HUMAN CAPITAL

To achieve the Altron group’s aim of realising a one company culture during the year under review, required dynamic leadership supported by strong, appropriately resourced teams.

Our aim was to mobilise our people behind a common strategy for the future that will allow us to continue to retain and attract the core, scarce skills on which our business relies.

We continued to meet our commitment to the development of our people and ensuring we have the right skills, including leadership skills, for our business. Leadership and skills development also play an important role in transforming our management team and the Bill Venter Academy provides our employees with a wonderful opportunity to develop their leadership skills. In the year ahead our focus will include assessing and responding to the impact of the amended Broad-based Black Economic Empowerment (B-BBEE) Codes.

THE MATERIAL FOCUS AREAS AND MATERIAL ISSUES THAT COULD AFFECT THE ALTRON GROUP’S HUMAN CAPITAL SUSTAINABILITY

Altron has identified three material focus areas for Human Capital in the Altron group. Although the material focus areas for Human Capital have remained the same for the past three years there have been some changes in the material issues related to the focus areas and the rating of these issues in terms of the risk and opportunity they represent to the group.

For more detail on the changes to our material issues refer to the table below.

    Altron group Altron group
    rating rating
Material focus area Material issues 2014/15 2013/14
Transformation * Management control with emphases on employment equity
Human Resources Leadership and accountability
Core skills and talent management
Employee attraction and retention
Company Culture One Company Culture

* It should be noted that wherever reference is made to ‘employment equity’ in the Human Capital section, it specifically refers to the management control element within the amended B-BBEE Codes.

Legend

Most material issue
Priority issue
Focus issue
Controlled issue

ACHIEVEMENTS

  • The Altron group and its operations either maintained or improved their B-BBEE ratings
  • Enterprise and supplier development initiatives, which support our B-BBEE ratings, implemented across the Altron group, including the roll out of Bytes Document Solutions’ Supplier Development Programme
  • 61% increase in skills development spend to R110 million (2014: R68,7 million)
  • Graduation and completion of various courses and diplomas by 175 students of which 97 were black students, from the first intake of the Bill Venter Academy
  • Established a One Company Culture in Altron
  • Imbedding the Altech Way into the new Altron TMT structure
  • Established a human resource shared service for Altron TMT that resulted in cost savings and recruitment efficiencies

CHALLENGES

  • The month long National Union of Metalworkers South Africa (NUMSA) strike had a major impact on Altron Power’s manufacturing operations and also affected Arrow Altech Distribution and Altech UEC
  • Lack of clarity from the Department of Trade and Industry (the dti) on the interpretation and calculations in terms of various aspects of the amended B-BBEE Codes and the future of the information and communication technology (ICT) Sector Charter
  • Increasing the number of black senior managers in the Altron group with a specific focus on black females in senior positions

IMPROVEMENTS

  • Completion of three-year payroll project at Altron Power consolidated its South African employee base previously on six separate payrolls onto one payroll. This resulted in improved efficiencies, reliable data, reduction in costs and a single platform for use with the operation’s performance management and succession planning systems

DISAPPOINTMENTS

  • Our first fatality in the Altron group in more than 14 years
  • Closure of the Powertech Transformers Booysens operation, which resulted in the retrenchment of 136 employees
  • Rightsizing at Powertech Insulation, which resulted in the retrenchment of 23 employees
  • Altech UEC had to retrench 100 full-time employees and 325 temporary employees during this financial year. This was mainly as a result of one of Altech UEC’s key customers not taking delivery of a large order of set top boxes destined for Africa

TRANSFORMATION IN THE ALTRON GROUP

To ensure that transformation in the group received the right focus, Altron established a transformation committee in 2002. The group executive: corporate affairs, chairs the committee and is responsible overall for transformation in the Altron group, monitoring the impact of the amended B-BBEE Codes that came into effect in May 2015 and addresses the challenges of achieving management control targets as outlined in the amended codes. Altron remains committed to transformation within in the group with a specific focus on management control and improving our employment equity levels. The shortage of historically disadvantaged South Africans (HDSAs) with suitable engineering and ICT skills remains a challenge in terms of achieving employment equity and transforming our senior management team. Our efforts to address this issue are discussed under the Core Skills and Talent Management sections of this report.

To support transformation in the broader sense we are changing our supply chain processes, particularly in our manufacturing plants, to create opportunities for small black-owned enterprises. We are assisting with the sustainable development of these businesses by providing skills development and enterprise and supplier development support. These initiatives are also contributing to the creation of jobs in the small business sector in general.

During the year under review we re-examined our transformation strategy to ensure we can meet the management control requirements of the amended B-BBEE Codes and increase employment equity representation in the group, particularly in management and senior management positions with a focus on empowering females. Our efforts with regard to improving our management control (with a focus on employment equity) within the Altron group are discussed in more detail under the Altron TMT and Altron Power sections that follow. Our internal auditors monitor the progress and achievement of transformation goals across the group on a monthly basis. Despite the tough socio-economic climate we operated in during the 2015 financial year, the group was able to maintain its Level 2 B-BBEE rating.

The uncertainty surrounding both the amended B-BBEE Codes and the ICT Sector Charter has still to be resolved. Overall, while we have a long way to go in terms of achieving the transformation we would like to see in the group, especially in our senior management teams, we believe the work our businesses have done in this regard will allow us to maintain appropriate B-BBEE ratings under the amended B-BBEE Codes.

Altron consolidated audited ICT Sector Charter and generic scorecard performance

2014/2015 2013/2014
Altron ICT ICT 2012/2013 2011/2012
Operations Scorecard Scorecard Generic Generic
Altron 2 N/A 3 3
Altron TMT 2 2 N/A N/A
Altech 2 2 3 3
Bytes 2 2 2 2
Altron Power* 3 3 3 3

*Rated on the generic scorecard.

HUMAN RESOURCES IN THE ALTRON GROUP

The Altron group employed 12 049 people at year-end, which is a 6,6% reduction in employee numbers year-on-year. Corporate office numbers increased slightly as a result of the move of shared services into the Altron head office, while Altron TMT’s head count decreased slightly (6,5%) as a result of retrenchments at Altech Multimedia (AMM). Altron Power’s head count decreased by 7,8% as a result of the closure of the closure of Powertech Transformer’s Booysens operation.

Occupational levels Male Female Foreign nationals Total
African Coloured Indian White African Coloured Indian White Male Female
Altron Exco 1 5 1 7
Top management 4 1 8 47 1 11 2 74
Senior management 20 16 37 336 8 7 15 55 1 3 498
Middle management 203 114 155 801 110 50 74 314 20 3 1 844
Junior management 1 360 457 418 1 189 740 185 189 559 20 6 5 123
Semi-skilled 1 385 433 106 63 611 145 78 108 4 1 2 934
Unskilled 383 54 17 8 135 17 8 1 3 626
Sub total 3 356 1 075 741 2 449 1 604 404 365 1 048 51 13 11 106
Offshore employees Management 116 48 164
Employees 504 275 779
Subtotal 620 323 943
Total 12 049

Total employee head count by group company (South Africa and offshore)

2012 2013 2014 2015 SA Offshore
Corporate 122 79 79 117 117
Altron TMT 8 438 8 196 8 247 7 712 7 256 456
Altron Power 4 672 4 577 4 578 4 220 3 733 487
Total 13 232 12 852 12 904 12 049 11 106 943

It is always challenging to retain talent in the industries in which we operate where critical skills are in short supply. The negative impact on our profitability discussed in the chief financial officer’s review and the financial sustainability sections of this report have also adversely affected employee remuneration in certain business units, making it even more challenging for the group to retain talent.

While we may have been tempted to reduce our costs by reducing our investment in training and development, this would have been short-sighted and damaging to the group’s future sustainability. We remain committed to the development of our employees who, particularly with regard to their contribution to the group’s intellectual capital, are one of our most valuable assets.

In the previous financial year 74,6% (2014: 75,5%) of our training spend in the Altron group was invested in training our black employees. Our investment in our black employees supports our efforts to achieve our transformation strategy and more specially improve our employment equity.

Altron group expenditure on training and development

2015 2014 % change
Type of expenditure R R year-on-year
Group total training spend 110 331 084 68 720 959 61
Average training spend per South African employee 9 934 5 763 72
Black training spend 82 299 145 51 867 792 59
Black female training spend 29 388 272 20 529 121 43
Black disabled training spend 9 229 458 3 615 945 155

In the year under review:

  • There were 105 apprenticeships in the group (a 9,4% increase year-on-year), of which 88,6% of the apprentices were black and 22,6% were black females
  • The 786 learnerships in the group represented a 33,2% increase in learnerships across the group year-on-year. All these learners were black, 58% were black females and 26% were black disabled learners of which 22% were disabled black females
  • We had 95 experiential learners in the group (a 27% decrease), 98% of these were black experiential learners of which 43% were black females
  • The group spent R3,5 million (R1,8 million: 2014) on providing 63 (2014: 94) bursaries for tertiary education, of which 83% were awarded to black bursars and of this 50% went to black female bursars
  • Our total group expenditure on educational assistance was R2,7 million (2014: R4,4 million)
  • The group provided 320 777 (2014: 238 462) hours of training to its employees, a significant increase from the previous year

Leadership and accountability

The ability of our leadership to manage change has been key during the past two years while the organisation has been undergoing a continuous change process intended to ensure that the Altron group is fit for purpose in a rapidly changing environment. To ensure we have access to the best possible leadership skills we not only develop our own leaders but also source leaders from outside the group.

The past two years have also been difficult years for our leaders, both in terms of managing the changes in our organisation and operating in a challenging socio-economic environment. While we are comfortable that change management, which was a key material issue last year, is now well managed, our risk management processes identified a lack of leadership accountability during this period as a risk that the group needs to address. We have put in place measurement processes that will identify where this particular risk exists and will be taking action to mitigate the risk and improve overall accountability at senior management level.

The Altron group has a long history of growing leaders from within. The Bill Venter Academy plays a key role in developing the future leaders of Altron, ensuring that we have a robust leadership development pipeline to meet our succession planning requirements and achieve our transformation goals. Our aim is to create a world class learning and sharing environment in which employees acquire knowledge and skills, are encouraged to freely express an entrepreneurial spirit and to embrace Altron’s culture and values of customer centricity, accountability, innovation, people focus, collaboration and results and achievement orientation. We are comfortable that the risk associated with an aging leadership pool in some of our businesses is being addressed through our robust leadership development programmes and succession planning exercises.

The Altron Young Presidents’ Club was formed with the aim of promoting, developing and retaining the group’s young leaders. Members are nominated by senior management and membership is restricted to a maximum of 75 employees. Currently there are 66 members (20 black, 7 black female). Young presidents must be energetic, goal driven, confident, dedicated and should exhibit strong leadership capabilities.

Communication is a critical element in leadership and the management of change. Previously, while the majority of the climate surveys the group undertook indicated that communication was transparent and informative, some surveys indicated that employees felt that leadership and the communication around change within the group could have been better. The latest surveys conducted throughout the group indicate that employees believe that they have been kept well informed and that leadership’s communication has improved and is seen as transparent.

Core skills and talent management

Skills Development and Talent Management play a key role in addressing transformation in the Altron group. We partner with further education and training (FET) colleges and universities to mentor students to develop the skills we need as part of our recruitment process. We also have bursary programmes in place as part of our commitment to talent development.

The ongoing development of core skills is essential to the sustainability of the group. Historically, each business unit ran its own training programmes. During the previous financial year, in line with our centralised approach to human capital management, we established the Bill Venter Academy as a centre of excellence that would roll out and manage selected training programmes throughout the group. Bytes People Solutions (BPS), which provides skills development solutions to both the Altron group and externally to a wide range of clients, is also responsible for the Bill Venter Academy (previously known as the Altech Academy), which was established to develop and nurture the vast pool of talent in the Altron group.

The academy has developed, in consultation with the various Altron operations, academic institutions and government, a set of programmes that will address the group’s skills requirements in both the short, medium and long term. The programmes include, among others, customer service, sales enablement, leadership and management development and also focus on developing scarce and critical skills.

Employee attraction and retention

Employee Attraction and Retention remains a material issue for the group that is managed on an ongoing basis, however, it is currently not a critical issue. Altech was recognised for the good work it does in terms of attracting and retaining employees during 2014. The particular challenges and successes of our various business units are addressed in the Altron TMT and Altron Power sections that follow.

Company CulturE IN THE ALTRON GROUP

Our brand proposition ‘United we grow is underpinned by our efforts to establish a One Company Culture. A great deal of focus has been placed on establishing a one company culture in the group over the past two years and we have made good progress. We recognise that establishing and nurturing a company culture requires an ongoing focus and we therefore continue to maintain a focus on embedding a one company culture. Details of the progress that has been made can be found in the Altron TMT and Altron Power sections that follow.

THE MATERIAL FOCUS AREAS AND MATERIAL ISSUES THAT COULD AFFECT ALTRON TMT’S HUMAN CAPITAL SUSTAINABILITY

The successful formation of Altron TMT depended on its ability to draw its people together behind a common vision. As a result achieving a One Company Culture was its most material Human Capital issue during the year under review. The climate surveys conducted to assess how successful the business had been at achieving these goals indicate that it has been very successful. The values contained in the Altron TMT 5+1 way underpin the group’s vision.

The Altron TMT 5+1 way

  • Customer focus
  • Accountability
  • Innovation
  • Results and achievement orientated
  • People focus
  • Collaboration

During the year under review, there has been some significant shifts in the rating of some of Altron TMT’s Human Capital material issues. Refer to the table below for the changes to Altron TMT’s material focus areas and material issues.

    Altron TMT Altron TMT
    rating rating
Material focus area Material issues 2014/15 2013/14
Transformation * Management control with emphases on employment equity
Human Resources Leadership and accountability
Core skills and talent management
Employee attraction and retention
Company Culture One Company Culture

* It should be noted that wherever reference is made to ‘employment equity’ in the Human Capital section, it specifically refers to the management control element within the amended B-BBEE Codes.

Legend

Most material issue
Priority issue
Focus issue
Controlled issue

The key issues for Altron TMT in terms of human capital this year were:

  • Retaining skills and
  • Establishing a cohesive company culture

One of the biggest challenges and opportunities we have had in Altron TMT during this financial year is that of establishing a cohesive company culture. Once we had established that both Altech and Bytes, the two companies we were integrating into one business, had very similar value systems we could establish a set of values, which we call the Altron TMT 5+1 way, and build on these to establish a cohesive company culture.

We used a structured change management programme to drive the buy-in and commitment we needed to integrate our businesses. Our research shows that we have done well in this regard, however, we recognise that continuing to build a unified Altron TMT will require an ongoing effort from both our employees and management. Communication has and will continue to play a key role in strengthening the one company culture approach. Bytes People Solutions (BPS) recently acquired a new business which will add an additional 1 069 employees to the Altron TMT group. To ensure that they become part of the Altron TMT family, we will introduce them to our values and our one company culture.

The centralising of the human capital function for the 18 businesses that make up Altron TMT, was a very important part of the establishment of a shared service facility for Altron TMT, which was completed during this financial year. The Altron TMT human resource function is responsible for our human resource strategy and policies, as well as for the provision of payroll services, training and development, recruitment, our human resource information system, transformation, succession planning and our reward strategy.

The purpose behind establishing shared services for Altron TMT was to achieve cost savings by removing duplication and increasing efficiency. One of our successes has been in recruitment where, by outsourcing the recruitment process, we have cut down the time it takes to fill a position by 86% and reduced the cost to the business of recruitment by 16%. These savings are detailed in the financial sustainability section of this report.

The NUMSA strike impacted both Arrow Altech Distribution and Altech UEC, Altron TMT’s distribution and manufacturing operations. In terms of human capital the greatest impact was on employee relations, which have since recovered.

TRANSFORMATION IN ALTRON TMT

Altron TMT’s operations face the greatest challenge in terms of their ability to transform. Transformation as our most material issue requires a great deal of attention with regards to the current demographics in Altron TMT. An analysis of the demographics of the industry in which we operate in terms of telecommunications, multimedia and technology showed that at executive level the majority employees are white (72%) and males make up 78% of that 72%. These statistics explain just how difficult it is to transform our operations when the majority of the executives in the industry are white males.

While the low turnover rate in our management team means we are retaining key skills in an area where skills are in short supply, it limits career opportunities for others and also hampers our ability to transform our management team. We did make some progress during the 2015 financial year as Altron TMT promoted 271 people of which 54% were HDSAs.

We were pleased that despite the transformation challenges we face, Altron TMT did well in terms of its B-BBEE rating, retaining its Level 2 rating in terms of the existing B-BBEE Codes under the ICT Sector Charter.

Altron TMT’s audited B-BBEE performance under the ICT Sector Charter

Company 2014/5 rating 2013/4 rating
Altron TMT Level 2 Level 2
Altech group Level 2 Level 2
Bytes SA group Level 2 Level 2
Altech Netstar Level 2 Level 2
Altech Autopage Cellular Level 2 Level 2
Altech Radio Holdings Level 2 Level 2
– Altech Alcom Matomo Level 2 Level 2
– Altech Alcom Radio Distributors Level 2 Level 2
– Altech Fleetcall Level 2 Level 2
Altech UEC (SA) Level 2 Level 2
Arrow Altech Distribution Level 2 Level 2
Altech Stream Broadband Communication Level 2 N/A
Bytes System Integration Level 2 Level 2
Bytes Managed Solutions Level 2 Level 2
Bytes People Solutions Level 2 Level 2
Bytes Secure Transaction Solutions Level 2 N/A
– Altech Card Solutions Level 2 Level 2
– Altech NuPay Level 2 Level 2
– Bytes Healthcare Solutions Level 2 Level 2
– Med-e-Mass Level 2 Level 2
– Mediswitch Level 2 Level 2
Bytes Core Business Software Level 2 N/A
– Bytes Universal Systems Level 2 Level 2
– Altech ISIS Level 2 Level 2
Bytes Document Solutions Level 2 Level 2
– NOR Paper Level 2 Level 2

In terms of our transformation agenda our focus will be on ensuring our compliance with the amended B-BBEE Codes, continuing with our mentoring, training and development efforts and making progress with employment equity within the operations with a specific focus on transformation at senior management level.

HUMAN RESOURCES IN ALTRON TMT

Altron TMT’S total head count at year-end was 7 712, which is 6,5% down on the 8 247 employees it had at the previous year-end.

Altron TMT head count for 2015

Altron TMT
Occupational levels Male Female Foreign National Total
African Coloured Indian White African Coloured Indian White Male Female
Top management 2 1 6 34 1 10 1 55
Senior management 7 3 17 156 4 5 9 24 225
Middle management 98 75 128 578 55 31 55 215 15 3 1 253
Junior management 1 084 334 391 993 658 144 172 455 19 4 4 254
Semi-skilled 448 72 83 25 466 105 72 91 2 1 1 365
Unskilled 39 4 8 1 36 9 6 1 104
Sub total 1 678 489 633 1 787 1 219 294 315 796 37 8 7 256
Offshore employees Management 96 39 135
Employees 207 114 321
Sub total 303 153 456
Total 7 712

In terms of Human Resources the issues we have identified as being material for Altron TMT is either such that they are material but do not require a key focus or they are currently managed so well that they are regarded as being under control and do not require any specific focus.

An important part of the process of combining Altech and Bytes under the umbrella of Altron TMT was to make the best possible use of opportunities for collaboration and cross-selling

Leadership and accountability

Feedback from employee surveys and the fact that we met the targets we set ourselves in terms of the management of the human resource changes necessary to achieve the integration of Altech and Bytes, indicates that this challenging process went well.

One of this year’s leadership challenges in Altron TMT included obtaining to get buy-in to the shared services model adopted by Altron. The excellent cost savings achieved as a result of the adoption of the shared services model in Altron TMT are testimony to the success of this process, which could not have succeeded without the commitment of the leadership of both Altech and Bytes businesses.

The businesses that make up Altron TMT have always been committed to developing their leaders and they continue to do so. 215 of Altron TMT’s future leaders were enrolled at the Bill Venter Academy of which 130 were HDSAs and 61 were female HDSAs. Six of the HDSA’s were also accepted as members of the Altron Young Presidents’ Club during the year under review.

An important part of the process of combining Altech and Bytes under the umbrella of Altron TMT was to make the best possible use of opportunities for collaboration and cross-selling. This initiative is bearing fruit.

An important part of the process of combining Altech and Bytes under the umbrella of Altron TMT was to make the best possible use of opportunities for collaboration and cross-selling. This required leaders to help their employees to become familiar with the offerings across not only Altron TMT but also Altron Power, in case there are opportunities to collaborate. An example was the contract Altron TMT and Huawei secured with the Passenger Rail Agency of South Africa (PRASA) to supply a digital radio communications system for its passenger trains and associated infrastructure. The securing of this contract would not have been possible without the pooling of the resources at both Altech and Bytes.

To ensure Altron TMT achieves its growth strategy and to ensure a sustainable future for the division, the leaders within the group need to be held responsible and accountable for their actions. Leadership and Accountability was raised as a key material issue that needs to be addressed within the Altron TMT group. Accountable leadership and our ability to measure performance to achieve accountable leadership will be a focus for Altron TMT in the next financial year. As part of this focus, Altron TMT will review existing key performance indicators (KPIs) and performance measurement in order to develop and ensure it has accountable leaders.

Core skills and talent management

The rating of the risk in terms of Core Skills and Talent Management has decreased from one still requiring attention to one that we consider is well managed and under control.

Altron TMT spent over R70,7 million on training its employees, 68% (2014: 69%) of which was spent on training HDSA employees.

We invested in:

  • 22 apprenticeships (2014: 9) of which 20 (2014: 8) were taken up by black employees of which four where black females
  • 661 (2014: 447) learnerships, all of whom were taken up by black employees, of which 385 (2014: 78) were females and136 (2014: 39) were disabled
  • 22 bursaries (2014: 86), 68% (2014: 49%) of which were granted to black South Africans and 57% of which were granted to female black South Africans
  • R1,7 million (2014: R3,4 million) were provided in educational assistance to employees
  • The learnership training provided to Altron TMT by Bytes People Solutions includes ICT learnerships for technicians, systems support and software developers. Of the 661 (2014: 447) learnerships Bytes People Solutions ran for Altron TMT this year 385 (2014: 183) were black women and 136 (2014: 78) were for people with disabilities.

This year nine people from Altron TMT joined the Altron Young Presidents’ Club. We enrolled 215 people in the Bill Venter Academy, of which 130 were black employees and 61 were black female employees.

A focus of our training during the year was developing sales skills and in particular training people in the range of products and services we offer so they are able to cross- and up-sell TMT’s vast range of products and services.

We remain committed to investing in training and development, maintaining our focus on leadership development and developing the type of sales skills we need to up-sell and cross-sell the wide range of products and services provided by Altron TMT and the Altron group.

We will continue to focus on measuring, developing and ensuring we have leadership accountability going forward. In addition the group will also focus on the transformation of its leadership team in the short to medium term.

Fine tuning our centralised human resources function in terms of obtaining further increases in service delivery levels to our business units and continuing to seek out additional opportunities to achieve cost savings and increased efficiency will continue to be a focus in the new financial year.

Employee attraction and retention

While our turnover at middle and senior management levels is low, we have a challenge in retaining software specialists. The arrival of international companies has further increased the challenge of retaining these important skills.

Our efforts to retain and attract employees earned Altech recognition from the global Employer Branding Institute, which recognised Altech as the best employer in Africa for 2014. The award recognised the importance Altech places on attracting and engaging the employees it needs to deliver profitable growth and for creating positive brand experience for its employees.

The employee benefit packages we offer our employees, which are described below in the human capital management section, are also intended to attract and retain employees.

Altron TMT had a low employee turnover (an average of 0.78% per month), particularly within its management team. While this is helpful in that we are good at retaining the key skills we need, the lack of turnover in our management team limits the opportunities for promotion and our ability to increase the numbers of HDSAs in management. It also puts us at risk of losing potential managers who may feel that their opportunities for promotion in the Altron TMT group are too limited.

Unfortunately, Altech UEC had to retrench 100 full-time employees and 325 temporary employees during this financial year. This was mainly as a result of one of Altech UEC’s key customers not taking delivery of a large order of set top boxes destined for Africa. For further details refer to the financial sustainability section of this report. To mitigate this situation the business has been busy with efforts to diversify its product range and protect itself from the risk of being dependent on a key customer and the increasing competitiveness of its existing market.

In an attempt to simplify and speed up the recruitment process and cut costs at Altron TMT we outsourced our recruitment process to ADfusion, which has cut the time it takes to fill a position by 86% and reduced the cost of recruiting by 16%. This has freed up our in-house human resource specialists to focus on achieving their strategic objectives.

At Altron TMT we will be continuing with our focus on strengthening and growing our one company culture while offering employees the opportunity to develop, grow and improve their skills.

We will also continue to make every effort to retain skills, improve succession opportunities and transform our business.

Company Culture IN ALTRON TMT

The focused approach we adopted to integrating Altech and Bytes into Altron TMT and in supporting the Altron group brand proposition of United we grow, is key to establishing a one company culture. This allows us to reap the business benefits gained from pooling resources and working together to present our clients with end-to-end value-adding solutions. This approach, together with the cost savings we have gained from introducing a shared services model, is already showing results. We would not have been able to achieve the financial benefits in terms of cost savings and the business we obtained through the collaboration between business units, details of which can be found in the products and services section of this report, if we had not succeeded with achieving a one company culture in Altron TMT.

In addition, the recognition the global Employer Branding Institute gave Altech in terms of being the best employer in Africa and also recognising our employee engagement efforts, creates a positive brand experience for our employees.

The Altech Way project, which drives our 5+1 values and includes an employee recognition programme, has played and continues to play, an important part in establishing and embedding the one company culture in Altron TMT.

We recognise that establishing and maintaining a united company culture requires an ongoing effort. We will be continuing with our efforts, by doing more of what has already proved to be successful in our approach to building a one company culture and embedding The Altech Way initiative.

THE MATERIAL FOCUS AREAS AND MATERIAL ISSUES THAT COULD AFFECT ALTRON POWER’S HUMAN CAPITAL SUSTAINABILITY

In the year under review many of Altron Power’s operations endured a month-long strike by NUMSA and other minority unions in the metal industry, which negatively affected both productivity and employee relations. An additional Human Capital challenge for Altron Power was the closure of its Powertech Transformers Booysens operation which resulted in retrenchments as well as retrenchments in the Powertech Insulation division.

A culture of accountability, responsibility and delivery continues to be a focus in Altron Power’s operations. This is driven by its approach to performance management where key performance indicators are closely linked to the group’s strategic objectives.

A culture of accountability, responsibility and delivery continues to be a focus in Altron Power’s operations

Similar to the Altron group’s overall ratings for Human Capital there were a few changes, mostly improvements, around Altron Power’s material focus areas and material issues. The changes we have made in this reporting period are indicated below:

    Altron Power Altron Power
    rating rating
Material focus area Material issues 2014/15 2013/14
Transformation * Management control with emphases on employment equity
Human Resources Leadership and accountability
Core skills and talent management
Employee attraction and retention
Company Culture One Company Culture

* It should be noted that wherever reference is made to ‘employment equity’ in the Human Capital section, it specifically refers to the management control element within the amended B-BBEE Codes.

Legend

Most material issue
Priority issue
Focus issue
Controlled issue

Two key issues for Altron Power in terms of Human Capital this year were:

  • the negative impact of a considerable decrease in orders from Eskom, one of Altron Power’s key customers, and the mining and construction industries resulted in Powertech Transformers closing its Booysens plant and retrenching 136 people
  • the NUMSA strike, which adversely affected both employee relations and the financial performance of the business.

Managing the impact of the month long metal industry strike on our operations included developing and implementing contingency plans for absenteeism, intimidation, violence, picketing rules and communication links. Approximately 1 746 hourly paid employees were involved in the strike, resulting in absenteeism of over 90% during the period of the strike. The strike finally came to an end when the metal industry concluded a three-year wage agreement with NUMSA, which included a 10% increase in minimum level wages in the first year of the agreement. This translated into an 8,9% increase on our payroll. In the second year of the agreement a 9,5% increase was negotiated and in the third year a 9% increase.

In total 64% (2014: 64%) of Altron Power’s South African employees are covered by collective bargaining agreements. While six different trade unions are formally recognised in Altron Power, 85% of its unionised employees are NUMSA members.

Our human resources team successfully completed the major task of finalising Altron Power’s human resources shared services facility, which serves all Altron Power’s business units. This, along with the new technology processes that were implemented, has resulted in a major improvement in the quality and availability of human capital data within the Powertech group and the submissions we need to make to government and regulators. In addition it has also improved the overall management of our employees and their performance.

Finally the human resources shared services initiative also included a review and where appropriate standardisation of human resource policies across Altron Power’s business units has taken place.

TRANSFORMATION AT ALTRON POWER

In the year under review Altron Power’s rating in terms of the existing B-BBEE Codes Level 3 managed to maintain their Level 3 rating. Powertech Cables was able to improve its rating to a Level 2 in the year under review.

Altron Power’s audited B-BBEE performance under the generic scorecard

Company 2014/5 rating 2013/4 rating
Altron Power Level 3 Level 3
Powertech Cables Level 2 Level 2
Powertech Transformers Level 3 Level 3
Powertech Batteries Level 3 Level 4
Powertech System Integrators Level 3 Level 4
Crabtree Level 4 N/A
QuadPro* Level 4 N/A

* Construction Sector Scorecard

During the year 70% of Altron Power employees who were promoted were black South Africans.

In the year under review Altron Power’s rating in terms of the existing B-BBEE Codes improved from a Level 4 to a Level 3

Altron Power’s succession planning process supports its efforts to transform its management teams. Our focus is not only on increasing the number of black South Africans in management positions, but also on increasing the number of females in management roles. During the year 92 (2014: 76) Altron Power employees were promoted, of which 64 (2014: 56) were black.

An important element of our efforts to increase the number of HDSAs in management positions is our engineering bursary programme, which we are running in partnership with the University of Pretoria, and our technical skills programme. This year ten black South Africans, of which two women, were recipients of engineering bursaries. The majority of our black bursars are studying electrical engineering.

As we have indicated transformation, particularly in terms of meeting the requirements of the amended B-BBEE Codes, will be a major focus for us in the year ahead. Through our employment equity initiatives identified for the short, medium and long term we hope to improve our Management Control throughout the group.

HUMAN RESOURCES AT ALTRON POWER

Altron Power’s head count at year-end had decreased by 7,8% to 4 220 (2014: 4 578) primarily as a result of the retrenchment of employees due to the closure of Powertech Transformers’ Booysens operation and retrenchments at the Powertech Insulation division.

Altron Power’s head count for 2015

Altron Power
Occupational levels Male Female Foreign nationals Total
African Coloured Indian White African Coloured Indian White Male Female
Top management 2 2 16 1 1 22
Senior management 13 13 20 169 3 2 5 22 1 2 250
Middle management 102 39 26 216 48 16 11 85 2 545
Junior management 274 123 27 194 78 41 15 91 1 2 846
Semi-skilled 935 361 23 38 143 38 6 14 2 1 560
Unskilled   340 50 9 7 93 8 2 1 510
Subtotal   1 666 586 107 640 365 105 39 213 8 4 3 733
Offshore employees        Management 20 9 29
                Employees 297 161 458
                 Subtotal  317 170 487
Total 4 220

In addition to the above focus areas, Altron Power has identified that Leadership and Accountability and Employee Attraction and Retention are areas that also require attention throughout the operation.

Leadership and accountability

Our drive to achieve a culture of strong leadership and accountability is supported by an automated performance management system that operates across the various Altron Power business units. Performance management, which has linked individual managers’ KPIs to the achievement of the group’s strategic objectives, plays a strategic role in driving a culture of accountability, responsibility and delivery in Altron Power.

We will be focusing on addressing the need to improve leadership accountability in Altron Power in the short to medium term. Our introduction of a new performance management system has assisted with this process. Performance reviews are conducted in March and September of each year. These include measurement of up to seven key performance areas and the assessment of generic performance dimensions such as quality of work, quantity of work, initiative, dependability and teamwork. Managers are also measured on their change leadership, driving for results, team development and collaboration abilities.

Core skills and talent management

Our training and development programme has a strong focus on our training needs in terms of our succession planning requirements. We have 25 (2014: 7) employees in the Altron Young Presidents’ Club of which 7 (2014: 4) are black employees which includes one black female employee. This increase in the number of employees nominated for the Altron Young Presidents’ Club is an indication of Altron Power’s commitment to growing and developing leaders from within the organisation. It will also ensure we have a pool of good managers to draw on as part of our succession planning process.

Despite the negative impact on our bottom line of our challenging operating environment, we invested:

  • R38,9 million in skills development, which is an increase of 30,7% year-on-year and 3,93% of payroll)
  • 87% (2014: 84%) of this was invested in the development of our black employees’ skills
  • 26% (2014: 28%) invested in training black females
  • 7% (2014: 5%) in training black disabled employees.

While we also invested in bursaries, experiential trainees, learnerships and apprenticeships during the year under review, our investment, as indicated below, was slightly less in some areas than it was in the previous financial year as a result of budget constraints:

Despite the disappointing financial performance of Altron Power, we plan to maintain our spend on skills development at 3,5% of our payroll costs
  • 10 (2014: 8) engineering bursars
  • 79 (2014: 107) experiential trainees
  • 125 (2014: 143) learnerships
  • 83 (2014: 87) apprentices

Project Ecole was put on hold in 2013 due to retrenchments in the Powertech group. It was relaunched in 2014 and it is anticipated that all our operators and first line managers will have completed the Ecole Manufacturing training modules in process technology, area process training and operator procedures by the end of 2016.

Despite the disappointing financial performance of Altron Power, we plan to maintain our spend on skills development at 3,5% of our payroll costs, manage our skills development score in terms of the B-BBEE Codes and continue to address the skills needs of the business in terms of apprenticeships, learnerships, experiential trainees and bursars. We will also undertake ongoing job-related training to address issues raised through performance management and aim to complete the Ecole training in the short to medium term.

Employee attraction and retention

For the period under review our employee turnover was 1,62% as compared to the reported figure of 1,15% in 2014. This marginal increase of 0,47% was mainly due to the termination of fixed term contracts as well as retrenchments at our Powertech Transformers Booysens operation and the Powertech Insulation division.

Altron Power continues to focus on improving people management skills throughout our business, providing developmental opportunities that enhance the skills of individuals and market-related rewards, while taking into account company and individual performance.

To retain employees we focus on providing an attractive work environment, personal development opportunities, job satisfaction and performance feedback. We also make every effort to provide our employees with regular and transparent communication.

The information we gather at employee exit interviews and newcomer surveys is used to gain insight into the experiences and concerns of employees.

The employee benefit packages we offer our employees, which are described in more detail later in this section as part of our approach to Human Capital management, are also intended to attract and retain employees.

We will be addressing the list of actions emanating from the employee surveys we conducted recently and will complete outstanding employee climate surveys. We will also continue addressing employee issues resulting from the closure of Powertech Transformers’ Booysens operation and the retrenchments in Powertech Insulation.

All salaried employees at Altron Power have annual performance reviews which we continue to use to develop and reward our employees.

COMPANY CULTURE IN ALTRON POWER

At Altron Power we have focused on building a culture based on service excellence and productivity. Strong leadership, accountability, responsibility and delivery are essential if we are to achieve our strategic objectives during a period when our profitability, productivity and employee morale have been badly affected by the impact of labour unrest, the current socio-economic climate and the dramatic drop in revenue in some of our business units. Performance management plays a key role in driving our culture and our managers’ key performance indicators are closely linked to the achievement of our strategic objectives.

The retrenchments and restructuring that have taken place in some of our business units over the past two years, together with labour unrest, affected employee morale. The results of a climate survey conducted in Aberdare Cables and Crabtree indicated that we have been able to rectify this situation as there was an impressive improvement in seven out of the eight elements measured by the survey, the eighth element being remuneration, which is linked to company performance, has been adversely affected by a drop in the group’s performance.

Previously, employee climate surveys revealed that we needed to improve our communication, particularly in times of change. Our communication with employees achieved a high rating in the surveys mentioned above, in particular for its transparency. Our employees indicated that our communication kept them informed of changes in the business, made them feel that the organisation valued them and as a result they felt more secure in their jobs.

We will complete the climate surveys that were outstanding at the end of this reporting period and use the information gained from these surveys to continue work on building the culture we have identified as the type of culture that will serve Altron Power both now and into the future.

OUR APPROACH TO HUMAN CAPITAL MANAGEMENT IN ALTRON

The section that follows explains the Altron group’s approach to managing its Human Capital, the structures it has in place, its approach to human rights, fraud and corruption and safety, health and wellness of employees.

The group executive: corporate affairs, chairs the human capital council. The council develops the human capital strategy for the Altron group, which in turn is executed by our two operations and their respective business units. The council also develops and assists with the implementation of plans to prioritise human capital issues that need to be addressed in the group.

To ensure the group complies with and adheres to all relevant human capital issues we ensure that all our operations comply with the Labour Relations Act, No 9 of 1995, the Basic Conditions of Employment Act (1997), the Skills Development Act (1998), the Occupational Health and Safety Act (1993), the Unemployment Insurance Fund Act (1993) and the amended Board-based Black Economic Empowerment Act (2003).

While there has been little change in the average male to female salary ratio in top and senior management, the average salary of middle management females came closer to those of male managers during this financial year. While the average male to female ratio in terms of junior management deteriorated this year there was a big improvement in the average male to female salary ratio for unskilled female employees.

Average male to female salary ratio

Occupation level 2015 2014
Top management 1,70 : 1 1,71 : 1
Senior management 1,1 : 1 1 : 1
Middle management 1,13 : 1 1,28 : 1
Junior management 1,13 : 1 1,05 : 1
Semi-skilled and discretionary decision making 1,1 : 1 1,2 : 1
Unskilled and defined decision making 1,15 : 1 1,43 : 1

EMPLOYEE RIGHTS

The Altron group ensures that its employees’ rights are protected by fully complying with all the relevant legislation in the countries in which we operate. None of the countries in which we operate have been identified as posing a significant risk for incidents of forced or compulsory labour, child labour, or for undermining the right to exercise freedom of association and collective bargaining.

Our employees can easily access the Basic Conditions of Employment Act, the Skills Development Act and the Employment Equity Act, which are displayed in our workplaces and are available online via the company’s intranet or on request from the various human resource teams.

Notice periods regarding operational changes are outlined in our standard terms and conditions of employment and range from 30 to 60 days. The provisions of the main agreement with the Metal and Engineering Industries Bargaining Council (MEIBC) determine the notice periods for scheduled employees.

The group has a formal grievance procedure in place, the details of which are made available to employees on request, or a copy can be found on Altron’s intranet, although it should be noted that most operations have their own procedures that were negotiated at plant level. No grievances concerning human rights violations were filed against the company during the reporting period.

None of our operations reported incidents of violations involving the rights of indigenous people. While none of our operations were subject to human rights reviews or impact assessments, no cases of human rights abuses have ever been reported in our operations.

As a signatory to the United Nations Global Compact (UNGC) we also report on our progress in meeting the expectations of the 10 UNGC Principles on human rights, labour, the environment and anti-corruption and any initiatives we have undertaken in terms of supporting the UNGC Principles. Altron’s annual UNGC report also includes information on any violations there may have been during the year.

In the reporting period 50 (2014: 58) cases of misconduct were referred to the Commission for Conciliation, Mediation and Arbitration (CCMA), while 184 (2014: 174) employees were dismissed for misconduct without being referred to the CCMA. During the reporting period 10 (2014: 13) cases were settled and 16 (2014: 26) cases were pending at the end of the reporting period.

FRAUD AND CORRUPTION

In recognition of our anti-corruption stance the Altron group became a signatory to the United Nations Global Compact’s ‘Call to action: Anti-Corruption and the Global Development Agenda’ in August 2014.

The Altron group’s anti-corruption policies and procedures are communicated to all members of the group’s governing bodies and they are accessible on the operations’ intranets. Members of Altron’s governing bodies received anti-corruption training during the period under review.

All Altech’s employees received anti-corruption training in the year under review. Since the crime and loss reports intensified in the year under review, fraud and corruption training was also conducted in Powertech Transformers and Bytes Document Solutions by an external service provider.

We regularly assess our operations for risks related to corruption. During the reporting period 20 of our business units were assessed for risks related to corruption. An employee was dismissed for corrupt behaviour and to prevent a recurrence a new supervisor was appointed to ensure that rules, policies and regulations are strictly enforced.

An annual declaration of proper conduct form is circulated to our directors, and managers, which they sign to confirm that their conduct over the past year has been in compliance with Altron policies relating to fair competition, bribery and corruption and related matters, compliance with relevant laws respecting third party rights and contractual obligations. During the reporting period more than 900 managers in the Altron group signed this form. Any incidences of non-compliance are reported to the financial review, social and ethics and risk committees annually.

KEY HUMAN CAPITAL STAKEHOLDERS

In terms of Human Capital issues our employees are our primary and most important stakeholder group, however, other human capital stakeholders include the unions, government, educational institutions and the communities from which we draw our labour. More detail on these and our other stakeholders are available under the external relationships section of this report as well as our stakeholder engagement section.

Our group prides itself on the level of stakeholder engagement we undertake. Where possible we provide detailed feedback on issues raised as part of our stakeholder engagement process. We engage with our employees and other stakeholders through a variety of channels, which are outlined in the stakeholder engagement section of this report. A table in the stakeholder engagement section details the key issues and concerns raised by our employees and how we have responded to them, as well as the focus areas for our engagement going forward.

One of the ways we engage with and inform senior management is through the group’s bi-annual results presentations where our management team is briefed on the group’s financial performance. These presentations also allow for two-way communication as the audience has the opportunity to pose questions relating to the company’s performance to Altron’s executive team. In addition Altron Power also presents its results to its senior management team every six months.

In recognition of our anti-corruption stance the Altron group became a signatory to the United Nations Global Compact ‘Call to action: Anti-Corruption and the Global Development Agenda

Senior leadership within each of our operations and business units communicates with their employees through presentations, email correspondence, internal staff meetings and internal staff publications, which include Altron Profile, TMT’s Let’s talk TMT and Altron Power’s PowerFlash. Employees are given a comprehensive view of the group’s vision and strategic direction and the role they need to play to help the company achieve its strategic goals. We recognise that communication during periods of change is particularly important and throughout the group there is a great deal of emphasis on ensuring employees are kept informed of changes that might affect them. A good example of this is Altron TMT’s Titan Times, which provided real time feedback on the progress made with regards to the integration of Altech and Bytes into the new Altron TMT operation.

During the year under review, our chairman, Dr Bill Venter, launched his Interaction with the people of Altron campaign by visiting some of the group’s major manufacturing facilities, including Altech UEC in KwaZulu-Natal and the Crabtree facility in Wadeville. He will be continuing with this campaign in the next financial year.

Other employee engagement platforms include internal newsletters and publications, awareness and poster campaigns, internal competitions, the intranet, internal meetings, company conferences, various staff surveys, training initiatives, one-on-one interactions, performance and reviews, road shows and various joint management and union forums.

If employees have concerns and queries regarding possible fraud or corruption cases they can use the confidential Tip-off Tim line to report these issues or give feedback through our ethics office or any of the social platforms used by our employees including Twitter, Facebook and LinkedIn.

EMPLOYMENT BENEFITS

The benefits we provide our full-time employees over and above those required by legislation include: medical aid, life, disability and invalidity insurance; a performance bonus; a leave allowance greater than required by legislation; financial assistance for further studies and retirement funds.

in recognition of the importance we place on our management of environmental and health and safety issues we developed separate policies for environmental and health and safety

The benefits we offer members of our executive and senior management teams include a short-term incentive in the form of an annual performance bonus based on business and individual performance and long-term incentives in the form of stock options.

The estimated liability of the Altron group’s defined benefit fund, which has 437 members, is R370,5 million.

HEALTH, SAFETY AND WELLNESS

The Altron group has had an excellent safety record over the past 14 years during which we have had zero fatalities. Our good track record sadly came to an end when an employee of Powertech Transformers was fatally injured at work in December 2014.

Despite having a low risk profile in most of our business units we take the health and safety of our employees very seriously and comply with all the relevant health and safety legislation. The majority of our business units operate in a typical office environment and therefore have a low occupational health and safety risk. The exceptions to this are the Altron TMT and Altron Power manufacturing operations.

During the year under review, in recognition of the importance we place on our management of environmental and health and safety issues we developed separate policies for environmental and health and safety. Our new group-wide health and safety policy provides a framework for the management of our health and safety issues, however, because these issues vary in our business units, individual business units develop, review and update their own policies that allow them to address their individual health and safety issues. Every manufacturing operation and most of our offices have health and safety committees, which represents, on average, over 75% of our workforce. These committees meet regularly in accordance with legislative requirements and feedback from these meetings is provided to management. Health and safety form part of our agreements with the trade unions and the unions also address health and safety issues in the workplace and in their union meetings.

We track fatalities, injuries, occupational disease, lost days and missed/absentee days and in addition our internal audit department conducts annual health and safety audits. In total 27 health and safety audits were conducted in our operations during the period under review. All audits received a good or satisfactory rating, except for two operations where corrective action was required.

All employees are supplied with the safety equipment necessary for the work they do and all our employees receive health and safety training every year. This training is supplemented by toolbox talks on safety matter and safety campaigns that our run in our operations.

Our regular safety and health reviews and audits ensure that the company complies with:

  • the requirements of the Occupational Health and Safety Act, No 85 of 1993, of and all its amended regulations;
  • the requirements of all the national and provincial environmental regulations;
  • the requirements of the relevant local and municipal bylaws relating to occupational safety, health and environmental matters;
  • Altron’s health, safety, and sustainability policies and operates in accordance with industry best practice; and
  • accurately reports selected sustainability indicator data.

The safety and health reviews we undertake cover the following areas of the Occupational Health and Safety Act, No 85 of 1993:

  • The general duties of both employers and employees.
  • Statutory appointments.
  • Facilities regulations.
  • General administrative regulations.
  • General safety and machinery regulations.
  • Environmental regulations.
  • Electrical and driven machinery regulations.
  • Electrical installation regulations.
  • Hazardous chemicals regulations.

Any other issue or acts deemed to affect the health and safety of employees are also reviewed if necessary.

A healthy workforce is an advantage to our business because it means that our employees are fit to work at their full potential and absences due to sickness are reduced.

All our permanent employees are members of a medical aid that gives them access to a wellness programme, which includes tuberculosis (TB) and HIV/Aids voluntary counselling, testing and treatment. Many of our operations host annual wellness days, which offer health risk assessments and healthy lifestyle coaching from medical professionals. The group is investigating the feasibility of introducing a wellness programme in all our operations.

HIV/Aids is not regarded as a major risk for the Altron group. Altron undertook a privilege audit in 2008, which had a very favourable outcome. A follow-up audit to assess the current level of employees affected by HIV/Aids, or at least determine if there is a potential risk to the company with regards to HIV/Aids, is under consideration. An issue that the organisation will take into consideration is the fact that we have manufacturing operations in areas known to have high prevalence rates, such as KwaZulu-Natal and Port Elizabeth. Altron will investigate the most appropriate path of action to take during the coming year. These could range from conducting a full-blown HIV/Aids prevalence audit to less formal initiatives such as general awareness and counselling. Further details will be provided in the 2016 integrated annual report.

In terms of section 16.1 of South Africa’s health and safety legislation the chief executives of our businesses have a legal responsibility for health and safety in their business. They in turn appoint section 16.2 appointees who are responsible for health and safety in their area of responsibility.

Altron’s health and safety performance
2015 2014 2013 2012
Altron Altron TMT Altron Power Altron Altron Altron
Total South Africa head count 11 106 7 256 3 733 11 924 11 274 12 812
Total average hours worked 20 257 344 13 234 944 6 808 992 21 749 376 20 563 776 23 369 088
Fatalities 1 1
Injuries 91 58 33 159 177 242
Lost time injuries 705 157 548 1 266 799 521
Missed or absentee days 28 899 10 681 18 218 33 012 33 104 23 741
Occupational diseases 3 1 2 6 10 23
Lost time injury frequency rate 0,90 0,88 0,97 1,46 1,72 2,07
Occupational diseases rate 0,03 0,02 0,06 0,06 0,10 0,20
Lost day rate 6,96 2,37 16,10 11,64 7,77 4,46
Absentee rate 2 282,55 1 291,25 4 280,93 2 428,54 2 575,71 1 625,46

Despite the already low level of occupational diseases in the group, Altron reported a further decrease of 57% for this reporting period.

OHSAS 18001 is an internationally applied standard for occupational health and safety management systems. Measurement against this standard ensures that our operations have in place sound health and safety management systems and that the occupational health and safety performance is also sound.

The operations within Altron that are OHSAS 18001 certified are listed below:

Companies OHSAS 18001
Aberdare Cables Certified
Powertech Batteries Certified
Powertech Systems Integrators Certified
Powertech Transformers Certified