Human resources

Key highlights

  • BBBEE rating improved to Level 4 under the new codes
  • Focus on leadership development across all levels of the organisation
  • Revised remuneration philosophy
  • Implemented a robust succession plan

Key challenges

  • Educating employees on the HR structure and the new remuneration philosophy
  • Maintaining and improving employee moral

Performance review

Key performance indicators

Key:

Target achieved:

Target not achieved:

Afrox’s ability to leverage The Linde Group’s global HR management and planning systems has granted us the opportunity to access and improve our:

  • talent, performance, and remuneration management systems;
  • data management and reporting;
  • global best practice; and
  • global visibility.

The Company prioritised the implementation of a forward-looking HR infrastructure aligned to best practice and legislation. This entailed reviewing our procedures and policies to ensure they are user-friendly and relevant to our strategic objectives. Balancing the career objectives and aspirations of our employees was a key consideration in the development of our HR infrastructure.

Our HR journey

Through clear targets aligned to our strategy, the HR journey has achieved positive outcomes and we are embedding core changes to support further operational development. A significant development was the Board approval of a new remuneration philosophy that clearly articulates the company’s remuneration approach. The philosophy supports the HR strategy and aims to build a competitive, high-performance and innovative environment. This will be achieved by offering attractive remuneration packages tailored to various business levels that will help the Company to attract, retain, motivate and recognise high-performing employees (see overview of remuneration policy for details).

Afrox’s 18-month executive development programme comprised individual coaching with eight modules which focused on aligning individual behaviours to the Company values. This programme resulted in an increased display of visible leadership from executive management, positively encouraging the rest of the Company to follow the examples set. For the third consecutive year, senior managers attended one-on-one leadership coaching with external accredited leadership coaches. The purpose was to enhance their skills in the various areas of leadership as identified by their managers.

The Company implemented the internationally accredited Future Manager programme to support our succession planning. In this programme, The Linde Group identifies training for high-performing individuals who are not yet leaders in the Company, but who show potential. This programme provides preparatory leadership skills for the individual and is facilitated by an HR representative from The Linde Group, enabling us to retain talent and establish career paths for our future leaders.

Our HR activities and additional CSI work earned Afrox an award from the Department of Labour and The Chemical Industries Education and Training Authority for addressing skills development and job creation in South Africa.

General employee and labour information

Employment types1

1 Figures in this section were derived from Afrox’s SAP HR, SAP Lift and training reports.

85.5% of our permanent employees are in South Africa and the remaining 14.5% are employed in Emerging Africa. When compared to the number of internal employees, Afrox outsources a minimal amount of its activities to its external contractors. This often relates to work of a project-based nature.

Employee retention

1 Full-time employee.
2 The high number of leavers is directly related to the start of our SWIFT restructuring programme to make the business fit-for-purpose.

Afrox has maintained a stable employee retention rate for the past two years. This is due to the positive effects of our employee engagement, employee development and wellness initiatives. The Company maintains a record of the reasons why employees leave and implements relevant responses through its HR strategy.

Diversity and transformation

Employment equity

Key:

Target achieved:

Target not achieved:

Afrox has 63% overall black management representation. The representation of equity candidates in our senior management remains unchanged and representation at semi-skilled junior management level has improved. Afrox is preparing managers for succession through various leadership development initiatives to enable them to move to the next levels of responsibility in the Company.

BBBEE profile (South Africa only)

Afrox subscribes to the principle of equal opportunity for all and strives to attain an employee composition that reflects the demographics of South Africa.

Our employment equity strategy forms part of the annual strategic planning process and is reported and reviewed at quarterly executive management meetings, chaired by the Managing Director. The Company’s overall black representation in South Africa improved to 81% (2016: 79.4%) and includes 26.7% (2016: 24.1%) female representation.

We increased our female representation by 2.9% in 2017. Employing more women across our operations is a priority area, thus the Company applies a preferential recruitment approach to black individuals and females. Special dispensation is provided by the HR executive or Managing Director for recruitment as and when required.

The Company continued to include skills development initiatives and learnerships as part of our employment equity plan. This ensures the development of a pipeline of female learners and employees to improve female representation in the medium to long-term.

BBBEE requirements

The Company developed a strategy to improve its BBBEE score in 2016. The strategy was instrumental in attaining our status as a Level 4 contributor, having been a Level 3 contributor under the previous codes in 2016 and a Level 8 contributor at the start of 2017 under the new codes.

Details of this strategy, which is ongoing, are captured below:

Focus area Action Progress
Build
  • Focus on Enterprise and Supplier development
  • Afrox continuously seeks to include Qualifying Small Enterprises (QSE) and Exempted Micro Enterprises (ESE) in our value chain.
Improve
  • Target management control, including employment equity
  • Utilise skills development
  • Effectively apply preferential procurement
  • Recruited one black female Board member.
  • Continued with our skills development initiatives.
  • Our revised procurement strategy focuses on the empowerment of black-owned suppliers and enterprises – particularly those that are black women-owned.
Maintain Socio-economic development
  • Supporting various community based initiatives relating to early childhood development, welding skills, and people with disabilities.
  • The number of the learners, apprentices, bursars and graduates supported exceeded our target. 80% of learners in Afrox-related skills training programmes were absorbed into various roles within the Company.

The Company spent R583.4 million (2016: R412.3 million1) on black-owned suppliers and enterprises. This supports our transformation journey, our commitment to economic development and promotion of positive and sustainable social change in South Africa. Where commercially viable, we provide preferential support to previously disadvantaged individuals through our value chain. This contributes towards:

  • job creation;
  • promotion of black ownership and equity;
  • diversification of supply chains;
  • improved competency of smaller enterprises; and
  • increased number of black-owned/black women-owned businesses in the economy.
1 Restatement from R357 million reported previously.

Afrox spent R279.1 million (2016: R169.3 million) on preferential procurement from black women-owned entities.

Black-owned and black women-owned businesses are involved in strategic supplies for Afrox and are not limited to our discretionary spend.

Unionisation

In line with fair labour practices, Afrox employees have the right to join any organisation, forum or trade union.

Unionised employees

The total union membership reduced to 35.1% (2016: 39.2%). The decrease was largely due to a reduction in total employee numbers and an increase in outsourcing of personnel in various areas of the business. Afrox experienced no instances of industrial action. Our relationship with the various unions remains positive and a two-year wage agreement signed in 2017 is valid until 2019.

Employee and trade union engagements take place regularly in forums that allow deliberation and sharing of opinions ahead of decision making. These include:

  • Management communication sessions and employee education sessions: Direct interaction with employee groups or individually.
  • Formal bi-annual employee relations sessions: A platform to discuss strategic matters while cultivating the Company’s relationships with the unions.
  • Communication through various lines of business: Monthly Shop Steward Committee meetings, which provide a forum to address arising matters and improvement opportunities on an operational level. Strategic interactions of a similar nature also take place throughout the Company.

All our employees have access to grievance procedures and disciplinary processes if required.

Succession planning and employee development

Post our restructure, the Company refined our succession-planning model. Through a defined process based on The Linde Group model, we annually review our critical roles and identify possible successors.

The progress in our succession planning process is reflected in the high percentage of vacancies filled from among the Company’s employees instead of externally. More than 61% of our talent pool comprises employment equity employees and our coverage rate for critical roles in the business remains at 85% (2016: 85%).

In addition to formal in-person training, Afrox uses online training platforms such as LiMSS, making procedures, standards and global business reference material easily accessible. Incorporated into the system is an individual learning management system1 and audit manager.

Employee training and talent pipeline

The Company increased spending in training, including bursaries, to R33 million (2016: R31 million). We supported the development of 195 (2016: 123) new learners through apprenticeship, learnership and internship programmes.

Employee and employee dependant bursaries

The Company spent R1.47 million (2016: R1.7 million) on employee bursaries. Afrox also offered recognition of prior learning to aid existing employees seeking to complete trade qualifications. R2.8 million was provided to 84 children of Afrox employees. These dependants could further their studies in any field of their choice at tertiary institutions (2016: R4.8 million for 138 children).

Management development and training

Afrox ensures that all first and second line managers participate in a leadership development programme to improve their leadership capabilities. We believe that the recognition and consequences management portion of the training has been a valuable tool and training is ongoing.

Graduate training scheme

Afrox’s 24-month graduate training scheme provides graduates with skills in mechanical, chemical and industrial engineering, as well as marketing and econometrics. In 2017, 8 (2016:13) graduates participated in the scheme.

Learnerships and apprenticeships

Afrox spent R19 million (2016: R15 million) on learnerships and apprenticeships.

  • Our various trade learnerships and apprenticeships comprised 24 men and 16 women (2016: 14 men and 11 women).
  • 35 learners enrolled in the Customer Service Centre NQF 2 learnership programme.
  • The programme in Business Administration NQF 3 and NQF 4 had 51 learners.
  • 21 learners participated in Wholesale and Retail NQF 3 learnerships and 24 female learners with disabilities in the Jewellery Manufacturing NQF 2 and NQF 3 learnerships.

Although there were no new enrolments year-on-year, the Company also provides adult education for employees and a bursary scheme for underprivileged students to study university degrees related to our core business activities. These degrees are typically in courses related to metallurgical (physical), mechanical, chemical, industrial and electrical engineering (heavy current). The bursary scheme includes financial assistance to second and final year students, and provides work experience at Afrox’s head office for the students during university holidays

Performance management

Afrox uses an annual performance management cycle to grade employee performance. This process considers the outcome of an employees’ contribution to achieving the Company’s objectives and the extent to which they display The Linde Group’s behavioural competencies in reaching these outcomes. Afrox cascades objectives from Company to individual level to ensure alignment. Individual development plans exist for each employee and are assessed with the employee’s manager to ensure appropriateness. The results of these sessions are a provided to HR for guidance in career growth targets and training.

Recognition

The annual long-service awards took place in November 2017. The ceremony acknowledged employee commitments from 15 to 30 years and 35 (2016: 30) recipients and their spouses were flown to Johannesburg for the event.

Employee wellness

Afrox employees have access to Independent Counselling and Advisory Service (ICAS). ICAS services include workplace productivity improvement, personal empowerment services and resilience development, among others. 38.8% (2016: 34%) of Afrox employees use the services offered compared to the ICAS average of 16.9% (2016: 18.6%). Afrox regularly engages with employees on health and wellness via an internal communication.

Afrox held wellness days at five sites nationally, attended by 300 employees. This included various health days that provided employees with the opportunity to have vital health assessments performed on-site free of charge.

The Company’s employees are encouraged to participate on Bumbanani Day. This CSI initiative promotes teamwork to benefit previously disadvantaged communities and facilities. Refer to Corporate social investment.

Afrox offers various forms of additional support to its employees, such as home-owner’s support, pension and provident fund, and tertiary education assistance for the children of employees.

Future focus areas

  • We will continue building our HR infrastructure to support the Company.
  • Our commitment to improving our BBBEE scorecard will remain.
  • Our focus on leadership and management development is a long-term imperative.
  • Succession planning will remain a focus area as it is a crucial element for operational sustainability.
  • We value our employees and safeguarding their wellness will remain an area of attention.