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Operational overview from the group human resources director
The next few pages provide supplementary information to the review from the group human resources (HR) director. We outline how we delivered against our objectives in terms of the areas under the HR director’s responsibility. These include human resource management, employee wellness, employee relations, human capital development and transformation.
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Human resource management
Over the last few years, we have adopted a proactive approach towards becoming an employer of choice. Our focus on employees continued to pay dividends, with employee retention, individual productivity and employee feedback improving further.
Delivery
Find below how we delivered on our objectives outlined in our F2010 integrated report.
Key focus areas Desired results Status Keep our employees committed and engaged by supporting training, career development and ensuring effective communications. Motivated employees during the downturn, with preparation in place for the next upturn. Maintain or improve our F2010 employee engagement score of 65.9%.
Our employee engagement score improved for the third consecutive year. Our overall score was 67%, which is within the “Top Company” range for the second consecutive year. Drive our performance-based culture. Increased efficiency and delivery against key deliverables to ensure maintenance or improvement of operational results. While our target remains 100%, we saw a pleasing improvement this year with 74.5% of employees having received a comprehensive performance appraisal. This is a pleasing increase from the 67% achieved last year. Transformation and succession at senior and executive levels. Identify opportunities to develop and promote black successors. Succession planning is a key HR process within the group. While the roll out within business units is still in an early phase, significant improvements are expected from this management tool. Ensure that our people and systems are geared for international opportunities outside the South African market. Ensure that we are able to mobilise our people and resources quickly, without detracting from our employee value proposition. The group’s international remuneration policy was reviewed during the year, which resulted in improvements in employee mobility and the HR administration system for the management of expatriate employees. Manage our industrial and employee relations effectively in a tougher market. Committed employees, focused on achieving the group’s objectives. Resolve potential areas of conflict with least disruption to productivity and employee morale.
Operational downsizing in various areas put pressure on industrial relations. However, our proactive approach ensured that relationships remained constructive in most areas. Looking forward
Our key human resource management focus areas for F2012 are outlined in the review from the human resources director below.
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Employee wellness
During the year, we focused on creating improved awareness around wellness. This included the roll out of our employee assistance programme introduced last year and health campaigns throughout the group.
The group’s common chronic medical conditions remained hypertension, cholesterol and diabetes mellitus. Although still within national norms, it is of concern that the percentage of employees diagnosed with these conditions increased across all conditions. We will continue to create awareness through our educational campaigns about health awareness to promote early diagnosis and effective management of medical conditions.
Delivery
Find below how we delivered on our objectives outlined in our F2010 integrated report.
Key focus areas Desired results Status Create health awareness through our employee wellbeing programme. Health awareness to ensure continued productivity and employee assistance. In F2010 we introduced an employee assistance programme. The uptake has been encouraging, with 670 employees using the service to date. The key areas of counselling have been personal financial management and relationships. The number of employees counselled on HIV and Aids was also well above the average for the industry.
During the year, we focused on actively communicating wellness issues to employees though a poster campaign and employee wellness sessions.
Increase the number of medical evaluations. Proactively manage identified health issues. During the year, 5 767 employees completed medical examinations (2010: 5 176) and 99% of our directors attended executive health examinations. Improve reporting and management of medical surveillance. Early identification of health trends and intervention to ensure a healthier workforce. During the year, we integrated our occupational health provider’s data with our internal human capital system. Further rolling out HIV/Aids testing. Achieve the target of 80% of employees knowing their status over a two-year period. 80% of employees know their HIV/Aids status. Looking forward
Key focus areas for F2012 Desired results Ensure increased health and wellness awareness. 
A workforce which proactively manages their health and associated safety Roll out integrated reporting. Reporting that provides a holistic view of the wellness of our employees to ensure proactive management Increase occupational wellbeing assessments. Timely health assessments to ensure we detect, manage and prevent diseases Improve employee awareness of prevalent diseases within the group, including cholesterol, diabetes mellitus and hypertension, as well as educating employees on personal financial management. Awareness of health and wellbeing in these areas -
Employee relations
Our employee relations remained robust this year. Although bargaining councils or workplace forums are in place for most of our business areas, progress at an industry level in establishing a bargaining council for the civil construction industry has been slow. This is particularly relevant to us as Civil Engineering is the largest employer of labour in the group. In response to the heightened tensions in the organised labour arena we concentrated on maintaining the integrity of our employee relations and increasing the competence of our managers to deal with the complexities experienced in this field.
Delivery
Find below how we delivered on our objectives outlined in our F2010 integrated report.
Key focus areas Desired results Status Intensify communication with our employees and organised labour on the economic constraints facing the group. To manage expectations and prevent a deterioration in trust between management and organised labour. Operational downsizing in various areas placed pressure on our industrial relations. However, our proactive approach ensured that relationships remained constructive with senior management engagement in areas where there were difficulties, such as the Kusile power contract and the Construction Materials cluster. Ensure that our industrial relations processes are above reproach. To limit the number of CCMA cases and to maintain our record of success with loss cases remaining very low. Significant improvements were achieved with the launch of disciplinary, chairman and complaint initiator training. Evaluate trends in the market in terms of industrial action. Taking proactive action to prevent similar incidences in our group. We achieved this, with the number of manhours lost through industrial action reducing by 43% this year. The group is a signatory to the civil engineering sector agreements. We are in full compliance with its associated timelines and negotiated agreements. Ensure that all worker representative forums within the group are functioning. Effective two-way communication. All business units have functioning worker representative forums in place. Disputes were kept to the minimum. CCMA referrals reduced by 13%, with a loss ratio of less than 2%.
Increase our employee relations capacity. Ensure that management has permanent, in-house and cost-effective access to labour law services. A full-time labour law attorney was employed to advise management on labour law and to ensure the group is compliant with labour law. Introduce an executive review process to ensure that retrenchment-based terminations are carried out within best practice guidelines. Ensure that management’s decisions in this regard are tested internally prior to the launch of the process. Internal review processes are now in place and resulted in an improvement in the adherence to due process. Develop the capacity of our HR professionals to equip them to present our cases at the CCMA and training our managers in terms of both drawing up disciplinary charges and chairing disciplinary enquiries. Effective handling of disciplinary procedures and CCMA representation. A panel of qualified chairpeople was identified and trained in the requirements and skills needed when presiding over disciplinary enquiries. Cooperation between the HR and internal risk management departments increased to manage employee-related risk issues such as fraud and theft.
Looking forward
Key focus areas for F2012 Desired results Ongoing focus on enhancing competence in dealing with sensitive employee relations issues. Ensure that management is able to maintain credibility, discipline and employee engagement in the face of increasingly hostile interventions from organised labour Continued proactive engagement with organised labour at industry level. Facilitate a peaceful and mutually acceptable solution to organised labour’s drive towards centralised bargaining in the construction industry A comprehensive understanding of labour laws in the foreign countries in which we operate to ensure compliance. Maintain good employee relations in our international operations Reduce the number of CCMA referrals in South Africa to below its current levels. Where CCMA cases are unavoidable, we want to achieve a success rate of 100% To stay abreast of the anticipated changes to labour legislation and develop a strategy in this regard. Proactive response to anticipated changes in legislation without disruption of the workplace Maintain and improve our current compliance to labour laws -
Human capital development
The Group Five Academy is responsible for the planning and delivery of learning and development across the group, as well as maintaining support systems to track and manage all learning. The Academy also coordinates and manages learning opportunities for enterprise development partners, as well as structured initiatives for the unemployed as part of the group’s socio-economic development initiatives.
During the year, we concentrated on increased engagement with business units to ensure training initiatives remain valuable to the achievement of business goals. In spite of tough economic conditions, the overall training spend (including employees, learnerships and bursaries) for the financial year increased from R31,5 million in F2010 to
R37,9 million. Employee training interventions increased from 14 941 in F2010 to 17 234 in F2011.Delivery
Find below how we delivered on our objectives outlined in our F2010 integrated report.
Key focus areas Desired results Status Ensure that training interventions add value to enhance competence and productivity of individuals in the group. Improved individual competence to deliver on time, within budget and according to specification. 17 234 training interventions were delivered during the year. Programmes continue to be reviewed for effectiveness to ensure they meet group requirements and strategy. Use e-learning as a method of training to keep productivity on our contracts at the required levels. An effective training platform which limits on-site downtime and increases the development opportunities of our employees. The available e-learning modules have increased. Electronic learning will continue to be promoted with a more focused site-specific approach. Encourage a culture of learning, particularly through the further expansion of mentoring in the group. Sharing of knowledge and increasing the group’s skills base. Adoption of the formal mentoring model throughout the business is increasing steadily, with 42 mentors trained in the year. The roll out of the group’s performance management process will help identify the opportunities to increase the level of mentorship in the group. Build awareness of our brand at institutions of higher learning to ensure we are viewed as an employer of choice. Being an employer of choice in the sector and industry. Consistent engagement with institutions of higher learning resulted in significantly increased attendance at information sessions and recruitment opportunities. We ranked first as an employer of choice in the construction sector in the Magnet Top Employer of Choice awards.
Looking forward
Key focus areas for F2012 Desired results Skills development Fully utilise resources within the Construction Skills Training Academy. Proactively manage requirements of the new SETA landscape.
Practical construction-related training which delivers direct results in terms of improved quality on site Optimal value within the constraints of various legislative parameters and codes of conduct Access SETA funding for additional programmes to deliver relevant skills to the group and the sector Technical and professional competence development Initiatives to promote compliance to changes in legislation. Provide access and support to the development of professional competence programmes.
Training which results in an awareness of and adherence to legislation and associated changes in behaviour Professional qualifications which benefit the group and the individual Leadership and management development Manage transitions in all aspects of work, including technical, cultural or inter-personal. Mentors to support learners to apply new knowledge and approaches.
A culture which is responsive to change and individuals who are resilient to adjustment Leaders who are self aware and prepared for the challenges within the workplace, the industry and the geographies in which we work Student management Recruitment methodologies. Build brand awareness to attract the best caliber of students.
Ensure that new recruits are matched to the group and its future needs General Take training to the site – either through e-learning or through creative approaches to deliver classroom training at a site level. Relevant and timeous development initiatives in the group which have a greater reach and result in better integration of employees from various business units Establish information system capability to track training initiatives. Effectively monitor and report on training initiatives Engage in sub-contractor training and development to increase quality and safety on site and improve the quality of training done over-border -
Transformation
Ownership
Group Five concluded a broad-based black economic empowerment (BBBEE) transaction in September 2005 which resulted in 26.1% of its enlarged share capital being made available to black South Africans. Regrettably, one of our shareholders, the iLima Consortium (iLima), defaulted contractually and this required the unwind of their portion of the initial transaction.
The group excluded any potential contribution from iLima to the ownership element of the group’s latest BBBEE scorecard verification audit conducted in September 2010. This resulted in a black shareholding of 25.67%. Notwithstanding this adjustment, the group’s overall rating is a Level 2 contributor due to a particularly strong focus on the skills development, procurement and employment equity elements. We are currently the only large construction group with a Level 2 rating.
Delivery
Find below how we delivered on our objectives outlined in our F2010 integrated report.
Key focus areas Desired results Status Partial unwind of initial BBBEE ownership transaction. Manage the finalisation of the unwind of the iLima Consortium portion of our BBBEE ownership transaction. The iLima unwind process has continued through the legal process. Address the group’s future black ownership strategy. The board will evaluate alternatives available with a focus on ensuring a robust strategy to address the intent and spirit of the scorecard, as well as the strategic direction of the group. The board has initiated an evaluation process. 
Looking forward
Key focus areas for F2012 Desired results Manage the unwind of the iLima portion of our initial ownership transaction.Timeous exit from the ownership agreement with iLima Finalise future ownership alternatives and implement when appropriate.Improve the overall ownership element to meet the 30% Construction Sector Scorecard ownership target, which will be relevant to us in F2013 Management
While we still have significant work to do before our management structures are representative of the South African demographic profile, we have improved our senior management element of the Construction Charter Scorecard from 2,3 points to 6,6 points out of 10 in our last verification audit in September 2010. Our success in terms of developing internal candidates is also demonstrated by the fact that 82% of promotions across the group and 58% at management level were secured by black employees.
Delivery
Find below how we delivered on our objectives outlined in our F2010 integrated report.
Key focus areas Desired results Status Improve transformation at senior levels. Move towards the sector transformation targets of 35% senior management and 45% for middle management. Against difficult market conditions, limited opportunities for recruitment and decreased employee turnover, we managed to achieve an increase in the percentage of black representation in the senior management category as per the Employment Equity Act from 11.1% to 16.7%. Modest improvements were seen in middle management and specialist categories.
Our internal succession plan revealed a strong pipeline of junior candidates available for advancement.
Ensure that the composition of the board is as diverse as possible. Functional and diverse board. The board conducted an assessment which recommended additional international engineering and legal skills. Two new board members were appointed effective August 2011. The diversity of the board is strong. Looking forward
Key focus areas for F2012 Desired results Improve transformation at senior management levels. Progress towards the BBBEE sector targets of 35% senior management and 45% middle management, which come into effect in F2013 Maintain diversity at board level. A functional and diverse board Finalise future ownership alternatives and implement when appropriate. Ability to attract and retain black talent in the group Employment equity
The group is committed to increasing the proportional representation of African, Coloured and Indian employees within the group and to systematically remove any barriers to their advancement.
Notwithstanding the reduction in overall headcount and the slowdown in recruitment, the proportional representation of African, Coloured and Indian employees in the senior management occupational category, as per the Employment Equity Act, increased from 11.1% to 16.7%. The middle management occupational category increased from 16.0% to 18.8% and in the junior management category from 63.2% to 67.0%.
Delivery
Find below how we delivered on our objectives outlined in our F2010 integrated report.
Key focus areas Desired results Status Ensure that our new mentorship programme receives traction in the group and that management is accountable for achieving real results in transformation. Ensure that black employees are prepared
to take on management positions, as and
when they arise.Functioning mentorship programme exists in all
major areas of the group. These programmes focus on the accelerated development of our junior
management in general and our pool of young
black talent in particular. The number of employees being mentored increased from 102 in
F2010 to 169 in F2011.Roll out our diversity programme across the group with a view to achieve a step change. Greater awareness and tolerance to
differences in the workplace and leveraging
differences.The group’s diversity programme continues to be
well received and attended, with 610 employees
having been through the programme to date. Pleasingly, the incidences of racially-based grievances reduced drastically. We have also seen an improvement in employee feedback engagement scores from black and female employees.Scrutinise all opportunities which become
available in terms of vacancies and promotions
to give priority to equity candidates.Create a stronger pool of black candidates
to fill vacancies at senior management
level.All vacancies are advertised internally and internal audit processes implemented to highlight non-compliance to equity procedures. Refine our succession management process. Create leadership depth and fill identified
positions with black or female candidates.A comprehensive succession management tool kit
was implemented in this financial year. Business
units are in the process of completing their succession plans for scrutiny by the executive
team early in F2012. Create more momentum and efficiencies in our employment equity committees to impact our equity profile. Functional equity meetings which drive the demographic change and actively address the employment barriers.Create more momentum and efficiencies in our
employment equity committees to impact our equity profile.Functional equity meetings which drive the
demographic change and actively address
the employment barriers.The group has worked closely with business units
to result in functional equity meetings and to ensure that required actions are taken. The group was audited by the Department of Labour in line
with the South African Employment Equity Act.
This compliance included identification of discriminatory practices in our policies, practices
and remuneration. At the time of writing, we were awaiting formal feedback from the department.Looking forward
Key focus areas for F2012 Desired results Gain further momentum in our mentorship programme. Prepare black employees for management positions and promotions, as opportunities arise Prepare a group employment equity plan which will cover targeted affirmative action measures. Effective affirmative action to address the current slow progress of black South Africans into middle and senior management roles. This will ensure that business units meet their employment equity and BBBEE scorecard requirements Gain traction in our succession management process. Create leadership depth and, where possible, fill identified positions with black or female candidates Continue to scrutinise vacancies and promotions to prioritise equity candidates for these positions. Create an increasingly stronger pool of black candidates to fill vacancies at management level Procurement
Group Five continues to focus on the transformation of its procurement profile. Currently, 33% of suppliers have empowerment certificates in place. During the year, R3,1 billion of the group’s total South African procurement spend of R5,8 billion was spent on black suppliers. Expenditure with black-owned businesses increased from F2010 by more than 60% and expenditure with black women-owned businesses by more than 70%.
Delivery
Find below how we delivered on our objectives outlined in our F2010 integrated report.
Key focus areas Desired results Status Identify and develop small and medium black-owned and black women-owned enterprises. Achieve the Construction Charter objectives in the medium to long term. Expenditure with black-owned businesses increased by more than 60% and expenditure with black women-owned businesses by more than 70%. Targets have been set for the next year for each of the measurement principles. This will continue to facilitate and promote the preferential procurement strategy. Ensure that we achieve not only the objectives of the Construction Charter, but also a competitive supplier base which supports quality, safety and environmental requirements of the group. The set targets were exceeded in each area. Looking forward
Key focus areas for F2012 Desired results Stretch targets focusing on the Construction Sector Charter Scorecard final targets, which will be applicable to us in F2013. At least 10% growth in the use of empowered enterprises Identify black women-owned enterprises which can be developed. At least 20% growth in the use of black women-owned enterprises Develop processes to facilitate the management of valid BBBEE certificates. Automate the process of retrieving and archiving empowerment certificates which require annual renewal 
Enterprise development
Our inaugural enterprise development programme in 2006 was driven almost exclusively by the group’s corporate office. Our focus this year was on maturing these relationships at a business unit level and ensuring that the various management teams take full ownership and accountability for their partnerships.
We managed to achieve 100% of the BBBEE scorecard requirements for enterprise development during our last BBBEE audit in September 2010.
During the year, we entered into two additional formal enterprise development partnerships, which brings the total number of partnerships to nine. With a further two contract-specific partnerships, we have 11 partnerships, which is in line with management’s target of engaging with 12 partners by F2012.
Delivery
Find below how we delivered on our objectives outlined in our F2010 integrated report.
Key focus areas Desired results Status Continue building sustainable systems and capacity in our existing seven partners. To prepare our enterprise development partners for growth by ensuring that they have robust management systems in place. We continued mentoring our enterprise development partners. Positive feedback was received from our partners on the programme to date. Increase the number of enterprise development partners to 12 over the next two financial years. Each business unit to have at least one enterprise development partner to increase our capacity to participate in BBBEE compliant bids, while also reducing our dependence on traditional joint venture partners. We currently have nine formal enterprise development agreements, with an additional two contract-based agreements. Offer management development to our enterprise development partners through: – Exposure to leadership programmes through the Group Five Academy – Exposure to the Group Five performance management programme – Increased participation in the formal management development programmes offered by the Academy Develop sustainable management capacity within enterprise development partners. Attendance of management development programmes at the Group Five Academy by employees from our enterprise development partners increased during the year. Offer joint venture contracting opportunities, as these are the most efficient way to transfer practical skills when working with our partners. Facilitate growth of our partners without risk of over-trading. All of our partners were engaged in either a joint venture or sub-contract with Group Five business units during the year. Where financial assistance is provided, an uncompromising reporting regime, together with risk identification, mitigation and remedial actions, will be required. Ensure no undue exposure to Group Five in terms of non-payment. Financial assistance granted to the enterprises this year was reviewed by the executive committee. Business unit operational management monitors the enterprise partners’ financial management every month. Looking forward
Key focus areas for F2012 Desired results Identify and enter into at least three more formal enterprise development relationships which comply with the group’s risk selection process during the course of the new financial year. Increase the formal enterprise development relationships to 12 by the end of F2012 Identify opportunities to provide the required enterprise development support in line with the Construction Charter and with the Group Five risk protocol. Meet our scorecard requirements without exposing the group to undue risk Accelerate managerial competency within our enterprise development partners through continued exposure to the various leadership development programmes offered by the Academy. Develop sustainable management capacity within our partners Socio-economic development
The biggest socio-economic development (SED) spend continues to be on empowering people with knowledge and skills to create independence. During the year, 53% of the SED budget was spent on education and skills development programmes in various communities around South Africa.
Economic development and entrepreneurship programmes represented 9% of the spend. These programmes assist communities to become self reliant. This was well below our 35% target due to a concentration on the skills development and social grant aspects of the SED strategy. This will receive renewed focus in the new financial year.
Due to economic challenges in South Africa, the group received a significant increase in applications for emergency social grants. The group decided to temporarily veer from its long term SED strategy to provide urgent, short term relief to a number of charities. The group also launched an employee assistance programme alongside its HIV/Aids programme. Both programmes are funded as social spend under the SED programme. This led to 38% of our total SED spent on social grants compared to the 10% target.
Delivery
Find below how we delivered on our objectives outlined in our F2010 integrated report.
Key focus areas Desired results Status Continue to develop local community skills and capacity and partner with local government, traditional leaders and other community leaders to ensure effective implementation of our SED initiatives. Local government employees and community leaders who are able to assist in sustaining SED initiatives. Significant in-roads were made in forging links with various communities. However, more focus is still required to result in skills transfer and sustainability of community support programmes. Manage programmes efficiently, which will involve instituting regular reporting and monitoring systems of our SED programmes. Efficient internal implementation and monitoring processes of all the group and business unit SED initiatives. Each business unit submits quarterly reports on their SED participation and spend. The impact in terms of programmes is reported on and monitored at the board SED committee. Communication of Group Five’s community initiatives to various stakeholders. Stakeholder awareness of Group Five‘s active role in community development. Although we made a concerted effort this year to promote our SED initiatives through information programmes, most of our key stakeholders are still not aware of our initiatives. Looking forward
Key focus areas for F2012 Desired results Identify and implement entrepreneurial projects which will empower target communities with skills and resources to sustain themselves. Create economic opportunities in target communities which will assist in reducing poverty and unemployment Efficient management of current SED initiatives though technology support tools and regular monitoring to ensure containment of costs within the allocated budget. Improved planning and accuracy of information to assist in monitoring and evaluation of SED programmes and their impact Ongoing engagement, capacity building and effective monitoring of selected key beneficiaries. Improved community engagement and self-reliance Refocus business unit programmes to align with the agreed focus areas and targets and to ensure the effective proportional spend in line with each focus area. Proportional spend within the set parameters, with a particular focus on achieving the 35% economic development target spend