Annual Report 2016/17 PART D: HUMAN CAPITAL MANAGEMENT. South African Post Office SOC Limited (Registration number 1991/005477/30)

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1 PART D: HUMAN CAPITAL MANAGEMENT 51

2 HUMAN CAPITAL MANAGEMENT Introduction Human Resources at SAPO have stabilised during the period under review. The process of rebuilding the HR environment to enable achievement of the corporate plan objectives was started in 2016/17. The focus was on building a high performance culture through developing and capacitating the organisational structure; developing the capabilities of the workforce and re-establishing performance management whilst maintaining labour stability. As a crucial driver of a high performance culture the objective was to re-establish the discipline of managing organisational and individual performance. This was done though a focus on aligning the corporate plan through the cascading of the goals and objectives to the management level in the different business units and the implementation of new tools and practices in performance management. The discipline of contracting, and conducting mid-year and year-end reviews was re-introduced with a high level of success. A new online paperless SharePoint site was designed to enable a streamlined process and immediate reporting. SAPO also started the process of reviewing all its human resources policies to ensure alignment to legislation and to enable policy environment that support the attainment of organisational objectives. The consultation process with labour is the second phase of this programme and this will be embarked on in the new financial year. The challenges faced by SAPO in its human resources environment are the continued development of the trust relationship between the organisation and its stakeholders, i.e. organised labour, the automation of its HR processes and systems to ensure a higher level of efficiency and compliance and the continued development the workforce to meet current and anticipated skills needs based on the strategic journey of transformation. HUMAN RESOURCE OVERSIGHT STATISTICS Staff Establishment The SA Post Office s staff establishment was as at 31 March 2017, compared to at 31 March The 10% reduction during the year under review was as a result of natural attrition (1 200) and the implementation of a voluntary severance packages (768). A number of employees who took voluntary severance packages went on early retirement. SALARY BAND EMPLOYMENT AT BEGINNING OF PERIOD APPOINTMENTS TERMINATIONS EMPLOYMENT AT END OF THE PERIOD Board Top Management Senior Management Professional qualified Skilled Semi-skilled Unskilled Total * The staff numbers represent a stabilisation of the workforce as the organisation managed to convert all casual employees into permanent employees providing better working conditions and employment stability, leaving only 82 non-permanent positions in the Post Office group. *Excludes internal promotions. Attrition The attrition rate from April 2016-March 2017 was 9,12%. This is also a positive trend from the previous year, where there was a higher level of attrition in especially the skilled workforce. The more positive employee engagement and increasing financial stability is attributed to this trend. The reasons for staff leaving the employment of SAPO is indicated in the table. 52

3 REASON NUMBER % OF TOTAL NO. OF STAFF LEAVING Death 105 5% Resignation % Dismissal % Retirement % Ill health 14 1% Expiry of contract 34 2% Other (VSP) % Total 1968 Employment and vacancies Changes in the strategic direction of the organisation and the operational model have necessitated a review of the SAPO organisational structure. The focus of the year under review was to embed the new Sales (previously Commercial) organisational structure and to finalise and capacitate management structures throughout the organisation to ensure greater accountability. The development of the organisational structures in the operational environment have started with revised crewing in Mail Business and Retail to be finalised in the next financial year. A major focus to capacitate the structure was the filling of branch manager positions to ensure greater accountability and improve customer service in Retail in preparation for the Postbank Corporatisation. The focus was on internal recruitment as part of driving employee engagement and ensuring talent development whilst curtailing a rise in staff cost. The management of vacancies is closely aligned to the need to manage the cost structure of SAPO and all vacancies are reviewed, all new vacancies are reviewed and if possible roles are combined to reduce the number of vacancies. Employment Cost The total staff cost for the year under review was R3,7 billion. The staff cost amounts to 66% of the overall SAPO costs. TOTAL EXPENDITURE FOR THE ENTITY PERSONNEL EXPENDITURE PERSONNEL EXP. AS A % OF TOTAL EXP. NO. OF EMPLOYEES AVERAGE PERSONNEL COST PER EMPLOYEE % Despite the decrease in employee numbers the R9m nett increase in the overall salary cost was brought about by: The appointment of critical skills to enable the Postbank Corporatisation at a cost of R15m Addressing historical salary liabilities at a cost of R168m, to enable labour stability Once off conversion of casual employees at a cost of R140m Implementation of the first phase of Equal Pay for Work of Equal Value targeting Retail branch manager at a cost of R13,8m to improve morale and increase accountability. The stabilisation in the salary bill was brought about through cost containment initiatives, which saved R2.7m in overtime and acting allowances for the period under review. In August 2016, voluntary severance packages were implemented, with the cost being reflected from October 2016 to January The initiative reduced annual employment costs by R138m. SAPO does not have a performance rewards system in place as a results of its financial situation. A key objective of the next financial year is the development of a variable remuneration programme with incentive schemes for the target programmes and employees. This is a crucial driver to establish a high performance culture and to re-establish the discipline of performance management 53

4 Learning and Development The amount spent on training was R3,360m at an average cost of R226 per employee. This reduction of 31% was due to internal training interventions. YEAR # TRAINED R SPENT COST PER PERSON 2014/15 8,249 R R /2016 6,419 R R / ,830 R R internal employees were trained during the 2016/2017 financial year. The training focused on the operations environment (Retail 4420; Mail business ; and other business areas ). PERSONNEL EXPENDITURE TRAINING EXPENDITURE TRAINING EXPENDITURE AS A % OF PERSONNEL COST. NO. OF EMPLOYEES TRAINED AVG TRAINING COST PER EMPLOYEE ,09% Training provided during the year under review focused primarily on increasing product knowledge and enhancing customer service, ensuring compliance (FIAS, FICA, ISO and Total Quality Management). A focus was also on training for managers in mentoring, coaching and performance management. A backlog in training on general computer skills was also addressed. As part of the voluntary severance programme training was offered in personal finance management and job-seeking skills. Funding was approved by Service SETA for 250 learners to obtain a National Diploma in Customer Management and a Postal Frontline qualification respectively. To enhance governance and enhance accountability and transparency with labour partners, the Employment Equity & Skills Development Committee (ESDC) was re-instated during the 2016/2017 financial year. Employment Equity SAPO has reviewed its employment equity targets taking into account the level of natural attrition and the strategic workforce skills plan. Although SAPO largely mirrors the diversity profile of the economically active population, inroads have been made in ensuring greater representation at management level, specifically in the retail business in the african and coloured female target groups. The targets for african and coloured females at senior management have still not been reached and programmes have been implemented to address this. WHITE AFRICAN COLOURED ASIAN TOTAL MALE FEMALE MALE FEMALE MALE FEMALE MALE FEMALE NATIONAL EAP TARGET 6,78% 5,34% 39,12% 35,77% 5,38% 4,70% 1,79% 1,12% Top Management Under/Over represented Senior Management Under/Over represented Professional Qualified Under/Over represented Skilled Under/Over represented Semi-skilled Under/Over represented Unskilled Under/Over represented TOTAL Disabled employees account for only 0,08% of the total workforce with the South Africa s national average at 8% and the Post Office s own target is 2%. A disability management programme is being developed to address this. 54

5 Employment Relations In the year under review, a total of 1274 misconduct cases were concluded nationally which led to 56 dismissals. 141 grievances were resolved across the organisation, which represent 0.7% of the total workforce SAPO has three recognised trade unions and 80% of its bargaining unit employees belong to trade unions. The objective for the year under review was a re-commitment of all parties to sound labour relations and a review of all agreements that govern the relationship. Greats strides were made to agree on the principles of a new National Recognition Agreement and the parties are committed to finalising the process in the 2017/18 financial year. The year under review saw the fruits of these efforts with increased operational stability and no debilitating industrial action. 55

6 Consolidated Audited Annual Financial Statements for the year ended 31 March Annual Report 2017