J O U R N A L
T H E
I N S T I T U T E
P E O P L E
M A N A G E M E N T
Editorial Content Policy
The Budget Speech
22 OFFICIAL PUBLICATION OF THE IPM
“Eskom cannot fail!” Notwithstanding what could be regarded as poor performance over the years, Eskom may not be allowed ‘to fail’. Or more precisely: ‘to die’, because fail – the enterprise seems to have managed all on its own. PEOPLE DYNAMICS | February 2019
Retracing the Steps
In its defence, it wouldn’t be fair to say that Eskom failed all on its own. There’s the argument that Eskom has always been a government tool and has fallen victim of different governments’ agenda. SOE’s as a Strategic Tool for Government
Pre-democracy, like several government entities, Eskom provided sheltered employment for a high number of blue-collar workers. At the time, Eskom served what was then a vibrant Industrial economy, and about 20% of the country’s suburban households, while the majority of the population used coal stoves, candles, paraffin lamps, gas burners and other primitive heating methods.
Towards South Africa’s democracy, the entity was expected to rev up its service to serve all segments of the population. Logically, the initial roll-outs were planned for peri-urban ‘black’ areas, including Soweto – South Africa’s largest township. At about this time, warnings of insufficient generation capacity and ageing infrastructure were sounded. Government, however, clearly had a different set of priorities. Notwithstanding deferred generation capacity upgrades, it extended services, introducing electricity to the peri-urban communities.
directly for the service. This makes for an efficient system since municipalities offer other services such as garbage collection, sewage services to businesses and households, for which they have to issue billing. As it turns out, not all municipalities handed over the cash due to Eskom, and attempts to enforce payment have been frustrated over the years. As at February 2019, municipalities owed Eskom billions in unpaid revenue. Among the top defaulters are three Free State municipalities which together owe a whopping R5billion. Ironically, Emalahleni Municipality, arguably an Eskom stronghold, is one of the top five defaulters, owing the enterprise R1.6 billion.
Came 1994, the same level of service enjoyed in urban areas was expected to be extended to rural communities. This was not purely to improve lifestyle, but major economic spinoffs were expected from appliance purchases, small business establishment and extended trading hours. Electricity was regarded as a critical strategic stimulus for economic development and for an enhanced quality of life for formerly marginalised communities. The increased demand meant that Eskom had to dramatically increase its capacity to serve the other 70-odd percent that was neglected up to that point.
The Soweto Monster
Soweto alone, has a debt of R17billion - half that owed to Eskom by municipalities countrywide. In 2016 Eskom attempted to address this by incentivising residents towards prepaid meter system. In exchange for this new system and consistent payment of electricity bills, residents’ historical debt would be written off. According to Eskom spokesperson, since the 2016 launch, about 44 000 of Soweto’s 180 000 (known) customers had been successfully converted to prepaid. There hasn’t been much traction with the initiative, with installation teams being harassed by protestors and residents being intimidated by their neighbours.
This time coincided with Eskom’s “need” to transform its human resources profile to reflect the demographics of the country. Transformation was a highly weighted factor in the entity’s balanced score card, hence executive and management focus on this aspect to earn bonuses, both in employment and procurement areas. Growing a Black Middle Class
Early retirement packages were eagerly extended to older employees who opted to leave, and the entity quickly boasted a transformed executive and management cadre – something the new government regarded as a great accomplishment for the new democracy. It served to build a new black middle class and to dramatically increase economic participation among black professionals who were previously ‘stuck’ in traditional, low-paying professions. Gaps for Exploitation
As it happens, the demand for increased generation capacity and new plants, the urgency to roll out rural infrastructure; the desire for a representative employee profile and broadened economic participation through a representative supplier base, presented an opportunity for unscrupulous employees and contractors to exploit the system. Since engineers cannot be produced overnight, it became easier to use general (management) functions to address the employee profile, while working on programmes to upgrade and develop a critical mass of black engineering cadre. Superficial layers of management were built in the structure where engineers suddenly reported to division managers who were effectively clueless about the technical roles of the subordinates. It became easy for consultants, some of whom would be retired employees, to offer duplicated service to management, and for wily service providers to have a layer of contractors which ends up costing Eskom a fortune. Municipality Non-Payment
Government structures are such that Eskom supplies electricity via municipalities, bar a couple of major corporations who pay Eskom
Poor Culture, Piracy, Unemployment
According to one Soweto resident, many people would rather spend their money on expensive clothes and shoes instead of paying for their electricity. “Malls are always jam-packed with people doing their shopping, yet they owe Eskom a fortune”, she says. Agreeing that this is a matter of poor culture is Eskom’s project manager, Daphne Mokwena: “80% of residents do not even make provision for electricity in their monthly budgets. This culture poses a challenge, along with illegal electricity connections and ghost vendors who allegedly sell electricity vouchers on behalf of either municipalities or the utility itself. This leads to an unstable power connection” for the entire system. Activists and members of the Electricity Crisis Committee are vehemently opposing the introduction of prepaid metres, vowing that residents will not pay for electricity, let alone settle historical debt. There are assertions that electricity is a right, and that government should deliver, especially given the high level of unemployment. Even individual residents claim that lack of jobs makes it impossible for residents to afford electricity. Political Protests
This, according to another Soweto struggle activist, Seth Mazibuko, is based on non-payment having been used as a protest tool. He points to a lack of consultation by government as the root of non-payment, and puts the debt in historical context: “The culture of non-payment has its history as a tool to bring down apartheid. As had been the case then, people need to be galvanised in a proper way, to know that they now need to pay. That must be done by talking to them, and not threatening them.” Turning the Beast Around
Now that we have traced and seen what got Eskom to this point, aside from “pure mismanagement and corruption”, we have to figure out practical ways of turning the beast around. There’s no doubt that the public enterprise team are hard at work figuring out how to make good the president’s SONA declaration that Eskom cannot fail! OFFICIAL PUBLICATION OF THE IPM
Getting your team to
Perform with Passion EMBRACING DIVERSITY to IGNITE PASSION
When people come to work, they bring different expectations and all sorts of baggage. The art of good people management is such that the manager finds what drives each member of his/her team is. It is to establish what motivates them to perform with passion, to unlock and optimise this. While many dismiss Maslow’s theory as outdated, people management students and scholars still draw insights from it and derive perspective on people motivation and employee psychology. This article is based on a current qualitative study on human behaviour, motivated by decades of practical people management. It seeks to share a different perspective on motivation and to empower managers in the igniting of performance passion in the workplace. It would be premature to regard this theory as a science, hence caution should be exercised not to prematurely fit individuals into boxes, nor to use this theory to unfairly discriminate or disadvantage employees. The theory classifies employees into Four Groups, in which you may readily see yourself, your subordinates or team members. Of not! It gives suggestions on what drives the different groups in the workplace, as well as suggests how they can be further motivated to ‘perform with passion’. The Obligation-driven “Bread-winner”
Certain members of the team are only in the job to meet their family obligations. They just want to put food on the table and provide security for their families, full stop. It makes little difference to them whom they work for or what exactly they do. Their requirement will often be that: • the job is straight forward and duties are clearly defined • the hours are predictable and do not interfere with personal time • the pay is good enough, regular or guaranteed Motivating Bread-winners
Instead of being resentful about prioritising family instead of work, a good manager will recognise the strengths the bread winner brings to the team. Typically, their strengths are: • dependability • punctuality • load-bearing PEOPLE DYNAMICS | February 2019
Many careers have been cut short or stifled by bad bosses. On the other hand, good bosses and astute people management have helped unlock talent and passion for great performance. BY: STELLA MCEWAN
These are people, when given a job, will deliver with little question, variation from the norms and likely at high quality standard. They do not like to present anything half-baked, or that may need a re-do, upset their schedule or eat up on the next task. They are likely to be robotic in their sign-in and knock-off time. Here again, you are assured of some predictability in your operation. They will be on time when everyone else will be giving excuses about being late. They are the ones you can leave to man the phones when there’s an office party, as long as they will still knock off at their regular time. Although it may upset them, they are the ones best positioned to catch any falling balls since they’ll likely be the first to pick up when anything is amiss, coupled with them likely having the most institutional memory. How to get Bread-winners performing with passion
Be disciplined when dealing with them. Don’t take them through a brainstorm session, if you can help it. Rather be direct. Ask for input or opinion, but be ready for them to throw the questions back at you. In spite of this, don’t stop asking for input, you may be surprised how smart they are in saving the company time through identifying and cutting unnecessary processes. They want to get things done and get home on time, remember. To feed their passion, let them know how you appreciate their contribution in the team. Acknowledge their dependability and punctuality. Acknowledge them for inspiring you to try get/keep things organised and prove this to them. For instance, when you brief them, come well prepared. Make your request clear, have goals and outcomes well-defined, and if possible, outline the plan as you see it. Bread-winners are not interested in fine details about why. It is all about what and by when. The Ever-Hassling “Opportunist”
This group enters the workplace to conquer. They will go over, under, around or through anything to achieve. They are driven by ambition and a burning desire to be super rich, powerful or super successful. They have a number of global icons who appeal as role models, and they see nothing stopping them from playing in that league. They are hardworking, energetic and may have pretty short-term concentration spells as they are curious - constantly looking out for something that might accelerate their meteoric rise a bit faster than
what’s in hand. Opportunists require an environment that is: • progressive; they need to see themselves moving up • dynamic; they don’t tolerate anything that binds them to tradition unless it’s linked to prestige • powerful; they want to stay close to power irrespective of who holds it or with what ideologies, and they will support this individual up to the point of taking over from them or jumping to a more powerful position. Motivating Opportunists
Firstly make peace with their lack of loyalty and constant search for more power. Find the right kind of carrot to dangle, and an opportunist will grab it as long as it symbolises wealth, power or success. Give them the toughest assignments but make sure the rewards are proportionate. Typically, opportunists’ strengths include: • valour; they won’t cower at challenges or be intimidated by individuals • multi-intelligence; they master politics, are quick to grasp high-level concepts, know how to find their way around difficult situations, and often have faith that the universe works with them • manipulation; not only are they good communicators, but they can play with words They are the people who will try to prove themselves capable of the impossible, so throw them the challenges – plenty of them, and they will be keen to show their prowess. Opportunists are always keen to operate at any level – the higher the better, so find ways to accelerate their development such that they don’t embarrass themselves, you or the organisation by jumping where they are not ready. Open doors for them, because if you don’t they’ll break them down. Try not to bog opportunists down with long-term projects without having a shadow or anchor as an insurance policy. Even though they will likely take on the project with vim and vigour and deliver ingeniously on the milestones, there will be no holding them back when some ‘bigger’ thing pops and presents an opportunity to them. How to get Opportunists performing with passion
Extrinsic rewards and material incentives such as shares will keep drive performance, particularly in the private sector. In public sector, plot the opportunist a succession plan and growth path that will lead not just to your office, but the next office above yours. Frankly there is little you can do to add to an opportunist’s passion, because they see everything as a stepping stone to the next great thing. If the motivation doesn’t come from you, or you have not created an environment that’s conducive to their growth, consider them gone. If anything, you may find yourself trying to temper an opportunist’s passion, particularly when their competence has not yet caught up with their drive. And should you need to do this, you need to ensure that it is done with insight, such that they don’t mistake it for being unduly constrained. Always show admiration for their drive, and actively seek ways of feeding their growth aspirations with assignments that allow them to work with more knowledgeable experts and specialists. Help them test their own growth by allocating them mentees or shadows that they can train and impart knowledge to. This will help them transfer knowledge to individuals that will feed their leadership (or power) ambition. Opportunists driven by monetary ambition make good business development agents or sales people. Offer them the most challenging portfolio which will have the highest yield and pay the best commission. While an opportunist will give star performance on the top-line of the business, make sure that delivery is fully rounded. If admin will prove an impediment to an opportunist’s progress, you would need to evaluate whether insisting on admin or having dedicated admin support would give better results for both the Opportunist and the company. Always be fair and do what is in the best interest of the organisation than hold back
the passion of an individual who stands to add value to the team and to the organisation. The Eager-to-Please “Impressionists”
Another group in the team will be intent on pleasing. More accurately, they are intent on pleasing in order to impress, get approval or praise. They always want to be in others’ good graces whether management or team members. They are keen on making sacrifices; helping others succeed in order to gain favour. Often this compromises their work quality. This can be a high-maintenance group. They will do anything, especially if they know it will be noticed and earn them points. Often, the need to impress doesn’t start and end in the office environment. You may find that this group has occasions of extending themselves beyond their physical and financial means even in their personal lives. At face value, they exude confidence and power, but in the process of trying to impress, they can get overwhelmed, caught up in stress and slip into depression if left unchecked. Their requirement will often be that: • their job is seen to be of importance; think frontline, executive support, customer service • their contribution is visible; achievement and sacrifices seen by all • they get assurance and frequent recognition Motivating Impressionists
Instead of being irritated by what may seem flippant or superficial about an impressionist, a wise manager will capitalise on their strengths. Impressionists always show up well polished and highly presentable to make a great frontline impression for the group, Typically, their strengths are: • organisation – everything looks orderly, neat and in its proper place (the perfect look) • networking: they are good at building rapport and keeping relationships • resourcefulness: with all the extra weight they carry trying to impress, impressionists think on their feet. They are quite creative in matching action to audience or matching service to need. When given a job, impressionists will quickly identify and isolate the most visible part of delivery and prioritise this. Everything else - all in good time! Delivery times may always be beaten, but quality compromised in the process. They like brand association and projecting the perfect corporate image. They are the ones who would tidy up public spaces and get the service staff running to maintain the right look. They are highly critical; quick to spot mistakes and to fix them, only making sure no one misses their saving moment. How to get Impressionists performing with passion
Give them responsibility. They make good performance drivers, albeit more about chasing time (meeting deadlines) and surface delivery possibly missing qualitative detail. They want to impress the team so they will try to lead by example or at least give the impression that they are leading from the front. They will insist on everybody pulling their weight, chipping in if it looks like the team might drop the ball. The more impressionable make good front line anchors. They know what to say and how to say it to every client, and will make the back office look good, and make sure everybody knows and owes them. It is important that when you deal with impressionists, you make quality expectations clear. Make sure you acknowledge their presentability and attention to detail (albeit superficial sometimes), nonetheless show appreciation for their keeping the team looking good. In helping them develop self-awareness, help them balance the ability to impress with deeper appreciation for quality. Encourage them to make OFFICIAL PUBLICATION OF THE IPM
time to go over their own work, and see how they can improve quality and have not just impressive but consistent solid performance. Feed their passion by giving them visible roles and using public praise and recognition to encourage them to improve areas of weakness. This needs maturity and tact, so that it serves as a motivator rather than deflate the elation from celebrated achievements. Help them adjust their obsession to project and be comfortable with just being and knowing they have delivered to perfection. If there are any underlying insecurities or unresolved issues, find ways to bring them out empathetically. Proper attention and coaching may help eliminate the obsessive aspects but fuel the passion without being dependent on validation. The Self-motivated “Dream-catchers”
Another group in the team may be there to fulfil a dream. The dream may have been to land them a plum job, and now that they have, they want to prolong the dream with mini projects that challenge them and affirm them with each accomplishment. This group is very keen on variety. It also makes every difference to them who they work for, who their boss is, what their team stands for. Their requirements will often be that: • Their work is varied • Their assignments have a bearing on higher organisational purpose • There’s creativity and self-expression required in the delivery of projects
focus on the specific end product – not just on the creative genius. Left to their devices, dream-catchers won’t only help you catch your dreams and deliver beyond your expectations; they can deliver outside of expectation. It is, therefore, important that team and organisational purpose is well articulated and aligned. With a good understanding of the why, you’ve got a dream-catcher switched on! FUEL THE FIRE WITH DUE RECOGNITION AND REWARDS
Whatever the makeup of your team, find their source of passion and fuel it. Find their motivators and preferred incentives and rewards. Exploit the value they bring to the team with their strengths, and help them deal with their weaknesses. While work is being done to eliminate weaknesses, ensure that team members play to their own strengths in a complementary role to each other. Team Contracts
While performance management is mainly focused on individual employees’ contributions toward the company’s strategic objectives, it is crucial to highlight the importance of the team. Every member needs to understand the value they bring to the team, and know that it is highly appreciated. They also need to know how their weaknesses affect the team, and recognise the importance to minimising them, and not relying entirely on fellow team members to pull them through. Due Personal Attention and an Enabling Environment
To be fair, just meeting their requirements as stated above is motivation enough for dream-catchers. Qualities you will appreciate about dreamcatchers are: • ingenuity • resilience • optimism; infectious enthusiasm that often lifts up the entire team To successfully assign any work to a dream catcher, they would need to get some background, understand the value proposition and be sold on the high-level purpose. And that purpose needs to resonate with their personal dreams and align with their personal mission. Dream-catchers are likely to enjoy brainstorms and once there’s an ‘aha’ moment, you can be sure that the project is in good hands. They will bring to the party all their resources, including sacrificing personal time or working round the clock to get things off the ground. They are the kind of team members who can afford you a long holiday on an island, without worrying about a call to ask you what, and how. As long as they appreciated the why, they are driven by that purpose. How to get Dream-catchers performing with passion
Let them see the reason for any assignment or project. Give them room to be creative and innovative but also, some parameters. Give them the timeline and resources and let them fly. Trust them to chase your dream and deliver. To keep your sanity, ensure that dream-catchers have periodic checkins or regular reporting mechanisms that help make sure things are on track; that the all-night candle hasn’t burnt the office down! Schedule milestone meetings or presentations, where they have something to chase throughout the life of a project or assignment. Remember their work already gives them a sense of accomplishment – through self-expression, so focus them on the project achievements which are to be nailed with just as much enthusiasm. Feed their passion by acknowledging good work, and articulate what value it brings to the team or organisation. Make sure to quickly identify weaknesses or potential downfalls and foster self-awareness to make sure they work through them before mission-critical projects. Compliment positive gains (not effort); celebrate milestones and keep PEOPLE DYNAMICS | February 2019
While Impressors may be the obvious group that seeks to impress, the fact is, every employee wants to know that they are delivering to expectation. Even more critical, they seek acknowledgement when their performance goes beyond target and expectation. The appropriate amount of attention given to each member of the team; giving feedback generously and ensuring that where a corrective measure is required, it doesn’t wait for a quarterly sit-down, but the intervention is instant – as it happens. A good balance between affirmation, coaching and corrective guidance assures the team that you have their personal success at heart and not just waving a red pen to highlight mistakes. As a manager, you are responsible for the environment your team performs in. If you embrace diversity and openly acknowledge the complementary qualities and strengths of your team, everyone will be positively motivated to be- and to bring- their best to the party. Proper Resources for Required Performance
Ensuring that the necessary resources are available and are sufficient for the required level and quality of delivery is of the essence. While there is expectation that employees become resourceful and thrifty in the use of company resources, it is best to incentivise saving and preservation, rather than make people go without basics. As they mature in their roles, they will learn to economise or even find alternative ways to do things – taking advantage of automation and technologies brought about by Industry 4.0. You owe it to your company, to your employees and to humanity to unleash and maximise human resource potential, to enable people to perform with passion. Caveat: While this grouping of employees follows intensive observation through decades of practical people management and an ongoing qualitative study, it does not represent a science. People remain individuals with unique idiosyncrasies despite having certain commonalities. This theory is shared to encourage managers and team members to recognise and respect diversity; to help them gain perspective on different motivation sources and support people’s individual aspirations so far as these help organisations meet their objectives. Readers are warned against stereotyping and are prohibited from using these for what could seem or prove to be unfair or unethical discrimination.
Editorial Content Policy
People Dynamics Editorial Content Policy A. Position Statement
1. People Dynamics seeks to drive innovation and excellence in people management; promote ‘human-centrism’ in the workplace; professionalism in human resource management and optimisation of digi-human capacity to help economies to thrive 2. In support of the SAQA-registered Institute of People Management’s mandate, People Dynamics supports programmes, policies, ideas and projects that promote human capital development and that position human resource as the primary driver of economic value 3. People Dynamics editorial recognises that people are the most important resource in any enterprise, and are most essential for delivery of professional service and quality products in the workplace and in the economy B. Contributions
1. Content that will be prioritised for publication will include: a. research extracts b. case studies c. essays and d. related thought leadership or analysis 2. Expert contributions and thought leadership is welcome from a. IPM members b. professionals from all disciplines who share the PD vision, appreciates its strategic position and respect the IPM professional Code of Conduct. 3. Priority will be given to fresh, first-hand material that adds to the body of knowledge in the field of Human Resource Management and People Management, particularly empirically supported articles that promote continuing professional development and organisational effectiveness in diverse and ever-changing contexts and environment C. Submission Guideline
1. All contributions should be original work, or are to be submitted with permission and/or acknowledgements of the content originator(s) 2. All contributors award publishing rights to People Dynamics, and accept that copy may be re-scheduled, adjusted or edited to align with the focus or theme pursued in a particular issue of the journal 3. All contributions should be made up of clean, edited copy, free of factual, grammatical errors or inaccuracies 4. Essays, abstracts, commentary and opinion pieces should be between 600 and 800 words; Research, case studies, lectures and illustrated content may not exceed 2000 words, with each diagram or illustration attached as a single page appendix 5. All copy should be submitted in Word, with pictures in high resolution JPEG, minimum pixel of 1MB 6. Copy for a specific month should be received by the 15th day of the previous month with any edits/changes or adjustments required to be received back by the 20th in order to meet the production schedule
7. First-time contributors are requested to attach abridged CV, stating publishing capacity, professional designation, professional association(s), other published works and formal/informal developmental work in business and the community 8. All contributions should be forwarded to email@example.com, copying firstname.lastname@example.org D. Readership
People Dynamics Readers include: i. Students/young professionals ii. HR practitioners, consultants/designated professionals iii. HR executives iv. General business management v. Social leaders and opinion makers vi. Development activists and policy makers vii. People Development specialists and subject-matter experts viii. Researchers, academics, authors, bloggers E. Subjects and Topics Covered (not exhaustive)
i. ii. iii. iv. v. vi. vii. viii. ix. x. xi. xii. xiii. xiv. xv. xvi. xvii. xviii. xix. xx. xxi. xxii. xxiii.
Human Capital Development Philosophy Corporate Citizenship, HR Strategy & Alignment Employer Branding & EVP Organisation Development & Organisational Effectiveness HR Information Systems, Technology, Automation, IoT, AI and Human Impact Digi-Human Optimisation Leadership Policy Formulation Employment Law & National Legislative Framework Recruitment Strategy and Operations Intrapreneurial and Entrepreneurial Imperatives Employee Assessment and Evaluation Orientation, Induction, Onboarding Technical Training & Culturisation Learning & Development, Mentoring & Coaching Performance Management Self-Leadership and Multi-Intelligence Development Personal Development, CPD, Career Planning Pipeline Development & Succession Planning Organisational Psychology, Motivation and Employee Engagement Compensation, Benefits & Rewards Employee Relations Risk, Safety, Health & Wellness Management
Material requirements for a full-page are as follows: • Trim: 210 x 297mm • Type: 190 x 277mm • Bleed: 220 x 307mm • 300dpi CMYK PDF OFFICIAL PUBLICATION OF THE IPM
Do what you Love
Love what you Do! With cradle-to-grave employment guarantees on the wane, itâ&#x20AC;&#x2122;s sensible to plan a dignified, if not a lucrative exit from your current job. Your options may include extending, updating or upgrading your skills-set to make yourself more attractive in the industry.
PEOPLE DYNAMICS | February 2019
For instance, think of the fashion industry. Many people have made great sacrifices to “do fashion” as a career. Some have enjoyed a measure of success: fame and fortune, but most have experienced a major fall at one point or the other. And this applies, in particular, to those who dared to make fashion a proper business that creates jobs that sustain families beyond their own – whether in fashion design, manufacturing, retail or fashion media. One has to think of names like Sonwabile Ndamase, Vanya Mangaliso, and Khanyi Dlomo, to mention a few. They have all tasted ‘fashion’ success, and it would be fair to say that each has had his/her share of headaches from ‘doing what they love’. Sacrificing to do what you Love
There are many sacrifices in following your heart. Firstly, there is no predictable income or payday. If you had been in a permanent job, used to a regular paycheque, you need to start making adjustments that will enable you to live with what can be described as crazy cash flow if you are lucky enough to have any cash flowing in. Get prepared
To avoid the psychological torment of debit orders and creditors’ phone calls: • close all clothing accounts • pay-up credit cards and anything bought on hire purchase • revise insurances and premiums according to new risk profile • cut all luxuries except one must-have for each family member • keep one practical car (if you must) and update its service & maintenance • upgrade your domestic help, and remunerate accordingly • identify a skilled/trainable, inactive friend, neighbour or family member as an anchor Find a Market
Finding a viable market is imperative. Much as you may love fashion – your particular style may not have appeal beyond you own circle of friends. So, while you may “do what you love”, you may find that you are not able to attract income from it and make it a business that can feed you - at least not for a while. Do thorough Research BY: JOSIAS WATSON
umping into another ‘secure’ job may be the logical thing to do, but instead of settling into slavery again, you may want to take a leap of faith and follow your heart into something you really love and have always wanted to do. Entrepreneurial adventures
This mind-set may the beginning of a great entrepreneurial journey, or the start of a very lonely but fulfilling solo adventure. Either way, doing what you love is an indulgence for which you can only be grateful. If not a billionaire at the end of it, you will surely be a very wise philosopher. Often those who decide to follow their heart have found that success is rare. Here, we talk of commercial success that takes a one-man-gig into a fully-fledged corporate entity.
A market is different to a fan-base. So, no matter how many likes your page or posts receive, you need to make sure that people like and commit with Ching. Before leaving your job, dedicate weekends and holidays to testing and building interest in your product, establishing what it would take for the interest to turn into purchase. Most successful business(wo)men start off with a regular blog; gauge the interest and when it’s strong enough with fans demanding more, they turn it into a commercial venture. Lindsay Nixon of HappyHerbivore, for instance, is now a published wellness author who is celebrated internationally, having started her venture from a cooking hobby. Build a Network and Intelligence
Find people who may want to profit through your creations, and incentivise them. This will help you expand your base and increase demand. Use your network to collect intelligence about seasonality, competition, preferred variations, usage situations, price sensitivity, socio- and psychographics of the potential customer. OFFICIAL PUBLICATION OF THE IPM
It takes Time and Money
If you decide to go full on with your love, work at building a market for yourself. It will take one or both time and money. Time: to grow the interest and to allow people to acquire your taste and “get your style” - something rare in fashion by its very definition. Often a design is either a hit or a miss. So, if you love fashion, you may persevere with several misses until you get a hit and take off. If your product has a ready but inert market – something highly beneficial yet lacks awareness, it will cost you time to do the education, show the benefits and quality. Money-wise: to expedite market uptake and to accelerate knowledge/appreciation or an acquisition of taste by end-users may require expensive brand development followed by advertising campaigns and sales promotions. This will be worthwhile if your product has the potential of bulk uptake by resellers or retailers. Money buys money; class attracts class. Higher investments can yield faster rewards and higher returns. Capitalising on the Internet Leg-up
Thanks to technology and globalisation of markets, you may find that hitting the web helps you discover a large enough interest for your product (e.g. style of fashion), such that you are able to sell and make decent income relatively quicker than if you were to rely on a physical shop window. Internet helps you reach multitudes of potential consumers at a fraction of time and cost than a full-blown ad campaign would have cost you. With accurate profile matching, your communication can reach enough people to keep you busy within a month of your launching. Growth Challenge
As you grow your business, you need to ensure that your operation and resources can grow with the demand. Whether you grow by extending the network of entrepreneurs you work with, or you structure a partnership with large manufacturing and distribution channel owners, you need to move swiftly enough, before the big players steal your innovation and overtake you with their value chain efficiency.
curve balls – whether technologically, legislatively or socially. The decision-making challenge to maintain a sustainable operation may extend beyond just yourself, but it is imperative that you stay protected and minimise your share of risks. Your assets need to be kept safe and separate from the risk that the enterprise carries in its commercial expansion. Entry-to-Exit Strategy
In any venture, it is wise to devise a long-term strategy that defines your posture during market development-, growth-, maturityand decline phases. The reality of the current times is such that markets are unpredictable and product life cycles are very short. Notwithstanding your level of success, always serve clients as though the business is forever, but run your personal affairs as though the company will fold tomorrow. Keep out of Debt!
While it is commercially astute to use some gearing and leveraging to grow the business, don’t let that interfere with your personal security. Keep your domestic overheads low. Enjoy the adventure of ‘keeping life simple’. After all, if you do what you love, work is as good as a holiday. As far as possible, keep all your household loan transaction periods short. Just because car financiers allow you up to 72 months to pay doesn’t mean you should take them up on the offer. If sharing a car makes sense, stick with it. Don’t let property gather dust and cost you in maintenance that you don’t need. By all means, keep your eyes open for investment opportunities, especially in property whose value will climb. But, if a R1.5 million home will cater to your family’s needs, resist the temptation to commit to a R3 million house, with trappings you don’t need – only to strain your cash flow and ruin your family’s peace of mind. A smaller, cheaper house, even if you could afford a more expensive one, will afford you enviable financial flexibility. It can enhance your lifestyle with more debt-free travel and leisure for you and the family. If your children are teens or older, consider how wasteful it might be to have a pool or an entire entertainment wing, when all they want is to be out there with friends.
Ongoing Market Research
Don’t be caught napping; from the onset, study the different options for growth and evaluate possible partners, testing for vision and value- alignment, as well as for commercial goal compatibility. While commercial growth considerations may involve debates on keeping your name/brand or allowing a complete brand neutralisation by larger partner(s), your life priorities should not be clouded. Remember that you got into the business to “do what you love”. This is what you should protect at all cost - ensuring that commercial decision do not jeopardise this. Of course, people are dynamic creatures, and it is possible that your own interests may have gone commercial. Should this be the case, then, where in the business you end up operating would not matter. But if you stick by your love, then, in your negotiations with any prospective partner(s) you would make sure to install yourself where you can continue your passion, like in R&D or creative and development unit. Sustainability Challenges
No matter how successful a business, there is the challenge of sustaining income and profit levels, particularly when it has grown in size and headcount. Consumer tastes change, competition increases, markets get saturated, substitute products crop up, operational costs rise beyond what can be absorbed, the external environment throws PEOPLE DYNAMICS | February 2019
It Takes Discipline
To keep doing what you love without debt traps takes discipline. What we discussed in “Getting Ready” applies throughout your pursuit. It takes high self-awareness and maturity to have ongoing appreciation of the freedom you really ‘enjoy’ each day. Having a regular paycheque may, once again seem appealing, but think of the advantages of knowing what’s going on and being in charge of your own destiny – rather than having your future in the hands of someone else. Reality Check
We also have to be realistic. No matter how much you love what you love – fashion for instance, there are silly but very necessary aspects to designing that you may not like, such as taking measurements, ironing, sewing or doing finishing touches to your designs. So, even when you do something you love, expect to do things you do not love so much, to be able to sustain and succeed in your venture. Oh yes, the more successful you are, the more you will need to nail admin, finance, sales and HR issues, albeit at executive level. No running away from that payroll! “Doing what you love is indulgence. Loving what you do is maturity.”
of strike action in an endangered sector OFFICIAL PUBLICATION OF THE IPM
Strike action can be very costly to the economy. Protracted strikes have negative impact for both the employer and the employee, and have many unintended consequences and secondary victims by the time they are over.
been costs incurred by all sides. There are alternatives to costly or protracted strike action that Labour Law makes provision for. Explains Labour Law expert, Ivan Israelstam: ‘Fortunately, the LRA does allow the parties to agree to private arbitration for purposes of resolving disputes.” He goes to describe what makes for an acceptable arbitrator to parties who opt for the private arbitration route: • reputable • fully conversant with labour law and with the need for positive industrial relations • able to gather the facts of the case effectively from both parties • able to assess the facts properly and fairly • able to reach a decision that is both fair and realistically implementable.
Why strike actions
Strike action is the one ‘most powerful tool’ that workers evoke when negotiations reach a dead end. A common belief among union leaders is that strikes will hurt the employer, or beat ‘him’ to submission. The ILO Body of Principles
According to the ILO supervisory bodies, even though strike action is an essential means available to workers and their organisations to protect their interests, the right to strike is not absolute. The International Labour Organisation acknowledges that strike action is a basic right, yet something to be considered as the last resort since ‘its consequences are serious, not only for employers but also for workers, their families and organisations, and in some circumstances for third parties’. Summarising principles developed by ILO to guide strike actions, Strikes and the Law captures the following: • Trade unions should be able to strike or take protest action to support or defend the socio-economic interests of their members • The right applies to all workers, with a limited number of exceptions e.g. workers engaged in essential services and employees exercising authority in the name of the state in whose case provisions are to be made for “compensatory guarantees” such as impartial conciliation and arbitration • It is permissible to restrict the right during the currency of a collective agreement • It is permissible to require procedural steps, provided that those steps are not lengthy or so complicated that they frustrate the exercise of the right • The right includes picketing or occupying the workplace, provided it is peaceful and does not prevent non-striking workers and management from entering the premises; it should be noted that peaceful picketing and a display of placards to persuade non-striking members to withhold their services or customers to suspend their custom from the employer is permissible, as long as there is no intimidation or physical interference • The legitimate exercise of the right to strike may not result in sanctions of any sort, including fines, civil claims, criminal prosecution or dismissals; this, however, does not preclude sanctions for engaging in unlawful strikes These broad principles are what was considered in drafting the South African Labour Relations Act. Alternatives to Strike Action
When a disagreement escalated into a dispute, and the dispute cannot be resolved at CCMA, workers may opt to strike. The reality is that, no matter how positive the result of a strike may seem to be, there will have PEOPLE DYNAMICS | February 2019
Success Factors for Arbitration
As with all things legal, arbitration requires good preparation by both parties in dispute. The arbitrator can only limit his/her arbitration process to what is presented to him/her for consideration in settling the matter. As Ivan puts it: “it is not necessarily the party who is ‘right’ that wins, but rather the party who presents its case most expertly that is able to persuade the arbitrator of what the right outcome should be”. Good preparation is, therefore, essential in getting one’s case across. A good presentation of facts and interpretation of figures, as well as a good grasp of Legislation and its application all help the arbitration process. Advantages of Arbitration
The advantage of placing the case in the hands of an arbitrator is that, theoretically, there’s an equal chance of either party succeeding to get his/her way. But, there is also a possibility of the arbitration process looking beyond two proposed outcomes to a mutually acceptable compromise that effectively translates to a win-win situation. This suggests that all parties should go into the process seeking a mutuallybeneficial, sustainable solution, rather than seek short-term victory while inducing a bleak future for the enterprise and for workers’ job security. Successful arbitrations tend to build better relations in the workplace. They open all parties to further ways to improve overall working conditions. The aversion of a strike, by itself, is already a win for all sides. It is also a win for stakeholders on each side, and of course, a major win for the economy. The costs of a strike
According to Labour Law experts, consequences of strikes can include, among other things: • Loss of clients • Financial losses for businesses • Closure of businesses • Loss of pay and financial hardship for employees • Dismissals • Industrial sabotage • Court cases • Reinstatement orders • Strike interdicts • Community services disruption • Blockades • Violence and death • Destruction of company or public property • Damage to the national economy if the strikes are widespread and/or last a long time • Reduction in investor confidence
• Disinvestment • Negative relationships: among striking and non-striking employees, and between employer and employees/unions once the strike is over
governmental economic or social policies that directly affect their members. The right includes being able to engage in sympathy strikes provided that the primary strike being supported is itself lawful”.
Social and Economic Costs
Lack of Trust and Greed at the root of Protracted Strikes
To underpin this, one has to look at the situation with the SibanyeStillwater strike. According to Business Report, in November 22 2018, about 15,000 union members at Sibanye downed tools. There was a clash among colleagues from rival unions, particularly because some unions whose workers continued to work had reached agreement and signed a deal with the company. Some union members were arrested during the strike and were charged with alleged theft of motor vehicles, public violence and robbery with aggravated circumstances. Such spill-overs of strike action and the negative effects imposed on the community have raised enough concern that a review of the national Labour Laws had been initiated.
At the base of strikes is distrust on the one hand and then greed. When companies are suspected to be acting unfairly toward workers, disputes intensify and strike action abounds and gets protracted. Distrust is pronounced when unions believe that employer is holding out on wage increases or workers’ compensation while enjoying benefits from a positive economic outlook. In support of this theory, a Mail & Guardian research on working days lost through strike action shows a positive correlation between economic upturn and number of working days lost. Workers have a perception that when a country or industry benefits from an increased economic activity, employers do not afford them proportionate financial benefit, whereas workers cooperate and absorb negative effects whenever the industry experiences a downturn.
Revision of the Labour Relations Act
In 2018 revisions to the Labour Relations Act were tabled in particular to address the terms and the mechanics of strike action. Irvin Lawrence of ENS Africa, shed light on the Labour Relations Amendment Bill which sought ‘to introduce measures which would address protected strikes that commence in the absence of picketing rules, as well as address the ever common issue of protracted strike action’. The Bill was passed by the National Assembly in May 2018, sent to the National Council of Provinces for confirmation before being signed into law by President Cyril Ramaphosa. The amendment ensures the protection of individuals’ rights as well as the rights of the public; to limit exposure to harm and destruction. Together with the new Codes of Good Practice, the amendments preclude the carrying of weapons during pickets as well as create better distinction between workers’ strike action and political unrest. The new law is such that prior to CCMA granting the permission for a strike, the parties would have the parameters and limits of the strike action clearly set and agreed to. It intends to make sure that picketing does not end up in violence, injuries, deaths, property destruction or disruption of non-related public services, and intends to restrict picketing to a designated area, by defining the specific area within or around the employer’s premises, taking safety and security into consideration. While arbitration was an alternative that parties could agree to as a mechanism to reach consensus on disputes, the new law seeks to curb protracted strikes that have the potential of violence, or a crippling effect on national economy. The new arbitration provisions aim to resolve strikes or lockouts that are intractable, violent or may cause a national crisis. The amendments seek to provide for the establishment of an advisory arbitration panel to, without delay, investigate the cause and circumstances of the strike or lockout and make an advisory award in order to assist the parties in dispute to resolve the dispute. The purpose underlying these amendments is to require trade unions to take responsibility for pickets and to ensure that the constitutional rights of others to freedom and security of person, freedom of association, fair labour practices and property, are not infringed. It is worth noting that LRA seeks to emphasise the difference between political protests and labour strike actions. As ILO emphasises, “political strikes do not fall within the ambit of the right to strike, although trade unions may take proportionate protest action against
Strategies toward Improving Trust
It clearly would work to the benefit of all parties, were employers to show more transparency and involve worker representatives in strategic discussions and organisational planning. For instance, if a windfall may best be used in reinforcing infrastructure and improving the safety of the workers, this information should be readily shared, so that when the economic upturn comes by, there are no wild expectations about wage increases. The prioritisation of sustainable operations which is in the interest of the employer as much as it is in the workers’ should be discussed at policy formulation and strategy development stages. Where the company can afford to increase wages or pay bonuses, it should be something done fairly across the board on merit. Paying handsome dividends to shareholders and nothing to workers will always look unfair – even greedy. As much as shareholders would have made sacrifices to invest in the operation, workers make daily sacrifices to sweat the assets and keep the firm in business. When unfavourable trading climate prevails, everyone should be prepared to absorb the pressure – meaning that employees across the board need to be prepared to make wage-related sacrifices in order to protect jobs. Any insistence for wage hikes or strikes against operational losses will only mean job cuts, if not immediately, then, in time. At the end of the day, it means loss of productivity for the entire industry, such that even when the tide turns, the industry looks to alternative means of production – relying on technology and automation, with human resources losing out. Leadership and Workers Greed
When heavy dividends are paid to shareholders as a result of a buoyant market with no due regard given to the workers, this would suggest greed on the part of company’s leadership. Protests, in the form of strike action, can only be expected. When the workers, on the other hand, make unreasonable wage hike demands in what may be regarded as a sunset industry and difficult trading climate, this may well signify greed. Often this greed is fuelled by a handful of the workers or leaders who push for protracted strike action against reason, thereby risking major losses for workers who might have preferred to trade dramatic salary increases for more sustained employment. It is time South Africa looks at curbing the ‘lose-lose’ effects of strike actions, and seek ways to find each other and increase the levels of trust among workers and employers. OFFICIAL PUBLICATION OF THE IPM
Loving the Team
Loving Yourself At a certain level of management, you will be familiar with “inheriting” a team, whether at executive level or at lower-grades. You will also know that it’s often a mixed bag. PEOPLE DYNAMICS | February 2019
BY: NALELI WASA
oining a team, you may land a group of driven, competitive performers or on the downside, a dysfunctional team with disengaged, demoralised, checked-out individuals. Whatever the case, your job is to love them! Yes, to invest genuine interest in each one of them, enough to find their unique ability to contribute to the objectives of the organisation. You are charged with motivating them enough such that ability is converted into sterling performance.
It’s a matter of playing the cards you are dealt and making the most of what might be a sticky situation. In effect, the job of a manager is transformation: transforming potential or static ability into active and positive energy that fulfils the goals of the team or organisation. Why is love a requirement?
People have an innate need to relate. They generally need to find a goal that they can hold in common, or a purpose that they can jointly espouse such that any or all differences can be relegated to the periphery. Having that common goal or purpose move people toward a sense of mutual-reliance, if just knowing that there is another fellow human going a similar challenge or experiencing the pain they feel. When allowing themselves to be their authentic selves, people will engage each other about how they cope or conquer challenges. This kind of interchange demonstrates a form of human partnership or fellow feeling. Some experts call it camaraderie. Sociologists and psychologists specialising in the subject of Love trace this to the feeling Greeks referred to as “philia”.
having slipped and split their skull. It is not love emanating from emotion, physical attraction or any common goal, but one that simply knows what’s right and does it – whether there ever will be acknowledgement or reciprocation or not. It is a disciplined love for fellow occupants of the universe, irrespective of colour, creed, persuasion, goodness or future/potential threat. Pragma love
As members of a team, you each have a share of the total responsibility towards delivering a goal. You bring unique qualities or abilities to deliver towards related objectives. You likely go through trying times at different moments and need each other to be there to sustain the team when one of you is down. Even as a manager, you may feel co-dependence with your subordinates, and hence recognising the need to walk a path together and adjust to each other’s paces to ensure that delivery is not compromised. The self-control and patience involved; the empathy and perseverance expressed all depict philia.
Pragma love has some resemblance to agape in that it looks beyond physical aspects or mutual interaction, but it recognises – this time not humanity but duty. It is a kind of practical love founded on reason or duty and one’s longer-term interests. Physical attraction, although not totally impossible, is either not a factor or not foremost. Personal qualities, compatibilities, shared goals, or a commitment to making things work is what inspires it, hence the suitable derivative: pragmatic relationships. In the work place, this love is not directed to an individual but to a comfortable co-existence as you work through common interests or work towards similar goals. It engenders trust and promotes a nonthreatening environment. Neel Burton, an Oxford Fellow, also covers three different types of love that preferably should have no place in the workplace: Mania, Eros and Ludus. Mania is an obsessive, possessive type of love that is often found in insecure relationships. Blind jealousy and stalking habits typify this love. Eros is about physical passion and desire, while Ludus is about flirtatious, playful love. The latter may seem harmless enough in an office environment, but it’s what has often got companies entangled in law suits even more so than the outright outrageous Eros. Ludus can start off as an innocent, platonic game, develop into physical “no-strings” relations that may easily be misconstrued by one of the parties, or potentially infuriate third parties (spouses) enough to sue the company for losses suffered from an indiscretion their spouse engaged in with a member of the company. Flattering and “fun” though Ludus may be, it is best kept away from the workplace or professional colleagues.
As a manager, you have the responsibility to play a mentoring and coaching role to members of your team. The accepting of this responsibility and the selflessness that goes with it, can be likened to the love exchanged between a parent and a child. In a childparent relationship, this is driven very much by instinct. In the workplace, healthy feelings of philia evolve to those of storge where the time calls for your mentoring skills. By sharing your experiences without holding back, and helping others learn from your success as well as your mistakes, you are expressing storge. While the kinds of love we have discussed demonstrate an interactive relationship where there is benefit flowing from one party to the other, there is a kind of love the Greek refer to as agape.
Finally: Self-Love! For you to have capacity to love others: to feel, empathise and hold healthy relationships, you need to have the capacity to love yourself and to be comfortable in your own skin. This love is nothing like narcissism where people obsess about themselves, their looks, abilities or influence. This love has substance. Philautia is a love which signifies one’s ability to accept oneself with whatever faults or limitations one may have; having the maturity to look past one’s mistakes and move on to bettering and enjoying one’s life. The ability to be at peace with oneself enables one to handle other people’s shortcomings more maturely; to become a better partner, colleague, mentor, coach or manager. It results from good self-awareness, and is far from vanity or egotism. So, go ahead: Love your Team and Love Yourself! This is not just a call to coincide with a flirty season. It is not a commercial endorsement – far from it. This is an SOS to every people manager, team player or individual in the workplace, for every one of the 365 days of the year.
Lonerwolf’s Mateo Sol describes this as “love among equals – a love devoid of physical attraction”. It is a love between or among friends who have experienced things together. It can relate to feelings of loyalty among team-mates. So what’s love got to do with the workplace?
Agape love is altruistic. It is principled love that humans share purely in recognition of humanity. It is the kind of love that will drive one to do good even for someone they might otherwise regard as an enemy. Agape is the kind of love where someone might dodge a fist from an attacker, and then turn around and rush the attacker to hospital after
OFFICIAL PUBLICATION OF THE IPM
Branding on the Decline Employer Branding is a corporate tool to attract great talent and high calibre candidates to oneâ&#x20AC;&#x2122;s organisation against what is perceived as strong competition among prospective employers. PEOPLE DYNAMICS | February 2019
BY: LITHA MOKOENA
Until the last quarter of 2018, employment has been on the decline, with the country shedding jobs as it experienced a technical recession. When organisations are on a retrenchment mode, or have a less than perfect trading climate, their focus turns to holding on to what they have, rather than go on an invitational or acquisition mode. As far as HR is concerned, organisations prefer to spend their energies on reassuring their human assets; averting any poaching of their valuable talent. Fair enough. Contrary to what management might fear as bringing undue attention to a Corporate Brand fighting tough times, the very studies geared at building Employer Brand serve as critical tool to check if ‘the house is in order’. Not only would they help detect negative climate creeping up, they would help isolate unethical behaviour or conduct among leaders in the organisation, creating an opportunity to apply corrective measures. Whatever results the studies yield, running them serves to reassure employees about their worthiness and of the organisation’s interest and appreciation of their contribution.
While GPTW study remains subjective, qualitative and complex, it yields positive influence on participating organisations, in that they all registered improvement on, for instance, all aspects denoting employee trust. Comparing 1998 stats to 2017, the following improvement was recorded: • People avoid politicking and backstabbing as ways to get things done (23%) • Promotions go to those who best deserve them (19%) • Managers avoid playing favourites (19%) • Everyone has an opportunity to get special recognition (17%) • People are paid fairly for the work they do (14%) • I am treated as a full member regardless of my position (13%) • If treated unfairly, I believe I’ll be given a fair shake if I appeal (13%) While employee development can be a personal thing since people aspire to different things in their careers, questions posed to determine how employees feel about the workplace have also shown positive improvement of the environment provided by the participating companies: • People look forward to coming to work here (14%) • People are encouraged to balance their work life and their personal life (13%) • This is a psychologically and emotionally healthy place to work (12%) • People care about each other here (9%) • I can be myself here (7%) • Management shows a sincere interest in me as a person, not just an employee (5%) Whatever the different strategies organisations employ to inspire these positive responses, if the strategies work for current employees, chances are, they will work in attracting employees with similar aspirations or those who respond to the type of environment the organisation offers. This qualitative information serves as powerful positioning and differentiating points for organisations seeking to attract highly discerning and sought-after candidates. Why is Cutting Back Puts You at Risk
Employer Branding surveys
South African companies have traditionally participated in the “Great Place to Work” survey, which mainly measures employee trust, organisational culture and climate. Although the results of the survey are reported quantitatively, the responses are based on employees’ perceptions and subjective take of the work environment created by the company. The study reflects employees’ response to the combined set of programmes, initiatives, interaction and management behaviours aimed at creating a positive climate. Different companies might get high ratings based on totally different strategies and approach to people management. According to the GPTW Fortune Report, despite differences in strategies, there is often a common thread among companies that rate highly in the survey. These companies are progressive and in tune with what tends to be a priority among their employees at any given time. In their recent study, these priorities were determined to be: 1. a fairer workplace for all 2. Increased focus on developing all employees 3. A deeper sense of purpose for all employees. The GPTW study goes on to determine the link among the key components or drivers of the GPTW rating to productivity, organisational effectiveness and profitability. It determined that companies in the top quartile of the survey metrics enjoy 3x the revenue growth of companies in the bottom quartile.
When the market is in a slump there is limited activity and few employment opportunities. This is where people become even more critical when evaluating offers, and if your organisation hasn’t bothered running a credible climate study or determined where it stands with employee trust, then prospective executive candidates will be hesitant to make the leap and join your organisation. It limits their ability to gauge the value they can add to your organisation, and whether or not they will be a fit as individuals. By implication, this risks your organisation’s failure to attract the right candidates. Consistent Climate Management and Employer Branding
Irrespective of what the economic climate is, it is important for HR executives and leadership to keep the organisational climate positive; communication flowing and messaging honest yet reassuring. Putting a halt to feedback channels such as climate studies may be interpreted as poor leadership capacity - an organisation’s failure to deal with challenges presented by the external environment – inducing fright, flight or unnecessary fights in the workplace. Keep your Employer Brand awareness high both internally and externally at all times. Not only will it compel management to live up to the Brand promise, it will also reassure and inspire employees to uphold it too. OFFICIAL PUBLICATION OF THE IPM
THE SANDWICH GENERATION: ARE YOU THE ‘FILLING’?
BY: GEORGINA BARRICK
not a big fan of ‘New Year’s Resolutions’. I prefer to work with a set of enduring and broad themes – or guiding lights to use as waypoints as each year unfolds. In 2018, my focus was very much on how to live more mindfully – how to manage stress better, get more sleep and live more consciously. While I didn’t always get it right, exploring ways to live more mindfully has certainly improved my overall quality of life. As Ralph Waldo Emerson said, ‘life consists in what we think of all day’. My mindfulness journey continues in 2019. As 2019 kicks off, I’ve been thinking about friends and colleagues who are paid-up members of the ‘Sandwich Generation’. Today, thanks to advances in medicine and health, we’re all living longer, while our children are growing up in a world where it’s harder to get (and maintain) financial independence. Actuaries are predicting that people who are PEOPLE DYNAMICS | February 2019
now in their 40’s will be the first generation to live to 120 and beyond (a scary thought when retirement age is still 65). The burden of managing this delicate generational balancing act falls on the Sandwich Generation – who sit in the middle and care for aging parents, while bringing up young children. This burden often comes at great personal, physical, emotional and financial cost. Research by the American Psychological Association found that nearly 40% of adults aged between 35 and 54 feel overextended and suffer extreme levels of (poorly managed) stress as they try to balance the needs and demands of growing children against those of aging parents. And, this stress is taking a toll, with 83% reporting that relationships with their spouse, children and family are their biggest source of stress, making it difficult to take better care of themselves. In South Africa, a survey by Old Mutual found that 28% of urban adults take care of their children, while also supporting parents, siblings and other family members – a statistic that is growing by 2% (on average) per year, making the ‘Sandwich Generation’ a reality for many South
over coffee with good friends. The world won’t fall apart in your absence – and you’ll return refreshed and better able to cope. Find (and Lean On) the Right Support...
Even if you’re Super(wo)man, it’s not possible to do everything yourself. Think about what you need and ask for help. Whether it be siblings, older children, friends or professional caregivers, help is available. Share the load. In my experience, people want to help. Manage Your Finances…
Africans. If this is what life looks like for so many of us, how do we find a balance between all of our dependents so that we’re not meeting the needs of one to the detriment of others? And, how do we make time to take care of, and nurture, ourselves?
Many older people shy away from talking about money, believing that it’s ‘not the done thing’. Given that 41% of respondents to the Old Mutual survey rely on their children for financial support, understanding the true state of your parent’s finance is key to being able to put together a financial plan that works for everyone. Start by getting everyone’s finances out in the open so that you can properly plan. It’s also a good idea to get your children involved so that they can learn to become financially independent themselves. Live in the Moment…
Identify (and Manage) Your Stressors…
I’ve found that being able to identify what triggers stress allows me to respond more appropriately. Also, unhealthy behaviours – like drinking or eating too much – aren’t helpful. Try to explore how you can replace this behaviour with healthier ways of coping and how you can incorporate stress-reducing activities – like exercise, socialising with friends or meditation – into your daily routine. Practice Self Care...
When you’re running on empty, you can’t properly take care of others. It’s important to make time to take care of yourself. Get good sleep, schedule time for exercise and do the things that you enjoy and that nourish you. For me, it’s about taking time to have a massage or catch up
Truthfully, being the ‘filling in the sandwich’ is sometimes no fun. It’s important to live in the moment. Love your loved ones. Prioritise what matters and let the little stuff go. This too shall pass – and you may miss it when it does. And finally, I believe that there are two gifts that you should strive to give… First, make your children truly independent. Focus on giving them a good education and ensuring that they understand how to become financially independent. Then, ensure that you remain financially independent as you age and make all of the big, necessary life decisions around retirement ahead of time so that you don’t burden your children. Good luck! OFFICIAL PUBLICATION OF THE IPM
And The Five Key Priority Areas N
ot that anyone has forgotten his son’s ‘contract’ with Bosasa, or overlooked his private consultation with the Private Protector, but I think all South Africans take their hats off to Mr Cyril Ramaphosa for having successfully walked a tight rope in the delivery of SONA, given the darker shade of the country’s economic, financial, social and moral standing. His overuse of poetry can almost dull one’s appreciation, but one has to give it to the first citizen, he pulled one from the top shelf when he lifted his audience to reflect on the journey the country has taken over the 25 years, and specifically the progress made since his first SONA speech and summit promises in 2018. You can be cynical, sceptic or apathetic all you like, but I suspect there aren’t too many who stand with you – not least of all the opposition parties and labour representative – the hardest to please by far.
in oversupply. We would hope that managers will do what they are hired to do as people managers: to unlock the talent and help individuals realise their potential to fulfil the mandate of their entities, and successfully deliver to the objectives of the enterprise. To get rid of people, only to realise them that they are needed after all, will merely cause unnecessary heartache and cost the entity much more that doing a proper reconfiguration, reskilling and upgrading of people – something the older, more experienced cadre and specialists should have done. With so much innovation required in the energy sector, one would imagine that an entity carrying the country’s power resource will put everyone technical to good use. If anything, the superficial and superfluous general management layers should disappear, unless there is real value there that can be unlocked – in which case, the nature of contracts would need to be reviewed to pure value-based relationships.
What he said
“During the course of this year, we must and will reflect on the journey of the last 25 years. As South Africans, we will have to ask ourselves whether we have realised the promise of our nation’s birth.” Have we? If not, are we on course? If not, what contribution have you made? If none, what contribution are you committing to? And, to make that worthwhile, who do you need support or cooperation from? What stops you from making in happen? These introspective questions establish our capacity to shape our own destinies, particularly as and when invited to do so. Keep reflecting. If you find anything you don’t like during this reflective year, reach out and make the change you wish for. Speak up, speak out, collaborate, corroborate others’ efforts, be an active activist in your corner, not a passive passenger weighing heavily on this highly charged train.
“While there is a broad range of critical work being done across government, this evening I want to address the five most urgent tasks at this moment in our history. These are tasks that will underpin everything that we do this year. Working together, we must undertake the following tasks: • Firstly, we must accelerate inclusive economic growth and create jobs. • Secondly, our history demands that we should improve the education system and develop the skills that we need now and into the future. • Thirdly, we are duty bound to improve the conditions of life for all South Africans, especially the poor • Fourthly, we have no choice but to step up the fight against corruption and state capture. • Fifthly, we need to strengthen the capacity of the State to address the needs of the people.
He also said
“A year ago, we set out on a path of growth and renewal. Emerging from a period of uncertainty and a loss of confidence and trust, we resolved to break with all that divides us, to embrace all that unites us. We resolved to cure our country of the corrosive effects of corruption and to restore the integrity of our institutions.” Of course, whether your glass is half-full or half-empty, you nonetheless will note the movement at SARS, Transnet, NPA, the Post Office, and even at Eskom to some extent. Things may not be going at your pace, and not all the heads may have rolled (yet), but the runaway (gravy) train seems to have been halted somewhat. Considering the job-creation mode the country has been switched on to – supported by heavy pledges, guarantees and budget reprioritisation, we stand hopeful that government, of all stakeholders, will be sensitive in its restructuring and rationalisation of human resources deemed to be PEOPLE DYNAMICS | February 2019
Programmes to stimulate job creation in human-resource intensive industries, such as Agriculture, Manufacturing and Tourism have received attention in the budget reprioritisation announced late 2018, and the 2019 budget further affirms this. The2018 Presidential Jobs Summit agreed on far-reaching measures that – when fully implemented – will nearly double the number of jobs being created in the economy each year. In what the President refers to as a living demonstration of successful collaboration between government and business, he cites a group of South African business leaders who have initiated the Public-Private Growth Initiative to facilitate focused investment plans of leading companies across 19 sectors of the economy; from mining to renewable energy; from manufacturing to agriculture. These industries expect to substantially expand investment over the next five years and create a vast number of
new jobs, especially if the demand for local goods could be enhanced, resulting in further stabilisation of the labour environment and improved conditions for doing business. Education
Education (and culture) has received the highest allocation of the budget, ensuring that proper foundation is laid at the elementary stages. Both content quality and school infrastructure have received focus and resources to make learning and teaching more effective. The higher education sector is more complex, and focusing on skills that the country ‘needs now and into the future’ will definitely test the system. Legacy education stands guard at the door of success, where qualifications still dress walls with little inventions or innovations placing us afoot with the world. This is an area in which HR executives are invited to give input, directly or through state agencies and fora such as the Human Resource Development Council, at which the Department of Higher Education shares strategy with HEI’s, Business, Labour, Professional Institutes and Civil Society. Familiarise yourself with the work of this Council, and be part of making Human Resources relevant now and well into the future. Addressing Poverty
As far as improving the conditions of life for all South Africans, the 2018 Investment Conference and the focused efforts of the envoys yielded impressive results, taking the country close to the R1.2trillion target over five years. The Conference alone attracted around R300 billion in investment pledges from South African and international companies, with foreign direct investment growing from R17billion (2017) to an impressive R70billion in 2018. “To prove that our investment conference was not just a talk shop where empty promises were made, as we speak, projects to the value of R187 billion are being implemented, and projects worth another R26 billion are in the pre-implementation phase... We will be identifying the sectors and firms we want and need in South Africa and actively attract investors.” Capitalising on the success of the 2018 summit, and to build on the momentum gained, another S.A. Investment Conference is on the cards for 2019, with intention to benefit projects spread out throughout the country. Addressing Corruption
As far as the fight against corruption, decisive measures have been taken to improve governance, strengthen leadership and restore stability, particularly in strategic entities like the South African Revenue Service (SARS), the State Security Agency and the South African Police Service (SAPS) and the National Prosecuting Authority, where a new NDPP has been appointed to strengthen the fight against crime and corruption. The Commissions engaged in uncovering the root of the rot has led to some swift action, particularly to resolve the SARS executive human resource issues.
expertise to manage SOE’s) so that we can shift the focus from immediate stability to long-term sustainability… “We have established the Presidential SOE Council, which will provide political oversight and strategic management in order to reform, reposition and revitalise SOEs, so they play their role as catalysts of economic growth and development. “We want our SOEs to be fully self-sufficient and be able to fulfil their development and economic role. Where SOEs are not able to raise sufficient financing from banks, from capital markets, from development finance institutions or from the fiscus, we will need to explore other mechanisms, such as strategic equity partnerships or selling off nonstrategic assets.” And he reassures
“As we do all this, we will not support any measures that, in any form, dispose of assets of the State that are strategic to the wellbeing of the economy and the people. We have the task and the responsibility to safeguard, build and sustain these key institutions for future generations. “We also seek to build a pragmatic and cooperative relationship between government, organised labour and private sector stakeholders, where we can jointly determine a strategic path for SOEs to create jobs, enable inclusive growth and become operationally and financially sustainable.” And about ‘the beast’ - Eskom
“Security of energy supply is an absolute imperative. Eskom is in crisis and the risks it poses to South Africa are great. It could severely damage our economic and social development ambitions. We need to take bold decisions and decisive action. The consequences may be painful, but they will be even more devastating if we delay. In responding to this crisis, we are informed by the need to minimise any adverse economic cost to the consumer and taxpayer.” Again, he gives further assurance that in addressing the challenges that face Eskom, there will be meaningful consultation and dialogue with all key stakeholders. “We will lead a process with labour, Eskom and other stakeholders to work out the details of a just transition, and proper, credible and sustainable plans that will address the needs of all those who may be affected. As we address the challenges that face Eskom, we also need to safeguard our national fiscal framework, achieve a positive impact on our sovereign credit rating, and pay attention to the rights and obligations of Eskom’s funders.” Gear yourself, South Africa!
“In line with a nine-point turnaround plan, Eskom will need to take urgent steps to significantly reduce its costs. It will need more revenue through an affordable tariff increase. We need to take steps to reduce municipal non-payment and confront the culture of non-payment that exists in some communities.” It is imperative that all those who use electricity – over and above the free basic electricity provided – should pay for it.
And yes, he acknowledges
When it comes to strengthening the capacity of the State through SOE’s, the President is confident about progress being made. He assures “To restore proper corporate governance, new boards with credible, appropriately experienced and ethical directors, have been appointed at Eskom, Denel, Transnet, SAFCOL, PRASA and SA Express… We have sought credible plans from boards to put in place the right skills and
“Our efforts may have been uneven, and we still have much work to do, but we have demonstrated over the last year our shared determination to work together to confront our common challenges… We have focused our efforts on reigniting growth and creating jobs. We have worked together – as government, labour, business, civil society and communities – to remove the constraints to inclusive growth and to pursue far greater levels of investment.” OFFICIAL PUBLICATION OF THE IPM
That will shape organisations
BY: DR NATALIE SKEEPERS: INDEPENDENT GOVERNANCE, RISK AND COMPLIANCE SPECIALIST
n addressing the future trends that organisations will be faced with, especially for leaders and those in strategic positions, considerable planning must include a constant scanning of the workplace environment. Risk and safety professionals must not only attempt to understand their own organisations’ strategic positions in the market place, but also the future landscape which will be shaping their thoughts, performances and accomplishments. According to Forbes (2018), As human beings we tend to focus on what happened in the past, to recoil from these new environments and to rely on the rear-view mirror as a kind of repeat of the preceding environment. It is not that there is anything wrong with the old environment or the old way of doing things, but it simply will not serve as a reliable navigational guide to the new one. PEOPLE DYNAMICS | February 2019
INVESTING IN HUMAN CAPITAL
Evidence is mounting in favour of investing in the people of your organisation. Employees want to feel noticed, special - like they make a difference. It is no surprise that with happy, engaged staff, positive financial returns and a competitive edge, some of the world’s most successful organisations are adopting these strategies. As for the South African market, the comparatively slow uptake has created a notable gap that could yield some exceptional returns. Whether organisations realise this or not, investing in people will always trump other priorities. After all, employees are the heartbeat of the success of any strategic objectives; short, medium or long term. FOCUSING ON INDIVIDUAL GROWTH
Looking at issues of competence, health and safety professionals for example, need to appeal to people who have the ability to change things in an organisation. No matter what field you are in, you need to show enormous flexibility because technology and economics can change what you are doing at any time. If top management isn’t motivated to do
something based on their sense of doing the right thing, then you need to use the most effective way available to you to get things done. Making the business case for safety doesn’t mean that, in the back of your mind, your motivation can’t be the ‘prime directive’ of preventing injuries and illnesses. As an organisation, you have a responsibility to drive the business forward, but you need to encourage employees to remain in control of their own futures. MILLENNIALS BRINING NEW CHALLENGES TO THE WORKPLACE
These are the people who grew up with the many social media platforms that we use today. They are used to being connected, collaborative and mobile. Millenials are used to sharing with each other, communicating through social platforms, working from anywhere, having a voice, and learning about what interests them. Most organizations today are struggling to adapt to this changing workforce as baby boomers are starting to make their way out. This is a big factor shaping the future of work as organizations seeking to attract and retain top talent are going to need to adapt. In adapting, this means that current policies and procedures need to change and become relevant to younger workforce. We may not like the idea of how millennials choose to communicate, because we may considered them risky employees; constantly on their phones, active on social media, etc. We should reconsider outdated policies such as cell phone policies, parking allocation, medical aid etc. in view of the digital world of today. FLEXIBILITY, MOBILITY AND “CONNECTING TO WORK”
Associate Professor Venitha Pillay, has reportedly taken her employer Unisa to court over their work from home policy. Professor Pillay emigrated to the US to take care of her special-needs daughter. The outcome of this case will shape how flexibility and mobility of employees is addressed and more so how women are being accommodated in the workplace. Flexibility and/or mobility is not just about being able to work and getting access to people and information from a mobile device. It’s also about being a mobile worker which means you can work from anywhere, anytime and on any device. This case is about reasonable accommodation: the idea of “connecting to work” has become more prevalent within organisations as they are starting to allow for more flexible work environments. With an internet connection you can now access everything you need to get your job done. The notion of having to work 9 to 5 and commuting to an office is dead. For health and safety professionals this poses new challenges as to what will define the workplace, how risk assessments will be carried out, the idea of supervision etc. The argument here is that, for certain employees, it is not necessary to be physically at work. With the advent of technology such as Facebook, Facetime, Skype and many similar communication tools, more employees are going to seek out their employers to allow them to work from anywhere, anytime and off-base. Understanding these trends will allow organizations to better prepare and adapt to the changes which are impacting the way we work.
healthy and in good spirit. This often becomes a race to the bottom. The final product is the “bare minimum” that they can agree with. So, complying with ISO 45001, whilst important as it encourages a systematic approach to safety management systems, promises nothing - and shall deliver very little. The gains are to be made elsewhere. We cannot continue operating in a world where the operating environment subscribes to a culture of compliance. It’s in our DNA to undertake risk assessments for everything that should or could go wrong, mostly by “the law says so”. Risk management is at the core of the new ISO 45001, whereby organisations, for survival, must facilitate risk assessment protocols as a fundamental element of managing their businesses. This would include emerging risks such as artificial intelligence (AI) and the internet of things (IOT). While this can be backed with investment from the organization, this is a journey your employees will have to take on themselves. THE GIG ECONOMY
The key theme across all of this is adaptability, both for the employer and the employee. Planning ahead will allow employers to pivot in and out of the workplace at short notice; adaptability in structure, process and people is required to survive. This approach to hiring employees for short-term assignments on their terms will challenge employers in their structural approach to the way the world of work is undertaken. There are a number of forces behind the rise in short-term jobs. For one thing; in this digital age, the workforce is increasingly mobile and work can increasingly be done from anywhere, so that job and location are decoupled. In a gig economy, businesses save resources in terms of benefits, office space and training. They also have the ability to contract with experts for specific projects that might be too high-priced to retain staff for. Consider an employee having different employers with all the labour laws still applicable. Only organisations that can adapt quickly enough to the changes ahead will be around in 10 years’ time to continue this discussion. ADDRESSING ISSUES OF SEXUAL HARASSMENT IN THE WORKPLACE
Is sexual harassment a health and safety issue at work? Of course, it is! Need we say more about what is shaping this space? More and more organisations are faced with having to deal decisively with sexual harassment. The approach seems to be failing women in particular. How is the sexual harassment defined?
“Sexual harassment is bullying or coercion of a sexual nature and the unwelcome or inappropriate promise of rewards in exchange for sexual favours. Sexual harassment includes a range of actions from mild transgressions to sexual abuse or assault. If we look at what has happened at the SABC and other institutions, we agree that women still receive the short end of the stick. Very little or no action in the workplace continues to make women vulnerable to sexual harassment in the workplace.
ENCOURAGE CONTINUOUS DEVELOPMENT
The world around us has changed and it is changing anyone who understands that the ground has shifted and is that planning for the future is critical. The standards that employers are clinging to are outdated. More needs to be done in the boardroom to ensure that the organisation stays fit and ahead of the game to survive; more so, to ensure that their employees (the ones that actually keep the organisation going) are protected, safe,
WOMEN IN THE WORKPLACE
A lot has been said and written about women in the workplace. Nothing more will be added; the statistics speaks for itself. It’s a shame that women still have to fight the glass ceiling. As we continue to consider the trends that will shape the future of organisations, we need to also consider the role we play individually in promoting the topics addressed in this article. OFFICIAL PUBLICATION OF THE IPM
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The Budget Speech
MINISTER OF FINANCE TITO TITUS MBOWENI On October 9, 2018, I stood before Judge Babalwa Mantame and took an Oath of Office. I said: “I will be faithful to the Republic of South Africa and will obey, respect and uphold the Constitution and all other law in the Republic; and I undertake to hold my office as Minister with honour and dignity; to be a true and faithful counsellor … and to perform the functions of my office conscientiously and to the best of my ability.” Today, I submit before this august House the National Budget. It reflects, to the best of my judgment, the nation’s financial situation. It is in the interest of our people and our country, and not in the narrow objectives of any political party. It is to safeguard the sound financial status of the Republic. I do this in my role as Minister of Finance, performing my fiduciary responsibility as the guardian of the nation’s finances.
Today, I hereby table: 1. The Budget Speech, 2. The 2019 Budget Review 3. The 2019 Estimates of National Expenditure, 4. The Division of Revenue Bill, 5. The Appropriation Bill, and 6. The Public Audit Excess Fee Bill. Madam Speaker, In the 2019 State of the Nation Address, our President set out an ambitious agenda for our nation. It is an agenda that speaks to the South Africa that we can be. It is a task list for all of us. It lays out a series of interventions that will put South Africa on a bold new path. How do we make this renewal a reality? I turned to the Good Book OFFICIAL PUBLICATION OF THE IPM
The Budget Speech
for guidance. In Zechariah 8 verse 12 it says: “For the seed shall be prosperous; the vine shall give her fruit, and the ground shall give her increase, and the heavens shall give their due; and I will cause the remnant of this people to possess all these things.” As a part-time farmer, I know that in order for the people to “possess all these things”, we have to plant anew. It is time for us to sow the seed of renewal and growth. But for the seed to be prosperous, as Zechariah enjoins us, we must first cultivate the soil. Once we have planted the seed, we must nurture it, water it, and protect it from the extremes, the elements and time. Despite our best efforts, sometimes, ravages and risks such as pests or rot could attack our green shoots, but we must persevere; we must prune and pluck away at the rot, until there is growth. This we must do as a collective. If we look after what we sow, and what we have ploughed and laboured over so tirelessly, since the founding of our democracy, it will grow and the seed will bear fruit. However, if we abandon our fields, the seeds we plant will wither. A few years ago, Madam Speaker, one of my predecessors handed out succulent plums to the members of this house, to demonstrate the times of plenty we were in. Today, we walk into this house with an iconic South African plant, the aloe ferox. This is one of the best known South African plants. It has a long history of medicinal use. It is resilient, sturdy and drought resistant. It withstands the elements. We must take the bitter with the sweet. Today, I bring you a seed to prove that if we plant anew, we can return to those plum times. Madam Speaker, our President has set us on a track of renewal. But today, I will leave the poetry (and the singing) to the President. I am here to speak about hard facts and figures. This Budget is built on six fundamental prescripts: 1. Achieving a higher rate of economic growth 2. Increasing tax collection 3. Reasonable, affordable expenditure 4. Stabilising and reducing debt 5. Reconfiguring state-owned enterprises 6. Managing the public sector wage bill It will not be easy. There are no quick fixes. But our nation is ready for renewal. We are ready to plant the seeds of our future. Developments since the October Medium Term Budget Policy Statement In October, during the 2018 Medium Term Budget Policy Statement (MTBPS), I outlined our main budget fiscal outlook. At that time, I projected that in 2018/19 tax revenue would be R1.3 trillion and that spending would be about R1.5 trillion. That left us with a budget deficit of R215 billion, or 4.3 per cent of GDP. I said that we were at a crossroads, and that we could go either to heaven, or the other way. Then, we expected economic growth of 0.7 per cent in 2018. This is still our estimate. But, many of the risks that we warned about have materialised. We now expect a slower but still steady recovery after the 2018 technical recession. It is expected that real GDP growth in 2019 will rise to 1.5 per cent, and then strengthen moderately to 2.1 per cent in 2021. South Africa is a small open economy and we are impacted by events in the global economy World growth is now expected to slow, constraining South Africa’s export growth forecast. PEOPLE DYNAMICS | February 2019
These macroeconomic conditions have led to a weaker economic outlook. Madam Speaker, walk with me on a journey of how we have chosen to respond to the challenges facing us. Tax revenue and raising SARS capacity
First, we must look at the President’s task list. Then we must match the resources we have to the plan. In this current year, tax revenue has been revised down by R15.4 billion compared to our October estimate. Approximately half of the increase in the shortfall since October is due to higher than expected VAT refunds. This lowers revenue collection for the year, but puts money back into the economy. SARS is being fixed. My thanks go to Judge Nugent and his Panel for their wise counsel. On their recommendations: 1. A new Commissioner will be appointed in the coming weeks. 2. A new Illicit Economy Unit launched in August 2018 will fight the trade in illicit cigarettes and tobacco. 3. The large business unit was a major source of tax collection, and its skill was renowned. 4. This unit will be reintroduced and will be formally launched in early April 2019. 5. SARS is strengthening its IT team and its IT systems and this is crucial for our tax collection efforts. 6. Information sharing agreements with allies will help fight cross-border tax evasion schemes. Judge Davis will assess the tax gap, which is the difference between revenue collected and what ought to be collected. We will also review the proliferation of duty free shops inside South Africa. Fiscal prudence requires some tax changes. We propose additional revenue measures of R15 billion in 2019/20. There will be a slight upward adjustment of the tax-free threshold for personal income taxes, with no change in the current personal income tax brackets. Together these will raise R12.8 billion. Madam Speaker, excise duties on alcohol and tobacco will be increased, as follows: 1. The excise duty on a can of beer goes up by 12 cents to R1.74 2. A 750ml bottle of wine will have an excise duty of R3.15, which is 22 cents more 3. The duty on a 750ml bottle of sparkling wine goes up by 84 cents to R10.16 4. The duty on a bottle of whiskey will go up by R4.54 to R65.84 5. A pack of 20 cigarettes goes up by R1.14 cents to R16.66 6. The excise duty on a typical cigar will go up by about 64 cents to R7.80 7. There will be no change to the excise duty on sorghum beer 8. Fuel levies will increase by 29 cents per litre for petrol and 30 cents per litre for diesel The Road Accident Fund levy increase is not enough to match the Fund’s R215 billion liability. We urge the Department of Transport to quickly resubmit the Road Accident Benefit Scheme Bill for Parliament’s urgent consideration. It will help stabilise fuel prices. The National Treasury will work with the Department of Trade and Industry and the Department of Economic Development to explore the introduction of an export tax on scrap metal. The ordinary taxpayer is fully tax compliant and pays their fair share. Thuma Mina. Paying your taxes is the right thing to do.
The Budget Speech
Let me turn to our spending projections. Since October, government has taken steps to adjust baseline expenditure downwards by a total of R50.3 billion over the medium term. Half of these reductions come from adjustments to government’s spending on compensation. R12.8 billion comes from measures to reduce spending on specific programmes. Provisional allocations are made for the financial support to Eskom and the Infrastructure Fund. This offsets the baseline reductions and as such the expenditure ceiling is revised upwards by R16 billion over the next three years. In October, I quoted Tale of Two Cities by Charles Dickens. After a few months in the role, I feel that Oliver Twist might be more appropriate this time. In short, ‘Please Sir, may I have some more.’ The SOEs pose very serious risks to the fiscal framework. Funding requests from SAA, SABC, Denel, Eskom and other financially challenged state-owned enterprises have increased, with several requesting state support just to continue operating. Isn’t it about time the country asks the question: do we still need these enterprises? If we do, can we manage them better? If we don’t need them, what should we do? State-owned enterprise restructuring
Madam Speaker, I said in October that we would have no holy cows when it comes to our approach to state owned enterprises. Eskom
In the State of the Nation Address, the President announced a clear and executable plan for electricity. At the core of this plan is the subdivision of Eskom into three independent components. This will set the electricity market on a new trajectory, and allow for more competition, transparency and a focused funding model. Pouring money directly into Eskom in its current form is like pouring water into a sieve. I want to make it clear: the national government is not taking on Eskom’s debt. Eskom took on the debt. It must ultimately repay it. We are setting aside R23 billion a year to financially support Eskom during its reconfiguration. The fiscal support is conditional on an independent Chief Reorganisation Officer (CRO) being jointly appointed by the Ministers of Finance and Public Enterprises with the explicit mandate of delivering on the recommendations of the Presidential Task Team. We will make announcements in this regard in the coming weeks. Minister Gordhan and the strong team he has built at the Department of Public Enterprises will continue to exercise close and ongoing monitoring of Eskom. Other state-owned enterprises
On other state-owned enterprises, we are reviewing our framework for state-owned enterprise support. Government has revised the contingency reserve upwards to R13 billion for 2019/20 to respond to possible requests for financial support. Financial support will be budget neutral as far as possible. During this past financial year, total guarantee utilisation increased by R51.1 billion: 1. Eskom used an additional R50 billion of its R350 billion guarantee in 2018/19. 2. Denel was granted a further R1 billion guarantee. 3. SAA guaranteed debt increased by R6.2 billion. 4. My congratulations to the Land Bank, which repaid debt, reducing government’s guarantee exposure. Other entities reduced their
guarantees, unfortunately in some cases as a result of appropriations. We must tighten the guarantee rules. If a state-owned enterprise applies for a government guarantee for operational purposes, it will be required to appoint a CRO in concurrence with the National Treasury and its bondholders. The CRO will undertake a full operational and financial review. When banks need state support, we appoint a curator. When provincial and municipal finances are in disarray, government can take over the running of the administration. These rules should also apply to all SOEs. Cabinet is considering a proposal to end the issuing of guarantees for operational purposes. Expiration dates on guarantees will also be strictly enforced. As the President announced, strategic equity partners will be found where possible. The consolidated fiscal framework
To summarise: in this coming year, we expect revenues of R1.58 trillion and spending of R1.83 trillion. That means we will spend R243 billion more than we earn. Put another way, we are borrowing about R1.2 billion a day, assuming that we don’t borrow money on the weekend. This coming year, interest expenditures will be R209.4 billion. This is R1 billion per day. The expenditure and tax adjustments are designed to largely counteract the additional allocation for Eskom and the revenue shortfall. As a result, gross national debt will still stabilise at about 60 per cent of GDP in 2023/24, broadly in line with our October forecast. We are masters of our own destiny. Our determination to regain our fiscal prudence will form the basis of our economic recovery. We will be on our way back to the plum years. As we face the future, I am reminded of the words of one of the continent’s independence leaders, Ghana’s Kwame Nkrumah: “…the task ahead is great indeed, and heavy is the responsibility; and yet it is a noble and glorious challenge - a challenge which calls for the courage to dream, the courage to believe, the courage to dare, the courage to do, the courage to envision, the courage to fight, the courage to work, the courage to achieve - to achieve the highest excellencies and the fullest greatness of (people). Dare we ask for more in life? “ Restoring our finances and fixing our state owned enterprises will take great courage. But it can be done. Division of revenue
Madam Speaker, the Budget remains redistributive. Taxes raised in wealthier areas fund poorer provinces and municipalities. In this budget, 47.9 per cent of nationally-raised funds are allocated to national government, 43 per cent to provinces and 9.1 per cent to local government over the medium term, after providing for debt-service costs and the contingency reserve. Pro-poor spending continues to grow in real terms. Medium-term spending plans
Let me start my presentation on government’s spending priorities by taking you through the key interventions government is taking to reduce compensation spending. Wage bill adjustments
The public wage bill is unsustainable. We must shift expenditure to investment. National and provincial compensation budgets will be reduced by R27 billion over the next three years. OFFICIAL PUBLICATION OF THE IPM
The Budget Speech
The first step is to allow older public servants who want to do so, to retire early and gracefully. This will save an estimated R4.8 billion in 2019/20, R7.5 billion in 2020/21 and R8 billion in 2021/22. In time this will be complemented by limits on overtime and bonus payments as well as pay progression. The system of staffing our diplomatic missions is unjustified and should be reviewed urgently. As a gesture of goodwill, members of Parliament and provincial legislatures and executives at public entities will not be receiving a salary increase this financial year. My colleague, Minister Ayanda Dlodlo will outline the details of the early retirement framework during the course of the week. Fulfilling government’s programme of action
The budget proposes total non-interest spending over the next three years of R5.87 trillion. This after taking into account measures taken over the three years to consolidate the public finances. The largest allocations are R1.2 trillion for learning and culture, R717 billion for health services (including National Health Insurance) and nearly R900 billion for social development. The President set us these five tasks: 1. Accelerate inclusive economic growth and create jobs. 2. Improve the education system and develop the skills that we need now and into the future. 3. Improve the conditions of life for all South Africans, especially the poor. 4. Fight corruption and state capture. 5. Strengthen the capacity and capability of the state to address the needs of the people. Mr President, let me illustrate how the Budget talks to your priorities. Accelerate inclusive economic growth and create jobs
The private sector is the key engine for job creation. Government’s policy actions aim to end the uncertainty that has undermined confidence and constrained private sector investment. The R300 billion worth of pledges made at the Investment Conference last year demonstrate that there is pent-up private sector demand if we grab hold of the opportunity. Visa requirements are being relaxed to make it easier for tourists to visit and invest in South Africa. We have also increased the income eligibility thresholds for the highly successful employment tax incentive scheme. Jobs for 1.1 million young people are supported by this programme. Data costs must fall! My fellow Minister will shortly be issuing policy direction to ICASA for the licensing of spectrum. I will work relentlessly with the Minister until this matter is resolved. This includes resourcing ICASA for this mandate. Government has allocated R19.8 billion for industrial business incentives, of which R600 million has gone to the clothing and textile competitiveness programme. This will support 35 500 existing jobs and create about 25 000 new jobs over the next three years. The Jobs Fund is a vital complement to private sector job creation. The Fund has disbursed R4.6 billion in grant funding, and created well over 200,000 jobs since inception. The allocation to this Fund will rise over the next three years to R1.1 billion. R481.6 million is allocated to the Small Enterprise Development Agency to expand the small business incubation programme. A robust debate on land is taking place in South Africa. We are PEOPLE DYNAMICS | February 2019
supporting private sector investments in agriculture by emerging farmers. R1.8 billion is allocated for the implementation of 262 priority land-reform projects over the next three years. R3.7 billion is set aside to assist emerging farmers seeking to acquire land to farm. The Land Bank will support smallholders, and leverage partnerships with other financial institutions. It aims to disburse R3 billion in the next fiscal year. Improve the education system and develop the skills that we need Learning and culture receives the largest share of spending as Government continues to provide access to quality basic and higher education, develop skills, provide training and contribute to social cohesion. Over R30 billion is allocated to build new schools and maintain schooling infrastructure. An additional R2.8 billion is added to the School Infrastructure Backlogs grant to replace pit latrines at over 2 400 schools. But to make certain these schools are effective centres of learning will also require parents to be a visible and constructive part in the governance of schools. Fully subsidised education and training for the poor is government’s flagship higher education intervention. Over the medium term government will spend R111.2 billion to ensure that 2.8 million deserving students from poor and working class families obtain their qualifications at universities and TVET colleges. Finally, the global renown of South Africa’s art and culture is an expression of our soft power and our heritage. Our public finance choices should reflect an intention to preserve and add to our cultural canon. Officials from the National Treasury and the Department of Arts and Culture will consider proposals for the development of a new national theatre, a new national museum, and also consider financial support for the National Archives, a national orchestra and ballet troupe. Improve the conditions of life for all South Africans, especially the poor In the fight against poverty and inequality, Government has allocated R567 billion for social grant payments. In 2019, the grant values will increase as follows: • R80 increase for old age, disability, war veterans and care dependency grants. • R40 increase for the foster care grant to R1 000. • The child support grant will increase to R420 in April and to R430 in October. Health services
In health, we need simple, effective interventions. We need more doctors and nurses. R2.8 billion has been reprioritised to a new human resources grant and R1 billion for medical interns. R1 billion has been added to raise the wages of community health care workers to R3500 per month. Finally about R319 million is allocated to eliminate malaria in South Africa. Access to housing
Government continues to focus on supporting people to own their own homes. Funding totalling R14.7 billion over the two outer years has been reprioritised to two new conditional grants for informal settlements upgrading which will enable these households to have access to basic amenities. Our Help to Buy subsidy helps first-time home buyers purchase a home. As a pilot, it gets R950 million over three years. Economic infrastructure
The South African National Roads Agency is allocated an additional
The Budget Speech
R3.5 billion over the next 3 years to improve non-toll roads. In October, I emphasised the importance of the user pay principle. It is a principle that we should uphold. In any future negotiations, this should be borne in mind. Combating crime and corruption
Over the past couple of years South Africa has been grappling with corruption. We must root this out. National Treasury and the Department of Justice will work swiftly to support the establishment of the new Investigating Directorate in the NPA. Strengthen the capacity and capability of the state to address the needs of the people My colleagues at provincial and municipal level are working as best as they can to deal with rising wage costs and reduced transfers. Provincial treasuries and the municipalities have a partner in the National Treasury to work with on their constitutional obligations. Grants such as the Financial Management grant, and the Municipal Systems Improvement grant are available. The Public Audit Excess Fee Bill tabled today strengthens the Auditor General’s role in municipalities. We need to build a strong culture of payment in our country. Collecting the revenue due to the state is the underlying foundation of our democracy, of building a nation, and it is our duty to pay for services especially if we can afford to do so. National Treasury will lead a process to encourage those, including government departments, who owe money to municipalities, to pay for services. Finally, service providers must build what they promised at a reasonable rate. Thuma Mina. Pay your municipal bills on time. Future proofing the budget
The budget is also about our long-term vision. We spend a lot on infrastructure. Four things will get us better infrastructure: First is to create a sensible project pipeline. Second, is streamlining the law to make it easier to build. Third, better information for everyone. And finally, is to actually build. So far we are working on a wastewater treatment facility works in the Vaal, a solar water geyser programme and student accommodation. R625 million is allocated to the Development Bank of Southern Africa, the Government Technical Advisory Centre and the Presidential Infrastructure Coordinating Commission to strengthen project preparation in this context and on a speeded up basis, projects based on rural roads and water will be prioritised. Details on several priority projects can be found on the Vulekamali portal. The infrastructure fund is a central pillar of the Budget and of reprioritisation. It will accelerate R526 billion worth of on-budget projects by bringing in the private sector and development finance institutions. In several instances the private sector will design, build and operate key infrastructure assets. In addition, government will commit R100 billion over the next decade. As we look to the future, I see the following huge shifts in society and the world. The first is the rise of technology. Twenty-five years ago, the Budget was prepared on reams of paper, carefully stapled together. I reviewed this speech on my tablet, and you can keep track of the speech on Twitter right now. By the way, it is at #RSABudget. Who knows how the Budget will be prepared in twenty-five years’ time? Our budget spending has to focus on getting our country ready for technology. The first step is to fix the education system. Government is rolling out a maths and science grant. The Governor of the South African
Reserve Bank is driving an ambitious FinTech programme, together with colleagues from the other financial-sector regulators. The sustainability challenge affects us all. Climate change is real. The steps being undertaken at Eskom will allow us to expand renewable energy, and the carbon tax will come into effect from 1 June 2019. The third challenge is rapid urbanisation. We cannot go on building horizontally, serious consideration must be given to “going up” as part of an integrated development strategy. The final challenge is nationalism. In many successful economies, immigrants have been a source of dynamism. Narrow nationalism often leads to stagnation. We need to redouble our efforts to attract highlyskilled people to South Africa. Professor Ricardo Hausmann of Harvard University talks of the “know-how” that these individuals bring. Their skills are complementary to our own. We need to free our entrepreneurs from stifling regulations and complicated taxes. We will continue to work closely with our partners in the BRICS, the African Development Bank and the South African Customs Union. Madam Speaker it is prudent to say that we are a shareholder in a number of multilateral institutions and this ensures that South Africa plays its rightful place on the continent and the world. Before I conclude, my thanks to the President of the Republic for his leadership during this budget process. A word of appreciation to the National Treasury Director General and his team. Their good humour and determination have got us through a difficult Budget. My thanks to Acting SARS Commissioner and Team SARS for persevering to restore the integrity of the institution, to the Governor of the South African Reserve Bank for his support and collegiality. To colleagues in the Cabinet, in the Minister’s Committee on the Budget, and all those that have supported us in this time. I recall Psalm 23: “Even though I walk through the darkest valley, I will fear no evil, for you are with me; your rod and your staff, they comfort me.” Conclusion
In summary, Madam Speaker, let me outline the highlights of this Budget: 1. We are taking tough steps to fix the fiscal position and state-owned enterprises. 2. Our children are our future. Most of the spending goes to education, and we will strengthen early childhood development and support higher education for the most deserving. 3. On land, we have set aside money to help our people buy their own houses, support land reform, and transfer title deeds. 4. On electricity, we face tough choices on Eskom. 5. We are reprioritising resources towards the President’s infrastructure fund and away from the wage bill. Madam Speaker, this is a Budget that plants a seed for renewal and growth. It is all of our duty to tend the seed and see that it grows strong, tall and fruitful. It is a Budget for the future. For ye shall go out with joy, and be led forth with peace: the mountains and the hills shall break forth before you into singing, and all the trees of the field shall clap their hands. Isaiah 55:12. Thank you. OFFICIAL PUBLICATION OF THE IPM
iii iii PEOPLE DYNAMICS | February 2019
OFFICIAL PUBLICATION OF THE IPM
PEOPLE DYNAMICS | February 2019
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