Archive for March, 2013


By Steven Cohen, managing director, Sage Pastel Accounting

Steven Cohen

Steven Cohen

To succeed in business, exceptional service is essential. Everyone says they do it but I question its true impact, particularly when I consider that everything is automated these days. In the world of electronic communications, everyone auto-signs their emails with a warm and fuzzy salutation, your birthday is recorded in a customer relationship management (CRM) system that triggers a congratulatory SMS on the appropriate date and it’s seldom that you get to talk to a real person at a call centre anymore. The result of the, so-called benefits of technology is a techno-void between a company and its customers.

The Extraordinary Customer Experience

Sage, the global parent of Sage Pastel Accounting has launched a new Extraordinary Customer Experience initiative which will benefit its 4 million clients globally. The programme’s key objective is to build real relationships with customers using an old-fashioned method; people.

Initially I was cynical about the advantages such a plan would bring to the business. Our local contact centre is manned by real people and it’s considered one of the best – it wins local and international awards all the time and is currently a regional finalist in three categories of the highly regarded Contact Centre World Awards run by ContactCentreWorld.com.

However, our new service initiative requires more than just people to offer extraordinary customer service; it’s their attitude and approach to the customer that is so crucial. In addition to the programme’s need for passion, accountability, collaboration and being enterprising when dealing with customers, I am drawn to its requirements for creating working conditions that encourage people to succeed!

It’s all about attitude

As a business leader, I’ve always said that it’s important to stimulate the thinking of those around you. This can only be applied if you understand that attitude and not just aptitude is essential when employing at any level in the organisation. I like to see the interview process as a gate that only lets exceptional people in – and it’s part of my management ethos to pay more for a good person. So, I think I am on the correct path to getting the customer service experience right but now the hard work really begins.

For the Extraordinary Customer Experience to become a reality we need to change the way we think about customer service. I want us to own every customer experience and not simply sell stuff to people because we have targets to meet. We need to build real relationships with all of our clients and recognise that a new client or a satisfied contact centre customer is not just another successful transaction. In addition it’s important to define what we are delivering to our customers in relation to what our customers think they are getting – a disconnect at this point is the difference between exceptional or deficient service.

By: Christophe Letellier, CEO for Sage ERP X3

Christophe Letellier

Christophe Letellier

When approaching the subject of the Cloud, there is a choice between being strongly positive or enthusiastic. The wave in favour of the Cloud is so strong that views which attempt to even mildly address the need or even the relevance of the Cloud could make you look like a supporter of the past. But this has always been true with new technologies or business models; just look back to the early 2000s.
Cloud technology is not a revolution; it’s an evolution that materialises the maturity of the Internet. By definition the evolution will take time, a long time, when in contrast a revolution could change our world in weeks or months. As customers and suppliers, it has already taken us 15 years to get to where we are today with the Internet. I would bet it will take even longer before everything runs from the Cloud
The Cloud, in my opinion, brings many good things to the software industry. It means solutions can be developed more quickly, agile development becomes standard and seamless upgrades a given. Software vendors are changing and the Cloud is the trigger, but the change is embraced because it creates value for customers.
On a similar note, the Cloud implies a different business model that is based on usage. The ‘per month, per user’ pricing model is the first step that will evolve into fully consumption-based pricing. Once again, it’s good for our customers. The Cloud will also open the ERP world to many more users than today. Because it’s more flexible and web based, we can expect that the Cloud will provide much easier access to an ERP system. C-level executives will, at last, benefit from the mine of data that is created by their ERP system. This is particularly true in mid-sized companies where the CEO is in the operational driving seat and today drives almost blind! Casual users will also be more at ease and will be able to contribute more. This is true for occasional internal users, but also for external users like partners, suppliers or customers. The 25-year-old concept of an extended enterprise now becomes a reality.
All these changes can bring great value to our customers and it’s important that we aim to deliver on these promises. The Cloud is not the means to get there, but only the trigger. It has changed mindsets and offers a technical solution, but we can deliver the very same value to our customers via other delivery mechanisms. If I look at the ERP world for instance, there are many examples of strong adoption of financials in the Cloud when manufacturing, that requires significant customization and close connection to shop floor control systems, looks less attractive. Does it mean that our customers should be put on the side of the road? Today a vast majority of mid-sized companies do use their ERP systems on fat clients without web access, when such systems have been available for over 10 years now. Why should we expect that adoption of full cloud solutions will be that much faster? And does this mean that our customers shouldn’t have access to the benefits listed above?
Adoption of the Cloud is a long journey. Cloud will become a standard in one or two decades. What do we do for our customers in the meantime?
My conviction is that although the Cloud will not dominate for some time in the ERP space, it will profoundly change mindsets and drive software vendors in a new direction. Having sold web-based products like Sage ERP X3 for over 10 years, Sage is not afraid of this evolution. On the contrary, we welcome this change towards flexibility and openness. This has always been our motto. Building hybrid systems and leveraging the best of the on-premise and cloud worlds will help the transition, drive adoption, and create true value for our customers. Our customers are pragmatic so we have to be inventive.

by Anja Hartman, HR Director at Sage VIP

Anja Hartman

Anja Hartman

The impact of employees that intentionally refrain from adhering to company rules, as well as the cost, time and energy wasted to solve such issues are counter-productive. For this reason, organisations should try to avoid the appointment of a ‘toxic’ employee as far as possible.

At VIP a simple rule is used when recruiting employees: “hire the smile and teach the skill”. VIP has a very strong value-based culture and instils it from the day that the employee starts with the company.

Companies have the right and responsibility to manage its business in a profitable way. Employees must therefore be managed in such a way that it will enhance efficiency and profitability, which implies creating and implementing regulated standards of behaviour.  In order to be effective, the employee needs to know which actions are regarded as unacceptable and the reasons for it.

The difference in how you approach a ‘toxic’ and underperforming employee lies in the question:  Are they willing and/or able to do the job?  It is almost always related to either their attitude or skill.  The underperforming employee is usually willing but not able to do the job while attitude is often found at the core of ‘toxic’ behaviour.

Underperforming employees are often incapable of doing the job for which he/she has been employed due to lack of skill, knowledge or ability. Companies should place their emphasis on matching the talent of the candidate with the role requirements during the recruitment and internal movement processes. A misfit of these key indicators often results in underperformance.

Underperformance can also be referred to as circumstance of ‘no fault’ on the employee’s side and should be addressed by means of counselling procedures, such as:

  • Step 1: Assessment – Review the content and standards of the job, evaluate the performance and pinpoint shortfalls. Identify and discuss the reasons for the sub-standard performance. Assess the employee’s competence against the job standards.
  • Step 2: Action plan – the manager and employee agree on the appropriate plan of action to rectify the situation.
  • Step 3: Review – decide on a reasonable date to review and monitor the improvement and establish if the underperformance has been resolved. A secondary review date can be set.
  • Step 4: Counselling enquiry – If it becomes clear that even after further counselling, the employee still does not perform in accordance with the required standards, or does not prove that he/she is capable of achieving the required standards, a counselling enquiry is called. A counselling enquiry is the medium through which the fair and just procedures required by law are conducted. A dismissal without an enquiry is deemed to be unfair.

The above-mentioned guidelines and steps do not refer to those situations where the employee is capable to perform in accordance with the standards set, but intentionally or negligently refrains from adhering thereto.

When an employee’s conduct is not in line with the rules, regulations or values of the company, it is dealt with as misconduct in accordance with the company’s disciplinary code and policy. It is however impossible to list all possible situations in the disciplinary code and it should therefore not be seen as an exhaustive list of conduct that the company will address by way of disciplinary action in the form of a disciplinary hearing.

The guidelines for a disciplinary hearing:

  • Step 1: Investigation – investigate the facts before embarking on formal action.
  • Step 2: Notification of the hearing – sufficient written notification of the hearing should be given. Employees have the right to internal representation and if required, an interpreter.
  • Step 3: Conducting the hearing
  • Step 4: Applicable sanction – if the employee is found guilty a decision is taken after mitigating and aggravating circumstances are presented.
  • Step 5: Notification – the employee is notified of the outcome, if they are dissatisfied with the outcome they may appeal.

In the 2013 Budget speech, Finance  Minister, Pravin Gordhan, emphasised that one of Government’s most pressing development challenges is to expand work opportunities for young people: “There has been extensive debate on how this should be done and the answer is that a wide range of measures are needed, including further education, training, public employment opportunities and support for job creation in the private sector.”

Learnerships help young people to obtain a formal qualification, while gaining relevant workplace experience. While there are many benefits to the prospective learners, there are also advantages to the employer implementing the learnership. Employers have the peace of mind that their employees are not away from the office for extended periods of time and while they are away, they are improving their relevant work based skills to be more productive and efficient at what they are employed to do.

In 2002, the Government introduced a Learnership Allowance Incentive, for employers to:

  • Encourage job creation by reducing the cost of hiring and training employees through learnerships
  • Promote skills development
  • Encourage human capacity development

However, there is a very specific legislation that guides the process and it poses certain challenges. Tax Talk spoke to Rob Cooper, tax expert and Director of Legislation Updates and Proposed legislation at Sage VIP, part of the Sage Group plc, about some of the recent changes made to the Learnership Allowance Incentive.

Cooper says: “To encourage employers to participate in learnerships, an allowance in the form of a deduction from the company’s taxable income has been available for many years. To qualify for the learnership allowance, employers must register the learnership with SETA. There is a R30 000 allowance at the start of the learnership, and a further R30 000 upon the successful completion. The value of the actual incentive has always been influenced by the when the learner is registered and the learner’s failure to complete. However, with new legislation introduced in January, the scenario will change.”

Cooper explains: “In the past, the allowance (deduction) was only allowed during the year in which the learnership agreement was officially registered with SETA.  For a variety of reasons, registration often takes a couple of months and this resulted in reduced value.”

“In future, employers will no longer have to register learnerships from the moment of the inception. A learnership will be deemed to have been registered for the duration of the agreement that falls within the employer’s year of assessment. However, it is necessary that the learnership is registered within 12 months after the year of assessment.”

“The second issue relates to failure to complete. In the past, the allowance was not granted if the learner previously failed to complete a prior registered learnership of similar nature to the new learnership.  Typically, the employer was not aware of prior learnerships (i.e. the information was not easily accessible or the quality of the information was not reliable, as it is dependent on feedback from other employers). Attempts to obtain this information also delayed the registration process.”

“In future, employers will no longer have to find out details of the individuals’ learnerships entered into with other employers.  Learnership allowances will only be refused if the learner failed the same type of learnership with the same employer (or associated institution).”

”Implementing a learnership programme within your company will definitely contribute to job creation, especially for young people. However, it is important to keep track of all the legislative changes.  Make sure that your company is operating within the parameters of the basic conditions of employment and its legal requirements. It is crucial to being a responsible citizen,” concludes Cooper.

For more information, employers are invited to attend the Sage VIP, Payroll and Tax Seminar. You can book your seat at:  www.vippayroll.co.za.

Rob Cooper is a tax expert and Director of Legislation Updates and Proposed legislation at Sage VIP, part of the Sage Group plc. 

Rob Cooper

Rob Cooper

“Changes proposed to South Africa’s Basic Conditions of Employment Act (BCEA), Labour Relations Act (LRA) and Employment Equity Amendment Bill (EEAB) will have a significant impact on how employers conduct their business in 2013,” says Cooper.

“In the draft Employment Equity Amendment Bill (EEAB), specific attention should be paid to the concept of equal pay for work of equal value, which can result in a new form of unfair discrimination.”

Cooper explains: “In cases where employment conditions, including remuneration, are applied differently to employees who do the same or similar work, then the employer must be able to show that the differences are based on fair criteria such as experience, skills, responsibility and qualifications. If the employer cannot do this, the differentiation would constitute unfair discrimination.”

“In practice it would mean that if a company employed factory workers on a permanent basis and at times of high demand took on additional workers from a labour broker and they worked side by side doing the same job, then both permanent and labour broker-supplied workers must be paid at the same rate,” says Cooper.

“Because the employer must pay the labour broker his fee on top of the wages for the workers, the result will be that brokered labour will cost more than permanent labour. This is logical and the premium that the employer must pay for flexibility.”

“Importantly, the intention is to align the Employment Equity Act with other general labour laws that need to be applied in cases where an individual supplied to a client by a labour broker is seen as an employee of that client.  One can only assume at this early stage that these employees, supplied by the labour broker, will have to be included in the client’s equity plan as well as in the labour broker’s equity plan.”

“The draft Employment Equity Act further changes the way in which companies implement affirmative action. According to Cooper, the groups of people who benefit from the affirmative action provisions will be limited to those who were South African citizens before democracy (April 1994) or to those who were prevented by the policies of apartheid from becoming citizens before 1994, and their descendants. This means that the employment of foreign nationals or those who became citizens after the democratic era (April 1994), will not assist employers to meet their affirmative action targets.”

Employment Services Bill

According to Cooper, the Employment Services Bill is another very important piece of legislation for employers to be aware of as it moves towards finalisation.

“The overall intention of this brand new piece of legislation is to empower the Department of Labour to provide a comprehensive range of employment services (free of charge) to members of the public in an attempt to achieve the Government’s objectives of: more jobs, decent work and sustainable livelihoods.  Any initiative that reduces unemployment is to be welcomed,” says Cooper.

The Government is aiming at making employment services open and accessible to all. This includes the following:

  1. Registering work vacancies and seekers, matching resulting opportunities, and facilitating the placement of seekers with employers or other work opportunities.
  2. Provision of advisory services for training, social security benefits, dealing with vulnerability, vocational and career counselling, assessment of work seekers to determine suitability, and improving work-related life skills.

UIF (Unemployment Insurance Fund) legislation

Changes to the UIF legislation have been pending for quite some time and will hopefully move through Parliament towards the end of this year.  Broadly, the proposed changes envisage increasing the value of the UIF benefit, as well as extending the grace period during which benefits can be claimed, from 6 to 18 months,” says Cooper.

He says there is also an intention to remove certain exclusions of which there are no details but hopes that this will include the exclusion of commission from the remuneration on which the contribution is calculated, which results in commission being excluded from the value of the contribution and the benefit.  Unemployed people, who were earning a low basic salary plus commission, are negatively affected by a benefit that is in line with only their basic salary.

Cooper is encouraging employers to attend Sage VIP’s Payroll and Tax Seminar in March and April 2013. “The seminar is regarded by many as a definitive guide to the changes in payroll and tax legislation and we endeavour to present it in a practical and interactive manner that does not focus on the legal aspects alone. The presentation will also aim at communicating future trends that will impact payroll and HR,” said Cooper.

Budget a balancing act

By Rob Wilkie, CFO Sage South Africa

Rob Wilkie

Rob Wilkie

Whilst last year’s budget was all about infrastructure expansion investment, this year the emphasis is in keeping the budget deficit in check.

Mr Gordhan announced in his 2013 budget speech that tax collections would be R16.9 billion less than the estimate made in the 2012 budget. This was largely as a result of weaker economic growth, labour unrest and lower commodity prices. Economic growth for 2012 is expected to be sluggish at 2.7% with mining strikes and stoppages costing the economy approximately R15.3 billion.

As a consequence, the budget deficit increased to 5.2% of GDP. In other words, government spending exceeded tax revenue collected by R185 billion. In business terms, government made an operating loss in 2012.

In order to reduce the deficit (or rate of cash burn) Gordhan said that he would not increase taxes or impose drastic austerity measures, but would instead reduce the rate at which public spend was escalating. He said he would do this by utilising government’s contingency reserve (R23.5 billion); reprioritising expenditure to strategically important initiatives (R52 billion); and reducing financial mismanagement and corrupt expenditure (6% of GDP).  If successful, the growth in government spending would be reduced to 2.3% in real terms (7.8% including the effects of inflation) and the budget deficit brought back to 3.1% over 3 years. Additional borrowings of R497 billion would be required to fund the deficit, increasing government debt to R1,7 trillion or 40% of GDP. Gordhan said that he was comfortable with this level of debt and SA’s ability to meet its debt service commitments.

If government were a business the budget would read as follows:

  • Business SA has made a loss equivalent to 5.2% of its turnover.
  • It does not want to increase its prices as existing customers may stop buying and new customer acquisitions decline.
  • To return to profitability (or reduce its loss) Business SA therefore has to reduce its cost base or at least slow its cost growth.
  • It will do this by a combination of resource reallocation to its priority initiatives and reduction of inefficiencies and wasteful expenditure.
  • Until such time as it is able to return to profitability Business SA will utilise its cash resources and credit lines to fund its losses.

It is a balancing act.  Do you cut deep; stop the cash burn but risk sustainability and preparedness for the next cyclical upturn? Or do you rather focus on efficiency gains and investment priorities, live with losses and more debt, but enhance sustainability and competitive edge?

Government has chosen the later, both for socio economic and structural reasons, but also because it has the capacity to borrow in order to sustain deficits. I believe they have got the balance right in this budget. It is now up to government to show the political will and commitment necessary to implement it.