Following major cyber-attacks, some large organisations around the world have started attaching cybersecurity assurance metrics to their executives’ short-term incentive plans (STIPs).
​
According to Fortinet’s 2024 Cybersecurity Skills Gap Report, approximately 50% of local companies have each experienced around four cyber-attacks in the last year alone, so should South African entities follow the same trend?

“Larger organisations in the US, including several Fortune 100 companies, have incorporated cybersecurity goals into the calculation of executives’ short-term incentives. While we’re not seeing this trend in South Africa yet, given the alarming growth in cybercrime, similar practices should be adopted urgently and remuneration committees and reward professionals need to stay abreast of these trends,” says Carmen Arico, Chartered Reward Specialist, and spokesperson for the South African Reward Association (SARA).

Cybersecurity as a strategic consideration
With cyber-attacks escalating worldwide, so too have incidents of enterprises being caught completely off guard by them. Such breaches may result in massive data losses, possibly costing millions in lost revenue and potential fines to data regulators and other third parties. Crucially, senior executives are at risk of facing fines, jail time or loss of employment following a cyberattack.

“Cybersecurity has become an undeniable strategic imperative that should reflect in executive rewards as dedicated KPIs,” says Arico. “Not including cybersecurity as a part of an overall risk and governance strategy places organisations at reputational or financial risk, among others.”

But how should these KPIs be developed and attributed to remuneration?

Proactive, not punitive
Arico raises an important point - cybersecurity-linked KPIs should be proactive in nature and not punitive.

Rather than relying on reactive measures like penalties for breaches, a more effective approach is to proactively incentivise executives to focus on implementing robust security strategies and ensuring this mindset is cascaded through the entire organisation.

Imposing penalties after a breach is far less effective than providing incentives that encourage executives to prioritise organic systemwide protection in the first place.

Executives who maximise system resilience, develop rapid response protocols, prioritise data privacy and protection, assure business continuity and, most importantly, foster a cybersecurity-driven culture and awareness across all functions in their enterprise are less likely to be breached, and will be able to pivot quicker in instances where a breach requires mitigation.

Those executives who will only be punished financially after an attack that might never happen will typically focus their attention on pressing concerns that impact the business - and their rewards - right now.

“Responsibility also can’t just be left to the CEO and CIO, but organisations must enlist other key players such as the Chief People Officer and Chief Financial Officer. Reinforcing a security mindset requires buy-in from all levels of leadership.” says Arico.

Cyber skills of the board and RemCo
If executive STIs should encompass rewards for resistance to cyber-attacks, who is qualified to develop them?
Cybersecurity awareness has become a top priority within organisations. However, board members and remuneration committees may lack the technical expertise to pinpoint specific cybersecurity priorities, so it’s essential they avoid setting vague or superficial goals for executive incentives.

Performance should be both meaningful and impactful in terms of staving off disaster, and that demands input from one or more subject matter experts.

This means that either someone with a cybersecurity background or expertise should be invited to act in an advisory capacity to the remuneration committee. It could be the CIO or a similarly qualified independent party.

“Either way, they must have a level of knowledge that contributes to the conversations around executive incentives, appropriate KPIs, and other elements of reward,” says Arico. “It is also critical that involvement of these experts should happen early on in the remuneration strategy development process.”

Additionally, reward consultants and practitioners should consider investing in cybersecurity training to expand their knowledge in this area, to allow for greater value to their clients and employers.

ENDS
 
MEDIA CONTACT: Idele Prinlsoo, [email protected], 082 573 9219, www.atthatpoint.co.za 
 
For more information on SARA please visit:
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X: @SA_reward
LinkedIn: South African Reward Association
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The promulgation of the Companies Amendment Act 16 of 2024 (the Act) introduces, among others, sections 30A and 30B to the Companies Act 71 of 2008. The Act was published in the Government Gazette on 30 July 2024, but a promulgation date is still awaited.

“Some of the amendments are understandable, but there are a few which are not clearly drafted and others where the implications could pose risks to remuneration governance and ultimately the performance of companies,” says Laurence Grubb, Exco Member at the South African Reward Association (SARA).

While media outlets to date have focussed on and praised a few of the amendments, a raft of similar comments on specific amendments which are very concerning to the implementers thereof, were ignored - companies need to be aware of these as they will require important changes to remuneration policies and practices as well as the reporting on remuneration in the Annual Integrated Report.

“In an ideal world, decisions and disclosures are to be based on principle versus being forced by law, so all stakeholders have a say in reaching an ideal outcome, not just shareholders.  We do, however, not live in an ideal world.” says Nicol Mullins, President of SARA.

The sections in summary
S30A provides for shareholders, by ordinary resolution (50% +1), to approve or reject a company’s proposed remuneration policy or any amendments every three years unless there is a “material” change that warrants shareholder approval within the 3 years.

“This means that unless shareholders in future approve material changes to the remuneration policy, these cannot be implemented. Although we believe that shareholder consultation is necessary and should be in place, we are concerned with the fact that the inability to make required changes to the policy, could restrict the ability of the remuneration committee to introduce changes which are appropriate in a certain set of circumstances or context,” says Mullins.

S30B provides for shareholders, again by ordinary resolution, to approve or reject a company’s remuneration report. However, as the remuneration report (which includes the Chairman’s background statement, policy and implementation report) will now be voted on every year, it means that if the remuneration report fails by virtue of dissatisfaction with decisions that were taken by the Committee and were disclosed in the implementation report; our view is however that the emphasis in the remuneration report should be on the implementation report and that the policy will only be deemed as a background document as shareholders have a separate opportunity to cast a vote on the policy.

If the vote on the policy fails, then the fall back is to the last approved policy which may be the same one which was approved in the most recent AGM. The implementation report presents what was implemented in the prior year, in respect of the year under review. The outcomes of the Committee’s decisions which are disclosed in the implementation report, cannot be undone even if the remuneration report fails to receive adequate support in the ordinary resolution.

If the remuneration report is not approved at the first AGM after the implementation date of the Act, then the committee needs to engage with shareholders and present feedback on how these concerns were addressed in the remuneration report tabled for an ordinary resolution, at the next AGM and they must be re-elected onto the Remuneration Committee. However, if the remuneration report in the second consecutive year does not pass the ordinary resolution, then the incumbent non-executive members of the remuneration committee, who served a full 12 months during the report’s financial year must step down from the committee and may not serve on the committee again for the next two years. They may however remain on the board if they have been re-elected in terms of the board’s rotation schedule under the MoI. The execution of this requirement needs regulations to the Act, which are awaited. However, in the meantime, boards need to consider how they will go about structuring their remuneration committees to be prepared for situations where they are faced with two consecutive failed votes on the remuneration report.

The Board will then need to appoint a new remuneration committee from the remaining independent non-executive directors.

Pay gap reporting
Section 30B also requires that companies report the pay gap between the top five percent of their earners and the bottom five percent, which is different from the Labour Relations Act 1995 (LRA) requirements.

The South African media has positioned this amendment as a sure way to lower the country’s terrible Gini coefficient. However, the Gini coefficient factors in unemployment and by halving unemployment our Gini coefficient drops to the average of the Global figure.

“Reporting the pay gap won’t improve the Gini coefficient; that can only be achieved by reducing unemployment,” says Grubb.
​
Employee definition
The Act draws the definition of “employee” from the Labour Relations Act, which includes amongst others, learners and part-time workers without determining that the earnings of these part time employees be annualised. In addition, albeit that learners and graduate trainees are considered employees, they typically don’t receive a salary but a stipend whilst they learn and develop which improve their ability for future full-time employment and commensurate earnings. This ratio will increase a company’s real pay gap, for which it may be chastised by its shareholders. A more informative reporting framework needs to be adopted to factor out data points which will lead to spurious results which are not a true reflection of the remuneration practices implemented.
​
Remuneration committee integrity and continuity
Deposed committee members take with them vital institutional knowledge, organisational insights, scarce technical knowledge, and years of experience. Independent directors of this calibre are rare.

“There is no B-Team standing by to take over, so their loss may impact remuneration governance within an organisation and threatens its continuity while new directors are being sourced,” says Grubb. Boards may need to have more independent non-executive directors to provide for such a situation, making Boards more expensive.

Shareholder pressure
Increased shareholder engagement with companies on remuneration policies and practices offers companies a valuable opportunity to refine their approaches. The Act is designed to enhance transparency and requires greater company disclosure. However, the success of its implementation depends on collaborative stakeholder engagement, ongoing dialogue, and creating a shared understanding of the remuneration report. While critique can highlight areas for improvement, it is through collective participative effort and cooperation that the Act's objectives can be realised, fostering transparency and trust in the process.

ENDS

MEDIA CONTACT: Idele Prinsloo, [email protected], 082 573 9219, www.atthatpoint.co.za 
 
For more information on SARA please visit:
Website: www.sara.co.za 
X: @SA_reward
LinkedIn: South African Reward Association
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"Cuspers" excel at connecting multiple generations within the workforce. But what exactly is a cusper, and why should organisations pay attention to them? A cusper is someone born at the intersection of two generations, embodying a blend of traits from both. These individuals act as a generational bridge, often referred to as "generational glue" or a "micro-generation," linking one generation to the next. Understanding the generational makeup of your team is crucial, says Deon Smit, Master Reward Specialist and Executive Committee Member at the South African Reward Association (SARA). The major generation groupings can be defined along the following date ranges:

• Before 1945: Traditionalists or Silent Generation
• 1946 – 1964: Baby Boomers
• 1965 – 1979: Generation X
• 1980 – 1995: Millennials or Generation Y
• 1996 – 2016: Generation Z, iGen or Centennial

So, what is a cusper, and what is their purpose?

• An unbalanced generational mix in an organisation could have an impact on certain key employee metrics like turnover, engagement and employee satisfaction. It also creates diversity to have a healthy mix.
• The question is: Does your organisation have enough employees who are considered generational glue or cuspers to connect the major generational groupings in your organisation?
• These cuspers will be this vital generational glue as they link the generation groupings.
• The main purpose of generational glue would be to link the different generation groupings to a common purpose, culture and jargon language. This will also facilitate cross-collaboration, improving teamwork and positively impacting team dynamics.
• These micro-generations or cuspers are roughly defined according to the following date ranges with their unique cluster names:
o 1943 – 1948: Troomers, Shhh-oomers, or Swing generation
o 1962 – 1967: Baby X’s, Boomerex or Tweeners
o 1977 – 1983: Xennials
o 1993 – 1998: MinionZ, Zillennials, Zenials or Snapchat Generation

So, why is generational glue or cuspers then so important for the organisation?

• Having a balanced generation mix could ensure higher employee engagement levels in your organisation as you have the important generation glue that interlink them.
• Higher engagement levels in your organisation could, in turn, lead to higher productivity levels.
• Higher productivity levels will positively impact the organisation’s bottom line.
• Cuspers or micro-generations will also positively impact an organisation’s culture and lead to more team cohesiveness and a greater sense of belonging for all employees.
• Too much of one generation grouping without the right amount of generation glue could make it difficult to create a unified workplace.
• A mix of generations create diversity – not just of age, but of thinking, ideas and perspective.
• Cuspers or micro-generations will ensure better communication between generations, creating a better understanding of each other.
• The absence of cuspers could also lead to increased employee turnover and dissatisfaction in the workplace.

What does rewarding these cuspers or micro-generations look like?

Cuspers are proof that a one-size-fits-all approach around reward solutions does not work and why flexibility in benefits, working methods, and pay structures is important. It is key to accommodate these employees who do not feel they fit in a specific generational construct. Allowing a great range of choices will empower all employees to customise their employee remuneration journey to meet their needs and wants.

Smit further says that generations in the workplace will always be fluid as one generation ends and a new generation starts their careers. Having the right balance can have a long-term positive effect on employees and the organisation. So, it is worth looking more closely at the generational demographics of your organisation and making generational glue work for you.

Deon Smit is a Master Reward Specialist and SARA Executive Member. He is the Group Remuneration Manager at Pepkor.
​
ENDS

MEDIA CONTACT: Idele Prinsloo, idele@atthatpoint.co.za, 082 573 9219, www.atthatpoint.co.za 
For more information on SARA please visit:
Website: www.sara.co.za 
X: @SA_reward
LinkedIn: South African Reward Association
Facebook: SARA – South African Reward Association

Written by: Morag Phillips and Martin Hopkins
 
What does fair pay really mean?
I imagine that if you asked a group what “fair pay” means, you’ll have a collection of views. If you then asked a group what “fair parenting” means, you’ll have another collection of views. The concept of fairness seems to rest partly in our own experience of the matter under consideration, and it seems that it is very tainted by our own comparison of the application in our immediate context. To step out of pay for a while into the parenting world, a sibling that was allowed to have a smartphone at age 15 may deem it unfair when a much younger sibling received their smartphone at age 12. The sense of outrage that comes with an experience of unfairness makes it a burning issue. It burns brightly when it’s happening to us! 

Fairness itself does not inherently have a bias. The concept of fairness revolves around treating all individuals or groups impartially and without favouritism or discrimination. It aims to ensure that decisions, processes, or outcomes are reasonable, justifiable, and consistent.

Fairness typically refers to the quality of being reasonable and impartial. It involves ensuring that decisions or actions are consistent, unbiased, and considerate of all relevant factors. Fairness often focuses on the process or procedure by which decisions are made rather than the outcomes themselves. For example, in a decision-making context, fairness might mean giving everyone an equal opportunity to voice their opinions or ensuring that rules are applied consistently to all individuals. So is it fair that both siblings got a Smartphone? Does the timing make it different?

Managing pay practices with a focus on fairness, justice, equity, and equality involves understanding each concept distinctly and designing a pay structure that balances these principles. Here’s a breakdown of each concept and how they relate to pay management:

1. Fairness: Fairness in pay practices implies impartiality and lack of bias. It ensures that decisions regarding pay are justifiable and reasonable. Fair pay practices take into consideration factors such as job responsibilities and content, job grade, skills required, and market rates for similar roles. Managers ensure fairness by applying consistent criteria across all employees and being transparent about how pay decisions are made – again, it is the process or procedure, and including measures to mitigate the influence of conscious and unconscious bias.
2. Justice on the other hand, is broader and often carries a moral or ethical dimension. It encompasses the concept of what is right, moral, or just. Justice seeks to ensure that individuals receive what they deserve or are entitled to, based on ethical or legal principles. In a pay context, justice refers to the moral or ethical dimension of pay practices. It involves ensuring that employees receive what they deserve based on their contributions, efforts, and performance. Just pay practices strive to reward employees proportionately to their impact on organisational goals and outcomes. Managers promote justice by aligning pay with performance metrics and recognising employees for their achievements fairly.   Consideration of a living wage for a company’s lowest paid employees is also relevant in the context of pay justice.

In summary, fairness tends to focus on the impartiality and consistency of processes or decisions, while justice is concerned with the ethical or moral correctness of outcomes. Bringing these 2 concepts together, a just pay decision could reward a high performer more than a non-performer; the fairness is in the application and communication of the rules.
​
Let’s add 2 more important concepts…

1. Equity: Equity in pay practices involves ensuring that employees receive fair remuneration relative to their contributions and responsibilities, regardless of demographic factors such as gender, race or age, as examples. Equity acknowledges that different roles may have different value contributions to the organisation and seeks to reward accordingly. Managers promote equity by conducting regular remuneration audits to identify and rectify any pay gaps based on unjustifiable factors. An equity audit would be testing whether fairness has been applied. Equity is a reflection of fairness by demonstrating that the outcomes of those decisions result in fair and just        distributions of reward. In this way, equity is an outcome of fairness.
2. Equality: Equality relates to providing the same opportunities and treatment to all employees regardless of differences. In the context of pay, equality would mean paying equal wages for substantially similar work performed by employees. This concept is enshrined in laws and regulations to prevent discrimination based on protected characteristics. Managers uphold equality by ensuring that pay differentials are based on legitimate factors related to job performance and responsibilities, rather than personal characteristics.

Let's use just a few examples:



 
 









​





We could ask which factor should be considered the most important. It is indeed possible that pursuit of one element may mean we don’t achieve the other. In this example, we could say there is fairness, but not justice: Imagine a scenario where a company needs to downsize due to financial difficulties. The company decides to retrench employees based solely on tenure, meaning those who have been with the company the shortest amount of time is let go first.

This decision might be considered fair because it applies the same criteria (tenure) to all employees without discrimination. However, it may not be just if some employees who are newer have made significant contributions or have higher performance ratings compared to longer-tenured employees who are retained. In this case, fairness in terms of consistent application of criteria (tenure) is maintained, but justice may be lacking because deserving employees are being retrenched based on a criterion that does not necessarily reflect their value or contributions to the organisation.

This demonstrates that fairness and justice are distinct concepts that can sometimes conflict with each other depending on the context and the specific criteria or principles being applied. Achieving both fairness and justice often requires careful consideration of both the processes used to arrive at decisions and the outcomes that result from those decisions, taking into account relevant ethical, moral, and contextual factors.

To design a pay structure that integrates fairness, justice, equity, and equality, managers can consider the following strategies and practical tools:

• Job Evaluation: Conduct systematic job evaluations to assess the relative worth of different roles within the organisation, using a formal unbiased system; this creates the framework for just and fair decision-making.
• Performance Management: Implement a robust performance management system that objectively evaluates employee contributions and ties rewards to individual and team achievements. This creates defensibility for just decision-making.
• Internal pay audits: Consider your internal pay patterns and any discrepancies that indicate equity issues.
• External market benchmarking: Regularly benchmark salaries against industry standards to ensure that pay rates are competitive and aligned with market trends, to inform your own unique pay structure.
• Transparency: Maintain transparency in pay practices by clearly communicating the criteria for determining salaries, pay increases, and bonuses to employees.
• Regular Reviews: Conduct regular reviews of pay practices to identify and address any discrepancies or biases that may exist, ensuring that pay differentials are based on legitimate factors.
• Training and Awareness: Provide training to managers and employees on pay equity principles and practices to promote understanding and adherence to fair and just pay standards.

By integrating these principles into the design and management of pay practices, managers can create a pay structure that not only attracts and retains talent but also fosters a culture of fairness, equity, and respect within the organisation. An important ingredient is the deep consideration of unintended consequences and testing whether all 4 dimensions have been considered.

In summary, while fairness focuses on the fairness of procedures and decision-making, equity assesses whether those procedures result in fair and just outcomes. Together, fairness and equity aim to promote a more just and equitable society or organisation where everyone has equal opportunities and access to resources based on their circumstances and contributions.

As we close, a challenge to our industry is to see the determination of an organisation-specific living wage as a decision sparked by justice, supported by fair policy, and resulting in an equitable outcome.

Morag Phillips is a Master Reward Specialist, a SARA Executive Committee member, Chair of the SARA Thought Leadership Committee, and a member of the SARA Conference and Reward Awards Committee.
Martin Hopkins is a Master Reward Specialist, and a member of the SARA Thought Leadership Committee, and Head of Reward Advisory Services at Bowmans Law.

ENDS

MEDIA CONTACT: Idele Prinsloo, [email protected], 082 573 9219, 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 launch of ChatGPT late in 2022, and the tremendous interest it provoked, inaugurated what one will one day see as the Age of Artificial Intelligence (AI). AI will make it easier to generate outputs in virtually every industry, creating a challenge for reward professionals: how does one measure an individual’s performance when one of his or her outputs can be generated by an algorithm?
 
“AI is here to stay, and we can expect it to get significantly better. Reward professionals should see it as a great opportunity to refine their thinking about what constitutes great performance, and thus how to reward it,” argues Dr Mark Bussin, Master Reward Specialist and Executive Committee Member of the South African Reward Association (SARA). “Specifically, AI prompts us to look at what humans do best and use that insight to determine how we measure and reward our people.”
 
Dr Bussin offers the following tips to help reward professionals, and HR more generally, to use the AI revolution to the advantage of their organisations:
 
Focus on creativity, quality and innovation. AI is going to be a great tool for automating routine tasks, but when it comes to creative problem-solving or generating innovative ideas, it is a non-starter. Finding ways to reward individuals or teams for creativity rather than output would be beneficial to both the employees and the organisation.
 
Similarly, reward professionals should look for metrics that measure quality rather than quantity. For example, customer satisfaction or product ratings could be used to assess the performance of an individual or team.
 
Emphasise collaboration. Humans have leveraged the power of collaboration to overcome seemingly insurmountable challenges over thousands of years. Encouraging individuals or teams to work together and rewarding them for doing so will play to humanity’s strengths and will generate excellent results.
 
Provide a sense of purpose. Humans are motivated to perform better when they feel their work is making a positive impact—AI is just a machine. Global research shows that purpose-driven companies realise huge benefits. Making sure the organisation has a clear vision and purpose can motivate employees to do their best, and ultimately drive the company’s performance in achieving its strategic goals.
 
Develop policy guidelines relating to the use of AI. Everybody in the organisation needs to know how AI should—and should not—be used. Each industry will have its own set of ethical issues, and employees will need charts to navigate this tricky terrain.
 
Provide professional development opportunities. It’s long been recognised that professional development is a key lever when it comes to attracting and retaining top talent—and driving high performance. Alongside providing policies to guide employees, organisations must provide employees with ongoing training in this rapidly changing technology and what it means for them. They will use it better and, as an added bonus, they will be more likely to remain with, or want to join, the organisation.
 
Use AI to speed up the drafting of reports and policies. Finally, HR and reward professionals themselves should find ways to use AI to make themselves more efficient. Freeing up more time to be devoted to adding value will also protect their own positions.
 
“The onward march of AI is in fact an opportunity for us all, and reward professionals in particular, to concentrate on the things that humans do best and focus on supporting them—leaving the drudge work to the machines,” Dr Bussin concludes.
 
ENDS

MEDIA CONTACT: Rosa-Mari Le Roux, [email protected], 060 995 6277, 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

​Companies need an internal committee as well as an industry body to ensure artificial intelligence (AI) is used responsibly for HR processes within their business and by their service providers.
 
This is according to Carmen Arico, Chartered Reward Specialist, and spokesperson for the South African Reward Association (SARA). "AI is not yet mature enough to be entrusted with the ethical nuances of HR without human intervention and close supervision," she says.
 
While AI promises an exceptional productivity boost across HR functions, it should not be implemented without proper policies, oversight and safeguards in place.
 
AI in HR
AI has a wide range of applications within HR. These include creating job descriptions, sourcing applicants, analysing CVs, filtering candidates, scheduling interviews, and even analysing facial and vocal responses during interviews.
 
After a new hire is onboarded, AI can be deployed in areas such as skills development, reward design, performance reviews, wellness assessments, and more.
 
Arico is firmly opposed to AI handling much more than rote HR administration. "When you apply the technology in areas that are too subjective even for humans, like gauging deception from facial expressions or confidence from voice tone, you're straying into dangerous legal territory," she says.
 
AI security
Arico is also concerned with how personal information may be used, and how easily it might be exposed by those who know how to bypass the shallow security barriers set by AI developers.
 
"Ask for private information directly and the model might refuse on moral grounds, but rephrase the request as a plot to a fictitious story and, in that context, it could freely share everything it knows about an employee," says Arico.
 
In addition, AI models learn from historical data that can often be littered with biases and falsehood. Will it suggest only male candidates for an occupation previously dominated by men; exclude a certain minority group if it has insufficient training data on that demographic; or reject a candidate who is neurodivergent because they don't fit a traditional psychometric profile or respond to social cues in a traditionally accepted way?

Internal committee
Arico says that corporate HR must understand how AI works and what its shortcomings are, develop policies for the scope of its use, and provide safeguards to mitigate any associated risk.
 
Most importantly, companies must establish an internal steering committee tasked with ensuring AI is employed responsibly and ethically across their organisation and throughout their supply chain.
 
This means their policies and practices must consider how AI is used by external HR service providers, such as recruitment specialists, head-hunters, training partners or reward consultants.
 
Industry body
Arico believes this can best be achieved through the establishment of a regulatory body that sets shared standards on the ethical and responsible use of AI, not just in HR but across all management functions and industries.
 
"Members will participate in the development of these standards and bind themselves to their universal implementation to ensure AI is a blessing and not a curse to business and employees and can conform to agreed-upon ethical and moral standards," she says.
 
Arico also advises that for the body to be effective, it should be led by neuroscientists, data scientists, AI researchers, AI ethics experts and another top talent in the AI space.
 
“A certification, similar to ISO 9002, would not only identify companies as responsible AI users but also act as a differentiator in what will soon be a highly competitive market,” she says.
 
ENDS

 
MEDIA CONTACT: Rosa-Mari Le Roux, [email protected], 060 995 6277, 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

Can South African workers look forward to increases in line with the cost of living this year?

According to Dr Mark Bussin, Master Reward Specialist and EXCO member at the South African Reward Association (SARA), economic instability in the country makes this unlikely – unless the government takes drastic action soon.
"Unfortunately, the current state of South Africa means the financial outlook for companies is generally bleak and this will have a direct impact on their ability to offer any kind of meaningful increases to employees," he says.

Dr Bussin provides an overview of the causes of the situation, their impact on employee rewards, and solutions that should be implemented promptly to improve conditions.
​
How will increase decisions be impacted by the current economic climate?
"First, we need to ascertain what is meant by 'current economic climate'," says Dr Bussin. He highlights the following key factors that define the country's economic situation and impede employers' ability to make favourable increase decisions:

• Pedestrian economic growth;
• Despairing energy supply;
• Zero investment confidence;
• High inflation;
• Dismal service delivery at all levels of government – local, provincial and national; and
• No political will from government.

What is the impact of these factors on employers' ability to make increase decisions?
These economic failings will inevitably cause employers to:

• Be more cautious and prioritise corporate budget stability over employee rewards;
• Face decreased revenues, causing them to delay or reduce salary increases to mitigate financial strain;
• Give more consideration to the current unemployment rate and market competition for labour when making decisions on salary increases;
• Hold back on incentive and bonus payouts, and strengthen the link between these payouts and company performance;
• Adjust the amount and frequency of payouts based on the company's financial performance; and
• Possibly opt to reduce or eliminate bonus and incentive payouts altogether to reduce costs, save money and maintain financial stability.

What needs to happen for this situation to improve?
"You can ask a thousand economists this question and you will get a thousand different answers," says Dr Bussin. However, from a company perspective, relative to the decisions around making salary increases possible, he believes the following must happen at all levels of government:

• Eliminate corruption;
• Streamline regulations and reduce red tape;
• Overhaul the education system entirely;
• Encourage entrepreneurship;
• Address the inequality gap;
• Promote exports and support SMMEs; and
• Manage government debt and implement fiscal discipline to help restore investor confidence.

What does this mean for employees?
"Until the government takes decisive and proactive steps to remove these economic barriers, organisations will be unable to respond positively to their employees' cost-of-living requirements," says Dr Bussin.
He encourages companies and concern groups to continue to put pressure on the nation's leaders to make tangible reforms that will help South Africa recover from crippling economic deficiencies.
​
"We can talk about working together towards a solution all we want. But, if the proper political, legal and socio-economic foundations are not in place, there is no footing to climb out of the hole in which we collectively find ourselves," he says.

ENDS

MEDIA CONTACT: Rosa-Mari Le Roux, [email protected], 060 995 6277, www.atthatpoint.co.za 
For more information on SARA please visit:
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Twitter: @SA_reward
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Employers should pay their workers a living wage and not just the national minimum prescribed by law.
 
This is according to Dr Mark Bussin, Master Reward Specialist and Exco member of the South African Reward Association (SARA). "An employee's monthly pay should be at least R12,000 to R15,000 for a 40-hour work week," he says. 
 
Bussin defines a living wage as remuneration sufficient for an individual and their family to have a frugal yet dignified lifestyle. "Workers who earn the minimum wage often still cannot afford basic monthly essentials and are woefully unprepared for financial misfortunes, like roof repairs or hospitalisation," he says.
 
Business impact
What many employers don't realise is that financial distress among workers is bad for business.
 
The strain of not earning enough and constantly struggling to survive can negatively affect employees physically, emotionally and cognitively.
 
In an August 2013 Science journal article, researchers Mani, Mullainathan, Shafir and Zhao observed that a lack of money led study subjects to make poorer decisions. They hypothesised that poverty reduced focus and effort, resulting in inferior performance.
 
So the stress associated with financial hardship causes employees to make errors in judgement and inhibits their productivity. It also prevents them from reaching their full potential, increases absenteeism, and results in higher turnover rates.
 
"These effects can reduce business performance in the short term and hinder economic growth over time," warns Bussin. Replacing workers will not solve the problem if most of them face the same predicament.
 
Trapped in poverty
According to estimates from PwC, the University of Cape Town and the Tshwane University of Technology, the national minimum wage level for 2022 of R23,19 per hour is only around half to a third of the current living wage.

It is not possible for low-income workers to survive on these amounts and they are often forced to turn to unlicensed money lenders for additional cash to make up the shortfall.
 
Saddled with unregulated terms and high interest rates, they soon become trapped in a vicious cycle of borrowing from Peter to pay Paul.
 
As they end up poorer than before, their descent into negative income can see their quality of life spiral. Being unable to look forward to tomorrow or plan for a better future can have dire physical and mental health consequences for them.
 
Breaking the cycle
Employers who pay a living wage are instrumental in the eradication of poverty. Employees with disposable income are not only happier and more productive at work but are also more active in the market, stimulating economic growth.
 
In addition, workers do not need to engage in risky lending to make ends meet, reducing their exploitation by the unscrupulous.
 
Therefore, the argument for a living wage is not only a moral one that focuses on business' obligation to society. It is also a strategically sound investment that, as it lifts up the poor, creates a more prosperous business environment for companies and citizens alike.
 
"The more companies that decide to embrace a living wage, the greater the positive effect will be," says Bussin.
 
ENDS
 
MEDIA CONTACT: Rosa-Mari Le Roux, [email protected], 060 995 6277, 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

In South Africa, fathers are entitled to 10 days parental leave upon the birth of the employee's child in terms of the Labour Laws Amendment Act. Mothers are entitled to 4 months unpaid maternity leave. However, this legislation has been brought into question.

In a recent case* filed at the High Court, Werner and Ika van Wyk argue that certain provisions of the Basic Conditions of Employment Act (BCEA) should be ruled unconstitutional because they unfairly discriminate against fathers of newborn children. This by unjustifiably restricting their rights to paternity leave in South Africa.
​
According to Carmen Arico, Chartered Reward Specialist and spokesperson for the South African Reward Association (SARA), local legislation does indeed need to be leveraged for different parental options. This could include more time off for fathers, or a situation where parents themselves can decide how parental leave is split to best fit their individual needs.

Laws and policies must adapt to the changing times
“If you look at other countries, particularly those in Scandinavia, there’s a shift away from defining it as either “maternity” or “paternity”, towards an approach of “parental leave” which can be shared between parents. This keeps in mind how traditional family arrangements have evolved to now include same-sex couples, single parents, and co-parenting families.”

She believes that in order to be effective, employers must keep changing circumstances and societies in mind.
“Less than half of working age women were employed in the 1970s, and men often didn't spend much time with their families. However, that has changed. Nowadays, men meaningfully engage with their kids around seven times more often than they did in the past. And this is something they want to do.”

Arico notes that though many local employers still don't seem particularly eager to formalise a flexible parental leave approach for various situations, she does believe lockdown has started to change the view of a lot of companies.
“Employees now have much more freedom, and ideally this trend will extend to parental leave as well.”

Fulfilled employees add value in the long term
Arico adds that flexible parental leave could be a valuable asset for a company’s Employee Value Proposition (EVP).
“Instead of viewing it as a drawback where you now have to give more time off for male employees, for instance, it should be viewed as what it is: an engagement driver. In light of these legal rulings, employers ought to think about offering flexible parental leave policies to staff members. It fosters an atmosphere where workers want to come back to the company following their parental leave.”

Arico further emphasizes that South Africa's constitution is among the most progressive in the world. "When it comes to ensuring that there is no discrimination based on gender, sexual orientation, or any other factor, we serve as an example to others. I do believe that the Labour Laws Amendment Act must follow suit in the parental leave area in order to recognize the various familial structures and parental roles.”

She concludes by noting that South Africa's employers generally get things right. “If we can now also change the thinking of “maternity versus paternity” and move towards a parental view, then we are a long way to being that progressive country we want to be seen as.”

ENDS

MEDIA CONTACT: Rosa-Mari Le Roux, [email protected], 060 995 6277, 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 concept of a four-day work week is attracting growing interest in countries around the world, including South Africa.
 
"Local employers must understand the model, decide if it will work for them, and know how to implement it effectively," says Kirk Kruger, Master Reward Specialist with the South African Reward Association (SARA).
 
How does it work?
"The four-day work week should not be confused with the so-called compressed work week," advises Kruger. For the latter, employees receive the same remuneration and work the same hours per week. However, they work more hours during on-days to make up their weekly total hours worked.
 
In contrast, a four-day work week means employees will work one day less in the week but the same number of hours per day as before. They will still receive their full salary and benefits. In essence they are being paid for outputs and not for hours worked.
 
Why the interest?
Both employers and employees are interested in the model because it promotes a healthier work-life balance, increases motivation and has a positive effect on productivity.
 
On their in-week off-days, workers can take care of personal, family and lifestyle priorities, resulting in a better quality of life, mental and physical well-being, and more energy.
 
Who will adopt it?
"I don't think South Africa as a country or an economy is ready for this on a large scale and interested employers will want to test the waters before committing," says Kruger.
 
Potential adopters are more likely to be niche organisations, such as smaller and medium-sized technology companies. Even then, they should take time to investigate its impact on their operations, possibly running a pilot programme first.
 
How does it compare to WFH?
"Since COVID ushered it in, work-from-home has gained momentum and I think it is here to stay" says Kruger. For now, he says WFH will remain the primary focus for employers due to the flexibility and location independence it offers and will overshadow the four-day model.

However, as WFH becomes the norm, workers - especially those with scarce skills - may start looking for employers that offer both. 
 
Is it a good way to attract and retain employees?
"Absolutely. Research shows a higher level of worker engagement, so there is good reason for employers to consider it as part of their employee value proposition," says Kruger.
 
It can differentiate them with in-demand and self-motivated candidates who will deliver results whether they work four days or five. And it will help retain those who appreciate the flexibility it affords them.
 
What do employers need to consider?
It is critical that companies consider the model's impact on operational continuity and customer engagement. This will ensure they don't experience lapses in service delivery during peak hours due to insufficient personnel.
 
"This requires a high level of engagement with employees to develop effective policies, including structured communication, active change management and collaborative corrective measures," says Kruger.
 
Reviewing rewards
With careful planning, employers can make the four-day work week a new highlight of their total reward strategy. "They should consult their reward specialist to ensure their leave, overtime, pay and benefits structure aligns with this new way of working" says Kruger.
 
ENDS

MEDIA CONTACT: Rosa-Mari Le Roux, [email protected], 060 995 6277, 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