Employment Equity Act Section 6 - SARA Equal Pay for Work of Equal Value.pdf · Remuneration Policy Performance Management ... promote objective appraisal of jobs on the basis of

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Employment Equity Act Section 6

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The History… 1868

1868

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The current scenario...

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Some interesting facts

According to the 2015 World Economic Forum global gender gap report, it is

likely to take 118 years on average for women to receive equal pay to men.

http://www.iol.co.za/business/news/negotiation-skills-essential-for-closing-pay-gap-2035012

In South Africa, this gap in

earnings is estimated to be

between 15 and 17%. The

implication is that a woman

would need to work two

months longer than her

male counterpart to earn as

much in the same role.

















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Reminder: Equal Pay for Work of Equal Value

Employment Equity Amendment Act 47 of 2013

(Effective 1 August 2014)

Section 6

Employment Equity Regulations 1 August 2014

(Effective from date of publication)

Criteria for assessment

Factors of differentiation

Code of Good Practice 1 June 2015

Guidelines on implementing:

• criteria for assessment,

• differentiators,

• comparing male and female dominated jobs,

process for evaluating equal pay/remuneration for work of equal value

Overview of the Legislation

6 6

unfair discrimination

Section 6(1): constituent elements

No person may unfairly discriminate directly or

Indirectly against an employee in any employment

policy or practice on one or more grounds

Including race, gender amongst others or

on any other arbitrary or unlisted

ground e.g depression or human dignity or

physical appearance e.g blonde hair

Reminder - Arbitrary and Listed grounds

7 7

Path to Follow

Plan

Corrective Actions and Timing

Audit

Pay differences Conditions of Employment Skills

Justifiable Differences

Remuneration Policy Performance Management

Foundation

Job Evaluation Terms and Conditions of

Employment HR Procedures

8 8

The ILO Convention, which is echoed in the Code, focuses on

gender based discrimination in terms of job evaluation.

The Convention requires that measures should be taken in order to

promote objective appraisal of jobs on the basis of the work to

be performed.

Responsibility for finance, people, material;

Skills and qualifications (includes prior learning and experience);

Effort (physical, mental, emotional);

Conditions under which work is performed (physical environment, psychological conditions, geographic location);

Any other factor indicating value of the work

Job Evaluation : Legal Requirements

9 9

Job Profiles

Typical Content Legal Requirement

Purpose Statement

Qualifications Skills and qualifications (includes prior

learning and experience);

Competencies

Outputs Responsibility for finance, people, material;

Budget

Biographical Issues

Conditions under which work is performed

(physical environment, psychological

conditions, geographic location);

Effort (physical, mental, emotional);

Any other factor indicating value of the

work

10 10

Policy

Grading system

Patterson

Peromnes

Hay

Methodology

Extraordinary conditions

Grade Jobs

Grading Committees

Consistency across the organisation

Removal of bias perceptions

Job Evaluation

11 11

Path to Follow

Plan


Audit




Foundation



12 12

Attach benefits:

Conditional benefits

Night shift allowances

Acting Allowances

Transport

Overtime

Commission

Job Requirements

Car Allowance

Petrol allowance

Terms and Conditions of Employment

Is the benefit

• a requirement of the job?

• Defensible

• Applicable to all in the role

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HR Processes / Procedures

recruitment procedures, advertising and selection criteria

appointments and the appointment process

job assignments

the working environment and facilities

training and development

promotion

transfer

Demotion

Incapacity

disciplinary measures

But it is not just Remuneration and benefits…

Monitoring mechanisms

• HR sign off

• Committee sign off

• EE Committee

14 14

Path to Follow

Plan


Audit




Foundation



15 15


NOT unfair discrimination if the differentiation in pay/remuneration is not based on a

listed or arbitrary ground.

Must be fair and rational and based on any one or more of the following grounds:

Seniority or length of service;

Qualifications

Ability,

Competence or potential above the minimum acceptable levels required for the

performance of the job

Performance,

Quantity or quality of work, provided that employees are equally subject to the

employer’s performance evaluation system, and that the performance evaluation

system is consistently applied;

Demotion as a result of organisational restructuring or for any other legitimate

reason without a reduction in pay/remuneration and fixing the employee’s salary

at this level until the pay/remuneration of employees in the same job category

reaches this level;

Employed temporarily in a position for purposes of gaining experience or training

and as a result receives different pay/remuneration or enjoys different terms and

conditions of employment;

Shortage of relevant skill in a particular job classification; and

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Justifiable Differences Remuneration Policy

Remuneration in your

Organisation

Purpose

• Attraction

• Retention

Scarce Skills

• Audit

• Market

Philosophy

• Prior learning

• Performance

• Recognition

Scope

• Equal

• Varying Benefits

Guiding Principles

• Fair & Equitable

• Reinforce Teamwork

Guaranteed Vs Variable Pay

Benefits

17 17


Guaranteed Pay

Job Complexity Measurement

Job evaluation tools

Company’s market position – percentile

Pay scales

Pay progression Principles

Underpinning philosophy

Skill

Effort

Conditions

Individual Performance

Team Performance

Bands per Job Function

Bargaining councils / Unions

Remuneration Considerations

18 18


Variable Pay

Short Term

Long Term

Underpinning philosophy

Self funding vs Budget

Retention or Attraction

Rules

Measurement Criteria

Timing

Eligibility

Levels in the organisation

Job Function


19 19


Benefits

Guiding Principles

For the majority

Legislative adherence

Fixed vs variable benefits

Flexilibity

Structure

Total Package

Add on

Level Dependent


20 20

Path to Follow

Plan


Audit




Foundation



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22 22

PERFORMANCE MANAGEMENT THE MEDIA IS STILL PREACHING ABOUT PERFORMANCE

MANAGEMENT

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CEB Research 2016

Based on 10 000 respondents in 18 countries (CEB, 2016),

the business case for throwing out ratings fails to hold for

most

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Initial Euphoria Does Not Last

Typical Satisfaction with Performance Management and Pay Over Time When

Removing Ratings

Illustrative Satisfaction with Performance Management Over Time

n = 9,686.

Source: CEB 2016 Pay for Performance Employee Survey.

Initial Euphoria: “There was an initial huge boost in morale. Employees felt good that we were removing the part of the performance management process they thought they hated most.”

Director of HR

Technology Industry

Reality Sets In: “Our performance and pay systems began to look like a black box. Without the visible symbol of a rating, employees didn’t understand the processes or the philosophies behind them.”

HR VP

Health Care Industry

1 4 2 3

Performance Review Cyc le Af ter Removing

Rat ings

Em

plo

yee P

erc

eptio

ns

Positive

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ceb g lo b a l . c o m © 2016 CEB. All rights reserved. CLC5952516SYN

Negative

http://www.executiveboard.com/


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Lack of Ratings Impact on Employee

Engagementa

Average Employee Engagement Score

Reality: Managers Struggle to

Engage Employees

Expectation 1: Increased Employee Engagement

6

%

Ratings No Ratings n = 9,686. Source: CEB 2016 Pay for Performance Employee Survey. a Employee engagement scores comprise two batteries that represent employees’ involvement in their work and intent to stay at their organization.

Note: The reduction in employee engagement is statistically significant p < 0.001.

Advice for Organizations

Without Ratings

■ Communicate new performance

management philosophy and

processes to employees so they

understand what to expect and

how it is intended to benefit

them.

■ Identify new and different

ways to recognize high

performance outside the

traditional performance

management process

to improve employee

engagement.

“Employees felt that having

performance reviews without the

rating was like g o i n g out to a nice dinner but without steak. You got the sides but

not the main meal.”

HR Leader

Telecommunications

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https://www.cebglobal.com/member/corporate-leadership-council/research/report/16/five-lessons-for-eliminating-performance-ratings.html.html











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Manager Time Spent on Performance Management

Activitiesa Average Hours (and Proportional Time Spent) on

Performance Management per Year, per Direct Report

The Bottom Line

In the absence of ratings, managers spend less time on performance

management activities. But they do not shift that extra time toward

ongoing, informal performance conversations.

Formal Performance Management Activities Informal Performance Conversations

n = 9,686.

Source: CEB 2016 Pay for Performance Employee Survey. a Formal performance management activities include goal setting, performance evaluation and calibration, documenting employee performance, and preparing for performance conversations. To calculate time spent on informal conversations per year, manager conversation sessions were estimated to last one hour.

Note: The reduction in time spent on performance management activities is statistically significant p < 0.001.

0%

50

25

7 Hours

(16%)

43 Hours

Ratings No Ratings

6 Hours

(20%)

30 Hours

36 Hours

(84%) 24 Hours

( 8 0 % )

Advice for

Organizations Without

Ratings

■ Set expectations for the

timing and frequency of

performance conversations

to encourage managers and

employees to have regular

discussions.

■ Allow employees to own

performance

conversations so that they

can customize discussions

and share accountability

with managers.

Reality: Managers Spend Less Time on Informal

Conversations Without Ratings

Expectation 2: Increased Performance Management Time

Spend

10 ceb g lo b a l . c o m © 2016 CEB. All rights reserved. CLC5952516SYN

https://www.cebglobal.com/member/corporate-leadership-council/research/case_study/14/mitchell-employee-owned-performance-conversations.html









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14%

Lack of Ratings Reduces Employee Perceptions of

Manager Conversation Qualitya

Average Quality of Manager Conversation Score

1 How They Per formed in the Past Performance on assignments, contributions to organizational success,

impact on customers or partners

How to Improve Future Per formance Developmental

action steps, future performance objectives, work

priorities, clarity of expectations

2

n = 10,531.

Source: CEB 2014 Enterprise Contribution Workforce Survey. a This calculation was completed using the Quality of Manager Conversation Score, which represents how effective managers are at helping employees understand their performance in the past and how they can improve performance and development in the future.

Note: The reduction in manager conversation quality is statistically significant p < 0.001.

Expectation 3: Improved Manager Conversations Quality

Reality: Manager Conversation

Quality Decreases Without Ratings

Ratings No Ratings

Qual i ty of Manager Conversat ion Score Def ined


Without Ratings

■ Measure the quality,

not just occurrence, of

manager

conversations through

existing employee

surveys

or other feedback

mechanisms to

focus managers on

conversation

quality.

■ Train managers to

send clear

messages

about performance and

development without

ratings by providing

concrete evidence of

how the employee

is performing

and progressing.

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cebglobal.com © 2016 CEB.

All rights

reserved. CLC5952516S

YN

https://www.cebglobal.com/member/corporate-leadership-council/research/case_study/14/cargill-everyday-performance-management.html









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Reality: Employee Perceptions of Pay Differentiation

Decrease Without Ratings Perceptions of Pay Differentiation Decrease Without

Ratings

Average Perceptions of Pay Differentiationa

“When we removed ratings,

employees seemed to

stop believing we were

differentiating pay at all. The

rating seemed to symbolize to

employees that ‘pay for

performance’ was occurring in

practice.”

VP of TR

Health Care Industry

n = 9,686.

Source: CEB 2016 Pay for Performance Employee Survey. a Perceptions of pay differentiation represents a drop in the number of employees who believe their organization differentiates pay.

Note: The reduction in pay perceptions is statistically significant p < 0.001.


Without Ratings

■ Guide managers to make pay

decisions by using simple

criteria such as performance

against role, goal achievement,

and role criticality to identify

employees who should

receive the highest awards.

■ Connect a summary of the

employee’s contributions to

their pay decision, and provide

organizational context to show

employees how pay decisions

were made fairly.

8%

Expectation 4: Increased Accuracy of Pay

Decisions

Ratings

28 ceb g lo b a l . c o m © 2016 CEB. All rights reserved. CLC5952516SYN

No Ratings

The Bottom Line

While many organizations report that pay differentiation

increased when they removed ratings, employees believe there is

less differentiation because managers struggle to explain how pay

decisions are made and linked to individual contributions.

https://www.cebglobal.com/member/corporate-leadership-council/research/report/15/five-lessons-for-managing-pay-without-performance-ratings.html













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Greater Negative Impact for High Performers

Without Ratings The Negative Impact of a Lack of Ratings Is

More Pronounced for High Performersa

n = 9,686; 10,531.

Source: CEB 2016 Pay for Performance Employee Survey; CEB 2014 Enterprise Contribution Workforce Survey.

a High-performing employees were in the top quartile on an index that measured performance against individual tasks and collective contributions.

“High performers are the ones who like ratings the most. The rating is a form of recognit ion for the

work they are doing , and we are afraid that whatever we replace that label with won’t have the same

effect.”

Senior HR Director

Pharmaceuticals

Industry

1 Manager Time Spend: High performers

are less satisfied with manager time spent

on performance management.

2 Manager Conversation Quality: High

performers are less satisfied with

manager conversations.

3 Reward Differentiation: High performers

are less likely to feel that they are rewarded

appropriately for their contributions.

n = 5,004.

Source: CEB 2016 Pay for Performance Employee Survey. b This calculation was completed using the Quality of Manager Conversation Score, which represents how effective managers are at helping employees understand their performance in the past and how they can improve performance and development in the future.

12%

Impact of Lack of Ratings on Employee

Satisfaction with Manager Conversations

by Performance Level

Average Quality of Manager

Conversation Scoreb

With Ratings Without Ratings

28%

High Low

Employee Per formance

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cebglobal.com © 2016 CEB.

All rights

reserved. CLC5952516S

YN




30 30

Conclusion:

Many organizations have received

positive feedback after eliminating

performance ratings. However,

the initial positive reaction tends

to fade and the key performance

outcomes that organizations

expected to increase actually suffer.

Although a handful of managers are

more effective without ratings, most

organizations will find it too difficult

to get their managers to the level

needed to make the change worth

the significant investment.

Rather than focusing on the

ratings debate, organizations

should improve their performance

management and reward

practices.

Business Case Fails to

Hold for Most

Success Without

Ratings Requires

Significant Investment

Focus on Other Changes

Besides Removing Ratings

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Alternatives…

“Democracy is the worst form of government,”

Winston Churchill reminded us in 1947, “except

for all those other forms that have been tried from

time to time.”

The same is true for performance evaluations:

They’re far from perfect, but they’re also far better

than the alternatives.

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Rated as important

Generation Y (< 31) Generation X (32–47) Baby Boomers and Veterans (47+)

1 Performance management and recognition (M = 4.10)

Performance management and recognition (M = 4.15)

Compensation (M = 4.04)

2 Development and career opportunities (M = 4.09)

Development and career opportunities (M = 4.02)

Performance management and recognition (M = 3.86)

3 Benefits and safety (M = 3.91) Compensation (M = 4.00) Benefits and safety (M = 3.74)

4 Compensation (M = 3.81) Benefits and safety (M = 3.85) Development and career opportunities (M = 3.59)

5 Work-life balance (M = 3.68) Communication work enabler (M = 3.51)

Communication work enabler (M = 3.33)

6 Communication work enabler (M = 3.13)

Work-life balance (M = 3.50) Work-life balance (M = 2.96)

7 Life convenience (M = 2.61) Life convenience (M = 2.39) Life convenience (M = 2.04)

SA Research

UP Masters Research (n = 303)

33 33

Different Types of Performance

Management Systems

Performance Management

Systems

Traditional

360°

Outcomes Based

Balanced Scorecard

34 34

Traditional

Several factors standard for everyone which are

rated on a rating scale e.g. 1 to 10

Volume of work

Quality and accountability

Relationship with other staff members

Relationship with company

Knowledge and skills

Reliability and punctuality

Attitude to the job

Achieving the objectives

35 35

360° Feedback

1. What is your relationship to the individual you are rating?

Self…………………... “I am evaluating myself”

Manager……………. “I am evaluating the employee as his/her manager”

Colleague………….. “I am evaluating a colleague within my department”

Direct Report….. …..“I am evaluating my manager”

Internal customer… “I am evaluating a colleague/team member outside

my department”

Other…………………“I am evaluating a person who does not fit in the

above group e.g. external customer”

36 36

Balanced Scorecard - Examples

Financial Customer

Operating Income Growth

Same Store Sales Growth

Inventory Turns

Expense / Sales Growth Ratio

Net Profit

Shareholder returns

Frequency of Purchase

Units Per Transaction

Transaction Size

Customer Feedback

Length of time

Internal Processes Learning & Growth

Category market Share

Category Margin

Sales

Quality / Returns

Out of Stock

Management processes and procedures

IT processes

Employee climate Survey

Turnover

Strategic Skill Coverage

Systems vs. Plan

New products and services

Innovation

37 37

Balanced Scorecard - Learning And Growth Perspective

Objectives Measures Targets Responsibility

Create new climate, new ethos and changed attitudes –

based on the core values of integrity, exceptional service through attention to detail, innovative spirit, competitive and embracing a global mindset

Staff attitude survey

New initiatives from staff (# suggested and implemented)

Employee turnover

Understand and minimise reasons for loss of key staff

Organisational structures in place and management & staff appointed (complete by DATE)

Staff attitude survey - DATE

Budget responsibility – DATE

Progress on Black Employment Equity (BEE) initiative

Implement effective HR Performance Measurement system

Policies implemented & system operating

HR performance measurement system introduced by DATE

All staff appraised by DATES (Quarterly performance reviews with annual appraisal)

Establish separate defined HR function

New Dept operating Fully functional – DATE

HR policy audit and plan by DATE

HR policy published and available on Intranet by DATE

38 38

Output Based Role Of Goals

1. Individual performance goals link what individuals do every day

to the larger goals and values of the organisation

2. Goals help connect individuals, teams and the organisation with

their customers

3. Goals can be used as a communication tool

4. Goals can assist individuals in the self management process

5. Goals help create the future

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If a teenager sees his job as “watering the garden” (an activity), he will probably

focus solely on the act of watering. On the other hand, if he is responsible for

producing “a healthy garden” (an output), he’ll be more alert for cues from the

garden about what it needs. He will do what’s necessary for the garden’s health,

whether it be weeding, fertilising, watering, irrigating, or eliminating insects.

If a manager sees her job as “training people” (an activity), she may be satisfied to

send them to classes. If, on the other hand, her responsibility is to produce

“managerial candidates” (an output), she’ll be concerned that her people actually

acquire the knowledge and skills that will make them good candidates. This approach

may require developing new training materials, providing developmental

opportunities on the job, finding self-study materials, sending people to classes,

testing competencies, coaching or any number of methods that may produce the final

output: managerial candidates.

Output Based

Outputs Not Activities…

40 40

OUTPUTS Quality Measures or Weighting Customer

Requirements Indicators

Outputs for the Year

Performance Plan

41 41

Recommendations

1. Keep things simple and not bureaucratic

2. Involve staff especially line managers whose “buy-in” is critical

3. Gain support from those at top of the organisation

4. Communicate and consult with staff thoroughly and manage expectations

5. Train those involved in decision making and those conduct the appraisal

6. Align performance management with other aspects of HR as well as

business strategy

7. Regularly monitor, evaluate make changes as necessary

8. Ensure that you comply with section 6 of the Employment Equity Act

42 42

Standard / Typical

4-6 ratings

Meeting or exceeding an expectation

Rating Scales

Rating

5 Outstanding

4 Exceeds Expectations

3 Meets Expectations

2 Needs Improvement

1 Unacceptable

43 43

Goal Status Scale

Rating Scales cont.

Rating

Goal Achieved (3): All milestones and success measures have

been achieved

Active Goal (1): The goal is still in progress, some milestones

may have been achieved

Goal Not Met (0): Timeframe for Goal has been met; however,

some or all milestones and success

measures have not been met

Goal Deferred (-): For timing or business reasons, this goal has

been deferred

44 44

Development Item Status Scale

May appeal to managers as it is a “score”

Employees may find it more robust?

Allows for more differentiation between employees

Could look at this and then work out an average

Link an average back to a rating of 1-5

Rating Scales cont.

Rating

100% Complete

75% to 99% Complete

50% to 74% Complete

Less than 50% Completed

Not Started

45 45

Observation Frequency

For soft skills

Rating Scales cont.

Rating

Consistently

Observed

This competency/skill is observed on a

constant basis; everyone in contact with this

person would observe excellence in this area

Observed This competency/skill is observed, please

continue to focus on it so that it is observed constantly without exception

Observed

Sometimes

The competency/skill is observed on an

infrequent basis, there is a clear development

opportunity here

Seldom Observed Needs Immediate Improvement

46 46

Facebook

We translate our ratings directly into compensation. Notably,

this process involves a formula, so managers have no

discretion in compensation decisions. It’s fair: If you excel,

your bonus multiplier rises according to a predetermined

equation, not someone’s opinion.

This focuses managers on what they can accurately assess

and allows the company to manage pay using compensation

expertise. It’s also a huge time-saver. When other companies

eliminate performance evaluations, they still spend many

hours agonizing over compensation decisions. For us, time

invested in performance reviews is time saved on

compensation.

47 47

Conditions Necessary To Link Pay To

Performance

Performance dimensions must be readily measured

All critical performance dimensions must be captured by the

system and standards set for each

Performance must be important to the employee and

employer/manager

Performance must be under employee’s direct control

Monetary incentives must be compatible with other outcomes

important to the employee

Monetary level and merit differences must be meaningful to

employee

System must be affordable

Relationship between manager and employee must be one of

mutual respect, trust, openness, effective communication

48 48

Path to Follow

Plan


Audit




Foundation



49 49

What is the Status Quo

50 50

Audit

Identify the scope of the audit – part or whole organisation

Compare the jobs that are the graded the same or of similar value

Include a comparison on female-dominated jobs with male-dominated jobs

Evaluate against pay and benefits

By race

By gender

By scarce skill

By performance level

Highlight differences

Report on those based on arbitrary grounds

Identify acceptable differences based on agreed principles for differentiation.

51 51

Path to Follow

Plan


Audit




Foundation



52 52

The Legislation

“Where employers find that there is differentiation between

employees and that such differentiation cannot be justified in terms of

the reasons provided in Regulation 7,

the employer should determine how to address the inequalities

without reducing the remuneration of the other employees

to bring about equal pay; and

review and monitor the above process annually”

The Plan

53 53

The Plan

Factors to consider

Highlight differences by job / by grade / by level / by function

Quantify the differences

Look for “quick fixes”

Small pay increases

Higher paid employees on the incorrect grades

Implement changes

Formulate a plan for correction

Higher than average increases over a period of time

Interim increases

Review annually

Institute monitoring measures for:

New appointments

Promotions

54 54

Pay parity explained

55 55

56 56

Thank you

Ngiyabonga

Dankie

Ngiyathokoza

Ke a leboga

Siyabonga

Inkomu

Ndo livhuwa

Enkosi

Documents

Employment Equity Act Section 6 - SARA Equal Pay for Work of Equal Value.pdf · Remuneration Policy Performance Management ... promote objective appraisal of jobs on the basis of