HUMAN CAPITAL
Pioneer Foods provides employment to more than 12 000 employees. The fundamental belief of the Group is that the main asset of Pioneer Foods is the competent and committed people who drive business value.
As part of the roadmap to sustainability, the human capital function has the following key focus areas:
People
The good performance results achieved by Pioneer Foods amidst challenges in the macro-business environment can largely be attributed to the drive, passion, commitment and dedication of our people. They are indeed the creators of value and the power behind our brands.
The affinity that our employees have for the Group and their appreciation of the continuous improvements in our people practices was further illustrated in this year’s Deloitte Best Company results, wherein Pioneer Foods was voted as the10th Best Company To Work For in the Large Company Category.
Employment
The Group is aware of the unemployment challenges in South Africa, which tends to be exacerbated by the vast pool of unskilled and semi-skilled people. The Group’s approach to this challenge is two fold; provision of job opportunities wherever practically possible and skills development through various learning interventions which include inter alia; apprenticeships, learnerships, bursary schemes, in-service training, graduate internship programmes, adult basic education and training, functional training and leadership development programmes to enable employability of people.
The Pioneer Foods national geographic footprint enables the Group to provide employment opportunities in rural, peri-urban, urban and metropolitan areas.
For the year under review, 11 314 people were permanently employed by the Group’s wholly owned South African operations and 302 people were employed by the South African-based joint ventures, being Heinz Foods (SA) and Bowman Ingredients (SA). A total of 3 208 people were employed in the dedicated sales and merchandising structure, Pioneer Foods In-Store and a further 1 185 people were temporarily employed in both fixed-term and seasonal contract employment.
The total employee turnover rate of 9,8% is well below the current national average rate of 11,9%.
Employment Equity
The Group is committed to employment equity and to ensuring that all occupational levels broadly reflect the demographics of the South African economically active population. The executive management and the human capital committee of the board carry the accountability of enabling and monitoring employment equity progress in the Group.
For the year under review, three black appointments were made to the executive management, namely; Theo Hendrickse – Executive: Group Legal Services and Company Secretary, Geraldine Monareng – Executive: Africa Business, and Lulu Khumalo – Executive: Corporate Affairs and Sustainability. There were two departures from the executive management; Rosh Naidoo – Executive: Group Legal Services and Company Secretary resigned on 31 December 2009 and Tertius Swanepoel – Executive: Marketing retired 30 September 2010. Currently, the Group’s black representation in executive management has increased from 22% to 40%.
The table below reflects the consolidated Group employment equity report (EEA12) as at 30 September 2010:
| Designated | Non-designated | ||||||||||
| Occupational Levels | Male | Female | White Male | Foreign Nationals | TOTAL | ||||||
| A | C | I | A | C | I | W | W | Male | Female | ||
| Top management | 1 | 1 | 0 | 2 | 0 | 0 | 0 | 7 | 0 | 0 | 11 |
| Senior management | 7 | 17 | 7 | 3 | 5 | 0 | 26 | 136 | 1 | 0 | 202 |
| Professionally qualified and experienced specialists and mid-management | 68 | 116 | 48 | 12 | 49 | 11 | 107 | 310 | 0 | 1 | 722 |
| Skilled technical and academically qualified workers, junior management, supervisors, foremen, and superintendents | 524 | 500 | 92 | 174 | 386 | 49 | 324 | 338 | 1 | 0 | 2 388 |
| Semi-skilled and discretionary decision making | 1 805 | 767 | 65 | 188 | 256 | 21 | 48 | 24 | 2 | 0 | 3 176 |
| Unskilled and defined decision making | 2 618 | 523 | 23 | 803 | 845 | 0 | 0 | 3 | 0 | 0 | 4 815 |
| TOTAL PERMANENT | 5 023 | 1 924 | 235 | 1 182 | 1 541 | 81 | 505 | 818 | 4 | 1 | 11 314 |
| Non-permanent employees | 85 | 34 | 1 | 28 | 21 | 0 | 18 | 26 | 0 | 0 | 213 |
| GRAND TOTAL | 5 108 | 1 958 | 236 | 1 210 | 1 562 | 81 | 523 | 844 | 4 | 1 | 11 527 |
To complement efforts made in improving the top management demographic profile during this period, good progress has been made in improving the Group’s demographic profile at junior- and middle-management, as well as professional levels.
Employee Relations
The Group upholds the right to freedom of association, thus enabling employees to join a registered trade union or professional association of their choice. There are currently 18 registered trade unions in the Group’s various business operations with a collective membership of 5 389.
Organised labour constitutes approximately 73% of the bargaining unit and approximately 53% of the permanent employees.
Human dignity, tolerance, mutual respect, open communication, organisational sustainability and Group values enshrined in the Pioneer Foods Way form the bedrock of our approach to employee relations.
The 2010 wage negotiations in the various business bargaining forums were challenging, but despite this, were characterised by constructive exchanges between the negotiating parties.
Employee Development
People development is at the centre of our agenda in the Group as we seek to build capacity on the one hand, while creating skills pipeline and leadership bench-strength on the other hand. The Group has invested approximately R24 million in the various learning and development interventions and, of this amount, R15 million has been spent on black employees.
Employee Wellness
The awareness programme continues to equip employees with life skills knowledge and healthy lifestyle choices. Although the focus during the past reporting period has been on conflict resolution and work ethics, the goal was to approach the wellness of employees holistically. The HIV/Aids programme is addressed under the physical wellbeing module of the wellness agenda, but given the high prevalence rate in South Africa, renewed focus is needed to ensure an innovative awareness campaign that removes the stigma of living with HIV/Aids.
Organisational Development
Several initiatives are implemented across the business to embed the Pioneer Foods Way in the Group. These measures include but are not limited to the “Value of the Month”; focus groups on values and associated desired behaviours; spot-recognition awards for people nominated by fellow employees or superiors who have been observed to be living the values and 360° values assessment for the leadership and managers.
The Pioneer Foods Way is an embodiment of the company values, desired effective behaviours that underpin each value and approved practices on how to relate to the Group’s multi-stakeholders.
Remuneration
The human capital committee of the board approved the remuneration philosophy, strategy and policy of the Group.
The Company’s remuneration philosophy is anchored on the World at Work total rewards approach and comprises a unique combination of career growth opportunities and recognition, culture and values, compensation, benefits and work environment.
The remuneration strategy’s main aim is to enable the Group to develop, motivate, maintain and retain an internal human capital pipeline; and when necessary attract the requisite skills from the labour market to enable the business’ growth strategy.
The remuneration policy codifies the remuneration principles, processes, practices and procedures to give effect to the Group’s remuneration philosophy and strategy.
The pay mix may comprise a combination of guaranteed pay (total cost to company) and variable pay (short-term incentives and long-term incentives) depending on the level of seniority in the organisational hierarchy.
Guaranteed Pay
The guaranteed pay is generally referenced to the job family market median.
Short-term Incentive
The short-term incentive is essentially a performance bonus that is designed to incentivise management to drive business performance in order to increase shareholder value.
Annual performance bonuses are payable and are based on a combination of performance achieved in terms of profit growth and return on average net assets. Depending on seniority, this amount is limited to an amount that varies between 8,33% and 75% of an annual remuneration package.
An additional incentive, limited to one month’s remuneration package, is payable to executive management, general managers and senior functional managers based on the formula approved by the human capital committee, if pre-determined broad-based black economic empowerment goals are achieved.
Long-term Incentive
The purpose of the long-term incentive scheme is to align the management and shareholder interests and also to enable attraction and retention of key managers over the long-term (at least five years).
To ensure that the long-term incentive keeps employees productively engaged for the duration of this period, a proportion of share options and/or share appreciation rights vest to employees annually.
The human capital committee determines the share allocation to qualifying managers annually in terms of the Share Appreciation Rights scheme. The number of share appreciation rights allocated is based on the multiple of the total remuneration package per year that varies from half a year’s package up to three years’ package. The total value of share appreciation rights allocated takes into account the value of share options and share appreciation rights allocated during the last five years.
The last allocation under this scheme was made in February 2010 at R34,74. Share options and share appreciation rights that have been accepted may be traded at 20% per annum within a maximum period of ten years.
The total number of ordinary shares that may be transferred to employees under the share appreciation rights scheme is limited to 14,5 million shares and represented approximately 7,5% of the issued ordinary shares at the date of approval of the scheme by shareholders.