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HUMAN RESOURCES

Shani Naidoo

MANAGING HUMAN RESOURCES

The role of the group Human Resources (HR) division is to set and implement strategies for human interaction within the group, working in collaboration with the group’s trading and service divisions. The HR division also provides a common platform to group companies for the provision of best-practice HR.

The services listed below are provided by the division and are directed at the group’s employees and at HR practitioners working within the group’s trading and service divisions:

  • management of the group’s payroll for its more than 15 000 employees;
  • management of policies regarding benefits and the practices associated with all these policies;
  • performance management;
  • reward;
  • talent development;
  • organisational structure management;
  • resourcing;
  • employment equity and transformation;
  • training and development;
  • industrial relations and dispute resolution;
  • corporate social investment (CSI); and
  • organisational development (OD).

In providing these services the division makes use of specialised information technology aimed at providing data where and when it can be used most effectively.

The group recognises that its success is dependent on the full commitment of its employees within an occupational framework that is moral, fair, has social conscience and can readily be managed.

WORKFORCE PROFILE

Our staff complement (total for group head offices and stores)
as at 31 March 2010

Employee statistics: 2010 2009
Permanent full-time employees 10 494 10 075
Permanent part-time employees 327 313
Flexitime employees 3 233 3 103
Contract employees 550 947
Casual employees 182 1 029

Summary of our staff complement, as at 31March 2010

  Male Female Foreign Grand
Occupational Level A B C W A B C W M F total
Top management       8 1     1     10
Senior management 3 1 10 70 1   3 63     151
Professional middle management 16 30 71 134 32 26 100 301 7 3 720
Skilled, junior management, supervisors 41 241 206 77 188 598 781 571 1 15 2 719
Semi-skilled 104 1 476 763 78 501 4 763 2 724 408 1 9 10 827
Unskilled 1 28 52 2 1 13 76 3 1   177
Grand total 165 1 776 1 102 369 724 5 400 3 684 1 347 10 27 14 604

During the 2010 financial year we continued to increase our permanent and flexible staff complement in alignment with the growth in stores. Contract employees decreased mainly due to a move away from using contractors and casuals in favour of flexible workers who are in fact permanent staff and are thus easier to motivate and retain.

The proportion of women in our workforce remains consistent, at around 77%. We have a relatively young age profile, with 86,15% under the age of 40 years and the average being 30 years.

Staff turnover

The total average staff turnover for the group (excluding contractors) in 2010 was 33%. This represents a decrease from 47% in 2009 and we aim to further reduce our turnover rate. Using company-wide surveys we have gathered sufficient data to understand the areas of concern and will be addressing these in the next financial year. We intend to reduce staff turnover using a number of retention tools, including incentivisation, flexible work practices, improved remuneration and enhanced talent development opportunities.

Age distribution

EMPLOYMENT EQUITY

The Foschini group continues to ensure that the employment equity strategy is aligned to the national legislative framework.

During the past year, particular focus was to align the current plans and targets to that of the economically active population of South Africa. This entailed a review of all plans for the next three years.

To ensure compliance to the recommendations received from the Director-General’s employment equity review in 2009, extensive evaluations of the barriers to employment equity, the income differentials, and the employment equity plan were considered. This required further consultations with all stakeholders to ensure that all the recommendations were approved by the Department of Labour. This exercise guaranteed that the spirit of the Employment Equity Act (EE) was maintained throughout the organisation.

Further activity during the year was the inclusion of a structured focus of EE at the board talent meeting held in March 2010. This year, the focus was on specific job families, namely merchandise buying, merchandise planning, store operations and support services.

This change in approach was critical and strategic and it highlighted the areas in the organisation where the businesses were at risk of not meeting their EE targets. This methodology builds on the transformation forums in the various business units and is a further extension of the succession processes. This also provides opportunities for managers to ensure that their talent planning aligns to the EE targets.

One of the initiatives will be the hosting of a second retail management development programme during 2010. It will cater for the merchandise buyers and merchandise planners only. The candidates selected for this programme will have been identified as future leaders in their various business units. The purpose of this programme will be to fast track these individuals, and also ensure the achievement of the EE targets.

The group has enjoyed platinum sponsorship at the Tomorrow’s Leaders Convention. This is the third year of participation. The group hosted a retail breakaway as part of its strategy to ensure that retail, as a career of choice, was showcased to top black African talent. Membership of the Black Management Forum continues and every effort is made to ensure that the group positions itself in the market-place as an employer of choice.

The bar chart below illustrates the workplace profile against the 2011 EE plan for the group.

It remains an imperative of the group to ensure that good skills are retained amongst our Black employees.

Affirmative action in Namibia remains a focus and strategy. All stakeholders, who include the union and employees in Namibia, are satisfied that the affirmative action targets are aligned to the legislation. The affirmative action measures include training and development for all the previously disadvantaged persons. The organisation will continue to ensure that it will target those individuals in all our interventions.

Workforce

TALENT MANAGEMENT

The ongoing management of talent remains a key priority. This is critical in light of the fierce competition for talent and the need to comply with the Employment Equity Act (EEA). Talent audits are done twice annually and appropriate retention and development strategies are initiated. We continue to monitor trends relating to employee departures to enable the group to react proactively to any identified risks to staff retention.

Our approach to talent management focuses on:

  • talent discovery;
  • talent performance;
  • talent development;
  • talent movement; and
  • talent retention.
Leadership competency framework

Competency framework

Our leadership competency framework has been redefined to integrate fully into all talent management processes to better position us to measure our leadership gaps and leadership potential.

In developing the leadership pipeline, extensive work has been completed in defining and using leadership competencies as a method of benchmarking current talent against future needs. The accountabilities and competencies that are required at each level have been communicated to leaders within the organisation.

The competency framework focuses on four key leadership functions namely:

  • people;
  • communication;
  • operations; and
  • strategy.

This provides a single framework which enables objective measurement and comparison in all talent management processes.

Integrated leadership competency framework

The competency framework will be pivotal in the implementation of development assessment centres. Scientifically defining our leadership competencies at various levels in the organisation allows us to improve our identification of leadership potential.

Leadership roadmap

The group has developed and established a leadership roadmap which defines the key leadership capability shifts that take place as employees progress through the organisation.

This emphasises a shift from an operational and transactional perspective to one of a transformational leadership capability.

Our development architecture aligns all our training and development interventions into our leadership pipeline/roadmap ensuring that all training is targeted to the individual’s appropriate level and supports specialist and leadership career paths.

Building a coaching culture throughout our entire business will position us to develop leadership capability at all levels. To date, we have trained 200 technical coaches in the organisation. These individuals are being groomed as change agents and in order to support their skills and competency development a generic coaching programme has been developed. This programme consists of various interventions focusing mainly on leadership, coaching and managerial competencies.

Further emphasis will be placed on driving this coaching capability throughout all leadership levels. Performance management remains key in terms of measuring performance and driving a performance culture. Performance review conversations occur biannually and in the year under review 80% of all group employees had performance reviews and career development conversations.

Level of intervention

Stores optimisation programme

The stores optimisation programme remains a key board strategy and focuses on people, processes and technology illustrated in the diagram below.

Store optimisation

Key programmes and initiatives aimed at supporting our store and area managers have been rolled out during the year. Our retail manager development programme, developing manager programme and graduate programme all support the continued employability of all employees and assist them in managing career endings.

Field manager

One of these initiatives was the area manager’s “toolkit” – an electronic “go-to place” for all necessary information, documents, references and reports, enabling our investment in the area manager “mobility project”. This initiative also enhanced productivity and has seen an increase in cross-company collaboration between our many area managers and has enabled the opportunity to pilot discussion boards within the group.

The diagram below depicts the architecture of the area manager’s toolkit, which allows area managers to improve the link into head office, to action any business decision quickly and to engage with other area managers without having to wait for a face-to-face monthly meeting. Optimising the effectiveness of the area manager is not only critical to business success but critical to all store managers’ effectiveness.

The Foschini group won a skills award at the Inaugural Achiever Awards for our field training programme which was hosted at the Skills and Training Summit in Pretoria. The success of this programme was due to the collaborative efforts between Foschinidata, group talent development and our many regional and divisional managers in building capacity within the operations management teams.

Manager’s toolkit

TRAINING AND DEVELOPMENT

This year the group significantly increased its investment spend on training and development to R88 million, up from R62,2 million in 2009 – as well as the number of employees trained (see performance data below):

Training statistics 2010 % increase 2009
Total number of interventions attended by employees 131 166 78 73 526
Total number of interventions attended by black employees 113 373 87 60 699
Total number of interventions attended by black female employees 108 309 161 41 477
Total spend on training and development (including cost of salaries for in-store training interventions) (R million) 88,4 42 62,2

During the last skills year, April 2009 to March 2010, the group paid a skills levy of R11,3 million. The maximum available rebate from the Wholesale and Retail SETA was recovered.

Central resourcing

In the past year 426 permanent and 440 contract head office and field placements were made (inclusive of our call centre agent placements). Of those hired externally, 72% were equity candidates. An increase in direct applications and placements was seen due largely to the group’s career website attracting candidates. CVs posted online increased from a database of 20 000 to 32 000 during the course of the past year.

Recruitment in the field of IT continues to be challenging. Fortunately our attendance at The Homecoming attendance at Revolution (a London-based careers  fair) provided an opportunity to expand awareness of Foschinidata and to source South African candidates with international IT experience who wanted to return home. This resulted in a placement of six candidates and proved financially viable as we reached the cost-neutral point after four placements.

The recruitment of call centre agents has slowed down from the previous year, largely because labour turnover has reduced. Reasons for this include: sourcing better calibre agents; and improved succession planning and career development for agents. Over the past year the number of agents recruited was 391 (50% down on the number recruited in the previous financial year).

Graduate recruitment was yet again successful with 31 placements being made, of which 50% were for trainee buyer and trainee planner positions. Graduate recruitment is a critical talent pipeline for management levels across the group and is a key driver of employment equity. 74% of the candidates hired fulfilled the equity requirements – an improvement from 70% last year. Of the graduates placed, 35% were recruited from within the group, thus providing valuable internal career development opportunities.

REWARD

Best practice in reward management remains a critical area of focus, to ensure that the group remains well positioned in a highly competitive market. A comprehensive, “total reward” approach is followed, recognising that whilst remuneration is critical, this must be balanced with attractive benefits, an enjoyable working environment and the opportunity for employees to develop and grow.

Remuneration for each employee in the group is benchmarked against a base pay range for their specific position or, in a minority of cases, for their grade. A desired market position is defined for each family of roles, taking into account the value that these groupings of roles add to the retail value chain.

Base pay is integrated with a best-of-breed job evaluation system that ensures that the market benchmarks that are used in determining remuneration are accurate and valid.

Recognising that employees are parents, family and community members, “Flex-e”, a flexible working hours programme, was introduced during this year. This programme is available to all non-store staff in roles where flexibility will not negatively impact service delivery to our stores. This has enabled staff, outside of defined core working hours, to flexibly self-manage their working hours to improve balance between work and other responsibilities and interests.

Current approaches to incentivise store staff have been reviewed and as a result a pilot was launched during the year to test a group-wide incentive for all permanent store staff. This pilot is being reviewed and it is anticipated that it will be rolled out to the group in the next financial year.

An extensive investigation was made towards the introduction of a second share incentive scheme that will be used in tandem with the existing Share Appreciation Right scheme to create the desired balance between retention and reward for organisational performance. This, subject to shareholder approval, will be introduced during the coming year.

MANAGING EMPLOYEE RELATIONS

The size of the workforce, the complexities and the diversities of the various brands within our organisation require that conflict management remains a key focus for the group. The employee relations team continue to manage out-of-line situations immediately and without any delays or disruptions to the workplace.

Issues relating to workplace disputes and referrals to the Commission for Conciliation, Mediation and Arbitration (CCMA) have increased from 143 referrals in 2008 to 172 referrals in 2009. These low levels of referrals can be attributed to fair processes and procedures in the workplace.

Union activity both in South Africa and Namibia is mainly confined to annual wage negotiations.

Occupational health and safety

The group is committed to ensuring a safe and healthy workplace for all its employees, and shopping environment. Due to the nature of our operations as a retailer, our employees work in a low risk environment. We comply with all relevant legislation, in particular the Occupational Health and Safety (OHS) Act of 1993, ensuring responsible management of occupational health through an external service provider. This includes monitoring risks in the workplace, addressing reported incidents, and raising awareness and responsibility amongst employees around serious diseases.

Treatment for injuries on duty, as well as curative and preventative care, is provided from a centrally located clinic that is permanently staffed by two qualified nursing sisters. The clinic provides a service to all employees working at the head office campuses as well as those in the larger distribution centres. Services offered include family planning, HIV testing, primary health care, post-employment health screening and health education. A medical doctor is on site twice a week to assist with cases requiring specialised attention.

All cases of extended ill health are managed through our service provider’s WAKE programme. The programme is available to all our employees working in stores within South Africa and Namibia and in our head office and regional centres. Permanently employed staff who are unable to work as a result of ill health or injury for an indefinite or fixed period of time receive income replacement benefit.

Our OHS performance remained relatively consistent with previous years; the majority of incidents reported were minor and there were no fatalities. Incidents relate primarily to emotional trauma or physical discomfort and impairment.

The statistics for reported incidents involving staff members of the group in 2010 are as follows:

Occupational injuries and diseases 2010 2009
Total number of days lost 1 510 1 924
Total number of incidents 445 403
Number of incidents involving three days or less off from work 349 294
Number of incidents requiring more than three days off from work 96 109

Managing HIV/AIDS

The group is committed to providing ongoing initiatives aimed at minimising the spread and impact of HIV/AIDS in the workplace. The disease is adequately managed in the group and is not regarded as a material risk. Enhancing the extent of participation by employees in our initiatives providing testing, counselling and treatment, is an ongoing challenge.

We have a formal HIV/AIDS policy in place, which is communicated to all existing and new employees and is available on the group intranet. Access to free and confidential HIV testing and counselling is provided to all our employees through an external network of pharmacies. Those employees who test HIV-negative are encouraged to adopt safe behaviour to retain this status, while those testing HIV-positive are encouraged to enrol on a disease management programme offered by QUALSA. All treatment is confidential and provided free of charge, including antiretroviral therapy, to all our permanent employees.

Treatment is also available to all our permanent staff in Namibia.

To date, 1 046 HIV tests have been conducted through the programme, with 79 testing positive. Treatment is being provided to 43 employees through the group’s disease management programme. Some employees choose to receive treatment through their independent medical schemes or through the State.

According to annual risk assessments commissioned by the group from Health Monitor Company, the HIV-positive prevalence rate within the group is estimated to be in the region of 7%. The direct measurable cost to the group as a result of HIV infection was R302 528 in 2010 down from R325 900 in 2009. Combined with the cost of benefits provided in Namibia, the combined cost for 2010 was R458 115.

Additional efforts to promote free HIV testing include providing ongoing facilities at our centrally located clinic in Cape Town and onsite testing during the group’s annual Health Days and on World Aids Day. Through our “Retailers Uniting Against HIV/AIDS” campaign launched in collaboration with four leading retailers in South Africa in 2007, we have provided testing to 1 056 members of our collective staff working in shopping centres.

Recognising that HIV/AIDS affects our workforce, their families, our customers and communities nationwide, a focus of our corporate social investment activities is providing support to organisations that assist communities in managing the impact of HIV infection.

Promoting employee well-being

In addition to ensuring health and safety in the workplace and promoting personal growth through skills development, the group offers its employees a range of benefits (outlined below) and has a formal employee assistance policy and employee wellness programme aimed at promoting a broader sense of employee good health and well-being. This service includes a free and confidential help line, managed by our occupational health service provider and manned by a qualified social worker, to provide telephonic psycho-social support to all employees irrespective of where they are located. Issues raised through the help line range from financial advice to family matters, inter-personal conflict, legal issues, substance abuse and HIV/AIDS. Referrals to community-based specialist networks are made when appropriate and all help line cases are followed up until satisfactorily resolved. Since its launch in 2008, the help line has recorded 1 356 cases.

The help line also co-ordinates support to stores that have been involved in armed robberies. This includes trauma counselling services and ongoing telephonic support. This year we introduced a regular weekly face-to-face counselling facility for employees working at our head office in Parow, Cape Town, who do not have access to private telephone lines at work.

Employee benefits
The following provides a brief description of additional initiatives aimed at promoting employee well-being.

Retirement funding
All permanent staff of the group’s wholly-owned subsidiaries are required to join the Foschini Group Retirement Fund. Despite the volatility of financial markets the fund achieved an overall performance return of 15,3% during its financial year. Total market value of the assets of the fund at 31 March 2010 amounted to R2,7 billion, which is R0,5 billion higher than the previous year.

Pensioners were awarded an increase of 7% effective from 1 January 2010, which is in line with the pensioner increase policy of the fund to award at least inflationary increases, subject to affordability. Apart from retirement benefits, the following are provided by the fund:

  • a funeral benefit of R10 000 for the principal member and spouse and a lesser benefit for their dependent children;
  • a death benefit of four times annual salary as well as the member’s gross equishare is available to provide benefits to dependants and beneficiaries, payable in the event of death in service and where the death is accidental, a further benefit of twice annual salary is payable; and
  • in cases of disablement, an insured disability benefit is provided to qualifying staff members, equating to 75% of pensionable salary earned at the time of becoming disabled, payable until attainment of normal retirement age (subject to continued disablement), after which the normal retirement benefit becomes effective.

Employees of RCS Group are not members of the Foschini Group Retirement Fund but receive comparable benefits from the Liberty Life Provident Fund.

Where required, employees of subsidiaries trading outside South Africa belong to umbrella funds that comply with the legislation of the relevant country. Further detail about our retirement fund is available through our website.

The Foschini Group Medical Aid Scheme
The Foschini Group Medial Aid Scheme is an in-house, subsidised medical scheme that is designed to best suit the needs of most employees. Membership is voluntary except for senior employees. We have approximately 2 500 principal members covering approximately 5 200 lives in total.

The scheme is administered by the Metropolitan Health Group and is fully compliant with the Medical Schemes Act. The board of trustees of the scheme is responsible for all aspects of its operations, which are reviewed by both the Foschini group medical aid audit committee and external auditors.

The accumulated funds ratio of the scheme at 31 December 2009 was 61,82% which is well in excess of the required minimum of 25%, but not excessive for a small in-house scheme that will be subject to greater volatility than the norm as a result of sporadic large claims.

The scheme experienced higher than expected claims during 2009 which necessitated increases of 19,5% and 15% respectively for the two benefit plans available for 2010, compared to 5% and 7,5% for the previous year.

A risk assessment of the scheme is undertaken at least annually, both by the trustees and the administrators. The highest risk identified by the trustees is the volume and impact of legislation affecting medical schemes. Keeping abreast of all current and pending legislation and adapting the scheme’s rules accordingly assists in managing this risk.

Employees based in Namibia may elect to join a medical scheme that is similarly funded by the group.

All permanent staff of RCS Group are required to become members of a medical plan of their choice offered by Discovery Health.

Educational assistance
The group offers its permanent employees low-interest loans to assist with tertiary education costs for their children. The loans are available on an annual basis for each child and are repayable over two years.

Personal loans
Interest-bearing loans are available to our permanent employees to assist with hardship, or the purchase or improvement of property. During the review period, 26 qualifying staff members took advantage of this facility, 81% of whom were from previously disadvantaged communities. The balance of the loans were weighted towards employees experiencing hardships due to the impact of the downturn in the economy. As at year-end, the outstanding value of these loans was R115 886.

Home assistance
Employees may access further financial assistance for home purchases or improvements from an outsourced facility, using their share in the Foschini Group Retirement Fund as security. This is subject to the rules of the fund. The total of these loans at the year-end was R8,7 million.

Sponsorship
Employees are encouraged to undertake studies that will assist them in their current or future careers with the group. Sponsorship varies according to the level of study and requires greater financial commitment from employees at higher educational levels. Support for matriculation study fees is 100%. The group also offers sponsorship for the UNISA Retail Certificate, an intensive one-year retail-specific diploma.

Sponsorship amounting to R404 866 was provided to employees during the review period, 86,8% of whom were from previously disadvantaged groups, up from 78% last year.

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