 The world of work is evolving rapidly and along with it, employee demands and remuneration practices.
“Companies who want to stay ahead of the talent race need to keep abreast of these changes and adapt accordingly,” says Dr Mark Bussin, Master Reward Specialist and President of the South African Reward Association (SARA). Dr Bussin says these are the top 10 global trends impacting remuneration policies and practices:
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
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MultiChoice, Standard Bank and others celebrated for setting new standards in reward excellence
Achieving greater transparency, simplifying the reward processes and addressing employee needs. Projects that achieved these goals took top honors at the 2024 Annual Reward Awards ceremony, hosted by the South African Reward Association (SARA). The awards annually recognise businesses and individuals who create excellence in rewards that attract and retain employees, while also motivating them to contribute to their organisations. The two big winners on the night were MultiChoice Group Ltd, which won the SARA Project of the Year Award for their Total Reward Online Tool, and Standard Bank, which received the SARA Remuneration Report Award. The prestigious President’s Award went to Lindiwe Sebesho, with Bukelwa Molefe honored as the second-ever recipient of the Young Remuneration Professional Award. SARA Project of the Year Award This year’s Project of the Year Award recognised the impressive work of MultiChoice’s Total Reward Online Tool project, chosen from a strong pool of nominations spanning multiple industries. The project’s goal was to develop a streamlined tool to manage the annual remuneration review cycle, covering salary increases, bonuses, share allocations, and payroll submissions. The tool’s efficient, user-friendly design supports management across various levels and ensures swift, accurate approval processes. Judges praised the project for its impactful business benefits, effective project management, and ease of use, making it a well-deserved winner. In second place, Doré Burger from BMW South Africa received acclaim for her leadership in BMW’s Total Reward Statement project, a benchmark for the company’s global Total Reward Statement reporting. Joint third-place honors were awarded to RCL Foods and ABSA for their respective Penny Wise project and eKhaya Colleague Share Scheme, both of which have successfully enhanced employee financial well-being and engagement. Remuneration Report Award This award traditionally celebrates the alignment of reward reporting with the principles of the King IV governance guidelines, particularly in fair and transparent policy practices. From what the judges deemed a “very competitive pool” of eight nominations, Standard Bank earned first place with a report described as excellent in terms of readability, disclosure, and narrative clarity. “The report’s balance of detail, transparency, and stakeholder focus is impressive, setting a benchmark for excellence in remuneration reporting,” the judges agreed. Vodacom’s “clear, strategically aligned” report took second place, while Old Mutual’s “creative, visually engaging” submission also secured a spot on the podium. Young Remuneration Professional Award Bukelwa Molefe, currently serving as Compensation and OD Manager at Adapt IT, was awarded the Young Remuneration Professional Award. Bukelwa’s journey has been marked by rapid advancement and a commitment to giving back to the reward profession. She holds a BComm Honours degree in Economics and several professional designations, including the SARA Reward Specialist designation. Her leadership roles in various SARA committees reflect her dedication to advancing the profession, and her peers regard her as an inspiring and committed leader in the field. President’s Award The prestigious President’s Award was presented to Lindiwe Sebesho for her lifelong contributions to the reward industry. With an impressive career spanning several senior leadership roles and an academic background that includes an MBA and a Master Reward Specialist designation, Lindiwe has consistently championed professional standards and governance. Her contributions to SARA include terms on the Executive Committee, meaningful policy discussions and mentorship initiatives, making her a true advocate and leader in the field. 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 Facebook: SARA – South African Reward Associatio  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 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:
Let’s add 2 more important concepts…
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:
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  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  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  Stronger remuneration committees are the solution to rampant executive pay. This is according to Laurence Grubb, Master Reward Specialist and Executive Committee Member at the South African Reward Association (SARA).
"We're seeing an imbalanced power dynamic between high-performing executives who associate significant rewards with the value they deliver and RemCos with structural expertise gaps that cannot assertively counter their demands," he says. Grubb suggests that alternative remedies are likely to do more harm than good. The danger of a binding vote The majority of South African businesses try to abide by the King IVTM code of corporate governance to achieve balanced and appropriate outcomes for executives, shareholders and other stakeholders. Yet, some CEOs, CFOs and executives continue to extract excessive remuneration from their companies. However, they have often built the enterprise from scratch or led it to significant growth, making them key to their company's success. So they may control the balance of power with a Board and Remco not willing to cross them. One suggested approach is to afford shareholders a binding vote that could deny gratuitous executive rewards, but Grubb says this is risky. "These leaders are the drivers of the business's growth and if their expectations are not met, they could move on and leave the Board to find a suitable successor, the impact of which will normally be a decline in the share price" says Grubb, noting that similar scarce talent might be impossible to find. Consequently, shareholders may end up shooting themselves in the foot. Rethinking the RemCo A better solution is to equip the RemCo with the necessary expertise to rationalise, negotiate and even restructure proposed packages in a way that satisfies of all parties. This requires that the committee augments its competencies with a deeper knowledge of current remuneration trends, industry standards and competitive best practices. To facilitate this solution, SARA is developing masterclass webinars and live sessions aimed at RemCo members, as well as other executive and non-executive directors, to enhance their understanding of executive remuneration. In addition, King IV suggests that the committee invites an external advisor to guide it in its duties. Executives will often hire remuneration consultants to help them determine the highest reward opportunities for their position. Their justification for greater compensation will be informed by data, industry benchmarks and practices and broader insights. RemCos without similar independent expertise will be left at a disadvantage. "In an ideal world, King IV might recommend a Master Reward Specialist as a standing member in all RemCos, allowing them to bring remuneration expertise, independent views and industry best practices to the negotiation," says Grubb. A real solution While most South African businesses have roped in runaway executive earnings, some executives continue to enjoy astronomical rewards. Many proposed solutions – like more onerous regulations or a binding vote for shareholders – may have unintended consequences which would prove to be negative in the long run. "The only real solution is to empower remuneration committees to do the job they were created to do," says Grubb. Most of all, they must be able to challenge the CEOs and executives who, up to now in some companies, have retained the balance of power in their struggle for greater rewards. 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  Dr Mark Bussin, EXCO member of the South African Reward Association (SARA), says that powerful international trends are changing the governance and remuneration landscape significantly.
“These trends are ushering in a profound shift in how we think about governance and remuneration, and smart boards and executive teams need to understand their implications,” he says. “Many of them are developing trends, so companies will need to keep their eye on the ball, and develop flexible strategies to respond to a shifting set of variables.” Dr Bussin says that while there are multiple trends, the following are the most important as they represent key directional shifts: Institutions and regulators flex their muscles Underlying many of these trends is the indisputable fact that both institutional investors and regulators are getting much more specific about what they want from companies in which they are invested. In particular, advisors like Lewis Glass and Institutional Shareholder Services are gaining more influence as they provide advice to large clients, and their agendas are thus gaining traction. Key agenda items include ESG and human capital measurement. ESG becomes a board matter Environment, social and governance (ESG) reporting has become mandatory globally. “The move to include non-financial metrics is positive, as it supplements traditional backward-looking and quantitative financial metrics with a new set that are essentially forward looking and qualitative,” he argues. “However, measurement is much more difficult and there’s no real objective way of doing it yet.” Human capital reporting grows up Another move to a more qualitative approach sees traditional reporting based on figures relating to gender and race being complemented by a deeper look at how the company is managing its talent. “We’re looking beyond numbers-based affirmative action to consider things like dignity, respect and, above all, inclusivity,” Dr Bussin says. Pressure to simplify remuneration Variable remuneration frameworks designed to drive performance have become so complex that that it has become virtually impossible to establish what anyone really earns, and so benchmarking cannot be done. Focus on the vertical and horizontal pay gap continues to grow The vertical pay gap—the CEO’s salary compared to that of the lowest paid worker—seems less and less useful as a measure. The top jobs are becoming more and more complex, and so attracting higher wages, while the lowest remain static. “The vertical pay gap will continue to widen and, in any event, redistributing the CEO’s salary to workers would make absolutely no impact,” says Dr Bussin. “For that reason, companies are moving towards paying a living wage (rather a minimum wage) to all employees as a way to make a real impact on people’s lives.” The horizontal pay gap—also known as the gender pay gap—remains a highly controversial issue. The global average is in the region of 25% whereas in South Africa it falls into the 10%-20% range. While the issue is not as clear cut as it might seem—other factors such as genuine parity of the work done and differing work/life priorities play a role—this is something that is receiving more focus. Work-from-anywhere trend raises significant issues Remote working has been growing in popularity over the past decade or so, strengthened by the recent lockdowns. On the governance side, this work style will demand a move from input-based to outcome-based performance management. Getting this right will surely only be a matter of time, but the tax question is more vexing: to whom would a consultant living in country A and working for multiple clients in various other jurisdictions pay tax? No firm answer to this question exists as yet. A related issue is the growing number of contractors, freelancers, part-timers and consultants: what kind and level of benefits are they entitled to receive? If the answer is none, then should they not be paid a premium? 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  Apart from the where, when and how of employee performance management, not much has changed since the emergence of COVID-19. This is according to Lindiwe Sebesho, Master Reward Specialist and Executive Committee Member at the South African Reward Association (SARA).
"This is because the key principles in performance management remain relevant in measuring and improving employee contribution to business performance or growth," she says. Performance philosophy Many organisations have become a mix of full time on-premises, fixed-hour staff and work-from-home (WFH) employees with flexible hours. So whilst how their performance is set, monitored and evaluated may be more complex, the need to manage performance remains key for business success. Leveraging technology, most employers are optimising various digital platforms that enable real-time, simple-to-use processes to ease the management of performance across the expanded enterprise. However, performance management principles remain focused on the need to set clear performance objectives and on holding ongoing feedback and feed-forward conversations between employers, workers and teams to optimise their contribution to delivering on corporate strategy. Therefore this process still aims to foster a continuous improvement ethic that focused individuals and teams on activities that drive business growth. Its outcomes are largely still ratings based and are used to inform fair, business-aligned skills development, reward and talent decisions such as succession planning. Key principles Organisations still need to clearly communicate their purpose, growth goals, ambition and strategy within a well-defined business context. Next, they must align employee efforts through personal, team, financial and non-financial objectives and key results (OKRs) that capture essential outcomes. As staff execute their duties, regular check-in conversations and real-time feedback enable development and continuous improvement of performance. Further, regular feedback and ratings should be administered, leading to formal annual evaluations that use an established rating scale linked to desired standards of contribution. These rating outcomes are then used as input for making reward and other talent-related decisions. "Whatever the circumstances, business must not become distracted from this proven approach to performance management even where different working arrangements have been adopted," says Sebesho. Underperformance With the country's economic downturn, organisations are eager to maximise resource output wherever possible. Accordingly there is a more concerted effort towards the proactive management of underperformance among staff. "While managers may have let underperformance slide in the past, they are now more focused On ensuring that every worker contributes to growth consistently," says Sebesho. As part of managing under-performance, it is key to understand the factors that negatively impact employee performance. The first is a lack of skills that could result from an ineffective education system and/or limited investment by employers in training and development. Assigning employees to roles that do not fit their competencies can also hamper optimal performance. Organisations that invest in skilling up workers and ensure employees are equal to their responsibilities can overcome this hurdle. The second is low employee morale and engagement, which can be caused by anything from the threat of retrenchments to rewards that do not align with worker values. The best solution is for management to establish a culture of open communication and engage with staff to determine the causes of poor morale. A show of concern alone can help reignite employee interest, although employers must follow through with solutions to maintain trust. Even workers with good morale may suffer from the third factor, a lack of motivation. This can be caused by societal conditions, such as social unrest or political instability, leading to personal problems, like poor mental or physical health. Employers can offset these obstacles with a comprehensive employee value proposition, additional mental and physical wellness support, and positive reinforcement through recognition of desired behaviours. Finally, a lack of resources may prevent employees from producing their best work. Low national economic growth, employer budget cuts or inadequate infrastructure, like transport and telecoms, can rob them of opportunities to work effectively. Employers should consider budgeting for critical resources that enable better productivity, and provide alternative working arrangements, like flexible hours or work-from-home solutions where the nature of jobs allow for such. They also need to provide technical and digital skills support where required. Enhanced performance In summary, WFH and hybrid models necessitated by the pandemic have created greater flexibility in the where, how and when of employee performance but have not necessarily changed the core principles of performance management which remain largely the same and employers must apply them consistently for the best results. Employers should therefore leverage technology to develop simple, real-time processes that enable performance management across expanded enterprise boundaries and maximise their people resources by minimising underperformance. "By acknowledging these trends, employers can maximise their workforce's performance and pursue their full growth potential despite the various operational challenges they face" says Sebesho. 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 litany of serious governance failures laid bare in the published elements of the Zondo Report is a wake-up for South Africa, and remuneration issues are at the heart of the problem—and it’s solution, argues Dr Mark Bussin, Executive Committee Member of the South African Reward Association (SARA).
“In many instances, inappropriate remuneration is the coalface of corruption and incompetence in our state-owned enterprises (SOEs) because, after all, it boils down to money,” he says. “If we sort out remuneration, we are half way to putting our SOEs back on the path for growth, with tremendous knock-on benefits for the economy as a whole.” A major contributor to the problem comes from the way in which Ministers often appoint CEOs directly. Best practice as recommended in King IV’s Supplement on SOEs advises that Ministers only appoint CEOs from a shortlist compiled by the board. Bypassing the board reduces it—and its committees, including the remuneration committee—to a mere rubber stamp. A CEO that is appointed directly by the Minister is in a position to instruct the remuneration committee to approve unjustified and excessive pay hikes and bonuses as has been done in numerous SOEs. Another key issue that emerges from the Zondo Reports is the negative impact of cadre deployment. With political connections counting more than competence or ethics in many of these deployments, many remuneration-committee members are incompetent even if they are not actively corrupt. This means they cannot properly interrogate remuneration benchmark studies and ask the right kind of searching questions. “In fact, these incompetent but politically connected individuals can easily be led to a foregone conclusion,” he says. Dr Bussin believes that too many board members rely on their emoluments from a single board, inclining them to adopting a passive role when it comes to controversial issues, such as the perennially vexed question of executive pay. To preserve their independence, non-executive directors should not be allowed to earn more than 20% of their income from one company, he says. “The real culprit here is cadre deployment which simply loads overheads onto companies for scant benefit. One way to attack this problem would be simply to do away with individual SOE remuneration committees, and institute a central one under the auspices of National Treasury,” he says. A similar approach was evident in President Ramaphosa’s 2022 State of the Nation, which indicated that moves were afoot to implement a centralised shareholder model for SOEs to improve governance. Many commentators pointed out that in essence the plan suggests that the only way to bring the sector under control is to impose governance from above. A centralised remuneration committee would immediately eliminate the need for hundreds of expensive board posts—a quick win for cash-strapped SOEs. “More important still, this approach would re-establish the link between remuneration and executive performance and value delivered to the company. It would also make being a deployed cadre much less attractive to incompetent and corrupt individuals,” Dr Bussin concludes. “Centralising remuneration could be accomplished easily and the payoffs would be large and immediate.” 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 |
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October 2024
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