Employment Equity Act Section 6

Transcription

1 Employment Equity Act Section 6 1

2 The History

3 The current scenario... 3

4 4 Some interesting facts According to the 2015 World Economic Forum global gender gap report, it is likely to take 118 years on average for women to receive equal pay to men. In South Africa, this gap in earnings is estimated to be between 15 and 17%. The implication is that a woman would need to work two months longer than her male counterpart to earn as much in the same role.

5 Reminder: Equal Pay for Work of Equal Value 5 Overview of the Legislation Employment Equity Amendment Act 47 of 2013 (Effective 1 August 2014) Section 6 Employment Equity Regulations 1 August 2014 (Effective from date of publication) Criteria for assessment Factors of differentiation Code of Good Practice 1 June 2015 Guidelines on implementing: criteria for assessment, differentiators, comparing male and female dominated jobs, process for evaluating equal pay/remuneration for work of equal value

6 6 Reminder - Arbitrary and Listed grounds unfair discrimination Section 6(1): constituent elements No person may unfairly discriminate directly or Indirectly against an employee in any employment policy or practice on one or more grounds Including race, gender amongst others or on any other arbitrary or unlisted ground e.g depression or human dignity or physical appearance e.g blonde hair

7 7 Path to Follow Job Evaluation Foundation Terms and Conditions of Employment HR Procedures Remuneration Policy Justifiable Differences Performance Management Audit Pay differences Conditions of Employment Skills Plan Corrective Actions and Timing

8 8 Job Evaluation : Legal Requirements The ILO Convention, which is echoed in the Code, focuses on gender based discrimination in terms of job evaluation. The Convention requires that measures should be taken in order to promote objective appraisal of jobs on the basis of the work to be performed. Responsibility for finance, people, material; Skills and qualifications (includes prior learning and experience); Effort (physical, mental, emotional); Conditions under which work is performed (physical environment, psychological conditions, geographic location); Any other factor indicating value of the work

9 9 Job Profiles Typical Content Purpose Statement Qualifications Competencies Outputs Budget Biographical Issues Legal Requirement Skills and qualifications (includes prior learning and experience); Responsibility for finance, people, material; Conditions under which work is performed (physical environment, psychological conditions, geographic location); Effort (physical, mental, emotional); Any other factor indicating value of the work

10 10 Job Evaluation Policy Grading system Patterson Peromnes Hay Methodology Extraordinary conditions Grade Jobs Grading Committees Consistency across the organisation Removal of bias perceptions

11 11 Path to Follow Job Evaluation Foundation Terms and Conditions of Employment HR Procedures Remuneration Policy Justifiable Differences Performance Management Audit Pay differences Conditions of Employment Skills Plan Corrective Actions and Timing

12 12 Terms and Conditions of Employment Attach benefits: Conditional benefits Night shift allowances Acting Allowances Transport Overtime Commission Job Requirements Car Allowance Petrol allowance Is the benefit a requirement of the job? Defensible Applicable to all in the role

13 13 But it is not just Remuneration and benefits HR Processes / Procedures recruitment procedures, advertising and selection criteria appointments and the appointment process job assignments the working environment and facilities training and development promotion transfer Demotion Monitoring mechanisms HR sign off Committee sign off EE Committee Incapacity disciplinary measures

14 14 Path to Follow Job Evaluation Foundation Terms and Conditions of Employment HR Procedures Remuneration Policy Justifiable Differences Performance Management Audit Pay differences Conditions of Employment Skills Plan Corrective Actions and Timing

15 Justifiable Differences 15 NOT unfair discrimination if the differentiation in pay/remuneration is not based on a listed or arbitrary ground. Must be fair and rational and based on any one or more of the following grounds: Seniority or length of service; Qualifications Ability, Competence or potential above the minimum acceptable levels required for the performance of the job Performance, Quantity or quality of work, provided that employees are equally subject to the employer s performance evaluation system, and that the performance evaluation system is consistently applied; Demotion as a result of organisational restructuring or for any other legitimate reason without a reduction in pay/remuneration and fixing the employee s salary at this level until the pay/remuneration of employees in the same job category reaches this level; Employed temporarily in a position for purposes of gaining experience or training and as a result receives different pay/remuneration or enjoys different terms and conditions of employment; Shortage of relevant skill in a particular job classification; and

16 Justifiable Differences Remuneration Policy Purpose Attraction Retention 16 Benefits Scarce Skills Audit Market Guaranteed Vs Variable Pay Remuneration in your Organisation Philosophy Prior learning Performance Recognition Guiding Principles Fair & Equitable Reinforce Teamwork Scope Equal Varying Benefits

17 17 Justifiable Differences Remuneration Considerations Guaranteed Pay Job Complexity Measurement Job evaluation tools Company s market position percentile Pay scales Pay progression Principles Underpinning philosophy Skill Effort Conditions Individual Performance Team Performance Bands per Job Function Bargaining councils / Unions

18 18 Justifiable Differences Remuneration Considerations Variable Pay Short Term Long Term Underpinning philosophy Self funding vs Budget Retention or Attraction Rules Measurement Criteria Timing Eligibility Levels in the organisation Job Function

19 19 Justifiable Differences Remuneration Considerations Benefits Guiding Principles For the majority Legislative adherence Fixed vs variable benefits Flexilibity Structure Total Package Add on Level Dependent

20 20 Path to Follow Job Evaluation Foundation Terms and Conditions of Employment HR Procedures Remuneration Policy Justifiable Differences Performance Management Audit Pay differences Conditions of Employment Skills Plan Corrective Actions and Timing

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22 PERFORMANCE MANAGEMENT THE MEDIA IS STILL PREACHING ABOUT PERFORMANCE MANAGEMENT 22

23 23 CEB Research 2016 Based on respondents in 18 countries (CEB, 2016), the business case for throwing out ratings fails to hold for most

24 Employee Perceptions Initial Euphoria Does Not Last 24 Typical Satisfaction with Performance Management and Pay Over Time When Removing Ratings Illustrative Satisfaction with Performance Management Over Time Initial Euphoria: There was an initial huge boost in morale. Employees felt good that we were removing the part of the performance management process they thought they hated most. Director of HR Technology Industry Reality Sets In: Our performance and pay systems began to look like a black box. Without the visible symbol of a rating, employees didn t understand the processes or the philosophies behind them. HR VP Health Care Industry Positive Negative n = 9,686. Source: CEB 2016 Pay for Performance Employee Survey Performance Review Cycle After Removing Ratings 2016 CEB. All rights reserved. CLC SYN 2 4 cebglobal. com

25 Expectation 1: Increased Employee Engagement Reality: Managers Struggle to Engage Employees Lack of Ratings Impact on Employee Engagement a Average Employee Engagement Score Ratings 6 % No Ratings n = 9,686. Source: CEB 2016 Pay for Performance Employee Survey. a Employee engagement scores comprise two batteries that represent employees involvement in their work and intent to stay at their organization. Note: The reduction in employee engagement is statistically significant p < Advice for Organizations Without Ratings 25 Communicate new performance management philosophy and processes to employees so they understand what to expect and how it is intended to benefit them. Identify new and different ways to recognize high performance outside the traditional performance management process to improve employee engagement. Employees felt that having performance reviews without the rating was like g o i n g out to a nice dinner but without steak. You got the sides but not the main meal. HR Leader Telecommunications 2016 CEB. All rights reserved. CLC SYN 2 5 cebglobal. com

26 Expectation 2: Increased Performance Management Time Spend Reality: Managers Spend Less Time on Informal Conversations Without Ratings Manager Time Spent on Performance Management Activities a Average Hours (and Proportional Time Spent) on Performance Management per Year, per Direct Report % 43 Hours 7 Hours (16%) 36 Hours ( 8 4 % ) Ratings The Bottom Line In the absence of ratings, managers spend less time on performance management activities. But they do not shift that extra time toward ongoing, informal performance conversations. n = 9,686. Source: CEB 2016 Pay for Performance Employee Survey. 30 Hours 6 Hours ( 2 0 % ) 24 Hours ( 8 0 % ) No Ratings Formal Performance Management Activities Informal Performance C onversations a Formal performance management activities include goal setting, performance evaluation and calibration, documenting employee performance, and preparing for performance conversations. To calculate time spent on informal conversations per year, manager conversation sessions were estimated to last one hour. Note: The reduction in time spent on performance management activities is statistically significant p < Advice for Organizations Without Ratings Set expectations for the timing and frequency of performance conversations to encourage managers and employees to have regular discussions. Allow employees to own performance conversations so that they can customize discussions and share accountability with managers CEB. All rights reserved. CLC SYN 10 cebglobal. com

27 Expectation 3: Improved Manager Conversations Quality 27 Reality: Manager Conversation Quality Decreases Without Ratings Lack of Ratings Reduces Employee Perceptions of Manager Conversation Quality a Average Quality of Manager Conversation Score 1 2 Ratings 14% How T hey Performed in the Past Performance on assignments, contributions to organizational success, impact on customers or partners How to Improve Future Performance Developmental action steps, future performance objectives, work priorities, clarity of expectations n = 10,531. Source: CEB 2014 Enterprise Contribution Workforce Survey. No Ratings Quality of Manager Conversation Score Defined Advice for Organizations Without Ratings Measure the quality, not just occurrence, of manager conversations through existing employee surveys or other feedback mechanisms to focus managers on conversation quality. Train managers to send clear messages about performance and development without ratings by providing concrete evidence of how the employee is performing and progressing. a This calculation was completed using the Quality of Manager Conversation Score, which represents how effective managers are at helping employees understand their performance in the past and how they can improve performance and development in the future. Note: The reduction in manager conversation quality is statistically significant p < CEB. 2 7 cebglo bal.co

28 Expectation 4: Increased Accuracy of Pay Decisions Reality: Employee Perceptions of Pay Differentiation Decrease Without Ratings Perceptions of Pay Differentiation Decrease Without Ratings Average Perceptions of Pay Differentiation a 8% Advice for Organizations Without Ratings 28 Guide managers to make pay decisions by using simple criteria such as performance against role, goal achievement, and role criticality to identify employees who should receive the highest awards. Connect a summary of the employee s contributions to their pay decision, and provide organizational context to show employees how pay decisions were made fairly. Ratings The Bottom Line n = 9,686. Source: CEB 2016 Pay for Performance Employee Survey. No Ratings While many organizations report that pay differentiation increased when they removed ratings, employees believe there is less differentiation because managers struggle to explain how pay decisions are made and linked to individual contributions. a Perceptions of pay differentiation represents a drop in the number of employees who believe their organization differentiates pay. Note: The reduction in pay perceptions is statistically significant p < When we removed ratings, employees seemed to stop believing we were differentiating pay at all. The rating seemed to symbolize to employees that pay for performance was occurring in practice. V P of TR Health Care Industry 2016 CEB. All rights reserved. CLC SYN 28 cebglobal. com

29 Greater Negative Impact for High Performers Without Ratings The Negative Impact of a Lack of Ratings Is More Pronounced for High Performers a Manager Time Spend: High performers are less satisfied with manager time spent on performance management. Manager Conversation Quality: High performers are less satisfied with manager conversations. Reward Differentiation: High performers are less likely to feel that they are rewarded appropriately for their contributions. n = 9,686; 10,531. Source: CEB 2016 Pay for Performance Employee Survey; CEB 2014 Enterprise Contribution Workforce Survey. a High-performing employees were in the top quartile on an index that measured performance against individual tasks and collective contributions. Impact of Lack of Ratings on Employee Satisfaction with Manager Conversations by Performance Level Average Quality of Manager Conversation Score b With Ratings High performers are the ones who like ratings the most. The rating is a form of recognition for the work they are doing, and we are afraid that whatever we replace that label with won t have the same effect. High 28% Without Ratings Low Employee Performance 12% n = 5,004. Source: CEB 2016 Pay for Performance Employee Survey. b This calculation was completed using the Quality of Manager Conversation Score, which represents how effective managers are at helping employees understand their performance in the past and how they can improve performance and development in the future. 29 Senior HR Director Pharmaceuticals Industry 2016 CEB. 2 9 cebglo bal.co

30 30 Conclusion: Business Case Fails to Hold for Most Many organizations have received positive feedback after eliminating performance ratings. However, the initial positive reaction tends to fade and the key performance outcomes that organizations expected to increase actually suffer. Success Without Ratings Requires Significant Investment Although a handful of managers are more effective without ratings, most organizations will find it too difficult to get their managers to the level needed to make the change worth the significant investment. Focus on Other Changes Besides Removing Ratings Rather than focusing on the ratings debate, organizations should improve their performance management and reward practices CEB. All rights reserved. CLC SYN 3 0 cebglobal. com

31 31 Alternatives Democracy is the worst form of government, Winston Churchill reminded us in 1947, except for all those other forms that have been tried from time to time. The same is true for performance evaluations: They re far from perfect, but they re also far better than the alternatives.

32 32 SA Research UP Masters Research (n = 303) Rated as Generation Y (< 31) Generation X (32 47) Baby Boomers and Veterans (47+) important 1 Performance management and Performance management and Compensation (M = 4.04) recognition (M = 4.10) recognition (M = 4.15) 2 Development and career Development and career Performance management and opportunities (M = 4.09) opportunities (M = 4.02) recognition (M = 3.86) 3 Benefits and safety (M = 3.91) Compensation (M = 4.00) Benefits and safety (M = 3.74) 4 Compensation (M = 3.81) Benefits and safety (M = 3.85) Development and career opportunities (M = 3.59) 5 Work-life balance (M = 3.68) Communication work enabler (M = 3.51) Communication work enabler (M = 3.33) 6 Communication work enabler (M = Work-life balance (M = 3.50) Work-life balance (M = 2.96) 3.13) 7 Life convenience (M = 2.61) Life convenience (M = 2.39) Life convenience (M = 2.04)

33 Different Types of Performance Management Systems 33 Traditional Balanced Scorecard Performance Management Systems 360 Outcomes Based

34 Traditional Several factors standard for everyone which are rated on a rating scale e.g. 1 to Volume of work Quality and accountability Relationship with other staff members Relationship with company Knowledge and skills Reliability and punctuality Attitude to the job Achieving the objectives

35 Feedback 1. What is your relationship to the individual you are rating? Self... I am evaluating myself Manager. I am evaluating the employee as his/her manager Colleague.. I am evaluating a colleague within my department Direct Report.... I am evaluating my manager Internal customer I am evaluating a colleague/team member outside my department Other I am evaluating a person who does not fit in the above group e.g. external customer

36 Balanced Scorecard - Examples 36 Financial Operating Income Growth Same Store Sales Growth Inventory Turns Expense / Sales Growth Ratio Net Profit Shareholder returns Internal Processes Customer Frequency of Purchase Units Per Transaction Transaction Size Customer Feedback Length of time Learning & Growth Category market Share Category Margin Sales Quality / Returns Out of Stock Management processes and procedures IT processes Employee climate Survey Turnover Strategic Skill Coverage Systems vs. Plan New products and services Innovation

37 Balanced Scorecard - Learning And Growth Perspective 37 Objectives Measures Targets Responsibili ty Create new climate, new ethos and changed attitudes based on the core values of integrity, exceptional service through attention to detail, innovative spirit, competitive and embracing a global mindset Implement effective HR Performance Measurement system Establish separate defined HR function Staff attitude survey New initiatives from staff (# suggested and implemented) Employee turnover Understand and minimise reasons for loss of key staff Policies implemented & system operating New Dept operating Organisational structures in place and management & staff appointed (complete by DATE) Staff attitude survey - DATE Budget responsibility DATE Progress on Black Employment Equity (BEE) initiative HR performance measurement system introduced by DATE All staff appraised by DATES (Quarterly performance reviews with annual appraisal) Fully functional DATE HR policy audit and plan by DATE HR policy published and available on Intranet by DATE

38 38 Output Based Role Of Goals 1. Individual performance goals link what individuals do every day to the larger goals and values of the organisation 2. Goals help connect individuals, teams and the organisation with their customers 3. Goals can be used as a communication tool 4. Goals can assist individuals in the self management process 5. Goals help create the future

39 39 Output Based Outputs Not Activities If a teenager sees his job as watering the garden (an activity), he will probably focus solely on the act of watering. On the other hand, if he is responsible for producing a healthy garden (an output), he ll be more alert for cues from the garden about what it needs. He will do what s necessary for the garden s health, whether it be weeding, fertilising, watering, irrigating, or eliminating insects. If a manager sees her job as training people (an activity), she may be satisfied to send them to classes. If, on the other hand, her responsibility is to produce managerial candidates (an output), she ll be concerned that her people actually acquire the knowledge and skills that will make them good candidates. This approach may require developing new training materials, providing developmental opportunities on the job, finding self-study materials, sending people to classes, testing competencies, coaching or any number of methods that may produce the final output: managerial candidates.

40 40 Performance Plan Outputs for the Year OUTPUTS Quality Measures or Weighting Customer Requirements Indicators

41 Recommendations Keep things simple and not bureaucratic 2. Involve staff especially line managers whose buy-in is critical 3. Gain support from those at top of the organisation 4. Communicate and consult with staff thoroughly and manage expectations 5. Train those involved in decision making and those conduct the appraisal 6. Align performance management with other aspects of HR as well as business strategy 7. Regularly monitor, evaluate make changes as necessary 8. Ensure that you comply with section 6 of the Employment Equity Act

42 Rating Scales 42 Standard / Typical 4-6 ratings Meeting or exceeding an expectation Rating 5 Outstanding 4 Exceeds Expectations 3 Meets Expectations 2 Needs Improvement 1 Unacceptable

43 Rating Scales cont. 43 Goal Status Scale Rating Goal Achieved (3): Active Goal (1): Goal Not Met (0): Goal Deferred (-): All milestones and success measures have been achieved The goal is still in progress, some milestones may have been achieved Timeframe for Goal has been met; however, some or all milestones and success measures have not been met For timing or business reasons, this goal has been deferred

44 Rating Scales cont. 44 Development Item Status Scale May appeal to managers as it is a score Employees may find it more robust? Allows for more differentiation between employees Could look at this and then work out an average Link an average back to a rating of 1-5 Rating 100% Complete 75% to 99% Complete 50% to 74% Complete Less than 50% Completed Not Started

45 Rating Scales cont. 45 Observation Frequency For soft skills Rating Consistently Observed Observed Observed Sometimes Seldom Observed This competency/skill is observed on a constant basis; everyone in contact with this person would observe excellence in this area This competency/skill is observed, please continue to focus on it so that it is observed constantly without exception The competency/skill is observed on an infrequent basis, there is a clear development opportunity here Needs Immediate Improvement

46 46 Facebook We translate our ratings directly into compensation. Notably, this process involves a formula, so managers have no discretion in compensation decisions. It s fair: If you excel, your bonus multiplier rises according to a predetermined equation, not someone s opinion. This focuses managers on what they can accurately assess and allows the company to manage pay using compensation expertise. It s also a huge time-saver. When other companies eliminate performance evaluations, they still spend many hours agonizing over compensation decisions. For us, time invested in performance reviews is time saved on compensation.

47 Conditions Necessary To Link Pay To Performance 47 Performance dimensions must be readily measured All critical performance dimensions must be captured by the system and standards set for each Performance must be important to the employee and employer/manager Performance must be under employee s direct control Monetary incentives must be compatible with other outcomes important to the employee Monetary level and merit differences must be meaningful to employee System must be affordable Relationship between manager and employee must be one of mutual respect, trust, openness, effective communication

48 48 Path to Follow Job Evaluation Foundation Terms and Conditions of Employment HR Procedures Remuneration Policy Justifiable Differences Performance Management Audit Pay differences Conditions of Employment Skills Plan Corrective Actions and Timing

49 What is the Status Quo 49

50 50 Audit Identify the scope of the audit part or whole organisation Compare the jobs that are the graded the same or of similar value Include a comparison on female-dominated jobs with male-dominated jobs Evaluate against pay and benefits By race By gender By scarce skill By performance level Highlight differences Report on those based on arbitrary grounds Identify acceptable differences based on agreed principles for differentiation.

51 51 Path to Follow Job Evaluation Foundation Terms and Conditions of Employment HR Procedures Remuneration Policy Justifiable Differences Performance Management Audit Pay differences Conditions of Employment Skills Plan Corrective Actions and Timing

52 52 The Plan The Legislation Where employers find that there is differentiation between employees and that such differentiation cannot be justified in terms of the reasons provided in Regulation 7, the employer should determine how to address the inequalities without reducing the remuneration of the other employees to bring about equal pay; and review and monitor the above process annually

53 53 The Plan Factors to consider Highlight differences by job / by grade / by level / by function Quantify the differences Look for quick fixes Small pay increases Higher paid employees on the incorrect grades Implement changes Formulate a plan for correction Higher than average increases over a period of time Interim increases Review annually Institute monitoring measures for: New appointments Promotions

54 Pay parity explained 54

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56 Thank you Ngiyabonga Dankie Ngiyathokoza Ke a leboga Siyabonga Inkomu Ndo livhuwa Enkosi 56