 Authored by: Dr Mark Bussin, Exco Member of the South African Reward Association (SARA)
December 9th is International Anti-Corruption Day, an annual event created by the United Nations in 2003 to raise awareness about corruption and how to fight it. Dr. Mark Bussin, Master Reward Specialist and Executive Committee Member at the South African Reward Association (SARA) and Chair of 21st Century, says reward practitioners are duty-bound to combat corruption along with the rest of society. “In fact,” he states, “their efforts are even more significant because they are responsible for a key area of public concern, that is, the fair and equitable remuneration of employees and executives.” Transparency International defines corruption generally as “the abuse of entrusted power for private gain". At a more fundamental level, something is considered to be corrupted when it is intentionally or unintentionally reduced from a desired state to an undesirable one. According to Dr. Bussin, the only true way to negate this effect is through moral reflection. “Corruption is not always an immediate condition but can be a weakening of principles and boundaries over time,” he says. “Reward practitioners must therefore have the courage to introspect themselves, their work and their organisation’s ethical posture, and decide to take corrective action where necessary.” Personal review It’s easy to become corrupted by small compromises, maybe for fear of losing a client or having one’s career sidelined. Every reward practitioner must regularly and honestly re-evaluate their conduct against their profession’s ethical standards, and recommit themselves to honour those codes if they have slipped. Programme review Likewise, reward programmes may seem ideal during conception. But always be willing to audit them after implementation to make sure they remain fair, equitable and ethical as the enterprise evolves. Organisational review Good governance considers not what is governed but the manner in which it is governed. This suggests that something can be successfully managed, though not in a responsible or ethical way. Does your organisation continue to adhere to good governance principles and practices, especially in terms of rewards, or has it devolved into lip service? Continuous professional development To ensure the best conduct from oneself and one’s organisation, ethics and good governance must be reviewed frequently, lest they be forgotten. So they should be a central component of the rewards practitioner’s commitment to lifelong learning. Whistleblowing Every organisation should have a formal whistleblowing process in place that assures anonymity and protection. Reward practitioners can promote this as part of their reward programmes, equal to wellness or location incentives, to attract desirable job candidates. After all, who wouldn’t want to work for a company that holds itself accountable? An incorruptible culture In some instances, corruption becomes the new norm among those conspiring to reap undeserved benefits, making it seem acceptable - even desirable - to conform. Reward practitioners can help develop a workplace culture where corruption is never tolerable but is readily exposed. On International Anti-Corruption Day, reward practitioners at all levels should take the time to reflect on ways to reduce corruption in their areas of responsibility and organisation. “It is the ideal opportunity to reconnect with our highest values,” concludes Dr. Bussin. ENDS MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za For more information on SARA please visit: Website: www.sara.co.za Twitter: @SA_reward LinkedIn: South African Reward Association Facebook: SARA – South African Reward Association
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 Authored by: Deon Smit & Muhammed Goolab, South African Reward Association
Your employees are your company’s most important asset. They are the ones tasked with serving your customers, implementing strategies and driving your teams forward to achieve their goals. According to 2018 Gallup research, however, 85% of the workforce is disengaged. What is a ‘disengaged employee’? They are mentally ‘checked out’ and sleepwalking through their workday without passion and energy. These workers withdraw themselves mentally and emotionally from their jobs. The economic consequences of lost productivity due to disengaged workers is estimated to be around $7-trillion per year, but many of the costs are difficult to quantify because these costs are often intangible and untracked. Disengaged employees often have higher rates of absenteeism, resulting in more sick days taken, and they are more likely to be actively seeking other employment.This increases the associated costs of recruitments because these employees often need to be replaced at higher rates. Employee engagement is generally measured or defined by a number of factors, including the extent to which an employee feels that his or her contribution is important and is recognized and how inspired the employee feels about the organization and the extent to which the organization can cultivate this inspiration. Whether the employee perceives a workforce within the organization, and the extent to which an employee believes that he or she is paid fairly and equitably for the jobs they do, are also things that can be tracked to measure how engaged an employee is. Turning disengaged employees into engaged employees in 3 steps Engaged employees are natural brand ambassadors and companies who want to turn their disengaged staff into engaged workers need to focus on three things: the organization’s culture, communication and rewards. Employee engagement starts at the top and leaders need to invest in a culture of engagement and growth. Employees will be looking to their line managers for leadership, so these executives need to have the right leadership skills to actively engage the people that report to them and focus on reinforcing a positive work environment. Secondly, companies also need to effectively communicate their objectives while at the same time taking employees along on the journey with them. Employees need to know and understand how their contributions make a difference in achieving the company’s greater vision, so their role and importance in the business needs to be clearly communicated to them.Communication allows the organization to be held accountable in driving engagement and deliver against what they have committed to. Thirdly, the success and contribution of employees must be celebrated and recognized. This recognition must be done in a meaningful and consistent manner. Organizations should focus on the individual by creating clear career paths, growth, and development programs, as well as career advancement planning. Although monetary rewards are not seen as a driver of engagement, employees will become disengaged as soon as payment is perceived to be unfair. Money is a reinforcement for achievements, so use this reward wisely. The importance of an engaged workforce can’t be overstated. Reduce staff turnover, improve productivity, retain more customers and increase your bottom line by connecting with your employees in ways that count. ENDS MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@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  King IVTM is set to have a major impact on how companies look at remuneration in 2019 and beyond, says Dr Mark Bussin, Exco Member of the South African Reward Association (SARA) and Chair of 21st Century.
“There has been a lot of discussion about King IV’s recommendations about non-binding votes and engaging with stakeholders about remuneration, but I think that the emphasis on single-figure reporting is likely to pose the greatest challenge—and have the longest lasting effects,” he says. “Single-figure reporting is integral to King IV’s move towards a full disclosure view of remuneration, not the traditional one based exclusively on just providing director remuneration in lengthy tables.” To arrive at the single figure recommended by King IV, companies will have to undertake the difficult task of valuing the shares to which executives and directors are entitled, whereas in the past they were able simply to state what the awards were. This move is aimed at making it easier for analysts as well as other stakeholders to gain a consistent view of the company’s true position.However, given the fact that market values and company performance are both highly unpredictable, a fair amount of educated guesswork will be unavoidable. The answer, Dr Bussin, believes, is to decide on a methodology for arriving at the desired value and then use it consistently over time.“In the end, we are looking to understand the direction in which the company is moving more than the absolute values,” he says. “It’s very important also to disclose the assumptions on which the final conclusions are based.” A related trend will be to get better at performance-related pay. Dr Bussin believes that a lot of work needs to be done in this area. In particular, companies need to be better at disentangling luck from skill. To a large degree, company performance is determined by the market: in a rising market, everybody’s revenues go up, in a falling one, they go down. He argues that performance-based remuneration should reflect out-performance of the average rather than simply rewarding better performance. “To be fair, the reward should be based on how much more the company has risen than its peers in a rising market, or on how much less it declined in a falling one,” he explains. “People get unhappy about high executive remuneration when they cannot see a link between what the executive in question did and the company’s performance. Companies will therefore need to get much better at articulating what an individual actually did to earn his or her bonus.” A third key trend for 2019 will be closing the gap between what is paid to men and women for doing the same job, and also between the highest and lowest paid within an organisation. To make progress in these areas, and to avoid simply mindlessly complying with legislation or codes, it will be necessary for companies to explain what lies behind their remuneration strategy, and how they propose to move towards a fairer dispensation. He argues that the gap between highest and lowest wages within the company is perhaps the most worrying because it is currently widening, and the lowest paid employees are particularly vulnerable to the impact of artificial intelligence and robotics as the so-called Fourth Industrial Revolution gathers pace. The only way to counter this, he believes, is to greatly increase the effectiveness of the educational system. Some commentators argue that in fact the Fourth Industrial Revolution will likely create more jobs than it destroys, but only for those with the right level of skill. “All of these trends are ultimately powered by King IV’s welcome insistence that ‘performance measures that support positive outcomes across the triple context in which the organisation operates, and/or all the capitals that the organisation uses or affects’ should be used when crafting remuneration policies,” Dr Bussin concludes. “The days of easy formulas are over: we have to be able to justify why we are paying what we do by showing that we are rewarding individuals who have created value for the company and society more broadly.” ENDS MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@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 At the 3 November 2018 Reward Awards ceremony hosted by the South African Reward Association (SARA), Standard Bank won the Reward Project award while the Nu Clicks Group won the Remuneration Report award. Martin Hopkins received the prestigious President’s Award.
The annual awards – sponsored by Remuneration Consultants and 21st Century – celebrate teams of reward professionals that design reward structures with a mix of innovation, business acumen and technical expertise in the financial and non-financial aspects of pay. The design of an effective reward structure is crucial for organisations that want to attract, retain, motivate, and engage the employees that are best suited to helping the organisation achieve its goals. These remuneration structures have to be designed for and applied in the unique South African context and take into account the numerous economic and social challenges employees have to face. Reward Project Award The award for the 2018 SARA Reward Project of the year recognised the team from Nu Clicks Group that was responsible and actively involved in the development and implementation of a new reward project. The aim of the project was to make employees shareholders of the Nu Clicks Group, not only to attract and retain specialist talent like pharmacists but to ensure that all employees realised the value of their contributions. The Nu Clicks Group was congratulated for not only achieving B-BBEE milestones but also creating wealth for employees. The project touched peoples’ lives in an unimaginable way and received coverage in various media. At the request of Cosatu, the project methodology is being shared with other organisations. The other placed nominees of the 2018 SARA Reward Project of the year award were ACSA in second place, and St Stithians College in third. Remuneration Report Award The winner of the 2018 SARA Remuneration Report of the year award is Standard Bank. Anglo Gold Ashanti received 2nd place and Sasol received 3rd place for their submissions. The Remuneration Report Award recognises organisations for how well they have demonstrated compliance with the King IVTM principles through clear and concise disclosure of the company’s remuneration philosophy and its application. The King IV Report was published on 1 November 2016 and is effective in respect of financial years commencing on or after 1 April 2017, and therefore this year’s submissions were the first evaluated against the King IV principles. A panel of judges evaluated nominations and considered how organisations are demonstrating the broad principles of transparency, fairness and responsible pay decisions. Specific focus was given to how organisations report on the remuneration detail, including fixed and variable pay. President’s Award A special President's Award that honours outstanding achievement in the field of reward was awarded to Martin Hopkins for his significant and notable contributions in shaping and uplifting the reward profession both during and prior to being a SARA Exco member. During his career, Martin has developed and nurtured many young reward professionals. As a consultant, he has developed leading edge remuneration programmes for companies based locally and abroad. Martin has also been the Remuneration Lead in the development of the King III and King IV remuneration governance sections. By continuing to host the Reward Awards, SARA hopes to highlight pay practices that adhere to good governance and industry best practice. The association hopes to inspire reward professionals to always aim for transparency, fairness, and responsibility in determining how employees and executives are rewarded for their effort. 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 Employment Equity Act provides for the equitable treatment of people in the workplace by ensuring that there is no unfair discrimination on the basis of race, gender, religion, language, political affiliation, disability, age etc.
However, there are certain instances where employers may differentiate the terms and conditions of their employees so long as such differentiation is not based on the above grounds or any other impermissible arbitrary ground. Lindiwe Sebesho, Master Reward Specialist and executive committee member of the South African Reward Association (SARA), says with the introduction of the “equal pay for work of equal value” legislation, a lot has been said about when employers can justifiably differentiate the way they pay their employees. The grounds The grounds on which an assessment of whether differentiation is permissible and fair are quite specific and include, amongst others - seniority or length of service; qualifications, ability, competence or potential; performance, quantity or quality of work; demotion, skills shortage, type of employment contract (permanent vs temporary). It is important that employers consider these factors holistically to ensure their justification for the differentiation is sound:
Burden of Proof Sebesho says the fact that the burden of proof is on the employee makes it very difficult for employees to raise issues or concerns related to perceived unfair differentiation. “It can be expensive and emotionally draining as the complainant employee has to make a prima facie case of discrimination and set out the grounds on which he/she believes they have been discriminated against.” A claim of discrimination has to be based on listed or arbitrary grounds. Listed grounds include discrimination on the basis of race, gender, language, political affiliation or age and religion, etc. In terms of arbitrary grounds, the employee will have to show what conduct of the employer has impaired his/her fundamental human dignity. Sebesho advises employers and employees alike to arm themselves with knowledge about the “equal pay for work of equal value” provisions of the Employment Equity Act and know what allowable differentiation entails. 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  Other than the structural issues our society faces, one factor that has been fueling the existing gender pay gap in South Africa is the educational and career choices young women make.
The World Economic Forum says the pay gap is not simply because men and women are paid differently for the same job. Women tend to work in industries with lower average pay‚ rather than high-income areas such as finance or technology. Lindiwe Sebesho, Master Reward Specialist and executive committee member of the South African Reward Association (SARA), says women have to empower themselves with knowledge about the skills demand patterns that attract more pay. They need to use this information to their advantage when they choose their study areas and eventually make their career choices. “It is also about understanding remuneration practices, especially when it comes to the pay gap issues. Progress has been made from a legislative perspective to ensure that equal work gets equal pay but most employees, especially females, may not have enough information about this.” Do the research Researching and reaching out to associations like SARA, who have large volumes of information on pay practices in different sectors, is part of how women can empower themselves. A good understanding of how remuneration packages are structured in both financial and non-financial benefit terms is key in ensuring that one understands job worth and one’s own package in relation to that. Once again women should have a general sense of what the benchmark remuneration packages are for the jobs they are considering. This will help them determine whether they are being treated fairly. Remuneration packages in many industries include short and long term incentives that are usually linked to company and individual performance conditions. “It is important to understand how these are calculated so that one can contribute optimally towards the success of the company in order to influence same.” Sebesho says the non-financial part of the package does not put money in your pocket, but it does carry weight when the total package is considered. This includes company benefits such as pension fund contributions, medical aid schemes, the number of paid annual leave days, maternity leave days, access to educational bursary schemes, etc. Although some of these benefits are legislated under the Basic Conditions of Employment Ac, many companies enhance their employee value propositions by offering more than what is legislated. For instance, women planning to start a family should consider what a company’s maternity leave policy is, over and above the financial remuneration elements. “It certainly becomes an attractive offering that one must consider as part of their remuneration package when a company pays over and above the standard three months for maternity leave,” Sebesho remarks. Track your progress Landing the perfect job or career is only the first step towards a successful career. To ensure that you are recognised and paid fairly for the work you do, it is important that one understands and optimises the performance management processes that the company follows to clarify expected deliverables. “Make sure that whatever you are supposed to deliver is measurable and easy to substantiate in order to illustrate the contribution you are making,” Sebesho advises. “Keep track of your progress and achievements.” Talk about your success Women tend to be too modest about what they are capable of. “Communicate your success and ensure that people who should know are fully aware of how you are delivering against your goals and therefore contributing to the company’s success.” Is it a competitive world out there and standing out by empowering yourself with knowledge that will help you negotiate for a promotion, increase your pay or ensure fair pay is key. Many women assume that if they work hard, somebody will notice and recognise them,” says Sebesho. It does not happen – success is partly up to you and you have to take charge of it. “You have to sell yourself. You have to use every opportunity possible to display your achievements and how things can be done even better.” In this way women can contribute towards making sure that the pay gap shrinks rather than grows. 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  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 |
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