Transformation
Code 100: Ownership Code 200: Management control Code 300: Employment equity Code 400: Transformation through skills development
Code 500: Preferential procurement Code 600: Enterprise development Code 700: Socio-economic development (SED)
B-BBEE executive summary matrix
Strategy and approach
Transformation is one of Altron’s key focus areas and the company remains committed to supporting government, NGOs and other stakeholders in changing the face of business in South Africa. The group’s transformation strategy is encapsulated in the Transformation Vision 2012 policy document which is aligned with the dti CoGP. It outlines implementation guidelines to assist the group’s operations in meeting their targets against the scorecards for each of the dti CoGP. The strategy is carried out by the Altron board, together with a transformation committee (Transcom) comprising members of senior management and transformation representatives from each major operation.Engagement
The policy was formally launched to all employees and stakeholders and adopted by the board and senior management in August 2008. To ensure a thorough understanding of the dti CoGP across the group, Altron has embarked on an extensive programme to educate and train management and transformation practitioners within its operations.In light of the economic downturn and the need to contain costs, the staff transformation climate survey planned for 2008 has been postponed. However, employees continue to be made aware of targets, progress and issues pertaining to transformation via various internal communications media. These include the staff publication Profile and the intranet.
During the first quarter of 2008, Transcom began working with all companies in the Altron group to translate Vision 2012 into transformation targets. Interactions took the form of a series of round-table consultations with transformation champions to help determine five-year targets for all areas of the dti CoGP. In addition, we have published our Vision 2012 targets and our progress to key customers. Vision 2012
In March 2009, Powertech’s transformation committee discussed transformation concerns with Eskom and Telkom. Important issues raised included: skills retention, a flagship SED project for Powertech, and a standardised database for reporting. The company will provide progress reports offering qualitative information that goes beyond the scorecard numbers. The first progress report was delivered in May.
Eskom’s view: As of 1 April 2009 Eskom will give priority to companies with an official B-BBEE rating according to the dti CoGP. For suppliers with less than a Level 4 rating, Eskom will set targets with timelines. Eskom expects its suppliers to achieve in all areas of transformation, not only in equity. The focus has therefore shifted to qualitative aspects, such as job creation and skills development.
Telkom’s view: Procuring goods and services from historically disadvantaged groups is a business imperative for Telkom. Although Telkom’s tender process gives preference to black empowered companies, the evaluation criteria are adjusted to suit each tender, with the only non-negotiable requirement being a minimum of 25.1% black ownership. The emphasis, however, is not on the actual shareholding but on the economic participation of the individual shareholders. Telkom uses the ownership requirement to drive transformation in the ICT industry, evaluating potential suppliers primarily on their performance against the dti CoGP targets. Telkom will conduct independent forensic audits of suppliers’ B-BBEE credentials to prevent fronting.
Measurement
Altron measures the group’s transformation progress against the Department of Trade and Industry’s Codes of Good Practice (dti CoGP). This year, the group achieved an overall score of 65.30%, or Level 4 Recognition, compared with last year’s score of 54.85%. The company was also listed in the Financial Mail/Empowerdex Top Empowerment Companies 2009 Survey, with an overall placement of 32 (a 17-place improvement on the previous year) and came first in the General Industrials sector in the Top 200 Companies ratings. In terms of Skills Development, Altron was ranked number six in the top ten with a score of 11.9% for this indicator.All operations at Altech, Powertech and Bytes were audited by rating agency Empowerdex.
Altron Empowerdex 2009 dti CoGP Scorecard
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| Element | Weighting | Total score 2009 |
Total score 2008 | ||
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| Ownership | 20% | 11.50% |
8.90% | ||
| Management control | 10% | 2.60% |
4.44% | ||
| Employment equity | 15% | 5.10% |
4.46% | ||
| Skills development | 15% | 11.90% |
4.46% | ||
| Preferential procurement | 20% | 14.20% |
12.58% | ||
| Enterprise development | 15% | 15% |
15% | ||
| Socio-economic development | 5% | 5% |
5% | ||
| Total B-BBEE score | 100% | 65.30% |
54.84% |
Towards implementation
The managing directors of the various group operations are responsible for achieving targets and a portion of any management bonus is paid out only on the achievement of these. A transformation committee within each operation receives feedback from line management on B-BBEE progress, and this information is fed through to the group Transcom by the various operational transformation committee members.Highlights, challenges and the way forward
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However, areas of challenge still remain to improve our performance under management control, where Altron scores only 2.6 out of 10, and particularly on the black executive director and senior top management elements.
Powertech Transformers faces a business risk with a key customer, Eskom, which requires that its suppliers be at a Level 4. In response, Powertech Transformers is restructuring ownership, control and top management, as well as developing enterprise joint ventures and increasing training spend.
These trends are generally reflected throughout the company’s three operations. The company expects that all companies will be rated between Levels 1 and 3 before the completion of Vision 2012 and has extensive plans in place to address those codes that present the greatest areas of challenge.
Progress and initiatives
Code 100: Ownership
Altron scored 11.46 out of 20 in terms of the ownership code against the dti CoGP, compared to 8.9% last year. The Altron group now has an empowerment shareholder in each of its subholding groups. Kagiso Strategic Investments owns 27% of Bytes Technology Group SA, Pamodzi Investment Holdings owns 25% of parts of Altech, and Izingwe Holdings has a 30% shareholding in Powertech’s Aberdare Cables. Powertech has other empowerment partners throughout its operations: Kagiso Ventures has a 25% equity stake in Battery Technologies, Mahogany Capital, a black female-owned company, has a 25.01% equity interest in the Powertech Industrial Group and Power Matla, a 25% equity stake in Desta Power Matla.Ownership targets are being pursued in line with Altron’s Transformation Vision 2012.
Code 200: Management control
Altron scored 2.62 out of 10 for management control against 4.44% last year, representing our greatest challenge across the dti CoGP. The company has placed increased focus on its B-BBEE board representation and during 2008 appointed Barbara Masekela and Dawn Mokhobo as independent non-executive directors to the Altron board. Altech appointed Zakhele Sithole and Moses Sindane to the Altech board. Through a governance review exercise, the mix between non-executive and executive directors has been reviewed to create an appropriate balance.
The company will continue to focus on transforming senior management so that it is representative of the cultural diversity of the country. This is being achieved through a targeted programme of mentoring, succession planning and identification of black talent for accelerated development programmes. Targets are in line with Altron’s Transformation Vision 2012.
Code 300: Employment equity
One of Altron’s key BBBEE goals is to transform the demographics of the workplace so that they reflect the diversity of the country. In this regard, the Group implements employment equity practices that seek to increase the number of black employees, black female employees and black disabled employees at all levels, but particularly in the senior management structures.
- Management of EE
Employment equity is reported monthly at management committee meetings and every group company submits EEA2 and EEA4 reports to the Department of Labour on an annual basis. In carrying out its EE mandate, Altron is further governed by the Employment Equity Act, No 55 of 1998 and the Skills Development Act, No 97 of 1998. During the year under review, Altron adopted the dti Code 300 Employment Equity’s category definitions of senior, middle and junior management. This has resulted in a standardised measurement approach regarding occupational levels and categories of employees, and ensures close alignment of Altron’s measurement of EE with that of the dti CoGP.
- Approach and policy
Employment Equity (EE) is one of Altron’s most difficult transformation challenges and the group currently scores only 5.1 out of a possible 15 points for this code. Areas that require urgent attention include gender in the senior management element (current score is 0) and the black disabled employee element (current score is 0.5%). The middle management element currently scores 26.7%. Not having enough black middle and senior managers, and especially black female middle and senior managers, will impact our ability to transform and meet the stringent Altron 2012 targets in many of our companies. Altron has devolved upon the senior management of each company the responsibility for submitting an EE plan in accordance with the EE Act.It is clear that the solution will not be found in external recruitment alone and it is for this reason that many of Altron’s skills development initiatives have a strong bias towards black, black female and black disabled employees. Only by growing its own internal EE skills pipeline will the Group be able to improve its scores on this important BBBEE code. Skills development of this kind will not deliver immediate results; for example, it necessarily takes time for the current 50,2% of junior black managers to grow, through accelerated leadership development programmes, into middle and then senior management positions. Succession planning therefore also plays a key role in providing solutions to the ICT EE challenge.
- Initiatives to address EE
The year under review saw intense focus being placed on skills development as a vehicle for bringing about EE change within the Group. All group companies have devised a human resource plan of action that focuses on identifying and developing black individuals at all levels within the group.Bytes has around 200 learners, 46 of whom are black and many of whom have been employed full-time by the company. Bytes has also partnered with the Information Technology Association (ITA) to address the need to increase the pool of black females in the industry.
During the year 13 high-potential black managers were enrolled in the Altech Academy Accelerated Leadership programme. Of the 116 individuals enrolled in the company’s learnership programme, 53% are black females and 46% are black males. Of the 15 graduates to be enrolled in the graduate-in-training programme, 8 came from historically disadvantaged backgrounds. Altech has the option of offering these individuals permanent positions within the company in areas of critical skill shortage.
Powertech successfully implemented a Succession Planning and Performance Management System to identify EE candidates for future leadership positions. This will be piloted at Aberdare Cables during the second quarter of 2009 and, depending on it effectiveness, can be rolled-out to other Powertech operations.
- Goals
While the approach of Altech, Bytes and Powertech might differ slightly, the goals remain the same: to identify and fast-track black individuals to junior, middle and senior management positions using EE-centred skills development initiatives. Altech, Bytes and Powertech’s key focus over the next three years will be to recruit or promote black people, including black women, to senior management levels. In line with the group-wide succession planning exercise, driven by the Altron board, we identify and develop suitable black candidates through a transparent and formal procedure governed by the nomination committee’s mandate and terms of reference, as well as by the Altron board charter Corporate governance report item 7.5
Code 400: Transformation through skills development
Overall, Altron currently scores 11.9 out of a possible 15 points for skills development on the B-BBEE scorecard. Many skills development areas, discussed above and in the employees section of this report, are geared towards identifying and fast-tracking black individuals through various programmes, for example those run by the Altech Academy
- Initiatives
At Altech skills development initiatives are largely run through the Altech Academy and include the Accelerated Leadership Development Programme, internships, bursaries, learnerships and the newly developed programme for the Altron Young President’s Club.Bytes People Solutions’ learnership programme has been particularly successful in training predominantly-black learners from all operations within the Altron group, which provides an important EE skills pipeline.
Bytes People Solutions has been particularly successful in training learners, the majority of whom are black and many of whom are disabled. These learners are trained by BPS on behalf of all companies in the Altron group. The company has a human resource action plan in place to identify and train high potential black employees.
Powertech spent more than 3% of leviable payroll on skills development for critical and technical core functions in 2008. Furthermore, Powertech focuses on management and leadership training in association with the Gordon Institute of Business Science to provide leadership training to middle and senior managers. To date, 32 employees have graduated from this programme.
Powertech Transformers established a world-class winder academy at a cost of R3.5 million, where unskilled groups of six trainee winders are trained per 12-month period on all winding types, to full competency, under actual production conditions, including on-job training in other factory areas. Since opening in January 2007, the academy has completed 485 windings, with no test failures, zero rework, and 100% on time delivery with the best experienced, qualified and dedicated trainers in the company – a true ‘centre of excellence’ for Altron. This year we will increase the number of companies in the group undergoing a skills audit.
- Goals
A comprehensive plan to identify and develop internal talent is being developed throughout the group in 2009. Key components include the identification of high-potential employees, succession management and workforce planning.Each year the Altron secretarial department takes on a secretarial cadet, providing a practical work environment where a wide range of secretarial functions can be experienced first hand. The cadet scheme (the Scheme) is aimed at historically disadvantaged CIS (Chartered Institute of Secretaries) students/graduates. Cadets are employed by Altron on a fixed term duration contract for six months which may be renewed by mutual agreement by both parties for a further six months. Only one trainee is engaged at any one time. Cadets report directly to the Powertech Group Company Secretary who is responsible for overseeing and managing their development through the Scheme. During the first six months a cadet’s work entails predominantly the completion of statutory returns with the Registrar of Companies such as annual returns and the drafting of basic board resolutions. During the second six months a cadet’s work experience is increased to the drafting of agendas and attending various executive committee and board meetings. Cadets are also required to assist both the internal and external auditors during statutory audits. The Scheme has to date successfully trained three candidates who have found permanent positions with other organisations as either trainee assistant company secretaries or junior company secretarial consultants.
Code 500: Preferential procurement
Through preferential procurement, the Altron group aims to help create a vibrant black small, medium and micro enterprise (SMME) sector, and to encourage procurement from companies that are B-BBEE compliant. Altron gives preference to suppliers who are black or black women-owned, value-adding suppliers and qualifying small enterprises (QSEs).
- Status
During the period under review, Altron showed an improvement of 1.62% on the previous year’s preferential procurement score, bringing the total score to 14.2% (out of a possible 20%). Some 37% of the company’s overall procurement spend goes to preferential suppliers, with 9.9% going to QSEs and emerging micro-enterprises (EMEs). Altron’s own policy of requesting the B-BBEE status of suppliers, together with a more general industry-wide insistence on verification, has seen a marked increase in the number of companies that are B-BBEE rated, making preferential procurement a far easier and smoother process. Among individual company successes is the work of Bytes Specialised Solutions (BSS) in developing black SMMEs and EMEs. Currently we are actively assisting 442 in number, up from 106 just two years ago.All of Altech’s operations achieved a score of over 11 points for preferential procurement, with many of them scoring well above 14. Those operations that achieved particularly high preferential procurement point include Arrow Altech Distribution (15.03), Altech UEC (18.06), Altech Netstar (17,01), Netstar Fleet Management, Altech Alcom Matomo (19,8), Altech Isis (15.3) and Altech Card Solutions (18.42). Such high scores have contributed to Altech’s overall score of XX on preferential procurement. More than 50% of Bytes’ procurement spend goes to preferential procurement. During the year the company achieved 12.78 against its target of 15. The work of Bytes Specialised Solutions in developing Black SMME’s and EME’s is outstanding and currently we are actively assisting 442 in number, up from 106 just two years ago.
- Goals
Most of Powertech’s operations receive full points on preferential procurement, but some major suppliers are not yet officially rated and could not be included in the scores for this year. This situation will improve by next year. Work still remains to be done to increase spend on black-owned and black female-owned enterprises, which currently only earn the company 6.7% and 1.4% respectively on the scorecard.
Code 600: Enterprise development
(ED)
Altron supports emerging black businesses so as to ensure their sustainability over the long term. Its investment in enterprise development involves a variety of assistance mechanisms including management advice, guiding new enterprises in financial best practice and providing assistance through advantageous payment terms, to mention a few. This not only benefits historically disadvantaged members of society, but also provides Altron with reliable, alternative procurement sources for many of its products and services.
- Measurement
Performance is measured against internal targets and the B-BBEE scorecard. All enterprise development activities within the company are documented between both parties, clearly identifying the area of development and assistance offered. Operations also retain records of costs incurred for verification purposes.
- Status
Enterprise development is implemented by managing directors and line management at each group company. In 2008, all group companies committed to the target of 3% of net profit after tax (NPAT) towards enterprise development activities. While Altron scored the full 15 points for enterprise development for the year under review, scoring was uneven, especially in the Altech stable. Altech’s operational transformation committee has contracted external transformation consultants to help develop guidelines to address the challenge.
- Initiatives and case studies
Altech Autopage Cellular has implemented a formal assistance programme for black owners of its dealership stores, undertaking a full needs analysis to establish each dealers’ requirements and then meeting these needs with the relevant training, systems, stock and payment terms. Altech Netstar also makes various stock items available to black-owned fitment centres at a discounted rate.In the past, Aberdare Cables has helped develop the businesses of drum manufacturers and during the year extended its support to include start-ups operating in the canteen facilities and cable manufacturing environments. The company procures goods and services from these enterprises, thereby supplying them with an initial customer base.
Powertech Transformers is engaged in a project that will see it outsourcing its marshalling kiosk production to a black-owned enterprise started by Powertech employees. The project is at an advanced stage and the new company is expected to be trading by May 2009.
CASE STUDY: Desta Power Matla (DPM) growing significant enterprises
DPM has a long history of enterprise development, pre-dating the dti CoGP, and these business relationships continue to flourish and spawn further enterprise development. VCM, a steelwork supplier that DPM assisted with advantageous payment terms and financial oversight, has seen its head-count grow from 18 people in September 2007 to 50 employees now, and turnover has risen to over R33 million. DPM has also played an important role in helping to develop Ikusasa, another steel supplier, by offering management advice, succession planning and advantageous payment terms. This company’s turnover has more than doubled in two years to nearly R18 million in 2008. The company also helped to increase the turnover of MWS, a supplier of paper-covered copper strip, by 50% over two years to R17 million in 2008, by facilitating the sale of DPM assets to the company and creating a fund to help it improve the quality of its products.
CASE STUDY: ATM Mzansi – Banking the unbanked
The number of fully black-owned companies receiving enterprise development assistance from Bytes has steadily grown from 106 in 2006 to 442 in 2008. Much of this has been achieved through the company’s flagship Bytes Specialised Solutions (BSS) ATM Mzansi Banking the unbanked project. Through this initiative, in partnership with major banks, BSS places ATMs in small black-owned businesses, where higher volume of foot traffic have, in some instances, increased turnover by as much as 35%. Beneficiary businesses also receive a percentage of the profit generated from the ATMs, helping to boost their earnings. South African Banks have opened 6 million Mzansi accounts since 2004, and the ATM Mzansi Banking the unbanked project offers decentralised banking to the previously unbanked sector of the population. Another benefit of this technology is to bring down banking costs in previously under serviced areas.
- Goals
While five of Altech’s operations have very high ED scores, many of the remaining ones score below 5 points. Altech’s operational transformation committees have contracted external transformation consultants, Trancend, to help them develop guidelines to address the challenge. Bytes will continue to expand its retail ATM enterprise development initiatives.
Code 700: Socio-economic development (SED)
SED forms an integral part of Altron’s mainstream activities – both as a component of its B-BBEE scorecard as well as a cornerstone of its corporate accountability and governance programme.
- Policy and approach
A CSI policy, incorporating SED, provides guidelines to group companies on how best to implement SED elements of B-BBEE, details the selected focus areas in which Altron makes SED investments and outlines the criteria for project selection. This policy is aligned with the dti CoGP regarding SED.
- Management
At the operational level SED it is the responsibility of executive management. The CSI policy provides scope for interpretation and implementation by group companies in their own operations and operating companies are encouraged to adapt the policy to suit their needs, business type and geographical footprint. Each operating company is responsible for regulating and monitoring their CSI expenditure according to the policy guidelines.
- Engagement
Each year, CSI practitioners throughout the group convene to share information, successes and lessons learned to ensure a co-ordinated approach, capitalise on synergies between group companies and maximise the impact for individual projects. The company undertakes regular reviews of spend and cost-benefit analysis. Each project is evaluated on an annual basis through a range of engagement activities with beneficiaries, including on-site visits, collection of relevant statistics and formal research. Post-mortem evaluations and audits are also conducted when each project is completed. Where possible and relevant, the company quantifies both financial and in kind contributions to projects. The group’s database system, Everest, monitors spending and progress against the targets set for CSI projects.
- Focus areas
Altron renders support in five key focus areas.- Education and training, incorporating:
- general education in technology and IT, electronics/multimedia, engineering, maths and science, school infrastructural development, outreach programmes and Adult Basic Education and Training (ABET); and
- skills development programmes aimed at improving skills levels in communities to allow people to earn a living and become self-sustainable.
- Job creation outside the company value chain:
- support for job creation projects that are external to the workplace and aimed at creating self-sustainability for organisations qualifying for CSI/SED support. (Does not include incorporate projects which qualify under enterprise development / preferential procurement as part of the company’s supply chain).
- Community development and support, incorporating:
- Health and social welfare in medical, primary healthcare and welfare projects within communities in which the company operates
- Community Aids awareness programmes aligned to government programmes that provide
- Support for security and public safety programmes (such as training of volunteers working at police stations, equipment or outreach programmes).
- Conservation and environment, including:
- Environmental awareness and projects;
- Support of conservation initiatives and programmes; and
- Involvement in disaster relief programmes.
- Arts, culture and sports, including:
- Support of developmental programmes;
- Training of new talent; and
- Development of historically disadvantaged individuals or teams.
These focus areas have been selected in line with national social development imperatives and Altron’s core business as a technology company. In order to be considered, projects must fall within the above focus areas, show sustainability potential and be able to demonstrate ongoing maintenance plans.
- Education and training, incorporating:
Flagship projects
Altech
- Altech UEC Briardene School (R261 276)
Altech UEC partners with Project Build, an NGO that builds classrooms for under-resourced schools in KwaZulu-Natal. During the year, the company’s funding helped to build classrooms and a media centre at Briardene Primary School.
- Arrow Altech
Distribution (AAD)/Altech IT Ekhuruleni Primary School (R242 313)
AAD continued its ongoing support for this Germiston-based school which, three years ago faced closure by the Department of Education due to poor infrastructure. During the year under review, the company assisted the school with further infrastructural improvements and equipment. It upgraded the laptops of all heads of department, provided desks and chairs for learners in grades 1 to 3, upgraded the furniture in the staffroom and computer room and provided athletics kits to the school athletic team.
Bytes
Since 1995, Bytes has provided 19 under-resourced schools and 21, 390 learners with 456 computers. During the year it renovated and upgraded facilities at the Qunu and Nkalani schools in the Eastern Cape. Each of the schools now has a dedicated computer centre and Bytes provided computer skills training to 35 of the 42 teachers. Qunu also modified the existing Altech science laboratory to be both a science lab and a computer centre, giving the school two fully functional computer centres and science lab.Bytes also created two state-of-the-art computer centres when it donated 48 desktop and 8 laptop computers to Nombuso High School on the KwaZulu-Natal South Coast. This was a collaborative project with five of the group companies assisting. A total of 1, 400 learners will benefit from this project.
Powertech
Desta Power Matla (DPM) granted a total of 41 bursaries (at a cost of R203 500) to 27 first-years, 9 second-year and 5 third-year historically disadvantaged students. The bursaries were granted to children, family members and relatives of employees as well as other deserving applicants. Powertech IST sponsored 13 bursary students from historically disadvantaged backgrounds who excelled in maths and science at the senior certificate level. Aberdare Cables’ bursaries made education possible for seven grade 11 and five grade 12 learners, as well as two first-year BSc electronics students and one first-year NHC accounting student.- Status
Altron scored the maximum five points on the B-BBEE scorecard for SED during the year under review, and met its target spend of 1% of net profit after tax. In total, R12.4 million was invested in various beneficiary projects across the group companies.
- Goals
Plans for this year include the following:- Altech has approved R1.7 million for the construction of an Altech Netstar (Netstar) Legacy Park in Tembisa, which will provide the local community with a sports park and community centre.
- Bytes has planned investment in a second KZN South Coast school. The Nombuso Secondary School will receive computers for its two computer classrooms in 2009.
- Powertech will be launching a flagship programme aimed at mathematics and science proficiency at both school and university level.
During the year under review, Altron moved from a policy-making to an implementation phase in its transformation journey. The focus is now on the implementation and achievement of goals at the operational level.
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