Integrated Annual Report 2020

Human capital

Our people are at the heart of our Blue Label strategy. We have begun a journey to achieve our purpose of eliminating inequality by enabling all South Africans to interact and transact on an equal footing. All human capital activities have been aligned to enable leaders, their teams and our people to rally behind this purpose and deliver our strategy collectively.

The landscape within which we operate remains challenging. In the last two quarters we navigated COVID-19 together with our line managers and employees. Through FY20 we implemented our revised people strategy. Collectively, we restructured most subsidiaries and in doing so we were able to overcome the challenges that COVID-19 presented swiftly and decisively.

We have managed to retain over 91% of our employees and the decision to not implement salary increases this year has put us in a position to maintain remuneration at all levels throughout the organisation.

The primary focus area during the 2020 financial year was organisational transformation to create a customer and consumer centric organisation. Working with executive leadership across each subsidiary and functional area has allowed us to restructure and align the business to new business strategies and plan for new capabilities that are required.

Through the organisational transformation we have:

• Assessed all roles and created new roles with a broader breadth and depth of skill thereby creating efficiencies and freeing up operating expenditure for investment in new market facing and technology roles;
• Reorganised our customer facing division by creating new teams to improve our ability to serve our customers;
• Aligned all roles to the new Hay Grading Scheme;
• Leveraged skills and capabilities from different departments for the benefit of the Group to reduce costs, increase efficiencies and improve our ability to better service our customers through a portfolio of Blue Label products and services;
• Invested in new roles (an additional 1% in headcount), skills and capabilities to enable speed to market, product innovation, enhanced cybersecurity and customer centricity;
• Retained critical scarce skills;
• Offered employees an opportunity to grow within and across the Group subsidiaries through:
  • Promoting talent, and
  • Deploying high potential and experienced talent into new customer channels and product portfolios;
• Revised business processes to increase efficiencies, customer centricity and productivity and to reduce the risk of fraud and cybercrime;
• Introduced new tools and resources to support customer centricity and productivity; and
• Digitised processes.

Our vision is to develop a creative, innovative and entrepreneurial spirit across our employees and value chain. At Blue Label we pride ourselves for being entrepreneurial and creating opportunities to grow and expand consistently. Innovating and creating opportunities have been our consistent rallying call to our leaders and our employees during COVID-19, and our teams have risen to the occasion:

• Adopting a high touch and high-tech people first approach in our response to COVID-19.
• Converting our entire organisation to work from home from the inception of lockdown level 5.
• Improving productivity, performance and customer service in our call centres despite all agents and management working from their homes.
• Accelerating our digitisation projects to fast track our ability to be responsive to our new environment.
• Creating and launching new products to our consumers and merchants within lockdown.
• Pivoting the Ticketpro business and creating new channels of revenue during lockdown.
• Focused on creating job security for our teams and limiting the impact of COVID-19.
• A decision was taken by the Remuneration Committee that no salary increases will be awarded in the 2021 financial year in order to preserve our liquidity to enable us to navigate any further economic or operational impacts the COVID-19 pandemic may have.

Despite many of our products and services qualifying as an essential service, we have opted to maintain a work from home strategy, as far as possible, while we collectively navigate the fluid impact of COVID-19. Our journey of organisational transformation will continue into FY21 as we evolve our business further to create an organisation that is scalable, delivers further efficiencies, increases customer centricity, enhances productivity and improves financial performance.

Labour turnover (LTO) for the Group was 35.7% for the year. The sale of the Blue Label Mobile Group and the handset division of 3G accounted for 16.2% of total labour turnover. Our voluntary LTO number was capped at 10.2%. Involuntary LTO was as a result of retrenchments, management of poor performance and the end of fixed term contracts (including learnerships) for the period. We have improved retention off the previous year and attribute higher engagement to our Employee Value Proposition (EVP)campaign "#HappinessisBlu" and our improved talent management.

Diversity and inclusion (gender and race) continues to remain a focus area to improve representation across the Group. There is still much work to be done.

 

We recruited new skills and capabilities into the organisation and aimed to progress our diversity simultaneously. While we are pleased with our achievements, we note that our recruitment numbers of women and black candidates declined in the 2020 financial year. This is, in the main, attributable to reducing our intake of learners in this financial year and secondly, a shortage of black and female information, communication and technology skills within the market where the majority of our recruitment has been focused.

Our current EAP performance is reflected in the table below. The table excludes our international operations.

Employment equity demographics - FY 20 - Blue Label Telecoms

		MALE						FEMALE						FOREIGN NATIONAL
		AFRICAN %	COLOURED %	INDIAN %	WHITE %			AFRICAN %	COLOURED %	INDIAN %	WHITE %			MALE %	FEMALE %	TOTAL %
	Top management and other executives (number)	1	1	2	22			0	1	0	5			0	0	32
	Actual percentage	3	3	6	69			0	3	0	16			0	0
	NEAP	42.80	5.30	1.80	5.30			35.10	4.50	1.00	4.20			0.00	0.00
	Variance against NEAP	(40)	(2)	4	63			(35)	(1)	(1)	11			0	0
	Senior management (number)	2	3	1	20			2	0	0	5			0	0	33
	Actual percentage	6	9	3	61			6	0	0	15			0	0
	NEAP	42.80	5.30	1.80	5.30			35.10	4.50	1.00	4.20			0.00	0.00
	Variance against NEAP	(37)	4	1	55			(29)	(5)	(1)	11			0	0
	Middle management (number)	10	2	4	36			7	1	2	15			1	1
	Actual percentage	13	3	5	46			9	1	3	19			1	1	79
	NEAP	42.80	5.30	1.80	5.30			35.10	4.50	1.00	4.20			0.00	0.00
	Variance against NEAP	(30)	(3)	3	40			(26)	(3)	2	15			1	1
	Junior management (number)	100	32	26	89			55	12	15	50			15	7	401
	Actual percentage	25	8	6	22			14	3	4	12			4	2
	NEAP	42.80	5.30	1.80	5.30			35.10	4.50	1.00	4.20			0.00	0.00
	Variance against NEAP	(18)	3	5	17			(21)	(2)	3	8			4	2
	Semi-skilled employees (number)	106	6	6	6			139	20	12	12			7	2	316
	Actual percentage	34	2	2	2			44	6	4	4			2	1
	NEAP	42.80	5.30	1.80	5.30			35.10	4.50	1.00	4.20			0.00	0.00
	Variance against NEAP	(9)	(3)	0	(3)			9	2	3	0			2	1
	Unskilled employees (number)	27	2	1	1			26	0	0	1			3	0
	Actual percentage	44	3	2	2			43	0	0	2			5	0	61
	NEAP	42.80	5.30	1.80	5.30			35.10	4.50	1.00	4.20			0.00	0.00
	Variance against NEAP	1	(2)	0	(4)			8	(5)	(1)	(3)			5	0
	TOTAL	246	46	40	174			229	34	29	88			26	10	922
	Overall	26.68	4.99	4.34	18.87			24.84	3.69	3.15	9.54			2.82	1.08
	Overall NEAP	42.80	5.30	1.80	5.30			35.10	4.50	1.00	4.20			0.00	0.00
	Variance against NEAP	(16)	0	3	14			(10)	(1)	2	5			3	1

*

A comparison against FY19 has not been included as it would have an inaccurate reflection of progress against the previous year. Our organisation has undergone organisational transformation through structural changes and the finalisation of our grading across the group. Secondly, disposal of the Blue Label Mobile Group and the 3G Handset division.

We remain invested in achieving a diverse and inclusive organisation. While there was a lot to be proud of, black and female attraction, development and promotions must be improved, specifically within Senior Management and top management occupational levels. Looking forward, we will continue to focus on accelerated development of key equity talent, supported by mentorship and succession planning. While we have made good progress to address equity representation, there is a need to improve our female representation within the organisation. We will need to increase focus on attracting high calibre female talent into the organisation in order for us to address current diversity gaps within leadership. Progress has been made within junior management, semi-skilled roles, and unskilled roles.

Over the last two years, the human capital team has standardised the job evaluation and grading system for the Group from Patterson to a standardised Hay job evaluation methodology. The human capital team, together with the Remuneration and Nomination Committee and the Social, Ethics and Transformation Committee, worked closely with leadership to re-evaluate roles and align grades across the Group. This exercise was completed at the end of Q2 in the 2020 financial year. The process has enabled us to:

• understand our current landscape;
• evaluate current practices across subsidiaries, especially newly acquired subsidiaries;
• review, standardise and align our job evaluation methodology and grading as per plan;
• benchmark our practices against the market for key businesses, capabilities and roles supported by The Korn Ferry Hay Group and Deloitte;
• evaluate equal pay for equal work and assess what steps must be taken to address gaps identified;
• revise our remuneration philosophy and policy to address shareholder concerns and bring us closer to best practice; and
• revise our performance management system to support performance-based remuneration.

The Group offers several employee benefits, including an employee assistance programme, group life insurance (inclusive of a life policy, severe illness, disability and a funeral cover) and medical aid through Discovery Health and a provident fund through Destiny Retirement Fund. The costs of medical aid and the provident fund are included in the total cost to company of employees, while the cost of the Group life benefit and the employee assistance programme is borne by the respective Blue Label operating company. Further benefits outside of fixed remuneration have been rolled out to employees to increase our competitiveness within the marketplace and to enable us to retain talent within an increasingly competitive landscape.

New initiatives completed in the 2020 financial year include the finalisation of our first round of talent reviews with management across the organisation. Key insights were established, and these have been built into our 2021 financial year plan. In the last quarter of the 2020 financial year, our first Blue Label Telecoms engagement survey was completed across the organisation and we achieved a weighted average engagement score of 8.09/10. Through the feedback, we were able to establish the strengths in our leadership, human capital practices and culture. In addition, we have identified opportunities to improve and this will be integrated into our FY21 plan.

Skills Development

Skills development remains a focus area within the organisation for employees, learners and talent within our broader value chain. In light of our diversity (gender and race) gaps we have revised our policies and processes to ensure that our skills development budgets support:

• succession planning and the accelerated development of black and female employees;
• the retention of key talent;
• investment into the development of critical scarce skills particularly within information, communication and technology skills;
• investment into new skills and capabilities that will enable us to future-proof ourselves and remain relevant in the marketplace; and
• investment into learners that will serve as pipeline for key roles into our broader Blue Label business.

The average spend per employee on training in FY20 was R2 031 per employee. Training budgets for the development of technology employees has increased significantly to enable us to develop new skills and capabilities required for us to convert to new technology stacks in support of our digitisation and innovation strategy. Our first cohort of the Management Leadership Acceleration Programme with Duke CE nears its completion and employees Action Learning Projects are being integrated into our process improvement and automation plans and our product and innovation pipeline. A decision was taken to limit bursaries within the Group to employees and tertiary education in support of our talent requirements of accelerating internal succession development to improve our diversity and inclusion across gender and race.

Diagram 6: Rationalisation of our learnerships in line with BLT pipeline requirements.

In FY21 we plan to maintain key focus areas and add additional initiatives:

• implement engagement initiatives by subsidiary in line with our employee engagement survey insights;
• implement our revised capability plan to accelerate development of black and female talent, support organisational transformation and our digitisation programme;
• implement a new leadership development journey for management;
• implement a mentoring programme for top talent with a focus on black and female talent;
• implement a Board programme in partnership with KPMG for our subsidiaries with a view to develop talent and pipeline for future appointments onto their boards;
• revise the environmental, social and governance (ESG) scorecard to enable accelerated delivery of B-BBEE and Employment Equity goals; and
• launch our #TeamBlu Employer Of Choice campaign in support of our talent attraction requirements.