We’ve had a really tough 2013 and I can’t really afford to pay my staff 13th cheques but I may be able to afford a small bonus for everyone. What does the law say my obligations are?
The festive season is looming, bringing with it the promise of a bonus or 13th cheque for many South Africans in formal employment. But, before your staff count on having that cash in your holiday budget, make sure that it is guaranteed to them under the terms of employment as stated in your contract.
With many South African companies battling to be profitable in a tight economy, employees can no longer take their bonuses for granted unless they are specifically entitled to a 13th cheque. Just because they received a bonus last year, doesn’t necessarily mean they will get one this year or that it will be as large as it was in earlier years. Study your employment contract and company policy to understand what is expected before your staff spend money they may not be getting.
Bonus or 13th cheque, what’s the difference?
The terms 13th cheque and bonus are used interchangeably, but they are not exactly the same. A 13th cheque is a bonus that the employee can expect with certainty if this is part of his or her employment contract. A bonus is a reward based on the employee’s performance and the performance of the business.
How to determine whether to pay bonuses and how big these should be
You will usually look at two major factors, depending on your employment contract:
You might look at your staff’s performance appraisals or whether they have met targets such as a sales target to decide whether to award a bonus.
2. The organisation’s performance
The company’s management team may look at how well a branch, department, or the organisation as a whole has performed to decide how much any bonus should be. For example, managers might look at whether income or production targets were met.
What rules must the company follow in deciding whether to grant bonuses or not?
No employee has a right to a bonus under South African labour law, unless it is stated in your employment contract.
Whether or not a bonus is paid or not is governed by the following:
- Your individual contract of employment might specify that your staff is entitled to a 13th cheque or a bonus that depends on their performance or that of the company.
- The company’s policy might outline which employees are given bonuses and how the value of the bonus is determined.
- Bonuses might be paid because of established practice, or “custom and practice” as lawyers might call it.
How do I best present an offer of employment?
You need to consider these aspects before offering a job position to future employees.
Many business owners think that presenting an offer of employment is quite a simple, cut and dried task. You present the offer and the candidate can “take it or leave it!”. Until you actually really want that exceptional talent in your business and they’ve declined your offer for something as simple as; not enough leave days or a proposed start date that they may not be able to adhere to.
These are all minor problems that if given the opportunity to be voiced could be ironed out quite easily without either party feeling like they’ve sold their soul. Unfortunately however in many instances this opportunity is not given and businesses end up losing talent to their competitors. So how do you best present a letter of offer?
1. Know the persons expectations before presenting
It cannot be stressed enough how important it is that both parties know expectations and priorities.
- What is more attractive to the candidate?
- Is it a higher salary or more days leave?
- Is it a company car or rather flexible working hours?
In an interview situation a candidate may not be too forthcoming with information on what salary they are looking for as they may feel intimidated or embarrassed.
In this case it’s a good idea to find out this information from their recruitment agent or ask them to email you after the interview with a range of salaries they would be happy to move for. You can then assess how this would fit into your budget.
2. Present the offer letter in person
Says Lisa Knowles; Head of Global Recruitment at Recruitgroup: “If you are using the services of a recruitment agent they will do this for you, they have built that relationship and trust with the candidate and will be able to offer an objective opinion. If not however it is best to meet in person and iron out any questions they or you may have.”
3. Implement an expiry date
A deadline of about 24 hours to a maximum of 2 days should be in writing on the letter of offer.
If the person is serious about the role they will not need more than this to think about and discuss their decision with their significant other.
Of course this is within reason and if longer is needed with justifiable cause then this can be negotiated.
4. Be flexible
Before presenting a letter of offer decide on how much room you have to manoeuvre. Presenting an offer is much like doing a dance, in the beginning you’re not quite sure of your partner’s style, you try to work together moving a few steps forward and a few steps backwards and standing on toes every now and then.
Eventually though you find out what works for both of you and you fall into step. If you need to change certain points of the offer then do so if you feel the candidate is worth it.
Communication and flexibility are key. Your business needs to move forward with top talent that are engaged, focused and happy. This can only be achieved they feel valued and satisfied right from the start. An offer letter is by no means purely about salary.
There are so many other factors that come into consideration when candidates choose to accept or decline an offer. It’s whether you’re willing to find out and listen to these that will help you either snap up or lose top talent.
Can staff training increase my turnover?
Can I afford to train my staff and maintain a profitable business?
At last year’s Consumer Goods Council, Small Business Development Minister Lindiwe Zulu stated, “Almost 80% of SMMEs fail in the first year and only 50% of those last more than five business years”. It is hard enough keeping your business on track, and having to train staff can be costly.
With legislation now in place that makes this training obligatory, the pressure is immense.
How can I comply with the Employment Equity Act to train my staff?
The Employment Equity Act requires business owners to conduct staff training in the fields of HIV/AIDS, sexual harassment and cultural sensitivity. If these requirements are not met, an inspector from the Department of Labour may issue a fine of R500 000. These inspections can happen unannounced at any time.
How can one balance complying with this Act with the extra expenditure on staff training?
E-learning materials are customisable and can be edited for a targeted demographic of learners. Information can be adjusted if it changes, which in turn cuts costs of having to purchase new textbooks or print materials.
Using video, animation, text and audio inputs, many industries have discovered the value of making training interactive.
For employees with low literacy capabilities, compiling video material allows for a dramatic reduction in reading for learners.
Animation can be used to demonstrate complex problems and solutions. Able to provide lessons in its social context, it assists learners to retain large quantities of information.
A virtual classroom allows online interaction between students, teachers and peers. The major benefit of using this method is that it eliminates the need to travel to lessons.
If your training needs are specific to your business, a customised e-learning solution can be designed and developed from start to finish to best suit your needs.
Related: Maximum Growth Through Top Teams
Not everyone has adapted to using technology. Some learners still need human interaction to grasp a topic. If this is the case taking the route of blended learning, which combines digital with face-to-face, would be most appropriate.
There is e-learning material currently available on HIV/AIDS, sexual harassment and cultural sensitivity. The beauty of e-learning material is its adaptability to meet the needs of your workforce.
What personality traits and qualifications do head hunters look for?
The age cut-off depends on the skills set the executive has to offer.
What personality traits and qualifications do head hunters look for when trying to fill a top executive position for a firm?
First and most important is displaying that you are able to walk in a fellow executives ‘moccasins’ (empathy not sympathy). Long-winded executives that cannot make a point will never make it to the ‘real’ top. Communication skills, whether verbal or written, are critical.
Integrity and honesty are well received. Even well seasoned executives sometimes cannot answer this question “what is the biggest mistake you have made in your life and how did you rectify it?” Executives must also be aware of their development areas.
When it comes to qualifications, it very much depends on the industry. It is highly unlikely that the group CEO of a mining house would not hold a relevant mining degree from a reputable university coupled with an MBA. On a lighter note I cannot imagine the CEO of a well known wine, beer and spirits company not having a keen interest in wine tasting and not knowing the difference between a good or mediocre wine.
A solid basic university degree or a good B Tech degree from a technikon is only an entry point not a guarantee to success, similarly a prestigious MBA might raise your profile, but at the end of the day if it cannot be applied optimally in the work place then that prestigious qualification is only good on paper.
Work history and a proven track record are very important when considering candidates. Good executives are not ‘job hoppers’. Executives that have steadily climbed the ladder with the same employer is a positive. To change jobs just for better remuneration is a no go. Hard core competencies are non-negotiable.
It is not the number of years that is important, but the knowledge you have gained during those years you worked and what change or turnaround record you have to offer to a prospective employer. One can have ten years experience, but in fact only have one year repetitive experience.
Officially age should not matter, but it would very much depend on the retirement age policy of the organisation at the older age spectrum. The pendulum is returning to where companies would consider a 55 year old for executive level employment.
At the younger end of the scale it would depend on the position requirements. The determining factors being qualifications, competencies and most importantly emotional intelligence.