When will charity start at work?

There’s an old idiom that says charity starts at home, but as the payroll giving trend starts taking off in South Africa, charity may very well find its place at work, giving new meaning to the concept of ‘give as you earn’.

Already well-established in the UK and US, payroll giving is gaining traction in South Africa, offering employers a simple but effective way to involve their employees in social investment initiatives while building a shared culture of caring for vulnerable groups and communities. Payroll giving is facilitated by employers, and enables employees to donate a chosen amount to a supported charity straight from their gross salary before it is taxed each month, with a minimum of hassle.  

Payroll Giving is growing in South Africa, and is founded on the basis that many small donations, given on a recurring basis, with minimal administration required by the employer, can amount to a substantial and meaningful impact for a needy charity. If only 10% of South Africa’s 9.2 million employed people contributed R50 a month of their salaries, it would amount to R46-million every month, or R552million every year invested in charitable programmes. Many companies are also challenging employees to support such programmes, with the promise of matching and doubling up on whatever employees donate in their personal capacities.

B-Cause is a specialist agency in South Africa that focuses specifically on cause-related marketing, social responsibility and sustainability issues, matching corporate brands with appropriate social and public benefit organisations.   

One of the greatest appeals of payroll giving is that employees have the peace of mind that all the checks and balances are in place, and that approved charities supported by their employer have been through the process of confirming their legitimacy and that the funds will be used effectively. There is also the cohesion that comes from working towards supporting a common vision where everyone’s smaller contributions can make a huge social difference as a collective effort. Finally, not all employees are able to invest their time or skills in worthy causes as often as they would like to, so payroll giving provides an opportunity to be part of a well-managed charitable effort, on a consistent basis without any demands on their time.  

While payroll giving initially took off in larger employers, small and medium commercial entities are also seeing the opportunity to rally their people around a common cause, with a minimum of effort and costs to company to administer the effort. At the same time, it provides the business with a distinct competitive advantage to differentiate in an increasingly socially-conscious consumer market. In fact, progressive business strategists have long been advocating for corporate social investment to be managed as aspects of core business strategy.

Entrench a culture of giving

There is an important internal marketing job to be done in creating and maintaining the payroll giving momentum. B-Cause works with employers to introduce and demonstrate to staff how easy it is to make a difference with payroll giving. Invest the marketing resources to promote the payroll giving opportunities, and then get leadership involved to challenge employees and set the bar. It’s also vital that staff get to see the results of their contributions, so provide regular feedback on how their hard earned money has benefitted a needy cause.  

Payroll giving drives employee engagement  

An often overlooked but valuable benefit of payroll giving is that of employee engagement.

Payroll Giving is one of many important employee engagement tools which are vital in the age of millennials. According to a 2015 Cone Communications study, millennials are far more engaged with social causes than their older counterparts. Millennials are more likely to work for a company based on its corporate social responsibility commitments, and will even be willing to take a drop in salary in order to work for a socially responsible company that they admire when deciding where to work. Millennials expect brands to integrate sustainable and responsible practices into all that they do. Brands that are embracing CSI as a business-imperative strategy, not only because it’s the right thing to do, but because it’s also the profitable thing to do, tend to retain skilled staff for longer, and enjoy a greater share of the consumer wallet.    

For the employer brand, besides the ease with which it can be integrated into the payroll system, payroll giving also brings structure to its CSI strategies. With payroll giving, you have the consistency of donor income that can be earmarked for specific charitable projects, allowing for long-term and structured forward planning which is worth gold for both donor and recipient organisations.

In embarking on a payroll giving strategy, B-Cause helps companies to identify NPOs that align with the strategic imperatives and nature of the business, and ensure that there is a good fit for the cause and beneficiaries that would be best served by the partnership. We focus on creating and sustaining mutually beneficial relationships between corporates, employees and NGOs – relationships that will last and become deeply ingrained in the mind of the organisation, its people and the public.

Michelle Govender is the Director of Strategic Marketing at B-Cause.

How to get the best out of BI

In an increasingly competitive market, insurers must use business intelligence (BI) to differentiate themselves in the digital age. But how best can the effectiveness of such a solution be measured?

Simply put, ROI comes down to the benefit of a solution minus its cost. The faster such benefits can be realised, the higher the ROI. When it comes to BI, these benefits can be quite impressive from both a strategic and an organisational perspective. But then, such a solution must deliver demonstrable results against the specific challenge an insurer sets before it.

And while BI has the potential to give an insurance provider the impetus for better strategic growth, a Cloud-based BI solution can deliver even better results given its cost-effectiveness and faster time to implement.

The key to maximise the ROI of BI for the insurer is to frequently deliver small solutions with a limited scope. This has the obvious advantage that business requirements are less likely to change over a short time period. Being able to implement a Cloud-based solution faster than a traditional one also means there is a significant advantage when it comes to improving the ROI.

Nucleus Research, a firm specialising in measuring the value of technology, states that a BI solution delivers ROI on three levels – eliminating manual processes, limiting errors, and saving time. According to the firm, in some instances, this yielded an ROI of almost 200 per cent. Moreover, leveraging analytics to improve decision-making following a BI implementation, the ROI derived increased to almost 400 per cent.

Even more impressive is the fact that when BI is deployed across the bulk of the organisation and aligned to daily operations in addition to the goals of senior management, ROI jumped to just under 1 000 per cent. BI cannot operate in isolation but must be pulled through all aspects of business in the insurance company. Additionally, the insurer has to set specific targets that need to be delivered on and evaluated against to prove the efficiency of the BI implementation.

BI provides companies in any industry with better information, resulting in faster and more improved decision-making.

As a result, there is a direct impact on the bottom line. Given this, organisations must ask themselves what would happen if they do not implement a BI solution. BI enables the insurer to remain relevant, competitive, and provides the information required to develop innovative solutions designed to meet specific customer requirements.

Kelly Preston is the data analytics manager at SilverBridge.

What happens with liability of the insurer for the insolvent insured’s debt

“Whenever any person (hereinafter called the insurer) is obliged to indemnify another person (hereinafter called the insured) in respect of any liability incurred by the insured towards a third party, the latter shall, on the sequestration of the estate of the insured, be entitled to recover from the insurer the amount of the insured’s liability towards the third party but not exceeding the maximum amount for which the insurer has bound himself to indemnify the insured” – s156 of the Insolvency Act, No 24 of 1936 as amended (Act).

Section 156 of the Act deals with claims made by third parties against an insurer, in circumstances where the person insured has become insolvent. Prior to s156 of the Act coming into effect, the legal position regarding such claims was that, upon sequestration of the insolvent (i) the estate of the insolvent would vest in the trustee of the insolvent estate and (ii) the third party would be precluded from claiming directly from the insolvent’s insurer. However, s156 of the Act created an exception to (ii) above in that it allows a third party to claim directly from the insolvent’s insurer if the requirements of the Act in this regard have been satisfied.

In order to rely on s156 of the Act, a third party must prove that (i) the insured had incurred a liability to the third party, (ii) the estate of the insured had been sequestrated and (iii) the insurer was liable for the debt of the insured.

The above principles came before the court in Bader and Others v Centriq Insurance Company Limited (4572/2015) [2017] ZAGPJHC 12 (Bader v Centric), as a stated case. The crux of the matter was whether the liability of the insured to the plaintiffs (which was established in the court a quo)] Bader V Wentzel and Delru Makerlaars CC 2014 JDR 0209 (GNP) (Bader v Wentzel) created an obligation for the defendant insurer, Centriq Insurance Company in terms of s156 of the Act.

Briefly, in Bader v Wentzel, the plaintiffs sued the insured, Delru Makerlaars who joined its insurer, Centriq Insurance Company as a third party. Judgment was given in favour of the plaintiffs and the third party proceeding against the insurer was dismissed. The claim was for the breach of professional duties by the insured, in respect of which the insurer repudiated the professional indemnity that the insured held with the insurer, based on an exclusion clause in the policy.

In Bader v Centriq the plaintiffs erroneously sought relief on the judgment against the insured in Bader v Wentzel, in submitting that simply because the insured had been found liable in the previous proceedings, it automatically followed that the insurer of the defendant would be similarly liable.

The court in Bader v Centriq found that the “plaintiff obtained no greater rights [against the insurer] than those enjoyed by the insured [against the insurer]”. Essentially, it could not be found that in one instance the insured had no claim against the insurer, but in another instance, that a third party substituting the position of the insured would have recourse against the insurer. To do so would afford the third party more rights against the insurer than those held by the insured.

Furthermore, the court held that s156 of the Act “does not transfer, nor vest existing rights of an insolvent in the third party”. The court ruled that, it “creates a new distinct cause of action for a third party on sequestration of the insured as a means to recover from the insurer precisely what the latter owes the insured under the indemnity”. Therefore, if there is no obligation on the insurer vis-a-vis the insured, a claim of a third party will fail.

The determination before the court was to establish a link between the liability of the insured and the terms of the indemnity. The court rejected the plaintiffs’ claim stating that, they had failed to prove that the insurer was obligated to indemnify the insured in terms of the policy. Consequently, there was no link between (i) the liability of the insured to the plaintiffs and (ii) the liability of the insurer in terms of the indemnity, for the purposes of s156 of the Act.

Denise Durand, Dispute Resolution practice and services, Cliffe Dekker Hofmeyr, overseen by Willie van Wyk.

Why you shouldn’t ignore the rights of labour tenants

In 1996, the legislature enacted the Land Reform (Labour Tenants) Act, No 3 of 1996 (Act). The objective of the Act was to protect all persons denied access to land as a result of past racially discriminative laws, and which persons had taken occupancy and enjoyed the use of land on farms upon which they were providing labour.

The Act confers certain rights on labour tenants and these rights create an encumbrance on farm owners’ use and enjoyment of their farms, and will impact any potential transactions concerning such farms. But who qualifies as a ‘labour tenant’ and how should farm owners deal with their rights?

As defined in s1 of the Act, a labour tenant is “a person who has or has had the right to reside on a farm; has or has had cropping or grazing rights thereon, in consideration of which he provides labour to the owner or lessee; and whose parent or grandparent resided on the farm and had similar rights”. As noted in Mokwena v Marie Appel Beleggings CC and Another [1999] 2 All SA 157 (LCC), the definition’s elements are cumulative and are to be read conjunctively, and a determination of their satisfaction involves a factual inquiry in each case.

A labour tenant has two main rights which may impact a seller and purchaser of a farm where labour tenants are in occupation: (i) the labour tenant’s right to occupy and use farm land in terms of s3 of the Act; and (ii) the labour tenant’s right to acquire land in terms of s16 of the Act.

The right of a labour tenant to bring an application to acquire a right in land, will in most cases be obsolete considering that such a right lapsed on 31 March 2001. So unless such an application was made to the Director-General of the Department of Rural Development and Land Reform (DG) on or before 31 March 2001, and for some reason remains pending, any applications made post 31 March 2001 will fall on this hurdle alone.

Notably, what gives this Act its relevance to this day is the fact that the right of a person who was a labour tenant on or before 2 June 1995, together with their family, to occupy and use farm land still persists.

The Act provides that an agreement may be concluded with the labour tenant in terms of which the labour tenant is compensated, alternatively relocated in lieu of their right to occupy and use the farm land.

An important aspect regarding this latter agreement is that it will be of no force and effect until such time that it is certified by the DG or its terms incorporated in an order of court or that of an arbitrator in terms of s3(7) of the Act.

As such, parties to transactions involving farms on which persons deemed to be labour tenants have taken occupancy need to be aware of the rights of labour tenants contained in the Act, and the impact those rights may have on their transactions and the enjoyment and use of their farms.  

Writter by Wessel Ramatsekisa, overseen by Burton Meyer, Dispute Resolution practice and services, Cliffe Dekker Hofmeyr.

Why is learning agility a must have for today’s business leader?

When we consider the disruptive changes to traditional industries that lie ahead (in technology, autonomous cars, electric cars, insurance, real estate, electricity, 3D printing, health and longevity, Smart phones, agriculture, Bitcoin … ) if they have not already done so.

Businesses would be well advised to cultivate more agile leaders able to confront these challenges, which have the potential to wipe out whole industries.

Our world has become increasingly volatile, uncertain, complex and ambiguous. To succeed in today’s world, we have no choice but to master our ability to adapt and learn and learning agility is one of the most important competencies for today’s leader. Learning agility is key to unlocking our ability to adapt. But what exactly is learning agility?

According to research conducted by Korn Ferry International in which they assessed nearly one million executives. Learning agility is a competency or capability which describes any persons’ speed of learning. Business results depend on learning agility because leaders like this can solve complex problems, adapt easily and thrive in a constantly changing world, in turn, they will position their organisations for future success.

Learning agile leaders excel at absorbing information from their experiences, reflecting and then extrapolating from these to deal with new and unfamiliar situations. This enables leaders to learn something in one situation by gathering and making sense of patterns from one context and then using them in a completely new context. It is the ability to learn, adapt, and apply ourselves in constantly changing conditions. Learning agility isn’t like IQ. It’s more about the lessons you take from the experiences that you’ve had, and your ability to apply those lessons in new situations.

Leaders must have the ability to:
• integrate apparently unrelated pieces of information and ideas while making sense of them;
• develop innovative solutions from them;
• make decisions on the spot, even when they lack complete data;
• adapt, listen authentically and be open to sudden or unexpected change; and
• embrace the fact that other people’s ideas or situations are seldom “black” or “white” but more likely to be “grey.”

Korn Ferry International’s research identified seven distinct profiles from a sample of 1,245 individuals classified as highly learning agile, drawn from 25 companies across four global geographic regions. These were: problem solvers, thought leaders, trailblazers, champions, pillars, diplomats and energisers.

People who are learning agile seek out experiences to learn from; and enjoy complex problems and the challenges associated with new experiences because they have an interest in making sense of them. They perform better because they incorporate new skills into their repertoire. A person who is learning-agile has more lessons, more tools, and more solutions to draw on when faced with new business challenges or unfamiliar terrain.

However, regardless of which profile a leader belongs to, there are five dimensions that are crucial to all learning-agile leaders:

Mental agility: penetrating complex problems by critical thought and expanding the possibilities by making fresh connections;
People agility: being able to harness and multiply collective performance by understanding and relating to other people and the challenge of tough situations;
Change agility: being curious, dealing effectively with the uneasiness created by change and enjoying experimentation;
Results agility: inspiring teams to deliver excellent results in unique situations and building confidence in others by demonstrating a personal ”presence”; and
Self-awareness: being thoughtful, understanding one’s own capabilities and their impact on others.

If businesses develop their key talent across the above dimensions, they can activate enduring human and strategic potential. This becomes increasingly important when one considers that only 15% of the global workforce is classified as being highly learning agile.

There are some excellent resources available to assist businesses in the accurate measurement of learning agility and developing their leaders. Each consulting organisation offers its own proprietary assessment to measure learning/leadership agility.  

Businesses can then make sure that these individuals are the ones that move through the leadership pipeline.

Being open to experience is fundamental to learning. Those individuals who become defensive when challenged or given critical feedback tend to be low in learning agility. In contrast, the high learning agile individual actively seeks out feedback, processes it as constructive criticism and then adapts according to their new understanding of themselves, their situation and the problems they need to face.

When we consider the disruptive changes to traditional industries that lie ahead (in technology, autonomous cars, electric cars, insurance, real estate, electricity, 3D printing, health and longevity, Smart phones, agriculture, Bitcoin … ) If they have not already done so, businesses would be well advised to cultivate more agile leaders able to confront these challenges, which have the potential to wipe out whole industries.

Although our understanding of learning agility is growing, the research is still in its infancy. It is imperative for practitioners to continue to evolve our understanding of the concept and to seek better clarity about what learning agility is, how it can be measured and what learning individuals do that differentiates them from others. Ultimately this work will help them to assess, select and develop high potential talent more effectively within their organisations. Through a better understanding of learning-agile behaviour, individuals and businesses can unleash their leadership potential.

Susi Astengo is the Managing Director of CoachMatching.

Caroline Malherbe


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How to manage living annuities

Choosing between a living and a life annuity is a critical decision with potentially lifelong consequences, especially if the latter is chosen.

As the name implies, a life annuity (otherwise known as a guaranteed annuity) binds an individual to a service provider and predetermined income for the rest of their life.

A living annuity is more flexible, as this allows an individual to select their own investments and income. This approach does, however, involve additional risk and responsibility as it is up to the individual to secure an adequate income for life and avoid outliving their savings.

To help prevent people from making uninformed decisions in this regard, here are a few pointers on how to manage a living annuity:

Manage your time horizon(s):

How long do you expect to be reliant on this income? This big unknown involves the struggle of balancing the fear of outliving your savings against the greed of spending too little – a balancing act that becomes even harder if your savings must also provide for a partner. Life in retirement will not be a constant, and during your sixties and seventies an active lifestyle can be led, incurring travel and recreational expenses. You may thus require a higher, more flexible income initially, with a lower set income later on.  

Based on this, a living annuity could be converted to a guarenteed annuity at a later stage. The overriding uncertainty persists however: what will the cost of an adequate annuity be in the future and how much money can I afford to spend until then, to preserve the necessary capital?

One way to take the unknown out of the equation is to buy a deferred guaranteed annuity that only kicks in at a later age, say 75 or 80. This type of longevity insurance only pays out if an individual actually reaches that age, and is as a result much cheaper than converting to a guaranteed annuity later on. Yes, it comes at the cost of losing some of your initial savings, but in return you have access to a flexible income, the certainty of a fixed time horizon and the security of a known and guaranteed income beyond that.

Manage your asset mix

Retirement savings may have to last for a long time, possibly longer than you envisage. To do this, the capital needs to be given the chance to earn returns that outpace inflation over time. Historically, the share market  has been the most reliable way to build wealth, and in doing so will most likely afford you either a higher draw-down rate, or sustain the required income for longer.

Despite the many alternatives offered by the investment industry, your choice is essentially between a high, medium or low equity portfolio. Although time horizon and personal circumstances are key to this decision, personal risk tolerance should not be ignored. There is no point investing for the long-term with a high equity portfolio if the stress of market volatility sends you to an early grave.        

There are a host of different asset types, all with different risk and return profiles. In deciding on your mix, don’t view your living annuity portfolio in isolation, but in the context of your overall financial position and balance sheet.

Manage your emotions

While the share market promises to boost returns; it will also test your nerve, and it’s necessary to manage emotions during the inevitable volatility and periods of negative returns. Avoid making emotional decisions such as sudden changes in asset mix or policies, as these may result in losses being locked in, introducing the prospect of a permanently lower income thereafter.

Manage your fees

Few living annuity holders, and indeed few advisors, appreciate that savings are depleted not only by draw-downs, but also by fees.

Government estimates the industry average fee for living annuity investors at approximately 2.5% (plus VAT) of the investment balance, made up of 0.75% for advice, 0.25% for administration and 1.5% for investment management.

If you are drawing down on your living annuity at 10% pa, the savings will be depleted quickly, and paying 2,5% pa in fees won’t make matters much worse. However, if you are drawing down prudently, at 4% to 5% pa, paying an additional 2,5% in fees will equal half the retirement income, literally taking years off of your savings. In short, if you intend to make your savings last, you need to keep fees below 1% pa.

Manage your draw-down rate

Draw-down rate is addressed last because it needs to be considered in the context of your time horizon, asset mix and fees.  

The major risk associated with a living annuity is the unfortunate event that you outlive your savings. The longevity risk is therefore primarily a function of your income needs relative to savings. The lower this percentage, the lower the risk. The conventional approach is to set your desired income upfront. Financial planning tools can help you find your optimal sustainable draw-down rate, based on your estimated life-expectancy and other parameters.

Alternatively, you can set a rand income each year at policy anniversary date, according to how your portfolio has performed. This means you could draw more following years of strong returns, and less following periods of low or negative returns.

Whatever you decide, it is important to inform the annuity provider before your policy anniversary date, or else they will simply re-apply your last instruction.  

Will you manage?

Moving into the dissaving phase in life – spending more than earnings – is daunting for most people, even those who appear well funded. There is an instinctive fear in consuming capital, earning increasingly lower returns, and of a diminishing lifestyle.  

While there is little you can do to increase retirement savings once you have stopped working, a lot can be done to help savings last. But ultimately, the best way to control your anxiety around this is to stay informed, control what you can, and accept what you can’t.  

Steven Nathan is the CEO of 10X Investments.

Employment law tips for the mining sector

The Constitutional Court (in the matter of Association of Mineworkers and Construction Union (AMCU) and Others v the Chamber of Mines of South Africa and Others1) has recently handed down an important judgment related to employment law. The judgment is likely to be of particular interest to the mining sector and companies who have multiple operations.

In summary, the judgment:

– enforces the importance of the principle of majoritarianism enshrined in the Labour Relations Act; and
– once and for all, clarifies the definition of the term “workplace” as including, not just one – but all operations of each respective mining company.

By way of background, in 2013 following centralised wage negotiations at the Chamber a multi-year wage agreement was concluded between the mining companies and the majority trade union in the mining industry, the National Union of Mineworkers, as well as the smaller trade unions, Solidarity and UASA. The wage agreement was extended to AMCU members in terms of section 23(1)(d) of the Labour Relations Act.

AMCU objected to this extension and claimed that its members were prevented from going on strike in demand of higher wages. AMCU argued that because it had majority representation at certain individual mining operations the wage agreement could not be extended to the employees at these operations and that the definition of “workplace” is limited to individual operations and not the entirety of the mining companies’ respective operations. AMCU also challenged the constitutionality of section 23(1)(d) of the Labour Relations Act, claiming that it unfairly limited the right to strike.

The mining companies argued that the “workplace” included, within each company, the entirety of all its individual operations and that the wage agreement was validly extended to AMCU, a minority trade union. They also argued that the extension of the wage agreement was constitutionally valid and that the Labour Relations Act was premised on the application of the principle of majoritarianism.
The Constitutional Court held that the agreement was validly extended to AMCU members at the AMCU-majority mines‚ and the applicable provisions of the Labour Relations Act were constitutionally compliant. The court also accepted the mining companies’ interpretation of the term “workplace” as correct.
This is an important decision in so far as it enforces the importance of the principle of majoritarianism enshrined in the Labour Relations Act. The decision also usefully provides, once and for all, confirmation of the definition of the term “workplace”.
Johan Olivier and Prévot van der Merwe at Webber Wentzel.

1 Acting on behalf of Harmony Gold, AngloGold Ashanti and Sibanye.
2 In doing such the Constitutional Court also upheld the decision of the Labour Appeal Court in this matter.

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