Human Resources
Human resource management and associated operational strategies are determined by the business needs of the group’s operating entities with direction from the corporate office. Although operational responsibility rests with all levels of management, the setting of policies and the specialist determination of strategic direction is driven by the Human Resources Executive. The strategies appropriately embrace the macro environment prevailing in each country of operation, and alignment is achieved through the group’s strategic intent. Underpinning this, and to ensure that the operational strategies are met, is a work ethic of continuous improvement which encourages focused, skilled employees to realise their full potential and to ‘make a difference’ in their areas of operation.
As a multi-national organisation, employee communication is considered critical to the business and each year a Business Understanding Programme is presented to all employees, promoting an understanding of the prevailing business climate at both the group and operational levels. With diverse and widespread senior management teams in several operating countries, regular communication and executive-led site visits are also undertaken.
Key areas of human resource focus include workplace safety; best practice benchmarking; targeted manpower succession planning; talent and performance management; the maintenance of collaborative industrial relations; human resource development and business understanding; Black Economic Empowerment (BEE)-linked employment equity and localisation programmes; and the health and welfare of employees and their dependants. To this end specific attention is given to –
- the staffing of all operations within effective organisational structures, with competent personnel both from an operational and managerial perspective, in order to ensure that goals and objectives are achieved. Manpower benchmarking exercises are undertaken to ensure that structures are efficient;
- the continued focus on talent management and manpower succession planning, to develop and retain managerial and technical skills, especially within the group’s identified key disciplines and positions;
- being the employer of choice. Remuneration packages which are merit-based and market-competitive in all countries of operation are reviewed regularly. Similarly, incentives such as performance-related bonuses, and share purchase and share schemes are utilised throughout the business and are up-dated to cater for specifically targeted outcomes;
- complying with internationally recognised labour practices as legislated in the various countries of operation and ensuring that sound employee relations prevail. Trade union involvement is an ongoing component of this process and some 80% of permanent employees are unionised. Collective bargaining forums, which determine the levels of wage rates and other substantive employment conditions via negotiated collective agreements, are established and supported by existing legislation in all countries of operation;
- training and employee development, which remains an important pillar for harnessing the group’s human resource talent and potential. Activities are aimed at satisfying both the current and future business needs in terms of the available skills supply, whilst also supporting employment equity and localisation initiatives. The group invested approximately R31 million of direct costs in this area over the period under review, representing 2.8% of payroll, of which some 6% was used for business alignment workshops, 48% for technical-type training, 33% for management, supervisory and leadership development, 6% for safety and health awareness and training, and the balance on education projects, including adult basic education type programmes. Employee development initiatives include –
- the implementation of internationally accepted safe working practices and health care programmes;
- the building of employees’ understanding of the prevailing business context within Illovo. Approximately 23 000 employees attended the group-facilitated Business Understanding Programme during the year under review;
- the continued development and implementation of performance management systems, together with ongoing technical competency training which is linked to ISO 9001:2008 standards, along with individual career-pathing and operational excellence;
- the delivery of group-based management development programmes, aimed at both first-line and upper management. Some 510 managers completed these programmes during the reporting period;
- the support of 25 students, mainly from the engineering discipline, through their tertiary education by way of Illovo bursaries. Upon successful completion of their studies, these students are bridged into the Management Trainee Programme. At any given time during the year under review, there were some 60 graduates progressing through this programme;
- the provision of structured formal technical apprenticeships, with 110 employees presently enrolled in varied apprenticeship courses across the group;
- in South Africa, the opportunity for graduate accountants to continue their Chartered Accountant studies whilst in full-time employment by the company, whilst under the Training Outside Public Practice programme;
- the leveraging of operational best practice across the group.
Employment equity
The company promotes equal opportunity and fair treatment in employment through the elimination of unfair discrimination. It encourages inclusiveness with regard to human resource practices, irrespective of race, gender, nationality or religious affiliation.
In South Africa, the annual Employment Equity and Income Differential reports, covering progress made with the company’s Employment Equity Plan, a key pillar of its BEE programme, have been submitted to the Department of Labour and the Employment Equity Commissioner respectively. Progress continues to be monitored through a group Central Co-ordinating Forum which includes representation from local consultative forums which are in place at the various operations.
In respect of income differentials, in line with its policy of equal opportunity and fair treatment, the company does not have any cases of unfair income differentiation which are based on arbitrary grounds such as, but not limited to, race, gender and disability status. Where there are cases of differentiation, they are based on objective grounds such as job level or grade, occupational category, performance and collective bargaining outcomes.
Relevant statistics in respect of designated employees, as defined in South African legislation, are shown in the table below –
| Representative areas | % designated |
| | 2010 | 2009 |
| Management level | 62 | 59 |
| Skilled level | 90 | 97 |
| Promotions (management / skilled) | 71 | 80 |
| External recruitments (management / skilled) | 66 | 78 |
| Promotions (all levels) | 90 | 92 |
| External recruitments (all levels) | 87 | 92 |
| Combined recruitments & promotions (all levels) | 88 | 92 |
| Combined recruitments & promotions (management/skilled) | 69 | 79 |
| Skills development initiatives (permanent employees) | 88 | 89 |
| Management trainees | 75 | 95 |
Particular focus continues to be given to designated appointments in the more senior levels of management. During the year under review, a shortage of technical skills in the market was experienced by the group in sourcing designated manpower in certain areas.
Complement
The group’s overall permanent manpower complement as at 31 March 2010 was 12 031. The focus remains one of right-sizing operations to ensure that the correct organisational structures are in place, staffed by competent people with appropriate skills to meet the group’s operational objectives. Employment was in the following categories –
| Sugar manufacture | 6 174 |
| Agriculture | 5 507 |
| Downstream | 350 |
In addition to the permanent complement, approximately 24 000 seasonal employees were engaged in agricultural operations at the peak periods during the year.
Managed health care
Access to health care is provided to all employees and their dependants, either through the network of group-run primary health care clinics and hospitals or through the provision of medical insurance schemes. Where no other public medical facilities exist, these services are extended to members of surrounding communities. The group operates 24 primary health care clinics and four hospitals. These facilities are staffed by 16 doctors, 150 nurses and other qualified medical staff, and 135 auxiliary personnel, and provide a service to approximately 32 000 employees and 70 000 dependants. In South Africa, the health facilities are clinic based, and focus on occupational health, primary health care and HIV/AIDS, whilst in the operations in the rest of Africa, the facilities are hospital-based, and focus on primary and secondary health care, occupational health, HIV/AIDS and malaria and other tropical diseases. During the past year, there were approximately 560 000 patient visits to the group’s health care facilities.
A holistic approach to the group’s managed health care policy is adopted by providing public health services such as potable water, sanitation and refuse removal, where these are not provided by respective governments.
Occupational health is an important facet of the medical services delivered at every operating site. Qualified nursing practitioners perform duties that include regular job-related medical examinations, along with medical surveillance, such as hearing and lung-function testing and biological monitoring of employees, in line with the health and safety regulations of the respective countries of operation.
The group continues to take a pro-active stance against life-threatening epidemics such as HIV/AIDS, malaria and tuberculosis. These diseases are being managed, largely on a preventative basis, to negate their impact on the business and the employees themselves.
Strategies towards controlling the spread of HIV/AIDS include preventative awareness programmes along with an established in-house Wellness Programme for those afflicted. These programmes continue to be developed in accordance with appropriate ‘best practice’ aligned to international standards. They involve ongoing high-profile education and awareness campaigns, effective treatment and prevention of sexually transmitted infections, use of peer counsellors in the process of preventative activities and education, voluntary counselling and testing (VCT), use of prophylactic antibiotics, effective screening for tuberculosis, and the promotion of a healthy lifestyle.
Determining the impact of any HIV/AIDS intervention is difficult, largely due to the confidentiality restrictions with respect to the testing and recording of the disease. However, the group recognises the importance of VCT as it enables individuals to become aware of their HIV status, empowering people to act safely and responsibly, and is therefore key to controlling the spread of the disease. To this end, the group continues to campaign for employees and their dependants to ‘get to know their status’ and in this regard, has set a target to test 50% of all employees annually. A further target has been set to ensure that at least 50% of HIV positive employees join the Wellness Programme. During the year under review, 5 508 employees underwent VCT. Excluding those who have been previously tested and identified as HIV positive, this represents 52% of the permanent complement. Of all employees who have tested positive, 61% have joined the group’s Wellness Programme.
Government interventions relative to the provision of anti-retroviral treatment (ART) are closely monitored in all countries of operation. Where the group is requested to assist in the process, it is particularly important to ascertain the long-term sustainability of intended programmes and the role that the government medical facilities are expected to play –
- in South Africa, formal facilitation partnerships have been developed with those local government hospitals designated as HIV-ART centres, to allow employees and dependants on the Wellness Programme to be bridged into the government ART programme as and when their status for this treatment is medically necessitated;
- in Malawi, Zambia and Swaziland, the group assists in implementing the government-funded ART programmes at its mill-based medical facilities. Affected employees and dependants in Tanzania and Mozambique are presently being referred to government facilities.
In respect of malaria, the group subscribes to the African continent’s recognised ‘Roll Back’ malaria programme, with mosquito control spray programmes and the distribution of insecticide-treated bed nets, being undertaken in the areas affected. This, together with established laboratory testing facilities, enables early detection and prompt commencement of effective treatment. Close liaison is maintained with national malaria control units and in some cases the group’s health centres are recognised sentinel sites for the collation of malaria statistics and research. In the case of tuberculosis (TB), the group works closely with national programmes in this regard, and assists with the diagnosis, treatment and follow-up of TB cases where appropriate.
Employee benefits and welfare
The group offers a diverse range of benefits to its employees, including –
- employee share purchase schemes in certain countries where the operating company is listed, enabling employees to acquire a stake in the business;
- retirement funding schemes, where elected employee trustees representing the interests of members assist with the prudent management of various funds;
- educational assistance which is extended to the children of employees in various forms, ranging from the provision of schools to the allocation of bursaries, grants and loan funding;
- upliftment of life skills of employees through the provision of Adult Basic Education and Training (ABET), retirement planning, HIV/AIDS education and counselling.
Black Economic Empowerment
The group is conscious of its responsibility to progress Black Economic Empowerment (BEE) in South Africa and local economic empowerment in the host countries of Illovo’s operations outside South Africa. The group has adopted an integrated approach which encompasses meaningful and sustainable participation of Black people at all operations and promotes participation of communities in the value chain of the sugar industry.
In South Africa, relative to the Codes of Good Practice on Black Economic Empowerment (the Codes), which were issued in February 2007 in terms of the Broad-Based Black Economic Empowerment (BBBEE) Act, 2003, for the year ended 31 March 2009, the company was audited by an external verification agency and was rated as a Level 5 Contributor, having attained an aggregate score of 59.14% (2009: 59.20%); comprising the component scores as reflected in the table below –
| Element | Score (%) |
| | 2009 | 2008 |
| Ownership Equity | 6.88 | 6.88 |
| Management Control | 1.72 | 2.54 |
| Employment Equity | 7.26 | 5.12 |
| Skills Development | 5.24 | 8.63 |
| Preferential Procurement | 18.04 | 16.03 |
| Enterprise Development | 15.00 | 15.00 |
| Socio-Economic Development | 5.00 | 5.00 |
In the 2010 Financial Mail / Empowerdex Top Empowerment Companies report in South Africa, the company was ranked 67th overall and 6th in the food and beverages sector. In terms of the various BBBEE elements, Illovo was ranked 2nd on socio-economic development.
Particular attention is given to preferential procurement from and outsourcing to Black enterprises and service providers, including the development and support of outgrower schemes. During the 2009/10 season, revenue paid to small, medium and large-scale Black farmers for their cane supplies in South Africa delivered to four sugar mills, amounted to R198 million, which compares favourably with the R194 million paid to such growers during the 2008/09 season, when the company operated five mills.
Since the initiation of the programme for the sale of the company’s farms to Black people in 1996/97, Illovo has sold 58% of its cane lands to BEE companies and commercial farmers.
To-date, in terms of the Restitution of Land Rights Act, 1994, land claims covering approximately 50% of the total areas under cane which supply cane to the company’s mills in South Africa, have been gazetted. Most of these claims have been made on behalf of local communities which reside in the relevant areas. The process has been particularly protracted and many of the affected growers remain uncertain of their futures. Many of the claims are being contested by the growers. However, where such claims are successful or where growers willingly agree with the Department of Rural Development and Land Reform and / or the Commission on Restitution of Land Rights to make their farms available to the local communities, the company is actively involved in seeking to ensure that the properties concerned can continue to be farmed on a long-term sustainable basis.
Society
The group operates in diverse environments many of which are predominantly rural, with limited infrastructure and significant development needs. These challenges are most evident in the countries of operation outside South Africa, four of which are classified by the United Nations as Least Developed Countries.
In line with the group’s strategic intent as a long-term investor and a major player in these communities, an active social investment programme is in place at each of the operations and is structured to address the specific needs of the respective communities. During the year under review, the group contributed R144 million towards the provision of housing, including water, electricity, road maintenance and sanitation; hospitals and clinics; education; community outreach programmes; and environmental initiatives for the benefit of both employees and local communities.
This amount was directed as follows –
| | Rm |
| Housing and related infrastructure | 72 |
| Hospitals and clinics | 40 |
| Education | 16 |
| Community | 12 |
| Environmental initiatives | 4 |
| Total | 144 |
Community projects are considered on the basis that they are motivated by members of the local communities and designated company representatives. To gain company support, projects must be shown to be meaningful and sustainable, with significant community reach and participation.
Stakeholder engagement
Illovo is cognisant that its long term sustainability objectives are supported by engaging with its relevant stakeholders to address matters of mutual interest, aware that its corporate reputation is based upon how well it performs compared with the legitimate interests and expectations of stakeholders. The type of stakeholders with which the group interacts and the nature of the interaction are products of the operating environment and consequently vary from country-to-country, but underscored by management’s responsibility to maintain its visibility to and accessibility by its stakeholders. Generally, across the group, the key stakeholders have been identified as: employees; trade and labour unions; shareholders, investors, analysts and providers of capital; regulators; customers; raw material suppliers; suppliers and service providers; governments; local communities, traditional and civic society; sugar industry representative structures; trade and consumer bodies, amongst many others.
| Key Stakeholder | Type of interaction |
| Employees | Communication forums / management up-dates relating to company business, strategy, general announcements, etc; group-wide business understanding programme; internal bi-annual magazine; skills training and career development; induction programmes; marketing awareness and promotions; workplace forums; safety ‘toolbox’ sessions |
| Trade unions | Trade union business interaction; labour forums, such as bargaining councils |
| Shareholders, investors, analysts | Investor / analyst presentations; one-on-one meetings; site visits; regular operational and financial communications; annual general meeting |
| Regulators:
The JSE Limited; Lusaka Stock Exchange and Malawi Stock Exchange | Ongoing communication and interaction – regulation, compliance, company information releases and announcements; annual SRI index (South Africa) |
| Customers | Trade market: Ongoing interaction with supermarket chains and wholesalers; promotion of sugar distribution and depot system amongst potential entrepreneurs; direct consumer stakeholder contact; involvement in community-based initiatives; support of annually sponsored sporting events Industrial market: Key customer interaction; focus on specific customer requirements; technical and operational support – annual “Cane to Sugar’ course, ongoing liaison |
| Raw material suppliers – providers of sugar cane | Ongoing communication at both industry and local level with grower associations and member groups; operational discussions of mutual concern; contact through industry structures |
| Suppliers and service providers | Support of local industry suppliers; development programmes to identify and maintain strategic group suppliers; annual recognition of top performing suppliers via awards programmes; business and operational up-date meetings; negotiation of service level agreements |
| Governments | Ongoing discussion at industry and company level with government departments relating to sugar cane growing and milling, together with other departments dealing with land reform, rural development, etc; regular contact to up-date government representatives on state of ongoing business, strategy, capacity expansions |
| Communities, traditional and civic society | Strong identification and communication with communities surrounding operations relating to cane development, community / company projects of mutual concern; support of community-based social investment requirements; provision of community infrastructure and advocacy of community issues |
The company participates in public policy development through sugar industry structures, tripartite business, labour and government public policy development structures, and other business associations. Its involvement in the facilitation of broader national strategic objectives continues through participation in organisations such as the National Business Initiative and the Business Trust (in South Africa), along with its membership across the group of other private and public forums to promote and facilitate the economic business landscape in the various countries of operation.
In its employment practices, the group remains committed to human rights and fair treatment of its employees in line with International Labour Organisation Conventions on employment, which in most countries of operation are also enshrined in the employment-related legislation. The group’s employment policies are explicit in their commitment to equity ensuring that forced and child labour does not take place at any of its operations. Where potential exists for the contravention of these principles and policies by partner enterprises in the value chain, these enterprises are formally advised that the ongoing business relationship between them and the group is contingent upon them complying with these standards and norms.
As a consequence of this commitment to human rights and fair employment practices, for the year under review, the group did not have to pay any fines for non-compliance with relevant legislation in any of the countries in which it operates.
Community and enterprise development
In the countries of operation outside South Africa, the group participates in the upgrading of schools and assists in their administration and management in an effort to improve education delivery. There are 27 schools in five countries currently benefiting from this type of support. In South Africa, the company undertakes local community projects to improve facilities at schools in the communities in which Illovo has agricultural and manufacturing operations. It also supports education-related initiatives, such as Rally to Read, a literacy-based development programme co-ordinated by the National READ Educational Trust. Through the South African sugar industry, the company supports the Sugar Industry Trust Fund for Education which provides student bursaries, finances school building projects, works with community-based educational authorities to improve education standards and also provides ongoing financial support for tertiary educational institutions.
In addition to providing financial and other support for community-based welfare and fund-raising organisations, Illovo contributes to the South African sugar industry’s social investment programme which operates in KwaZulu-Natal and Mpumalanga, and continues to contribute to the National Business Initiative and the Business Trust.
Job creation and poverty alleviation initiatives in the communities in which the group operates are actively pursued. This is achieved through the outsourcing of support services and other requirements which can be procured from local entrepreneurs. Cane development programmes are also encouraged by the group as revenue generated by deliveries from private growers, particularly those in rural, impoverished areas, promotes economic development and further enterprise development in the local communities concerned.
By way of cane delivered by private growers across the group to Illovo factories for processing, amounting to around 60% of total cane throughput, the group has well-established and ongoing interaction with local small, medium and large-scale farming communities.
The group continues to actively promote the development and support of indigenous growers. Dedicated offices have been established across all six countries of operation to provide agronomic expertise and advice on optimal agricultural management practices, together with ongoing training to build technical, financial and administrative competence in order that these growers are able to take charge of their own agricultural businesses. Illovo also assists in facilitating access to grant and other types of funding for both new and existing cane agriculture developments. In the year under review, total cane from indigenous growers, including community-based co-operative schemes, generated revenue of approximately R645 million for such growers.
General staff support and development
In addition to the community and enterprise development initiatives, and to the employee development activities covered elsewhere in this report, there is a range of other types of support that the group makes available to its staff.
Illovo provides assistance to employees who wish to further their studies, where such further study is beneficial to both the employee and the group. Permanent employees of the group are assisted with the costs associated with secondary and tertiary education for their dependants. On the basis of academic ability as future employees, children of employees may also benefit from bursary schemes which the group offers to enable students to study at universities or equivalent institutions.
Enhancement of the employees’ life skills is carried out through the provision of adult basic education and training, retirement planning, and HIV/AIDS education and counselling and wellness programmes.
The group continues to facilitate home ownership in South Africa and Swaziland in order that employees have a stake in the communities in which they live and work. Initiatives include the provision of home loan subsidies and the ongoing sale of company-owned houses.