The country’s celebration of a welcome change in leadership was quickly followed by an upbeat State of the Nation Address from newly-elected President Cyril Ramaphosa. Acknowledging that South Africa’s economy will be sustained by small businesses, the President stated that it is “our shared responsibility to grow this vital sector.” In a closing reference to Hugh Masekela’s song “Thuma Mina”, he concluded: “Now is the time to lend a hand. Now is the time for each of us to say ‘send me’.”
The reward practitioner's role Dr Mark Bussin, Master Reward Specialist, Executive Committee Member of SARA (South African Reward Association) and Chair of 21st Century agrees completely. “There is a definite opportunity for reward practitioners to play a role and lend a hand to small businesses,” he says. According to Dr Bussin, SARA members are typically employed by large corporations, but can still do their part by offering free advice and services to small business managers and startup entrepreneurs. “We may have family, friends or acquaintances who run or are starting their own business, and who employ several workers. This is a great opportunity to contribute to their growth because at that level, not many consider the productivity fostered by a solid reward structure.” Introducing reward to small business Small business owners are often completely focused on operations, finances, marketing and sales but miss the basic incentives needed to motivate staff to perform their best work. Reward specialists can help them lay the right foundations for job satisfaction to keep employees engaged as the company strives for growth. Dr Bussin mentions several elements that must be in place from the start: “If these are cobbled together too late, only after dissatisfaction arises, employers could find their business suddenly struggling as their top workers exit.” His points include being clear on job descriptions and their responsibilities; establishing who reports to whom; defining pay scales with minimum and maximum limits; ensuring meticulous tax administration; documenting the rules governing bonus schemes; clarifying if employees have ownership in the company or not; having employment contracts that respect the law; and developing clear recognition schemes and promotion paths. While small businesses are usually not capable of offering extended non-financial rewards, they should start planning for a time of growth when development, training, a pleasant work environment, wellness programmes and other incentive schemes become more important to attracting and retaining valuable talent. How big businesses can help Dr Bussin also strongly encourages large organisations to become involved in such initiatives rather than discouraging them. “Every corporation should identify several small business candidates and lend out their reward practitioners for free for an hour or two a week as part of their CSI projects,” he says. “Just doing this, they too could make a significant contribution to the economy.” Small businesses face many challenges getting off the ground and surviving their first five years. Reward professionals can answer the call of “send me” by helping them build a motivated, loyal workforce to add greater assurance of their success, especially when the going gets tough. ENDS MEDIA CONTACT: Juanita Vorster, 079 523 8374, juanita@thatpoint.co.za, www.atthatpoint.co.za For more information on SARA please visit: Website: www.sara.co.za Twitter: @SA_reward LinkedIn: South African Reward Association Facebook: SARA – South African Reward Association
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The prosperity and equality of the nation’s workforce – alluded to in the recent State of the Nation address by President Ramaphosa – is in large part determined by reward practitioners: professionals that advise companies on how to structure financial and non-financial pay elements to compensate employees for their work.
“Inequality was mentioned at least ten times during the address,” says Dr Mark Bussin, a Master Reward Specialist, Exco member of the South African Reward Association (SARA) and Chairperson of 21st Century. “Reward practitioners must take this seriously in their practices and policies by reporting the wage gap in annual financial statements, and finding ways to close the wage gap in companies.” Tough calls for private sector reward practitioners Reward and HR practitioners also need to step up their focus on training and education. Tough calls are necessary on employing more people through internships, and creating entrepreneurs within companies. Tougher yet will be the decision to release these successful candidates to industry in order to let the larger economy benefit from the initial training and development investment. Tough calls for public sector reward practitioners HR and reward practitioners in government will be tasked with cutting costs, cutting pay increases, and managing fruitless and wasteful expenditure across the public sector workforce. “Reward practitioners need to be steady, well informed and consistent in their approach,” says Bussin. “They also need to stand up to those that resist changes for the greater good, as well as new leaders who want sweeping changes just for the sake of it.” Tough calls for individual practitioners HR and reward practitioners furthermore need to be the custodians of women representation as well as youth development in organisations. Bussin advises reward practitioners to follow national policy in all areas including benefits, working conditions and employment practices. Reward practitioners will also have the added challenge of supporting government and business in creating increased remuneration for 6 million people. The implication of this is that practitioners focus on getting their remuneration governance right and working without any further delay. “As per our President’s closing words, all reward practitioners have a chance to make a difference right where they are by moving beyond historic practices and being willing to say “send me” to do the tough work where it is necessary.” ENDS MEDIA CONTACT: Juanita Vorster, 079 523 8374, juanita@thatpoint.co.za For more information on SARA please visit: Website: www.sara.co.za Twitter: @SA_reward LinkedIn: South African Reward Association Facebook: SARA – South African Reward Association Executive’s pay has come under scrutiny after a report titled ‘Shareholder Alignment, Company Performance and Executive Pay’ was released by Deloitte earlier this week. Addressing inequality is an important national imperative and we support it wholeheartedly. Unemployment is at unacceptably high levels and as a nation, we need to do everything possible to create jobs. However, it is necessary to contextualise executive pay.
When reporting on executive pay increases, it is important to consider one executive at a time. Using this approach, we believe that executive remuneration increases have been on par and in most instances lower than the general workforce. Organisations have adopted this approach in an attempt to close the wage gap. If the Top 100 CEO’s or CFO’s remuneration is considered as a group, the increase in the remuneration will be impacted on by CEO’s and CFO’s who have left and the new ones appointed often at premiums to “buy” them. This is also true for public service and public office bearers who have over the past several years taken smaller pay increases than lower level workers in order to address the pay gap ratio. The allegation that executive pay is misaligned with performance is not true, even based on the author’s own research. Total Annual Cash growth and shareholder value growth is in our view closely aligned over the period. It is not aligned with HEPS growth, but that is due to the economic downturn in the final year which is reflected immediately in HEPS. What is even more compelling is the Total Remuneration of executives (including LTI’s), which is the most holistic measure of actual pay, has gone up much less than the investment returns. This allegation is thus wrong even on their own data and may be based on cherry picking measures. Strengthening the link and evidence between organisation, individual executive performance and executive pay is high on the agenda of most Remuneration Committees. When analysing and substantiating this link, several measures of organisational performance can be used. There are different views as to the most appropriate measures, and certain measures are more applicable in certain industries. In the South African Reward Association library, there are several research reports that take on average 8 organisation performance measures and correlate them to CEO contribution and remuneration. Generally, several measures correlate positively and one or two may not correlate. From this, one should not take the one or two that don’t correlate and conclude that there is no correlation between CEO performance, pay and organisation performance. Care needs to be taken to arrive at the correct conclusion between organisation performance and executive pay. We believe that the corporate governance processes in South Africa are, broadly speaking, working well. Arresting the pay gap ratio is something that we all need to work harder at. There are many ways to address this. Education is pivotal to this approach because higher skills leads to more skilled work, better productivity and better pay. Halving CEO pay will not address the problem. With the ever increasing regulatory and governance environment and increasing complexity of running a business, CEO’s are commanding higher salaries. This needs to be carefully balanced with the pay gap ratio. The gap between the unemployed and the lowest level worker is infinite. Unemployment is our biggest problem. Let’s not ignore the wage gap but more importantly make sure whatever we do does not result in more unemployed. Institutional investors also need to come to the party and resist demanding ever higher returns from CEO’s which in turn exacerbate the pay gap ratio. As a Nation, we all need to address this problem collectively, and responsible reporting is also part of this solution. SARA is a professional body aimed at promoting the reward profession and practices. While setting minimum standards for the industry, we award professional status to eligible members in various reward categories and create knowledge-building, sharing and networking opportunities for our members and those operating in our industry. We do this to promote and develop the reward industry and to ensure sound reward management practices and acceptable standards. As a professional body, we support strong and robust corporate governance, especially when it comes to remuneration. Strong media and shareholder activism goes a long way in supporting better governance and we are in support of both approaches to strengthen current codes of practice for example King IV, Sarbanes Oxley, Basel and Pillar frameworks and stock exchange requirements. ENDS MEDIA CONTACT: Carla Coetzee, 072 112 8347, carla@thatpoint.co.za, www.atthatpoint.co.za For more information on SARA please visit: Website: www.sara.co.za Twitter: @SA_reward LinkedIn: South African Reward Association Facebook: SARA – South African Reward Association With South Africa Inc facing strong economic headwinds, both the private and public sectors must take a radical, creative approach to remuneration, says Dr Mark Bussin, Executive Committee Member of the South African Reward Association (SARA) and chairperson for 21st Century. “With economic growth officially in the 1 percent range, and closer to 0 percent in reality, employers and labour are going to have to face up to some tough decisions,” Dr Bussin says. “On the one hand, across-the-board increases are simply not sustainable but, on the other, the high performers in the company have to be rewarded and incentivised. In other words, our current way of thinking about wages has to change—and radically. Conditions are going to get tougher, at least for the next few years.” As a result, reward will have to be more tightly linked to performance in order to ensure that companies receive value and bloated wage bills do not threaten their long-term sustainability. Over the past several years, wage demands have borne no relation either to the company’s health, the economy or workers’ performance. This, Dr Bussin argues, is simply unsustainable. In addition, companies will have to have the freedom to selectively reward the employees who have contributed to their growth or whose skills are particularly in demand. At the same time, though, he readily accepts that those who are being paid less than a living wage—creating the unwelcome category of “in-work poverty”—need to be prioritised. However, this legitimate drive to pay workers a fair wage still has to be linked to performance. Achieving this will require an investment in training as well as focused management input. One way to pay for this special category of increases could be for highly paid executives to give up their automatic increases and bonuses. This would also be a powerful tool for building employee engagement and defusing some of the antagonism between management and labour that continues to hamstring commerce. The fact that the President and other members of the executive, members of Parliament, members of the provincial legislative, judges and others government leaders agreed not to receive increases in the 2016-17 financial year is a good example that the corporate world has signally failed to follow. “Similarly, in the public sector, we cannot go on granting automatic increases on demand. There, too, pay has to be linked to performance. Cutting the huge levels of fruitless and wasteful expenditure could actually be linked to pay-rises in the sector, giving everybody an incentive to curb this abuse,” Dr Bussin argues. “In general, all parties—labour, management and shareholders—need to accept that they are in the same boat. If the company, or the country, for that matter, goes down, then everybody goes down with it. Simply put, we all need to do things differently, to think differently. “This will require political will on the part of leaders, but there is no alternative,” he concludes. ENDS MEDIA CONTACT: Cathlen Fourie, 082 222 9198, cathlen@thatpoint.co.za, www.atthatpoint.co.za For more information on SARA please visit: Website: www.sara.co.za Twitter: @SA_reward LinkedIn: South African Reward Association Facebook: SARA – South African Reward Association The South African Reward Association (SARA) has welcomed President Zuma’s decision to accept the Independent Commission for the Remuneration of Public Office Bearers’ recommendation that top public officials receive no salary increase this year. Among those that are affected are members of the national executive, members of Parliament, provincial executives and mayors.
“The Commission made a bold move in recommending a general wage freeze of South Africa Inc’s top executives, and the President has to be commended for acceding,” says Dr Mark Bussin, Executive Committee Member at SARA, former member of the Commission and Chairperson of 21st Century. “This is a great example of nation-building because it sends a very direct message that those that govern us do not exist in a golden bubble, and that we are all in this together. It also sends a very powerful signal to trade unions and public servants, and will set the tone for the next round of wage negotiations.” Dr Bussin adds that the fact that the President and other top public office bearers have accepted a wage freeze should also be taken very seriously by big business. The massive salaries paid to top executives and the gap between them and the lower ranks of employees has been a source of widespread dissatisfaction both in South Africa and globally. He points out that this is the third time that President Zuma has accepted a pay freeze for himself, but the first time that the freeze has been recommended to cover all the top public office bearers. “The government is leading from the front on this issue, and leaders in both the public and private sectors are now under pressure to follow its lead,” Dr Bussin concludes. “We are a very unequal society, and the fact that the economy is not growing is making this disparity even worse and ratcheting up social tensions. Those who lead the country and society need to exercise restraint, and this is an excellent foundation for rebuilding social trust and cohesion.” ENDS MEDIA CONTACT: Cathlen Fourie, 082 222 9198, cathlen@thatpoint.co.za, www.atthatpoint.co.za For more information on SARA please visit: Website: www.sara.co.za Twitter: @SA_reward LinkedIn: South African Reward Association Facebook: SARA – South African Reward Association By Dr Mark Bussin, |
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