Human resources

Key highlights

  • Successful business restructure programme
  • Implemented improved talent management systems
  • Sharper focus on organisational performance through individual and team alignment
  • Reviewed and started the implementation of the BBBEE strategy
  • Implemented more suitable HR policies
  • Implemented a new sales incentive plan to enable focused growth

Key challenges

  • Retention of critical skills
  • Development of appropriate skills to ensure that our employees meet our business objectives
  • Addressing the negative impact of the restructure programme on employee morale
  • Embedding Company-wide adherence to HR policies

Performance review

Key performance indicators

Afrox focused on the development of our employees as reflected in the year-on-year improvements. We are reviewing our transformation efforts and creating an HR infrastructure with good governance and compliance to achieve organisational discipline. The advantages of working with a global organisation are reflected in our HR developments, specifically through access to global best practice and the ability to leverage the support of The Linde Group’s global HR management and planning systems.

Our HR journey

Afrox started this journey to engage, develop, promote and retain our best employees to create a strong pipeline of technical and leadership talent to deliver on our business plans now and in the future. This will ensure that employees are supported to become the best they can be, adding value to the Company and feeling valued in the process.

We will be the leading gases and welding products Company, admired for our employees by any measure.

Emphasis was placed on addressing legacy issues that existed as result of inconsistent HR policies and practices to support our drive for high performance and improve the ease of doing business with Afrox.

Operational
strategy stages
Get healthy Get strong Get business
From an HR
perspective
What will make us successful? How will we become a high-performing organisation with a high level of employee engagement?
Current stage of activity
Core actions
  • Business restructuring began which included right-sizing and retrenchments
  • Sales and marketing structures revamped
  • Operational structures reassessed and regrading of all roles completed
  • Rationalised aspects of distribution, finance and HR through outsourcing
  • HR policy refinements
  • Building a centralised HR infrastructure
  • Accelerating organisational discipline
  • Streamlining allowances to achieve consistency, compliance and cost-effectiveness
  • Integrated talent management strategy created
  • Re-introducing core HR processes such as succession planning and leadership development
  • Implementing employee-friendly policies and benefits to aid retention
  • Focus on enhancing employee engagement and productive work relations
  • Drive further organisational efficiencies
What changed? Although difficult, the process ensured that we now have the right employees to develop and take the business forward. We refined policies and created a centralised user-friendly tool to promote consistent application across our geographies. This created a platform for better compliance while aiding the resetting of the business’s cost base to more competitive and sustainable levels. We know our employees better, thanks to improved talent analytics.

We are making an effort to let our employees know they are valued and are worth investing in (see details of our development programmes, succession planning and our wellness activities).

We achieved savings through HR-led initiatives since 2015. We now have an HR infrastructure with policies and a strategy to enable our future goals.

The remuneration philosophy was reviewed and communicated to the business, with plans for full implementation during 2017 (refer here for details).

A revised sales incentive plan was implemented with the aim of driving improvement in sales performance. The performance of sales representatives on an individual and team basis are now used to benchmark incentives as opposed to the broad Company-wide approach used previously. Key measures are margin, pricing, inventory and debtors of the Company and 240 sales employees are being assessed. The plan is aligned to the sales budget and business growth strategy. This provides an improved line of sight for enhanced sales and budget targeting.

Employee retention

1 Full-time employees.

Overall, Afrox has a healthy retention rate and is gaining further stability post completion of the restructure. Various development, wellness and employee engagement initiatives are in progress to positively impact retention levels. To help make Afrox a better place to work, we record the reasons why employees leave and prioritise relevant improvement opportunities through our HR strategy.

Diversity and transformation

Employment equity

1 Full-time employees.

Afrox’s diversity improved by 17% in the senior management representation to 47%. This is below target, but indicative of renewed efforts to improve employment equity. The Company’s employment equity plan is under review to ensure that we continue to close identified gaps and improve representation across all levels.

BBBEE profile (South Africa only)

Despite a change in employee numbers due to the restructure programme, the Company’s overall black representation in South Africa improved to 79.4% (2015: 78.5%) and includes 24.1% (2015: 24.2%) female representation.

A significant challenge remains the employment of more women across our operations. The Company applies a preferential recruitment approach to black individuals and females with special dispensation provided by the HR executive or the Managing Director as and when required. Our skills development initiatives and learnerships were integrated into this approach to support our employment equity plan and create a pipeline of learners and employees to improve female representation in the medium to long term.

BBBEE requirements

We developed a new strategy to improve the various elements of our BBBEE scorecard while considering the business strategy and customer requirements. The Company is regarded a level 8 contributor under the new BBBEE Codes (as compared to level 3 under the previous Codes). This position presents some contract risks for the Company, particularly for government-related contracts such as in the healthcare sector.

The strategy includes the following focus areas for 2016 and 2017:

We will seek to engage further with businesses operated by previously disadvantaged individuals in our supplier value chain and focus on enterprise development. The Company has spent R6.2 million (2015: R6.0 million) to ensure we contribute towards significant empowerment of black-owned suppliers and enterprises.

Black-owned and Black women-owned

Our BBBEE strategy includes further integration of black-owned (BO) and black women-owned (BWO) spend and development. In addition to actively seeking the inclusion of BO and BWO suppliers where commercially viable and appropriate in our value chain, we increased our preferential procurement spend by R157 million to R357 million (2015: R200 million).

Unionisation

The Company believes in fair labour practices and ensured that these principles are reflected in our policies and processes. This includes the right of Afrox employees to join any organisation, forum or trade union.

Unionised employees

Afrox experienced no instances of industrial action during the year. Employee and trade union engagement take place regularly in forums that allow deliberation and sharing of opinions ahead of decision making. These include:

  • ­Formal bi-annual employee relations sessions: Providing a platform for discussion of strategic issues while allowing the development of positive relationships between Afrox and unions.
  • Industrial relations forum meetings: Such meetings take place three times a year to encourage and promote relationships between employee forums while providing an opportunity to exchange ideas, opinions and information.
  • Communication through various lines of business: For example, monthly Shop Steward Committee meetings. These operational meetings provide a forum to discuss problems and improvements. Strategic interactions of a similar nature also take place throughout the Company.
  • Management communication sessions and employee education sessions: Direct interaction with employees either individually or in groups.

All Afrox employees have access to grievance procedures and disciplinary processes.

Employee development and succession planning

Afrox conducts an annual review of its critical roles and possible successors through a defined process.

Afrox experienced significant success with the succession planning process. Our coverage rate for critical roles in the business is over 85%. The majority of our employee movement comprises internal promotions and our senior management teams primarily consist of long-standing Afrox employees. A higher number (approximately 70%) of Afrox’s vacancies are filled from our succession pool rather than from external sources.

By considering diversity, our succession plans for future critical roles are largely populated by a diverse range of employees. This, in turn, has led to a larger number of leadership developments that positively impacts employment equity levels. Employment equity employees make up 61% of our talent pool.

Afrox continues to use various online training platforms to develop skills. LiMSS is such a system, placing procedures, standards and global business reference material at employees’ fingertips. Individual learning management system1 and an audit manager are incorporated in the system.

Employee training and talent pipeline

We provide our employees with opportunities to grow their scope of work and be exposed to a wider range of responsibilities. Training spend, including bursaries, increased to R31 million (2015: R26 million). In line with Afrox’s skills development strategy, we employed 123 new learners on apprenticeship, learnership and internship programmes during 2016.

1 This system is a learning database linked to LiMSS called TRACCESS.

A total of R1.7 million (2015: R1.1 million) was spent on employee bursaries and Afrox offered recognition of prior learning to aid existing employees in completing trade qualifications

Performance management

With the restructure complete, Afrox reinstated the normal performance management cycle using a process that is based on the outcome of an employees’ contribution and display of The Linde Group’s behavioural competencies in reaching these outcomes. The Company is applying greater emphasis to behaviour this year, as opposed to statistical achievements, to entrench a high performance culture. The use of individual development plans for each employee ensures a customised assessment of abilities by management before results are escalated to HR for guidance in career growth targets and training.

There is a greater focus on cascading targets to ensure that we remain focused on achieving the overall goals of the Company and not individually focused targets.

Recognition

Our annual long-service awards take place in November. In 2016, 30 recipients and their spouses were flown to Johannesburg for a centralised long-service award ceremony, acknowledging commitments from 15 to 30 years.

Employee wellness

We provide employees with access to the independent counselling and advisory service (ICAS) which assists employees to:

  • enhance workplace productivity and performance;
  • instil a corporate culture of wellness and caring;
  • become empowered to take responsibility for their own wellbeing; and
  • develop personal and organisational resilience.

The programme was relaunched in 2016 at all sites. To date Afrox’s level of engagement with the service is 34% compared to the ICAS average of 18.6% usage. We conducted wellness days at five sites nationally, attended by 300 employees, and held health days where employees could have vital health checks performed on site at no charge. Our wellness programme was enhanced by incorporating wellness days and regular communications related to employee health.

Afrox employees are encouraged to participate in team building activities that positively impact our surrounding communities. Refer to page 63 for details on Bumbanani Day.

Remuneration

We updated our philosophy (refer here for details) to ensure that employees are fully aware that they are remunerated fairly on the basis of their capability, performance and behaviour. Our global performance management system allows managers to be assessed and remunerated according to a mix of target and performance-related statistics for the year. For details of variable remuneration structures, refer here.

Additional support

We made a significant effort to display our philosophy of growth and support through three main channels of social benefit:

Such contributions are made in addition to our legally mandated benefits such as paid maternity leave, family responsibility leave and disability grants. There are a range of benefits offered to employees that aim to make a tangible development impact in their lives, and not just a monetary one. We continue to look at opportunities to enhance our employee experience in the Company and set us apart as an employer of choice.

Future focus areas

  • Attention to organisational efficiency will ensure that we maintain a culture of continuous improvement at all levels.
  • Our BBBEE scorecard has a significant impact on our licence to trade. The BBBEE strategy in place will target areas that meet our scorecard improvement criteria, customer requirements and provide value to stakeholders in our value chain.
  • We will continue to enable and upskill our leaders through our leadership coaching programme, mentorship programme and future manager programme. The programmes will enhance abilities while ensuring a suitable pipeline of talent to support our succession plans.
  • We will remain focused on developing talent. Our robust succession planning process ensures adequate business support as we move towards the future.

Go to the top