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Three threats facing SA business and how to overcome them

23/11/2015

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Using a reward strategy to efficiently navigate the economic downturn
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PicturePeet Kruger says reward management must link directly to the changing needs of employees as it affects their employment decisions and commitment.
The way people are rewarded for the work they do needs to change if business is to efficiently navigate the economic downturn. While it may be tempting for business to simply reduce financial reward in response to the economic downturn, a longer-term strategic view that blends financial and non-financial reward is advised.

“People are the biggest asset to any business,” says Peet Kruger, Exco member at the South African Reward Association (SARA). “Business therefore needs to keep in mind that the way they rewards their people has a direct effect on how their goals are achieved. Reward management must link directly to the changing needs of employees as it affects their employment decisions and commitment.”

Reward management takes into account more than just current basic pay; it also looks at what people need to be productive and positive in their work environment during and after the economic downturn. 

Kruger highlights three key areas where organisations should focus on building a reward strategy that rewards people in recognition of them being business’ greatest asset.

Keep employees involved through non-financial rewards
The economic downturn has seen many people remain in jobs purely for the salary, not because they are committed to or passionate about their work. Limited opportunities elsewhere mean that they stay and bide their time, instead of truly delivering on their potential.

“Great reward strategies blend financial and non-financial rewards that attract the right people and involve them in order to achieving the business’ goals,” advises Kruger. “I believe that the differentiating factor going forward will be how we combine the financial and non-financial rewards to create an attractive working environment for employees.”

One example of a non-financial reward could include working from home a couple of days a week, if the position doesn’t require face-to-face interaction with clients, or hands on operational duties on a daily basis. Accountants, writers, administration staff and even executives – these all positions where people could work just efficiently, if not more so, from home. Travel time and fuel cost are saved which in effect also leads to more money in the pocket.

Understand reasons for widening wage gap
“Unique threats faced by South African employers must be taken into account when developing reward strategies,” advises Kruger. “By knowing the threats, a business can address challenges impacting employee satisfaction and engagement in a number of ways.”

“One of the most dominant issues impacting on employee satisfaction is the wage gap,” says Kruger. “While management believes that people need to be rewarded for performance, unions want their members to make a living from salaries.”

This gap is widening as a result of lack of understanding of the emotional driving forces behind opposing views. Only once the focus shifts towards gaining a true understanding of the opposing view could strides be made towards a balanced resolution.

Business must be flexible and adaptable 
An excellent reward strategy is an art, not a science. Business has to be flexible and capable of adapting to changes in legislation, transparency or employee behaviour as there remains a growing disconnect between labour and management. 

Against the backdrop of governance, legislation, wage gaps and equality, organisations need to craft reward strategies that are built on their key objectives, understand the challenges unique to South Africa and will remain flexible and dynamic over the long term.

“None of these things can be resolved overnight as the issue of equal pay when legacy systems are in play means there is no short term fix. There must be a longer term view with long term strategies that address unavoidable issues,” says Kruger.

ENDS
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MEDIA CONTACT: Cathlen Fourie, 012 644 2833, 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

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Standard Bank and MTN awarded top reward honours

12/11/2015

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Standard Bank and MTN Group Management Services were awarded top honours by the South African Reward Association (SARA) at the annual Reward Awards event on 7 November 2015.
 
The Reward Awards aim to recognise thought leaders that make a noticeable impact to business through reward strategies and practices that deliver business results and support the objectives of a company.
 
“Reward professionals ensure that an employer does everything it can to attract, inspire and retain the best possible workforce, while still increasing profits year on year,” says Peet Kruger, executive committee member of SARA, a professional body that promotes and develops the reward profession and practices in South Africa.
 
The three award categories recognise reward professionals, teams and organisations that have lead the way in promoting and developing the reward profession. Reward includes everything valuable to an employee in relation to his/her employment, including salary, benefits, and their experience of their workplace.
 
Remuneration Report of the Year Award
Standard Bank was awarded the 2015 Remuneration Report of the Year Award.
Nominees for this category also included Anglo American Kumba Iron Ore, Aveng (Africa) Pty Ltd, Goldfields, Group Five, Impala Platinum Ltd, and Liberty Holdings Ltd.
 
This award recognises organisations that apply the key reporting and disclosure principles and requirements stipulated by King III. Furthermore, the judging panel considers demonstrated commitments to best practice, and how the company’s approach to remuneration supports the business strategy, good governance and how it aligns the interests of its stakeholders.

 
Reward Project of the Year Award
MTN Group Management Services was awarded the first prize for the 2015 Reward Project of the Year. Second place went to Aveng (Africa) Pty Ltd, and third place was awarded to Siemens.
Nominees for this category also included ArcelorMittal South Africa, BP South Africa, the Clicks Group, PPS Insurance, and PwC.
 
This award recognises an individual or team for the development and implementation of a reward project that uses reward practices and principles in a manner that contributes significantly towards the achievement of the organisation’s objectives or success.
 
Entries for the above Reward Awards are invited annually and judged independently by various experts in the reward industry, using criteria relevant to each award. 
 
President’s Award
Dr Mark Bussin was awarded the 2015 President’s Award.
This award is the prerogative of the President of SARA and recognises an individual that has shaped or significantly contributed to the ongoing development of the reward profession, or has been responsible for the design and implementation of complex reward strategies or programmes that have set the standard for best practice in South Africa or internationally.
 
The winners of the 2015 awards were announced at the SARA Reward Awards Banquet. The event was sponsored by 21st Century, Remuneration Consultants, and Synntech People Solutions.
 
For more detailed information on the annual SARA Reward Awards please visit www.sara.co.za

ENDS
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MEDIA CONTACT: Cathlen Fourie, 012 644 2833, 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

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Shareholder votes influenced by more than only excessive pay

10/11/2015

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PictureLaurence Grubb was recently speaking at the SARA conference, sharing 4 solutions to address the key concerns voiced by shareholders.
Shareholders are as likely to vote against remuneration resolutions if they consider disclosures to be incomplete as they are in the face of excessive pay.
 
“Clear and precise disclosure of reasons for remuneration decisions is essential for shareholders to decide their vote, and companies need to ensure that the required detail is available in simple terms,” advised Laurence Grubb at the annual conference of the South African Reward Association (SARA), held on 5 and 6 November at Vodacom World in Midrand.
 
Remuneration policies are created, inter alia, to attract and retain the best executive talent. Balancing this objective with shareholder demands requires a clear understanding of a number of factors considered by shareholders in determining their votes.
 
Grubb suggested solutions to address the key concerns voiced by shareholders following a recent study conducted with 40 JSE listed companies by Khokhela Consulting, of which Grubb is the CEO.
 
Be transparent in disclosure of performance targets and measures
Actual targets and measures for all incentive schemes need to be clearly defined and disclosed, and must be aligned with the financial strategy and budgets.
 
“We advise that thresholds should be achievable 75% of the time and targets achievable 50% of the time while requiring significant effort,” said Grubb. “Stretch targets should however be set at levels that require impressive effort with results that are achievable 15-25% of the time.”
 
Selection of peer or comparator groups
Grubb suggests selecting companies for comparing performance using factors such as revenue, market capitalisation, industry, magnitude and location of operations and reasons for shareholders investing in the company.
 
“Structured remuneration design should align with company strategy and shareholder values and be funded by the additional performance required,” said Grubb. “Incentives should drive performance and encourage retention; it should never be implemented as a stand-alone retention scheme without performance requirements attached.”
 
Report on clawback policy
Actions around retrieving monies already paid out due to over incentivising key personnel should be published as part of the remuneration report.
This clawback policy should include the detail of adequate procedures to retrieve any or all bonuses should conditions of misconduct, misrepresentation or malus exist.
 
Encourage minimum shareholder requirements for executives
Shareholders consider Minimum Shareholder Requirements (MSRs) desirable as it ensures alignment with shareholders’ objectives by having ‘skin in the game’. Through MSRs, executives are encouraged to invest a substantial part of their after-tax bonus in the company, as it reinforces executives’ commitment to the success of the company by sharing the same earnings risks as shareholders.
 
“Irrespective of the contents of a strategy driving a chosen remuneration policy, companies need to remember that timeous disclosures and an increased level of transparency are imperative,” concluded Grubb. Engagement with board members, shareholders and proxy advisors is recommended when key changes are made to remuneration policies.
 
“Timeous transparent disclosure, balanced with keeping competitive information confidential, will lead to an improvement in how shareholders make decisions.” 

ENDS
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MEDIA CONTACT: Cathlen Fourie, 012 644 2833, 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

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