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SA’s Global Competitiveness

Improving productivity levels critical to enhancing SA’s global competitiveness.

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South African companies, many of which are operating at between 50%-60% of their potential productivity, will need to urgently address inefficiencies in several key areas if they are going to remain competitive in global markets.

This is according to Arjen de Bruin, operations solutions MD at OIM International – one of South Africa’s leading business consultancy firms – who says that current low levels of labour productivity have the potential to cripple South Africa’s economy as cheaper imports crowd the market. “As productivity decreases and cost per unit increases, local products become more expensive to sell and margins become harder to earn.”

He says stunted productivity is particularly prevalent in South Africa’s financial services, mining, manufacturing and retail industries.

“Even the companies with highly sophisticated technology and the best training programmes have administrative centres that are operating at 50% of their potential levels. We have found that, across a variety of industries, most staff only work 6,5 hours a day including time for meetings and machine failure or downtime,” he says.

Lack of management

According to de Bruin, one of the biggest barriers to productivity in South Africa is the lack of proper measurement. “Companies are either not measuring productivity at all – or the methods being used to assess productivity are out-dated and inaccurate,” he says.

Other barriers to productivity are management’s inability to properly coordinate and execute production plans, a lack of transparency between management and employees and poor first-line supervisory leadership skills. Furthermore, de Bruin says while many companies are very good at formulating detailed strategies and plans; they fail to execute these plans effectively.

De Bruin explains that companies have detailed forecasts that calculate how many employees they will need at certain times such as low seasons, peak seasons and stock arrival days. However, when it comes to practically implementing these time schedules, instead of altering employee working hours and remuneration accordingly, most companies continue as normal.

“As a result, during times when productivity and profit should be peaking, there are too few staff to attend to customers leading to a loss of business and productivity,” he explains.

Understanding employees

According to de Bruin, in many cases there is a disconnect between management and front-line employees. He says this leads to a lack of transparency where staff are not informed of what they are supposed to be producing in terms of volume and quality of productivity – and therefore have no way to measure their performance.

In order to address these concerns, de Bruin says management need to ensure not only that they have set the right standards for staff and product lines, but that these standards are communicated to employees and that performance and behavior are frequently reviewed in structured team meetings. It is also necessary that leaders and their teams can anticipate potential obstacles and decide on appropriate action plans to deal with these – thereby engaging everyone/all staff members to improve productivity.

Executing strategy

It is therefore critical that leaders are equipped with the ability to execute strategy. This involves management and leadership training at all levels to enable leaders to:

  • Create shared purpose and direction among team members
  • Establish alignment and focus – establish role and team alignment with clear performance targets and measures
  • Build leadership credibility and climate
  • Facilitate employee engagement
  • Enable continuous improvement of cost, quality and services
  • Facilitate measurement and feedback – performance and behaviour measurement and feedback

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Don’t Let Strikes Strike Out Your Business

Strikes are fairly commonplace in South Africa, with hardly a week passing that a new or ongoing strike doesn’t make the news.

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The impact of strike action can be immense for both employers and employees, especially when strikes are drawn out and negotiations are conducted over extended periods of time. In such instances, strikes are typically lose-lose, with neither party receiving any real benefit, even if the demands of workers are met.

Organisations feel the pain of strike action in a diminished or completely non-existent workforce for the duration of the strike, often resulting in the loss of customers when there is a significant drop in production. Workers feel the impact of strike action in other ways such as loss of income which, in some cases, can exceed the amounts that they gain in wage increases – a common reason to strike.

Businesses need to adopt a strategy to mitigate losses, maintain productivity, uphold reputations and wherever possible, retain mutually beneficial employer-employee relationships in the event of a strike.

Strikes – the good, the bad and the ugly

Strikes take place for a number of reasons, and these reasons are not always invalid, according to Sean Momberg, MD of Workforce Staffing Solutions. He explains that there is a common misconception with the general public that strikes take place in order to create disturbance or inconvenience, or as a result of unfair demands for more money. Although there are cases where demands are unreasonable, strikes can ensure that employees receive fair rights and employers do not take advantage, especially in the use of unskilled or semi-skilled labour.

“Workers typically strike due to a demand for increased wages or better working conditions. This is usually in conjunction with the relevant union for the specific industry. There are no specific ‘peak times’ for strikes, although increased strike action is usually noted around annual contract renewal periods and bonus time,” says Momberg. “Regardless of the reasons for a strike, they can be debilitating for businesses.”

There are two types of strikes, protected strikes which are sanctioned by the law, and unprotected strikes which are not. The latter does not have the backing of the law and may result in the strikers’ dismissal from employment for participating in an unprotected strike, depending on the circumstances.

According to Joanette Nagel, Head: Commercial and Labour at Hunts Attorneys, for a strike to be deemed protected, there are certain requirements, regulated by law, which need to be met.

Related: Will A Strike Cripple Your Business?

Says Nagel, “According to law, a protected strike has to comply with the following requirements: the reason needs to be something of mutual interest for both employee and employer, the matter has to be referred to the CCMA and the CCMA has to issue a certificate that the matter remains unresolved, or a period of 30 days, or the extension thereof as agreed between the parties have lapsed after the referral to the CCMA, there needs to be at least 48 hours’ notice given of the intent to strike, whether or not unions are involved.”

Nagel adds that, in the case of protected strikes, employees still forfeit their wages for the duration of the strike, however their positions are not in jeopardy and their employers are obligated to allow them to return to work once the strike is over.

Don’t strike out

Companies are able to prepare for strike action and can take necessary steps to ensure their business is protected against losses and damage, however they need to have a sound Industrial Relations policy and manager who fully understands the processes and parameters for both protected and unprotected strikes.

“Strikes are intimidating for any business, which is why they can be so successful,” says Momberg. “However, businesses are able to implement temporary measures to protect themselves, such as leveraging the assistance of a Temporary Employment Service (TES) agency which has the resources to quickly mobilise large workforces in a short space of time.”

Nagel agrees, saying that while many businesses opt for shutting down operations as a precaution against strike associated violence and intimidation, this is not necessarily the best option. “Businesses have legal recourse to discipline any employee who damages property or engages in intimidation tactics while striking. Furthermore, employees who are violent, abusive or cause damage during a strike may face additional criminal charges for their actions. The risk of losing business and productivity far outweighs the risk of strikes becoming dangerous. A replacement labour force ensures that doors remain open, and business can continue as usual, especially when the TES has a reputation for meeting any employment requirement.”

Momberg points out that organisations can avoid getting involved with strikes altogether, with the right TES partner.

“Reputable TES’ understand strikes and have the right resources in place to not only assist and advise organisations who are subjected to strike action, but also to help businesses avoid them altogether. Outsourcing the HR division and the bulk of a business’s labour requirements means that the responsibility for handling a strike does not lie with the business, but with its TES,” says Momberg.

TES’ typically retain the skills of in-house IR and HR specialists, as well as legal counsel with a specific focus on labour laws, thus owning the ability to both manage the entire HR function for any organisation in any sector, but also the ability to manage strikes – and ensure business continuity – in the event that they occur.

“As a TES company we have an open and transparent relationships in place with various trade unions as well as the legal entities. We are able to manage the staffing process from start to finish, including employee engagement, grievance handling, and matching the right people to the right positions, so that employees are happy and rarely find reason to strike. Organisations who outsource their staffing component, either in its entirety or when strikes arise, will find that strikes do not strike out their businesses,” concludes Momberg.

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21 SMEs Graduate From The Property Point Enterprise Development Programme

Twenty one SMEs graduate from the Property Point enterprise development programme in a celebration of entrepreneurial success.

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The Property Point Enterprise Development Programme

Twenty-one thriving small businesses have graduated from the rigorous two-year incubation programme offered by Property Point as part of the enterprise and supplier development initiatives of South African real estate leaders Growthpoint Properties and Attacq.

Together these successful graduating small and growing businesses have created 1,122 jobs, gained 135 new clients and accessed contracts valued at over R271 million.

The entire property industry stands to benefit from the services of these professional, experienced and innovative businesses, which all offer skills and services for the real estate sector. They are:

  1. TT Holdings owned by Thapelo Tlhapane
  2. Arebone Building and Cleaning Enterprise owned by Dwaine Moth
  3. Kusile Hygiene and Industrial Services owned by Olga and Sifiso Ncube
  4. Kgoano Infrastructure Solutions owned by Kate Morekhure
  5. Orizoe Services owned by Orianda Ntsompo
  6. Lazar Robotics and Welding owned by Ranzel Louw
  7. Mapitsi Holdings owned by Rahab Matebane
  8. Imbewenhle Airconditioning and Refrigeration owned by Trueman Myeza
  9. Koena Engineering and IT Solutions owned by Kagiso Mokoena
  10. Inzaghi Trading and Projects owned by Clive Mailula
  11. Mila Cleaning Services owned by Charlotte Khoza and Annemarie Mostert
  12. Sosha Facilities owned by Rupesh Nath
  13. Smith and Madisha owned by Alice Madisha
  14. Ndabendala Trading Enterprise owned by Thulani Mlotshwa
  15. DVY Properties and Maintenance owned by Vernon Govender
  16. Nonku Ntshona Associates and Quantity Surveyors owned by Nonkululeko Ntshona
  17. Thatego Holdings owned by Thabo and Dorcas Malefetse
  18. Makasela Air owned by Tiyani Khoza
  19. Twin Cities owned by Chris Ndongeni
  20. Ndzilo Fire Protection owned by Themba Ndlovu and Henchard Njoni
  21. TMT Cleaning owned by Mpho and Godfrey Sono.

Related: Persistence Can Beat Any Odds Says The Founder Of Rebosis Property Fund

2018 Marks a decade of impact for Property Point, which has been a driver of transformation and small business growth within the property industry over the 10 years since it was founded by Growthpoint in 2008.

In this time, it has created 2,066 full-time jobs and R865.6 million in procurement opportunities generated for the 130 SMEs that have participated in its two-year incubation programmes. These small businesses have reported 43% growth in revenue.

Shawn Theunissen, head of Property Point and Corporate Social Responsibility at Growthpoint, says: “We are incredibly proud of the achievements of the small businesses in the graduating class of 2018 and we celebrate their fundamental and exceptional growth. Property Point is also delighted to celebrate a decade of impact, during which we have become a leading partnership platform for both public and private participation in enterprise and supplier development for the property sector. From the start of our journey building sustainable small businesses, we have focused on the need to see and measure our impacts. As we say in property, we need to understand what the yield will be for our investment in small business. Just doing something isn’t enough, we want to achieve real growth and impact.”

Property Point’s graduating class of small businesses was celebrated at an inspiring ceremony where keynote speaker, musician and Mi Casa frontman, J Something, who has recently opened a restaurant, launched a book and appeared as a judge on My Kitchen Rules SA, inspired the graduates with the story of his own entrepreneurship journey.

The event was also attended by CEO of Growthpoint South Africa Estienne de Klerk and interim CEO and CFO of Attacq Melt Hamman, and representatives of both companies.

De Klerk, congratulated the entrepreneurs on graduating from the intense Property Point incubation programme. He pointed out that Growthpoint itself started small. In 2001, it owned only nine properties worth R100 million. Today, 17 years later, Growthpoint is the largest South African primary JSE-listed REIT and provides space to thrive in a diversified portfolio of 559 property assets, locally and internationally, with a total value approaching R130 billion.

De Klerk said: “Creating successful entrepreneurs and small businesses is absolutely essential for the success of South Africa. We as business, small and big, need to make a difference. To ensure that our economy moves in the right direction, we need to stand up, be brave, and change the way that we, as South Africans, see our place in the bigger scheme of the economy. We all need to contribute. This is why Growthpoint established Property Point and today its success has exceeded anything we thought possible.”

He added: “To achieve these positive economic impacts, collaboration is imperative, and I thank Attacq for partnering with Property Point. The result of our partnership is significant for small business development, but also for the future direction of the initiative itself. Shawn and I have a dream to roll out this initiative to the entire industry. There is increasing pressure on business to not only do good, but to prove and measure the difference they are making. No programme in the property sector is more successful at doing this than Property Point. It is very relevant for the industry today and, with even more collaboration, Property Point can become a powerful industry initiative.”

Hamman praised the entrepreneurs for the hard work they had put into building their businesses. As a relatively young business itself, Attacq has grown from no employees to 128 in a few years. Hamman believes that success in business is all about people, and how you manage and develop your employees. He encouraged the small businesses to create a community among themselves, their clients and suppliers, and to look after their staff and nurture the career aspirations of their people.

Hamman said: “Transformation is defined as a marked change in form and nature, and that is exactly what has happened in all the graduating businesses. They have experienced a material change in their businesses, the way they operate and their profitability. We are proud to honour these businesses and entrepreneurs. Over the past three years Attacq beneficiaries on the Property Point programme have generated turnover exceeding R112 million. The five businesses graduating from this Attacq enterprise and supplier development programme have created 295 full-time jobs, have produced sales close to R80 million and most of the business have increased their profitability by more than 200%. This is evidence of real transformation.”

He also congratulated Property Point for providing 10 years of excellent service to the property industry. “At Attacq, we believe in supporting small businesses. Property Point has a well-established and proven track record and has made a huge difference to empowerment and transformation in the sector. Collaborating with property leaders like Growthpoint helps us to develop the industry.”

Rewarding excellence, Property Point gave three outstanding graduates and four runners-up a combined R360,000 boost for their businesses – R70,000 for each winner and R50,000 for the runner-up position in each intake.

Related: What You Need To Know To Become the Next Property Entrepreneur

The top achiever among the five Attacq enterprise and supplier development graduates was TMT Cleaning and the runner-up was Makasela Air.

The top performer of the nine Growthpoint enterprise development graduates was Kusile Hygiene and Industrial Services, and sharing the award for the runner-up position were Arebone Building and Cleaning Enterprise and Kgoane Infrastructure Solutions.

Top out of the the seven Growthpoint supplier development graduates was Mila Cleaning Services, and the runner-up was Ndabendala Trading Enterprise.

In addition, several special awards were given by Property Point for outstanding achievement by the graduating small businesses. The awards were given to Imbewenhle Airconditioning and Refrigeration, Mila Cleaning Services, and Thatego Holdings for brand ambassadorship. TMT Cleaning scooped the innovation award, Koena Engineering and IT Solutions won the wealth creation award and Kusile Hygiene and Industrial Services received the job creation award.

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Improve Your Cash Flow: Manage Your VAT

Viresh Harduth, Vice President: New Customer Acquisition (Small & Medium Businesses) for Sage Africa & Middle East on the increase in VAT in South Africa and how it affects your business.

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If you went shopping on 1 April, you likely encountered aisles and aisles of products with no price tags as retailers updated their shelf pricing to reflect the new VAT rate. As a consumer, this was probably a slight inconvenience because you didn’t know how much something cost until you had to pay.

Yet, as a small business owner, the VAT increase was more than a slight inconvenience. Not only did you have to update your systems and train your teams but you likely had to spend money printing new price tags and ensuring you were compliant – this was, after all, the biggest tax change in 25 years.

The VAT increase will also impact your cash flow because you will need to pay more money to SARS. But now that the dust has settled, Small & Medium Businesses have an opportunity to review their operations and uncover ways to improve their cash flow and offset the higher VAT payments.

Related: 5 Marketing Missteps That Make Cash Flow And Business Growth Stumble

Here are five ideas to free up cash that are easy to implement and don’t require major changes to your business:

  1. Negotiate extended payment terms with suppliers. When you receive an invoice, you generally have 30 days to pay. Try to negotiate longer payment terms with your suppliers – like 60 days – so that you have cash in the bank for longer.
  2. Enforce your own payment terms for customers. The time between issuing invoices and waiting to get paid is a danger zone for small businesses, especially when you need to pay VAT to SARS. Reduce your payment terms for customers from one month to 14 days, for example, and stick to it. Send regular reminders on overdue accounts and follow up on the phone.
  3. Incentivise customers to pay earlier. Offer various payment methods that make it easier for customers to settle their accounts sooner. Issue invoices promptly and offer discounts for early – and full – payment. This will also increase loyalty.
  4. Reduce stock on hand. If you have surplus stock, it means you haven’t aligned your stock with your sales, which ties up available cash. Stock management is as important as financial management. Knowing what’s in your stock room – and bank account – at all times, is crucial to maximise cash flow.
  5. Work with an accountant. While cloud-based accounting solutions like Sage can help you keep track of your cash flow and stay compliant, an accountant can identify areas to save money and cut costs, freeing up working and investment capital.

Related: Strategies To Help You Stay Out Of The Red With Cash Flow

When you improve your cash flow, you reduce the need to rely on bank overdrafts and loans. The key to the success of any business is to free up as much cash as possible. And, with the VAT increase, you need more cash than you did yesterday.

*Remember, you have until 31 May to reflect the VAT increase in your product and service prices. Until then, you can apply the additional 1% at the till point, as long as you put up signs informing customers that you will be doing this.

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