copyright reserved 2007, Sasol Technology Employment equity through system dynamics Sasol Technology Marthi Harmse March 2008

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1 Employment equity through system dynamics Marthi Harmse Sasol Technology March 2008 copyright reserved 2007, Sasol Technology

2 Agenda Background Approach Scope Assumptions Data Deliverables Recommendations Case study Next steps Conclusion Acknowledgements

3 Background Employment Equity (EE) Any form of unfair discrimination eliminated Workforce profile reflects equitable representation of suitably qualified people from designated groups at all levels in all categories Affirmative Action (AA) intervention measures Ensure equal employment opportunities Ensure equitably representation in all occupational categories & levels for suitably qualified people from designated groups Diversity Management (DM) Comprehensive process to develop & sustain environment that works for all employees Designated groups Blacks (Africans, Coloureds and Indians) Women People with disabilities

4 Background EE Act No. 55 of Republic of South Africa of 1998 requires all employers to Analyse policies, practices, procedures & environment to identify employment barriers & determine if groups are under-represented Develop plans including annual objectives, affirmative action measures, numerical goals for achieving equitable representation, annual timetable & internal monitoring & evaluation procedures Report to Director General: Department of Labour

5 Background Sasol Group of companies founded in 1950 which comprise diversified fuel, chemical & related manufacturing & marketing operations, complemented by interests in technology development, oil & gas exploration, & production

6 Background

7 Background

8 Background Sasol in SA Contribute about R40 billion (4%) to national annual GDP, largest direct taxpayer, largest locally domiciled company, single largest industrial investor & largest chemical feedstock producer Number six in top ten companies to work for Provide about jobs (43% in management from designated groups, 65% in total from designated groups)

9 Background Sasol Group EE policy of 16 October 2003 Applicable to Sasol in Republic of South Africa Disparities exist in employment, occupation & income due to South Africa s past discriminatory legislation & practices Disadvantages for certain categories of people not redressed simply by repealing discriminatory laws Commitment to effective implementation of EE, AA & DM programmes All business units must adhere to all requirements of EE Act

10 Background Sasol Mining Supply coal to Sasol synthetic fuels & chemical plants in SA from Sasolburg & Secunda collieries Mine about 45 Mt p.a. of coal (23% of SA s requirement), export 4 Mt p.a. Comply with EE Act No. 55 & Sasol Group EE policy Analyse workforce profiles, policies & practices Develop & implement EE plans (numerical & qualitative) Report to Centre of Expertise: Sasol Group Diversity Management & Director General: Department of Labour System Dynamics approach utilising ithink software to develop simulation model

11 Approach Current Sasol Mining SP structure Current SP data Promotion detail Turnover detail EE targets System Dynamics simulation model Directions for EE plans VSD / GST / STST / CT / IP / SSM / HPLRC Proposed EE plans Valid EE plans Yes Validated EE plans No

12 Approach SP at Sasol Mining regarded as team Stable environment EE plans of repetitive nature Employees prepared to abide by EE policy formulated by employer Problem situation of relatively low complexity SP at Sasol Mining employed at 9 well established levels with set performance indicators Major interaction of concern among levels is well organised promotion Unlikely that structure of levels will evolve over next 10 years

13 Approach Unitary relationship between SP as employees & Sasol Mining as employer & SP from designated & non-designated groups Transparent implementation Accountability by line management Inclusive process of consultation with all employees No termination of employees services to attain EE targets (voluntary & co-determined severance arrangements may be concluded) Preference to designated groups & SA citizens Planning, training & development of designated groups to cater for shortage of suitable candidates Measurable performance indicators Fair employment practices Primary focus on internal applicants Posts for designated groups clearly identified in advertisements Conducive facilities & reasonable accommodation for people with disabilities No absolute barriers against appointment & advancement of nondesignated persons

14 Approach All SP participate in decision making re EE All SP share common interests Constitutional right of equality Business growth All SP share values & beliefs Sasol values with particular reference to Winning with People Existing disparities in employment Redress of disparities not only by repealing discriminatory laws Diversity is competitive advantage All SP agree upon ends & means Application of AA strategies as temporary intervention Spirit & requirements of Sasol Group EE policy All SP act in accordance with agreed objectives Participation in true democracy Elimination of unfair discrimination in employment Equitable representation of all groups in workforce profile Environment with no unfair discrimination where all employees have opportunity to develop & grow to their full potential

15 Scope Included EE targets per level for SP, ML & MCS as set by Sasol Mining [April 2007] All SP at Sasol Mining (both at Sasolburg & Secunda) level 8-2B [April 2007] Promotion trends [January May 2007] Turnover trends [January May 2007] Turnover parameters include death, desertion, dismissal or retrenchment, medical unfitness, resignation & retirement Excluded EE plans for each post & discipline at Sasol Mining EE plans for people with disabilities Sasol Mining staff establishment other than SP level 8-2B Supply of recruits of required quantity & quality on all levels Effect of wider environment Effect of various behaviours of employees

16 Scope Salaried personnel (SP) Level 8 Management level (ML) Level 7 Level 6 Mining charter scorecard (MCS) Level 6C Level 5B Level 5A Level 4 Level 3 Level 2B

17 Scope 50% 48% 45% Total SP 50% 47% 43% 8 50% 47% 43% Total ML 53% 48% 43% 7 53% 48% 43% 6 40% 36% 33% TOTAL MCS 46% 44% 42% 6C 46% 44% 42% 5B 46% 44% 42% 5A 46% 44% 42% 4 46% 44% 42% 3 46% 44% 42% 2B MC Scorecard Managerial Level FY08/09 FY07/08 FY06/07 Target % Level

18 Assumptions Number of posts [April 2007] Actual number of posts budgeted for by Sasol Mining (over strength figures excluded) Will not change over next 10 years SP promoted based on achievement of set performance indicators [January May 2007] If person is promoted without vacancy then promotion is motivated & business temporarily goes over strength on next level Promotions equally distributed over all diversity groups (historical data could not be used) Required training, coaching & mentoring will be implemented to ensure equally distributed promotions Vacancies filled through promotions If additional vacancies exist then personnel recruited externally to Sasol Mining

19 Assumptions Number of recruits from each diversity group = ratio for new recruits from diversity group - number of promotions from same diversity group Individuals in (and older) year age class retire over next 10 years [April 2007] Monthly turnover rates for all levels stay constant for next 10 years [January May 2007] Controlled turnovers include desertion, dismissal / retrenchment, resignation & transfers out Uncontrolled turnovers include death, medical unfitness & retirement Turnovers equally distributed over all diversity groups

20 Assumptions Number of employees (April 2007) B A 05B 06C Level Black - Female Black - Male White - Female White - Male

21 Assumptions Total number of promotions (January May 2007) B A 05B 06C Level African - Female African - Male Coloured - Female Coloured - Male Indian - Female Indian - Male White - Female White - Male

22 Assumptions Numer of employees in (and older) year age class (April 2007) A 05B 06C Level Black - Male - 59 Black - Male - 61 White - Female - 56 White - Female - 57 White - Female - 58 White - Female - 59 White - Female - 60 White - Female - 61 White - Female - 65 White - Male - 56 White - Male - 57 White - Male - 58 White - Male - 59 White - Male - 60 White - Male - 61 White - Male - 62 White - Male - 63 White - Male - 64 White - Male - 65 White - Male - 66 White - Male - 70 White - Male - 74

23 Assumptions Total number of controlled trunovers (January May 2007) A 05B 06C Level African - Female - Contr African - Male - Contr Coloured - Female - Contr Coloured - Male - Contr Indian - Female - Contr Indian - Male - Contr White - Female - Contr White - Male - Contr

24 Assumptions Total number of transfers out (January May 2007) B A 05B 06C Level African - Female African - Male Coloured - Female Coloured - Male Indian - Female Indian - Male White - Female White - Male

25 Assumptions Total number of uncontrolled turnovers (January May 2007) A 05B 06C Level African - Female - Uncontr African - Male - Uncontr Coloured - Male - Uncontr Indian - Male - Uncontr White - Female - Uncontr White - Male - Uncontr

26 Deliverables Recruiting ratios for respective levels indicate minimum requirements in order to achieve set targets Worst case scenario if higher ratios for designated groups not available Ratios for designated groups at lower levels more optimistic since supply is larger & Sasol Mining has more control at these levels From financial year 09/10 all ratios for designated groups reduced to maximum of current supply of graduates as worst case

27 Deliverables Level Recruitment ratio % from designated groups FY06/07 FY08/09 FY 09/10-2B 0% 0% 3 0% 0% 4 20% 20% 5A 33% 33% 5B 50% 50% 6C 50% 50% 6 60% 60% 7 66% 63% 8 75% 63% Total number of recruits from designated groups FY06/07 FY08/09 FY 09/

28 Deliverables Less recruits required at level 7 & 6 than at level 8, 6C & 5B Smaller number of promotions from these levels Relatively high number of promotions to level 7 compensates for high turnovers from level 7 If person is promoted but no vacancy exists then promotion is motivated and business temporarily goes over strength on next level Vacancies filled through promotions If additional vacancies exist then personnel recruited externally to Sasol Mining Number of recruits from each diversity group = ratio for new recruits from diversity group - number of promotions from same diversity group

29 Deliverables AA strategy could be applied as temporary intervention until end of FY 08/09 when workforce profile should reflect equitable representation of designated groups at all levels & equal opportunities exist Targets achieved for combined levels for SP, ML & MCS Targets achieved for level 8-5B Target for level 5A achieved only after 6½ years Targets for level 4 & 3 not achieved even after 10 years Target for level 2B should be ignored since only one position is available (target indeed for level 3 & 2B combined)

30 Deliverables 1: DG 8 2: DG 7 3: DG 6 4: DG 6C 1: 100 2: 3: 1 4: 1 2 1: 3 2: 50 3: 2 4: : 2: 3: 4: Page Months 05:40 AM 15 Jun 2007 Level 8-6C over next 10 years

31 Deliverables 1: DG 5B 2: DG 5A 3: DG 4 4: DG 3 5: DG 2B 1: 100 2: 3: 4: 5: 1: 2: 3: 4: 5: 1: 2: 3: 4: 5: Page Months 05:40 AM 15 Jun Levels 5B - 2B over next 10 years

32 Deliverables 1: DG SP 2: DG ML 3: DG MCS 1: 100 2: 3: 1: 1 2: 50 3: : 2: 3: Page Months 05:40 AM 15 Jun 2007 SP, ML & MCS over next 10 years

33 Deliverables Managerial Level MC Scorecard Level 2B 3 4 5A 5B 6C TOTAL MCS 6 7 Total ML 8 Total SP Designated group % of total number of employees end FY08/09 Target 46% 46% 46% 46% 46% 46% 40% 53% 53% 50% 50% 50% Forecasted 10% 21% 28% 38% 49% 45% 40% 58% 57% 50% 80% 56%

34 Deliverables Managerial Level MC Scorecard Level 2B 3 4 5A 5B 6C TOTAL MCS 6 7 Total ML 8 Total SP Designated group % of total number of employees end FY16/17 Target 46% 46% 46% 46% 46% 46% 40% 53% 53% 50% 50% 50% Forecasted 0% 27% 37% 49% 54% 56% 49% 61% 65% 58% 63% 59%

35 Recommendations AA strategy could be applied as temporary intervention until end of FY 08/09 when workforce profile should reflect equitable representation of designated groups at all levels & equal opportunities exist Targets not achieved for level 5A-3 Promotions equally distributed over all diversity groups Vacancies filled through promotions In line with principle that no absolute barriers exist against appointment & advancement of non-designated persons Number of required recruits Over next 2 years 392 (13% of annual graduates) from designated groups 149 (8% of annual graduates) from non-designated groups Over next 10 years (10% of all annual graduates) from designated groups 954 (10% of all annual graduates) from non-designated groups

36 Recommendations Further investigate availability of required recruits for employment by Sasol Mining in Sasolburg & Secunda If adequate supply Increase ratios to achieve targets for level 5A-3 If non-adequate supply Adjust targets

37 Case study Further investigate availability of required recruits for employment by Sasol Mining in Sasolburg & Secunda Department: Project & Technology Services level 6C 3 33 employees (4 Electrical, 4 Electronic, 5 Industrial, 13 Mechanical & 7 Mining Engineers) Sasol Mining AA strategy could not be applied as temporary intervention until end of FY 08/09 when workforce profile should reflect equitable representation of designated groups at all levels & equal opportunities exist Ratios for new recruits specifically for Project & Technology Services differ from overall ratios for Sasol Mining

38 Case study Electrical Industrial Number of graduates from designated groups Mechanical Mining Year

39 Case study Recruitment ratio % from designated groups Level FY07/08 FY08/09 FY09/10-3 0% 0% 4 20% 20% 5A 60% (33%) 60% (33%) 5B 50% 50% 6C 82% (50%) 63% (50%)

40 Case study Discipline Electrical Industrial Mechanical Mining Total number from designated groups end FY08/09 Graduates Recruits 2 (0.1%) Total number from designated groups end FY16/17 Graduates Recruits 4 (0.1%) 2 (0.1%) 14 (0.4%) 5 (2%)

41 Next steps Complexity of problem situation Effect of environment Quantity & quality of recruits on all levels for next 10 years Availability of recruits for employment by Sasol Mining in Sasolburg & Secunda Influences on reasons for turnovers such as death, desertion, dismissal / retrenchment, medical unfitness, resignation & retirement Volatility to which Sasol Mining must adapt to Effect of various behaviours of SP at Sasol Mining Actual relationships among SP at Sasol Mining Complexity of task to implement & sustain EE

42 Conclusion System Dynamics approach utilising ithink software to develop simulation model Assist development of EE plans for all SP at Sasol Mining based on analysis of workforce profiles, policies & practices Enhance sustainability of Sasol Mining Advance diversity as competitive advantage in multi-cultural & diverse market place Indicate strategic business processes Enhance business growth Facilitate equitable representation of designated groups Assist in creating environment where no unfair discrimination exists & all employees have opportunities to develop & grow to full potential Indicate where to focus efforts to develop employees Indicate how to apply AA strategies as temporary intervention until workforce profile reflects equitable representation of designated groups at all levels & equal opportunities exist

43 Conclusion Avoid undesirable interventions Save costs e.g. recruitments, appointments, education & training, turnovers, non-permanent employees, etc. Identify advantageous interventions e.g. education programmes, improvement of working conditions, better recruitment processes, etc. Improve effectiveness & efficiency of interventions e.g. targeting specific group with training programme Determine indicators to evaluate performance Staff turnover of designated groups New appointments from designated groups at different levels Promotions of employees from designated groups Success of processes introduced to advance EE Enhance understanding of business dynamics Establish basis for deliberations & consultations relating to EE Encourage employees to abide by spirit & requirements of EE Act Identify best practices to inform strategic direction & policy framework group wide

44 Conclusion OR creates bridges Between organisation and government Among functions in organisation Among employees from different groups To sustain development

45 Acknowledgements Christa Coetzer (Sasol Mining Human Resources) Charl Norden (Sasol Mining Project & Technology Services) Bongi Ndimande (Sasol Mining Human Resources) Herman Victor (Sasol Mining Human Resources) Wilma van der Westhuizen (Sasol Shared Services Human Resources) Marietjie Vosloo (Sasol Limited Human Resources)