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Labour Complexity

Good HR Management is a Keystone of Success

The benefits of a streamlined, comprehensive HR and payroll system are far-reaching.

Monique Verduyn

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Businesses have been hard pressed in the past few years to find ways to improve operations, increase profits, and streamline processes. Companies spend vast amounts of time coming up with plans and roadmaps that will help them to achieve these goals, yet many fail because they simply don’t appreciate how significantly workforce management influences their performance.

That’s one of the reasons why it’s time for SMEs to change their thinking about human resource management. According to Grant Lloyd, MD of Softline Pastel Payroll, many business owners believe that implementing an HR software solution is too costly, and that a stretagic focus on HR management will introduce too much red tape into the business.

“It’s a fallacy that HR software costs an unjustifiable amount to buy, and implement,” Lloyd says. “While the market is hardly flooded with cost-effective entry-level HR software, there are vendors who have successfully extended payroll functionality into the realm of HR, providing a simple, easy, and logical starting point.”

Make payroll a priority

No matter what type of business you’re running, payroll is an essential monthly activity involving complex calculations, deductions and statutory regulations. Sandra Swanepoel, sales director, Softline VIP, says that while buying good payroll software to manage this in-house saves a lot of money, even more important is the legislative knowledge a small business will receive from a reputable payroll provider.

“Payroll administration is much more than just knowing your software product. In any industry, experts in their field are hired to lessen the risk of non-compliance to the business and the same should apply in the payroll industry,” she says. “Employ a payroll administrator who knows the legislation, who knows payroll best practice and who is able to apply this to the company’s specific payroll requirements.”

Lloyd concurs. “Labour legislation, competitive markets worldwide, increased competition for skilled human resources and generation gaps mean that sound HR strategies, coupled with flexible, easy-to-use and extendable software that supports all related functions, are no longer discretionary – they are essential.”

The solution a company chooses should be able to handle all the aspects of payroll reporting. The software must be able to integrate into the accounting system, and it’s important to look for a payroll product that will serve your business’s needs for the long term.

“Choosing the right payroll solution doesn’t have to be a daunting task,” Swanepoel says. “What is important is to match the product’s functionality with business needs, and this means looking beyond all the bells and whistles vendors often put on the table.”

Related: How to Deal with Dismissals for Misconduct

Training is vital

To operate effectively and get the most from software products, companies should not only invest in a good solution, but also implement best practice procedures as part of that solution. “Often companies do not use the software to its full capacity, resulting in a poor return on their investment,” Swanepoel points out.

“Training employees to use your payroll and HR software is one of the most cost-effective decisions you can make. If everyone knows how to optimally use these solutions, you can save time and money while increasing skills. By investing in software that will last the company a long time you not only make sure that the return on your investment is great, but payroll administrators will feel that they are equipped to do their jobs if they have been well trained. Having your payroll expertly administered builds trust among employees – everyone appreciates being paid correctly and on time,” she says.

It’s good for business

Training, education, salary, benefits, incentives, career-path and performance criteria are important to just about everyone. “Implementing HR and payroll software demonstrates the employer’s equally serious commitment to these aspects of the employer-employee relationship,” says Lloyd. “A sound HR base encourages excellence in products and customer service.”

Interestingly, until a few years ago, formal payroll qualifications were lacking in South Africa, something Swanepoel believes “old school” work processes had a lot to do with. Payroll administration was always seen as a back-office job which required little expertise – an “add-on” to someone else’s job, where the tricks of the trade were learnt through trial and error. However, over the past ten years changes in payroll legislation have greatly affected the way the job is done today and, more importantly, by whom it’s done.

“The new legislation introduced skills levies and brought significant changes to tax and labour laws, as well as UIF reporting. Companies were suddenly faced with the realisation that in order to avoid penalties for non-compliance, they had to bring payroll administration out of the attic and into the boardroom. Payroll is now a priority business process in which no risks could be taken.”

Related: Dealing with Poor Performance

Monique Verduyn is a freelance writer. She has more than 12 years’ experience in writing for the corporate, SME, IT and entertainment sectors, and has interviewed many of South Africa’s most prominent business leaders and thinkers. Find her on Google+.

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Labour Complexity

Why You Should Consider Retrenchment Cover for Your Employees

Not sure if a retrenchment benefit is for you? Keep reading for more insight into why considering retrenchment cover for your employees is best for them and you

Amy Galbraith

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As a business owner, looking after your employees is an important part of what makes your business a success. You need to be sure that all of their needs are being met, especially in terms of income protection and retrenchment insurance.

If you’re lucky, you may never need to retrench anyone, but if you do, having retrenchment insurance in South Africa can help your employees immensely in keeping debt at bay.

You can invest in retrenchment cover in South Africa in order to protect your staff. The retrenchment cover can provide your employees with a lump sum which allows your employees to manage any issues that might crop up while they are unemployed. It will also help with temporary disability cover should an employee be injured at the workplace.

Not sure if a retrenchment benefit is for you? Keep reading for more insight into why considering retrenchment cover for your employees is best for them and you.

It Can Help to Replace Their Income

If one of your staff members is the sole breadwinner in their household, being retrenched can have a devastating effect on their family’s way of living. If you offer them the option of income protection cover, this will replace their income while they are looking for other employment.

This will also help if they have permanent disability due to an accident at work and are unable to earn a salary for a certain amount of time. The benefit pays up to six months of income so that the insured can cover expenses. For example, your employees can use this money to make car insurance payments or rent payments while they are unemployed. This can help them to look for work without having the added stress of not earning any money.

Employees Can Maintain Their Savings Accounts

By offering retrenchment cover, you are allowing your employees to have better financial planning abilities, such as maintaining their savings accounts despite no longer being employed.

Your employees will be able to keep this savings account intact and rely on this money for its intended purpose. They can also keep this money in the account and use it when the income protector cover has run out and they are still unemployed. Be sure to speak to a financial adviser about how long your employees will be covered in order to adequately make plans for their future.

Planning for VAT and Petrol Increases

When you are unemployed, any increase in prices such as petrol or VAT can negatively affect your financial situation,  so it’s preferable that your employees are able to weather any price increases without having to dip into their savings, or take out a loan they can’t afford.

But retrenchment cover will allow them to continue living their life, unaffected, regardless of these changes. While they might have to cut back on their spending, a VAT increase will not affect them as harshly as it would if they did not have any income protection. Being able to prepare for an uncertain future will ensure that your employees are happy and satisfied in their jobs, cementing their loyalty to your company.

It Can Help with Illnesses During Retrenchment

We can never predict what awaits us in life, which is why you should consider retrenchment insurance for your employees. If they were to become ill during the time they are retrenched, expensive medical bills will pile up, putting them into a further debilitating financial situation.

But, if your employees have retrenchment insurance, they will be able to use this money to pay for medical expenses. For example, if one of your employees has young children who need to be rushed to the hospital for an injury or illness, the retrenchment cover will allow them to pay for these bills without too much stress. Being ill while unemployed can become expensive and stressful, but you can alleviate this stress by providing cover for your employees.

It Will Show Them You Care

Having an employer who truly cares about them means that employees will be happier, healthier and more productive. And this is great news for your business. You can ensure that your employees are taken care of if you need to retrench them due to whatever reason.

Having loyal employees is not only good for your company but good for your employee morale too. You are only successful as a business if your employees are happy and willing to work hard to reach your company goals.

Retrenchment cover will allow them to be less stressed in their positions and will make your workplace a more productive one. Be sure to consult with your staff before making any financial decisions that will affect their future as their opinions matter the most in this instance.

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Labour Complexity

Charity Begins At Home This Festive Season

3 Ways to invest in your own employees.

Nation Builder

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We often only think of corporate social investment (CSI) as an organisation’s actions in the surrounding communities (philanthropy and volunteering), but CSI is also inward facing. By promoting employee well-being, your business can be a vehicle for change, not only in the society around it, but also directly in the lives of those working there.

Here are some ways you can invest in your own employees during the festive season:

1. Involve your employees in a higher purpose

This might sound like a bit of circular reasoning, but studies have shown that involving employees in CSI activities has several benefits. People involved in meaningful activities tend to be more motivated and willing to go that extra mile because of the higher good associated with the work. CSI programmes also:

  • Increase co-operative behaviour and employee relationships
  • Enhance the sense of company identity
  • Improve employee retention and commitment
  • Create an attractive company culture.

Related: What’s The Fuss About Corporate Social Investments?

2. Provide the space for physical and mental breaks

The end-of-year and festive period is often a very stressful period. Balancing festive and family duties with increased pressure at work due to colleagues taking leave, looming year-end targets and planning for the next year can take a toll.

You, as the employer, can ease this stress by ensuring that there are systems in place that define holiday working policies. Promote time and productivity management to plan workflows and keep the momentum going in these last weeks of the year. Also make sure you have effective communication strategies in place for plans that are in the pipeline for the new year, so that employees can get their heads around upcoming changes. This will allow employees to plan ahead and build in time to switch off, knowing that all of the boxes have been ticked.

3. Constructive feedback/motivation

Also, take the time to acknowledge and show appreciation for the hard work that your staff has put in throughout the year. As the saying goes “valued employees are valuable employees.”

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Company Posts

How Medical Savings Accounts Are Changing – For The Better

By Jeremy Yatt, Principal Officer of Fedhealth

Fedhealth

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The concept of medical savings accounts (MSA) emerged in the industry in the early 1990s, reputedly when Discovery founder Adrian Gore was working at Liberty. At that time medical scheme benefits for different kinds of day-to-day healthcare were specified, so for example, you’d get a certain amount of Rands to spend on your over-the-counter medicine, or for optometry services. But this was problematic, as people’s daily medical needs are all so different. So, you’d have medical aid members calling their medical schemes saying, “I haven’t used my spectacle limit this year, so can I transfer it to use on medication instead?”.

The idea for MSAs was to pool these separate benefits into a total Rand amount, that you could then spend how you wanted, and more importantly, retain if you didn’t use them all. Initially, medical schemes were reluctant to follow this idea, as they thought it would lead to under-servicing: medical aid members might be unwilling to spend their savings, and so might not get the proper day-to-day medical attention until it became a crisis and they were hospitalised. However this was not the case, and MSAs proved very popular.

At first, there was no real limit on how much of your contributions as a member could go into your MSA, so most schemes allocated around 40-50%. Many schemes also pushed major medical procedures like MRI scans into savings, which was effectively a way of forcing members to self-fund these costly medical expenses. As a result, the Medical Schemes Act was amended in 1998 to impose a 25% limit on the benefits that could be put into MSAs, which largely forced the schemes to be responsible for these major costs.

Related: Why Your Employees’ Health Is Your SME’s Wealth

Under the previous structure there was no disincentive not to use your benefits, particularly as they didn’t roll over from year to year like Medical Savings do. It was therefore not uncommon for a call centre to get queries from members asking how much was available in their different benefit areas, so that they could make sure they used them all up.

MSAs solved these sorts of problems by giving medical aid members increased convenience and autonomy, which is why schemes have been using them for the past 20+ years.

The concept of an MSA isn’t far removed from a loan. Like a loan, an MSA lets you use a sum of money when you want to, but you still have to pay for it regardless of whether you use it or not. It forms part of the registered gross contribution to the medical scheme. Take the example of a member who has R12 000 they can access in their MSA each year. Effectively they are paying for this “loan”, contributing R1000 a month, starting in January. However an MSA means they can use all of that R12 000 upfront, such as if they need expensive dental treatment (crowns etc.) at the start of February that costs R12 000.

In this situation, the member has only paid for R1000 worth of that R12 000 “loan” (with their January contribution), so they effectively “owe” the medical scheme R11 000, which they then pay off over the remainder of the year. If the member left the scheme straight after their dental work, the scheme would then contact the member to repay the R11 000, as they still owe that amount.

Related: Is There A Link Between Physical And Financial Wellness?

The concept of giving members access to medical financing led us to develop our new MediVault offering for day-to-day medical expenses. Describing it as a loan holds negative connotations for some, but it’s not that different from the concept of an MSA: in fact, we see the MediVault as a natural evolution. All it means is that you won’t need to pay for day-to-day savings upfront. Instead, you’ll be allocated money for these everyday medical expenses in your personal MediVault and, once you’ve taken the money out, you only have to pay it back over a period of 12 months – completely interest-free. This is a far better option than taking out an expensive loan from a traditional loan company, or getting it from an unscrupulous loan shark.

Our MediVault offering is not at all about loaning funds to people irresponsibly. We’re not creating a monster that’s going to indebt you – we’re just changing the way you can access funds for your healthcare. After all, health is everyone’s most worthwhile investment, and we want to give people the flexibility to make it their top priority.

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