Recent reports of shareholders voting against executive remuneration structures have again highlighted the need for increased transparency in the disclosure of not only the amounts paid, but how the amounts were calculated and the link to performance. Many companies have made significant progress with the disclosure of executive pay and the quality and content of remuneration policies and implementation reports.

However, the improved transparency of certain excessive executive pay packages has also fuelled the perception that all executives are paid exorbitant amounts of money, causing an ever increasing pay gap.

Laurence Grubb, Master Reward Specialist and executive committee member of the South African Reward Association (SARA), says a handful of executives are still able to manipulate remuneration committees, despite notable efforts to follow the principles set out in King IV and the association’s guidelines.

Committees agree to targets which are a little too soft or potential remuneration that is out of line with industry. “Although these executives are in the minority, it remains a concern and needs to be contained.”

Independent advice needed
Grubb says remuneration committees should be entitled to obtain independent advice from their own remuneration consultants to validate what has been presented to them by the executives. The cost for this service should be borne by the company.

SARA published guidelines on the drafting of a remuneration policy and the implementation report at the beginning of the year which follows the principles set out in King IV.

Some ‘old’ long term incentive schemes may have awards which were not linked to performance. Those shares may now be vesting, and with no performance linked to them, it is quite possible that shareholders will vote against such schemes.

Grubb says companies need to confirm the performance criteria for vesting before making any awards for long term incentives. Failing to do so, will undoubtedly annoy shareholders.

Barclays Africa experienced this first hand when shareholders voted against the company’s policy and implementation report earlier this month (May 2018).  

In terms of the King IV principle on remuneration, the policy should record the measures that the board commits to when 25% of the votes are exercised against either the remuneration policy or the implementation report, or both. These actions should then be communicated in the background statement in the following year.

South Africa is the only country in which the threshold for these remedial measures is as low as 25%. In Australia, the UK and Belgium, among others, remedial measures are only mandated if 50% or more of the votes are cast against the remuneration policy and implementation report.

Pay gap realities
The pay gap in South Africa remains a burning issue, although companies have been trying to address it by offering larger annual increases for lower level workers and smaller increases at executive level.

However, an increase of 5% on R2 million will always make a bigger gap than 8% on R100, 000. Several companies have also introduced the minimum wage, and in some instances, wages which exceed the minimum wage.

In countries where the pay gap is much narrower, the level of skills, education and productivity of the lower end workers are much higher than in South Africa.

Grubb says companies operating in those countries are typically able to pay much higher rates to their lower level employees because of the higher skills and productivity levels.
“Unfortunately, in countries where education is severally limited and not at the right standard, the impact is felt mostly by those whose skills and level of education do not offer them the opportunity to increase their earning potential.”

Companies find it difficult to continually pay higher salaries to lower levels and, inevitably where that does happen, there are job losses.

Experts trained in how to balance the expectations of international workers with the strategic, financial and practical constraints faced by the employer are in high demand. The driver of this demand is the technology that makes a larger international mobile workforce possible.

“Aligning an expatriate’s reward expectations with company policy is an intricate science,” says Nicol Mullins, Chartered Reward Specialist and Chairperson of the International Mobility Group at the South African Reward Association (SARA).

International assignees must get a fair pay package in return for their willingness to uproot themselves from their local support system. Employers should however not hand over a blank cheque.

If a company pays for staff to take their pets on a foreign assignment, does that include the relocation cost for an employee’s horse? Would a female employee be able to develop her career in Saudi Arabia? Will a country's high tax rate overwhelm the benefits of an otherwise handsome remuneration package? Considerations like these are often overlooked when dealing with expatriates, especially for urgent deployments.

This is where the services of an International Mobility Reward Specialist prove invaluable. According to Nicol, expatriate reward programmes must be based on a comprehensive set of policies for each foreign destination to which employees may be assigned.

“Mobility specialists are businesses’ architects of expatriate reward programmes,” he says. “They are also the custodians of the standard by which all international deployment decisions will be made.”

A Mobility Reward specialist develops the what and how of expatriate remuneration and benefits; the International Mobility Policy and the International Mobility Framework derived from it.

The International Mobility Policy is informed by a large body of tax, immigration, legislation, cultural and other data about selected destinations, gathered and correlated by the mobility specialist. They consider rewards in terms of identified trends, best practices and their organisation's own HR remuneration directives.

“It is because of the complexity of the knowledge required that expatriate reward programmes should be treated differently than local reward calculations,” explains Nicol.

Coordination
While the mobility specialist must have a good knowledge of each subject their policies address, it is impossible to know the intimate details of visas, legislation, tax or lifestyle for every target location. For this, they build and leverage a network of validated and reliable foreign area specialists, like relocation agents, tax advisors and environmental adjustment consultants.

“These service providers are like the pieces on a chessboard,” Nicol explains. “Without a dedicated organising authority like the mobility specialist, companies would struggle to coordinate the efforts and interests of all stakeholders.”

Protecting the investment
Ultimately, an expatriate is deployed to achieve a corporate goal, making their remuneration only part of a larger investment.

Many foreign assignments fail because an accompanying partner is unable to adapt to an unfamiliar lifestyle, culture or surroundings. Another common problem is the lack of a visa for the partner that allows them to pursue fulfilling their own purpose.

“It is a pity when either the rewards or the total investment are devalued or even rendered worthless by unforeseen problems that could have been anticipated,” says Nicol.
 “A mobility specialist will track cases where a successful transition was achieved in a specific environment. They will also be able to identify the best solution to potential problems, ensuring the employer’s objectives are not derailed.”

Bringing order
The greatest advantage of employing an International Mobility Reward Specialist is that they prevent the foreign assignment dynamic from devolving into a chaotic and costly mess.

“No organisation that deploys expatriates is too small to benefit from the order that mobility policies and controls establish,” concludes Nicol.

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

Which is better - company car or travel allowance? It’s a question that regularly plagues both employers and employees. “In light of new SARS requirements for travel reimbursements, it needs to be carefully revisited,” says Jerry Botha, Master Reward Specialist and Executive Committee member of the South African Reward Association (SARA).

Important changes
Botha is referring to the removal of the 12,000 km limit that was previously applied to reimbursements. If travel exceeded this distance was reimbursed at a per kilometer rate higher than that prescribed by SARS, or other travel allowance was paid, the total amount needed to be reflected under code 3702. However, reimbursement paid at or below the prescribed rate was declared under code 3703. Either way, PAYE was not deducted from the employee’s income.

From 1st March 2018, if an employer reimburses staff at a per kilometer rate higher than that prescribed by SARS, they have to split any reimbursement into two components. The portion that falls within SARS’ rate must be declared using code 3702 while the portion above that rate must be reflected under a new code, 3722. If the employer also pays a fixed travel allowance, this is declared separately with code 3701 as usual.

Under this new system, the excess reimbursed portion is subject to PAYE just like a fixed travel allowance or fuel, garage and maintenance cards. Reimbursement at or below the prescribed rate is reported using code 3702 as before.

“More important than the new code and method of calculation is the removal of the 12,000 km limit and the introduction of PAYE on the excess portion,” says Botha. “These changes affect the reward dynamics significantly.”

Employers should therefore review the new rule to ensure their workers are enjoying the best tax and cost benefits, especially those who reimburse certain segments of personnel well over the prescribed rate.

It may be that a lower reimbursement rate puts more money into an employee’s pocket, as there is no PAYE thereon and the reimbursement does also not have to be substantiated by a logbook on filing of the employee personal income tax return.  

Either way, the compliance around the new rules makes it important for all employers to enforce compulsory employee logbooks, even where the employee does not claim on a tax return. We know employer PAYE audits is a SARS focus area and employee logbooks is critical for the employer to evidence tax compliance.

Is it time to offer a company car?
In seeking travel compensation that is fair and rewarding to a worker, it is a good opportunity to decide if they would benefit from a company car. “As a rule of thumb,” advises Botha, “if more than 60% to 65% of an employee’s travel is for business purposes, they are losing out by using their personal vehicle.”

Typically, fuel only makes up 50% of the total cost of running a car. Additional expenses, like maintenance and insurance, or depreciation on the vehicle are not covered by travel allowances, reimbursements or fuel cards. A highly mobile employee may also have to bear the early replacement costs of their private car.

The vehicle buying habits of South African employers and employees remain routed in emotion and decisions are not made based on running the numbers. This causes the employer to be burdened with too high fleet costs, whilst the employee is mostly significantly out of pocket, often only realising the mistake when they want to trade in their vehicle.

According to Botha, there remains a sweet spot for travel reimbursement, reimbursement with travel allowance and company vehicles. The employers who care about the cost and staff allows all three, as part of their Total Package approach. Especially for employees on high business travel, the employee is severely disadvantaged where not on a company vehicle. “If an employer does the calculation correctly,” says Botha, “they will see that a company vehicle is the best reward strategy in this case.”

Botha advises organisations to engage their reward specialist to ensure their employees receive the appropriate package for their needs.

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

To mark Human Rights Month, the South African Reward Association (SARA) is calling for business to look beyond the national minimum wage agreement, and vigorously explore ways to implement a living wage.  The phenomenon of “the working poor” is fuelling the ongoing resentment and violent industrial action that increasingly bedevils South African business, says Martin Hopkins, Master Reward Specialist, Executive Committee Member at SARA and partner at PWC in the People & Organisation practice.

“In many senses, the national minimum wage is something of a red herring, because it could distract companies from the need to work towards paying a living wage, rather than just a minimum wage,” says Mr Hopkins.

He argues that the minimum wage does not allow employees to live a decent, dignified life, and employers should therefore devote attention to how to do so. While there is no consensus about what a living wage in South Africa is, it is certainly substantially above the R3,500 minimum wage. Cosatu’s Patrick Craven says that the working poor earn anything below R4,125 a month; Mr Hopkins says a true living wage is probably in the region of R10,000 – R 12,000 per month, although there is no “official” living wage figure for South Africa.   The British figure is £7-8 per hour.

He cautions however that these adjustments to worker pay need to be done in an economically sustainable way, and that being good stewards of shareholders’ money is also an ethical imperative for directors.

Disclose both top and bottom pay
A consequence is that companies and society as a whole pay a great deal of attention to the rate of executive pay. In fact, companies would find it hard if not impossible to attract top talent if they did not pay a market-related rate. He thus recommends paying this rate in order to attract leaders of the right calibre but to structure packages carefully to align reward and performance.

“An equally intense focus on what the lowest earners are paid would actually tell one more about the true remuneration ethics in play within the company,” he says. “I believe that companies that are serious about the wage gap and poverty will increasingly disclose both their top and bottom wage-earners, and the detail of what they are doing to assist those at the bottom to manage their money better.”

Understand the benefit of paying living wage
Research by the United Kingdom-based Living Wage Foundation shows that 93 percent of companies that have implemented a living wage have seen benefits: 86 percent cite reputational benefit, 75 percent say it has increased motivation and retention rates, while 64 percent identify differentiation as a positive. Particularly relevant for South Africa with its adversarial labour relations, 58 percent say that paying a living wage improved relations between managers and staff.

“Paying a living wage is as much about enlightened self-interest as anything else,” Mr Hopkins comments. “Poverty and the resulting social instability are huge issues that have direct, immediate repercussions for companies, but they also affect the overall business environment. Paying a living wage will go some way towards proving business’s commitment to economic justice, and to healing our society.”

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

The South African Reward Assocation (SARA) has launched A guide to the application of King IV™: Principle 14 - Governance of Remuneration. The guide was co-authored with the Institute of Directors in Southern Africa (IoDSA) and is intended to help reward specialists – as well as members of governing bodies and other stakeholders – better understand and apply the principles of King IV in regard to remuneration.

“Many reward specialists struggle with the practical application of the remuneration principles and recommendations of King IV,” says Martin Hopkins, Master Reward Specialist and Exco member of SARA. “A particular sticking point is the reporting of the organisation’s remuneration policy and the implementation report, especially given King IV’s emphasis on increased disclosure.”

Hopkins joined his fellow SARA Exco members and Master Reward Specialists Morag Phillips and Laurence Grubb in launching the Guide at a breakfast attended by 150 reward professionals who are responsible for the design, development and implementation of reward strategies, policies and processes that will support organisational strategies.

King IV is only applicable to integrated reports relating to financial years ending after 1 October 2017. The first King IV-compliant remuneration reports are only now being published. These reports will be the first examples for professionals to learn from.

One of King IV’s most notable innovations is the requirement that the remuneration disclosure should reflect a single total figure of remuneration for each member of executive management relating to the reporting period. This single figure should encompass the salary, benefits, short-term and long-term incentives and any other remuneration elements. The values for the short and long term incentives should be reflective of the period of performance covered in the annual report and not necessarily of the time of payment. The idea being that the reader can relate the payments to the performance during that period.  

The single figure follows broadly the principle established in the United Kingdom, and now part of its company law. It is intended to make it much easier for stakeholders to establish what remuneration an individual received during the reporting period, and to compare this with performance. The single figure also makes it easier for readers to compare remuneration across reporting terms.

A fundamental principle of single-figure disclosure is to identify when remuneration is received or receivable, in order to enable this comparison between remuneration and performance during a specific period.

King IV also requires unvested awards to be reported, again in order to promote transparency and to give stakeholders a clear indication of future liabilities contingent on the performance targets being met.

Establishing these values can be complex, says Hopkins, because many performance incentives have a number of variables, such as vesting dates and valuations, and may refer to share prices or other measures. The Guide details the principles informing how each of these elements should be disclosed.

More broadly, the Guide contains detailed notes on each of the Recommended Practices relating to King IV’s Principle on remuneration (Principle 14).

Remuneration is an important performance driver, but a remuneration policy that is unfair or is perceived to be unfair can negatively impact an organisation’s sustainability and it’s shareholder voting. King IV aims to provide a framework for achieving a fair and effective remuneration policy that can be defended convincingly.

“However, it is a complex area and sufficient implementation will only be achieved over time and as the result of focused effort by the remuneration committee. This Guide is designed to provide practical help to achieve the outcomes envisaged by King IV.”

The Guide is available at http://www.sara.co.za/sara/file%20storage/Documents/2017/Nov/KingIVGuide_ToTheApplicationOfRemunerationGovernance.pdfwww.sara.co.za/sara/file%20storage/Documents/2017/Nov/KingIVGuide_ToTheApplicationOfRemunerationGovernance.pdf

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

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

Companies usually base how they pay and reward their employees on financial data. Deon Smit, Chartered Reward Specialist and Executive Committee Member at the South African Reward Association (SARA), says that corporate communications like emails or instant messages, social media posts and many other data sources should be used to provide deeper insights.

These insights can help to keep financial and non-financial elements of remuneration relevant to what employees need as motivation.

“Good data management and analytics will play a central role in developing future reward strategies. Effective reward solutions must be designed based on reality rather than assumptions,” says Smit.

“Reward practitioners must start taking responsibility to gather the right information and develop the ability to draw valid conclusions from the data available.”

Smit offers the following practical guidance:

Start with a purpose
It’s important to decide what business problems should be solved first and what data is best suited to that purpose.

“Tackle the simple business problems first and build up to the big ones,” advises Smit. “This will help you get your data and your process right at each discrete level of growing complexity.”

HR and people data will be central to efforts, but strategic, financial, and corporate communications data will also play an important role.

Be a visionary
For most problems, a large set of historical data is needed to facilitate predictive analysis and produce accurate results.

“You have to decide what you want to measure in 6 months from now, build the datasets and make sure the data is accurately captured,” says Smit. “Only after that period will you have enough to work with.”

Clean up
“One of the first mistakes companies make is to start with incomplete, incompatible or mismatched data,” reports Smit. The data collection methodology employed must be consistent to ensure there are no information gaps that could produce misleading results.

Learn
Reward practitioners should understand how datasets are constructed, how relational databases work and how unstructured data found in emails, social posts and other digital sources can be collected. They also need to evolve past Excel and embrace programming languages like R (a statistical language), Python (a general programming language) or SQL (a database query language). In addition, business intelligence and data analysis skills are essential.

This may seem unnecessary for reward programmes but Smit foresees that these competencies will be in demand in the future.

“HR will start hiring data specialists over people specialists because data will become the key to understanding workforce behaviours and motivators,” says Smit. He suggests that practitioners become self-educated to increase their value. Universities now offer numerous free courses on these subjects through MOOC (massive open online courses) platforms.

Don’t forget qualitative inputs
Although quantitative analysis - mathematical and statistical modelling - is critical, reward specialists should not overlook qualitative analysis - the study of observable behaviour or structure. “Don’t become too focused on the numbers,” recommends Smit. “They need to be viewed in conjunction with phenomena like group dynamics, behavioural psychology, generational concerns, cultural norms and other non-numerical inputs.”

Start over
Data analysis must always solve a business problem. Once the collected information has been studied and understood, reward specialists can develop innovative solutions and drive their implementation forward.
 
Smit concludes: “After a solution has been found, the cycle will start over so that another – more complex – business problem can be targeted.”

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

Inflation is typically used as the basis for calculating annual salary increases. But inflation is a poor guide for working out how to reward employees to ensure competitiveness when compared to the market, says Nicol Mullins, Exco member of the South African Reward Association (SARA) and Principal Consultant at Mercer South Africa.  

Instead of inflation, he argues, employers need to take various other factors into account when calculating salary increases. If not, they can end up disadvantaging both employee and employer as well as, potentially, shareholders.

“Using consumer price inflation (CPI) as a basis for calculating salary increases just does not make sense,” Mr Mullins says. “Inflation figures vary from one source to another and are far from perfect. Even if they were reliable, there is no logical reason why they should affect an individual’s salary. It makes much better business sense to use a scientific, evidence-based methodology for calculating salary increases that is based on what a particular role commands in the marketplace.”

Inflation-based increases are not sustainable
The fundamental point to understand is that a salary is paid to compensate an individual for doing a job. Therefore, a salary is actually dictated by the supply and demand of that particular skill, not what the inflation was for that year or the following.

Even if one insisted on using CPI as a basis for this calculation, one should logically only apply it to that portion of the salary that is used to buy goods and services that are inflation-linked.

Mr Mullins says that a valid argument could be made that employers should be protecting the purchasing power of employees, especially those at the lowest level. But this argument is somewhat negated by the fact that when such workers are employed, they are offered as low a wage as possible.

“One of the most harmful effects of using inflation as a way to calculate salary increases is that it has the effect of steadily making an individual less and less affordable to a company as the supply and demand of the skills in the market are not linked to inflation. In turn, this means either that the company has to pay more than it needs to in remuneration, or the employee becomes too expensive” he says. “Neither of these outcomes is desirable. Rather, we want to determine what is externally competitive while ensuring internal equity.”

Increases should consider across-the-board relevance
Mr Mullins advises that the salary discussion should fall into two distinct sections: how all the salaries across the company should be increased, resulting in an overall salary increase budget; and then what increases should be granted on an individual basis to align those employees to their optimal placement within the company pay ranges where there is currently misalignment to the pay policy.

The across-the-board salary increases budget should be related to supply and demand of the particular role, whereas the merit increases are based on individual alignment to ensure that salaries are aligned with the internal pay policy.

For calculating salary increases, Mr Mullins advises following a logical methodology that looks at what the fair, market-related recompense would be, and what the overall budget for increases actually is.

The process begins by determining what the market rate of pay for each role, grade or function is. As part of this process, the company’s own pay structure/scale or bands should be compared with market data. This step is known as the range-adjustment factor.

The above adjustment should be made after taking into consideration the market-adjustment factor which in essence is the predicted movement of the market from when the data was collected to when the increases are going to take effect.  Guidance on this should be provided by the company lead/lag policy.

The company must then decide how it will adjust its salary bands to align with the market. The company needs to determine the range adjustment factor; how much budget it will assign towards adjusting to the market rate.

Increases should consider individual employees
Obviously, companies want to pay at the market rate. The next step must be to look at those employees who are being paid below the current company guidelines. Some of them will be new hires or inexperienced, but others will need to be adjusted upwards. A separate budget needs to be determined for this exercise – this is known as the equity-adjustment factor.

The next step is to determine a promotion budget. Companies can make an assumption based on historical data that, for example, 2 percent of their employees will be promoted and receive 15 percent salary increases. By following this approach an organisation outlines their promotional increase factor.

At a practical level, Mr Mullins advises that companies should consider adding unspent HR budget from the previous year to the budget for current year salary increases – this is known as recovery.

The final step would be to consider merit increases.  This is the process of aligning employee compa-ratios to their internal grading structure after the range adjustments have been taken into consideration.

“Such an approach has the advantage of being based on market realities and is thus sustainable. And because it is scientific and evidence-based, it can be shown to be fair, with a positive impact on employee morale and engagement,” Mr Mullins concludes.

“Just giving everybody a blanket increase each year based on inflation sets unrealistic expectations; this method forces employees and employers to confront the reality that the market dictates business profitability, and thus job security.”

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

South African companies implicated in the Guptagate scandal find themselves facing a bleak future. With their reputations in tatters they risk losing the vital human resources they will need to recover, and one of their most pressing challenges is to restore employee morale and engagement.

“People do not go to work just to earn money,” says Morag Phillips, Director of 21st Century and Exco member of the South African Rewards Association (SARA), a professional body focused on promoting transparent, fair, and responsible pay practices.

“Their deeper motivations derive from the impact their work has on their feelings of self-worth and their desire to be part of something that makes a positive impact on the world –this is what drives employee engagement and energy, and builds successful companies.”

“During times of crisis, employees begin to worry about the organisation’s continued existence, their own reputation due to association risk and, of course, become targets for competitors on the lookout for talent.”

Ms Phillips advises that companies finding themselves in this situation have to undertake a rigorous process of restoring the internal organisational culture in tandem with efforts to repair the corporate brand externally. If there is a lack of internal focus – displayed through staff dialogues, support programmes, and evidence of continued job security – they might find themselves in the short to medium terms without their most important intellectual capital.

Start with understanding the true culture
Chances are that a crisis such as Guptagate would deepen any cracks that might exist in the corporate culture. It is therefore critical that corporate leaders should begin the process of consolidation and healing first by analysing the status quo honestly. That means, she says, looking behind the façade to see what employees are genuinely feeling.

“Corporate culture is driven and influenced by the leaders in an organisation, and management must play a guiding role in making it a day to day reality,” she says. “They need to find out what employees love about what they are doing, and build from there.”

Companies should undertake an active process to get input from employees about what motivates them about their jobs and what they do, along with what they love – or loved – about the organisation. If employees are involved in the process of defining the current culture, they will sign up more readily to keeping it healthy.

“We often ask ‘what are our shared values’, but a better way to frame this question might be ‘what do you want your every day to feel like’,” says Ms Phillips.

Involve more than appointed leaders
Another important action point is to identify those individuals who are influencers within the company, and make them part of the process.

“Management needs to listen to and understand what employees are thinking and saying around the proverbial water cooler, and get influencers on board to change conversations that do not fit the desired ‘flavour’ of the company.”

View company culture as strategic imperative
Ms Phillips believes that the campaign to regenerate the corporate culture should at all times be seen as a business imperative driven from the top, not a reactive feel-good campaign run by HR.

“It’s all baby steps,” says Ms Phillips. “Generate a little bit more positivity, and it could turn into renewed confidence, which could turn into a few more deals, a few more months of employment. These small steps then turn into a whole new chapter that grows into a whole new story.”

“The mistake that prompted the crisis has to be seen by everybody as an event that occurred, and not necessarily a signifier of the company’s culture,” she concludes. “That can only be done by understanding what the culture actually is, and how it needs to change if the same mistake is not to be made again.”

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