Term 1 : Topic 1 Macro environment: impact of recent legislation on business


Skills Development Act (SDA)

Nature of The SDA

  • The Skills Development Act (SDA) (N0. 97 of 1998) was developed to redress the need of skillful workers.
  • The development of SDA was to enforce a workforce, which leads to improved productivity, increased employment and therefore social development.

Purpose of the SDA

  • Improves productivity, by developing and improving workers skills.
  • Ensures quality training in the workplace.
  • Encourages businesses to improve the skills of their workers.
  • Encourages employees to participate in leaderships and other training programmmes
  • Improves the chances of previously disadvantaged people to find work.

SETAs (Sectors Education and Training Authorities)

SETAs Are organisations that were established for each of South Africa's economic sectors to organise that sector's education and training programmmes.

National skills Authority

Advises the Department of Labour on national skills development policy and strategy and liaises with the SETAs.

Role/function of SETAs in Skills development

  • Approves skills plans and annual training reports
  • Allocates grants to companies
  • Ensures that workplace have skills programmes to improve skills of current employees
  • Promotes Learnership
  • Registers learnership agreements
  • Provides support for the development of training materials
  • Communicates with National Skills Authority

Impact of SETAs on a business

  • More developed skills of the South African labour force.
  • Encourages employers to use the workforce as an active learning environmnet.
  • Encourages workers to participate in learnership.
  • Ensure quality education and training in the workplace.
  • Promote job creation for yourself because skills are learnt.
Skills Development Levy (SDL)

The Skills development levy (SDL) is a tax that businesses pay that goes to the SETAs and the National Skills Fund for the purpose of skills development

  • All business with an annual payroll of over R500 000 must pay a 1% Skills Development Levy of the total amount spent on salaries
  • The business may then claim back up to 60% of the skills development levy for training purpose, provided that the training has been approved
  • A business is allowed to claim 15% if it submits a workplace skills plan (WSP) and 45% if its submits an annual training report (ATR)
  • Businesses not paying this tax may not offer learnerships nor claim grants
  • 80% of the amount received through the Skills development levies goes to different SETAs and 20% goes to the National Skills Fund.
Impact of the SDA on Employers/Businesses and Employees

Employers/Businesses

Positive impact
  • Increases the number of skilled employees in the workplace.
  • Improves productivity in the workplace.
  • Improves the competitivesness of business.
  • Increase investment in education and training in the labour market.
  • Improves the return on investment in education and training.
Negative impact
  • The SDA process is lenghty and requires a large amount of paperwork and administration. Not Cost effective.
  • Many business may not support this government initiative.
  • Implementation of the SDA can be difficult to monitor and control.
  • Employees are expected to attend learnerships during work hours which could affect the prodction process/productivity
  • It can be costly for businesses to employ a person to implement, manage and control learnerships

Employees

Positive impact
  • Higher skilled employees have a better standard of living.
  • Higher skilled employees may get promoted to higher positions.
  • Improves work prospects and labour mobility.
  • Increases self-esteem when learnerships are completed.
  • Employees have the opportunity to acquire new skills/qualifications/work experience.
Negative impact
  • Some employees may not be interested in skills development and may think its a waste of time.
  • Some employees may gain high stress levels because they are required to learn and work.
  • Employees may not be credited by SETA when attending certain workshops.
  • Some employees may acquire skills which won't benefit them in the futures.

Implications of the SDA for Large and small businesses

  • All businesses can gain advantage from the skills development initiatives.
  • A motivated and well-trained labour force adds value to the business
  • To create a learnership, both parties must sign a formal learnership agreement.
  • Employers can be fined or even sent to jail.

Compliance with the SDA

Ways to comply with Skills Development Acts (SDA)
  • Businesses should register with SARS.
  • Register employees with SARS to be able to claim back after training.
  • Skills development levy must be paid.
  • Provide all employees with the opportunity to improve their skills.
Non-compliance Employers can be fined or given a jail sentence of up to a year if they:
  • Neglect to apply for registration with the levies in mind
  • Provide false information in a statement
  • Neglect to pay levies
  • Neglect to submit documents

National Skills Development Strategy (NSDS)

The National Skills Development Strategy is a South African policy that focuses on addressing past imbalances through skills development.

The National Skills Development Strategy:
  • Establishes partnerships between employers, the SETAs and training institutions.
  • Promotes good quality training in the workplace.
  • Supports economic growth through job creation and poverty relief.
  • Promotes and support small .
  • Promotes productive citizenship.

The Human Resource Development Strategy:

  • Addresses skills shortages in the South African workforce
  • Improves the supply of skills
  • Increases employee participation in lifelong learning
  • Supports employment growth through innovation and research

Natural of the LRA

  • The Labour Relations Act (LRA) (No. 66 of 1995) provides a framework for sound labour relations and it protects employees against unfair labour practices.

Purpose of the LRA

  • Makes provision for collective bargaining.
  • Makes provision for the resolution of labour disputes.
  • Makes provision for trade unions and explains the role of trade unions.
  • Promotes workers participation in decision-making through the establishment of workplace forum.
  • Regulates the right to strike and the right to lockouts in accordance with the constitution.

Important definiations for LRA

  • Collective bargaining is when employees together with their employer negotiate and bargain over aspects conerning their jobs and their workplace.
  • A trade union is an organisation formed by workers to protect their interets through collective bargaining.
  • An employer's organisationis an organisation that protects the rights of employers, and makes it possible for employers in the same industry to work together and negotiate with trade unions.
  • The Commission for Conciliation, Mediation and Arbitration (CCMA) is an independent dispute-resolution body that attempts to promote co-operation and industrial peace.
  • The Labour Court adjudicates matters relating to labour disputes that cannot be resolved by the CCMA.

Provisions of the LRA

According to this Act, a strike is legal if:

  • the dispute has been referred to the CCMA or a relevant council
  • 30 days have passed since the dispute was referred to this body
  • a certificate has been issued stating that the dispute remains unresolved
  • the employees are providing an essential or maintenance service
  • the employees are bond by an agreement or an arbitration decision

Rights of Employers and employees

    Employers have the right to:

  • particiate in the founding of an employers' organisation, to join the organisation or to participate in any lawful activity organisation.
  • dicipline/dismiss/retrench employees according to legal procedures
  • not pay an employee who participated in a protected strike for service or work that have not been paerformed during the strike
  • implement a lawful lock-out whereby employees are not permitted to enter the workplace before a dispute has been settled

Employees have the right to:

  • be treated fairly and have the right to fair processes of labour disputes settlement
  • particiate in the founding of trade union and to join a union
  • request a trade union representative to assist or represent them with regard to a grievance
  • take a reasonable amount of time off work, with pay, yo perform trade union duties
  • particiate in a protected(legal) strike

Impact of LRA on employers/businesses

    Positive impact

  • Promotes a healthy relationship between the employer and employees
  • Provides protection for both employer and employees
  • Provides protection for employers who embark on lawful lock-outs
  • Provides specific guidelines to employers on correct and fair dismissal procedures.
  • Employers and employees have guidelines regarding correct and fair dismissal procedures

    Negative impact

  • labour disputes and bargaining council processes become time-consuming and can lead to a decrease in productivity in businesses
  • Employers may not dismiss employees at will, as procedures have to be followed
  • Strike actions always results in loss of production for which employers may not claim
  • Some businesses may feel that the LRA gives employees to much power as it creates lengthy procedures
  • labour consultants may be employed to deal with labour related issues, which may be costly.

Compliance with the LRA

    Non-compliance actions

    The following conduct is considered discriminatory

  • Unfair/Illegal dismissal of employees
  • Concellation of employees' contracts by a new owner/employer when a business is sold/transferred
  • Refusing the formation/recognition of workplace forums
  • Forcing employees to give up trade union membership
  • Preventing employees from joining trade unions
  • Not allowing employees to take part in legal strikes
  • Dismissal of employees participating in a legal strike

Dismissal is unfair if:

  • an employer cannot prove a worker's misbehaviour or inability
  • a worker is forced to accept a demand
  • a worker is pregnant or plans to become pregnant
  • a worker planned to participate, or participated in a lawful strike or portest
  • National Defence Force
  • National Intelligence Agency
  • South African Secret Service.

Trade unions are recognized under the 1996 Constitution of South Africa, which provides for the right to join trade unions, and for unions to collectively bargain and strike.

Three institutions have been created to reduce industrial relations conflict, and eliminate unfair discrimination and redress past discrimination in the workplace: the National Economic Development and Labour Council (NEDLAC), the Labour Court, and the Council for Conciliation, Mediation and Arbitration (CCMA).

For most businesses the fact that the LRA prescribes rules on how to dismiss employees makes it a very important. However, the purpose of the act covers more than that – it promotes economic development, social justice, labour peace and the democratisation of the workplace through:

Freedom of association

Freedom of association means the right to come together with other individuals and collectively express, promote, pursue and defend common interests. This includes the right to join a union.

Organisational rights

The Act allows trade unions to gain access to the business’ premises to recruit members and hold meetings.

Bargaining and statutory councils

Bargaining councils are formed by registered trade unions and employers’ organisations. They deal with collective agreements, attempt to solve labour disputes, and make proposals on labour policies and laws. As well, they may administer pension funds, sick pay, unemployment and training schemes, and other such benefits for their members.

Commission for Conciliation, Mediation and Arbitration

The Commission for Conciliation, Mediation and Arbitration (CCMA) is a dispute resolution body established in terms of the Labour Relations Act, 66 of 1995 (LRA). It is an independent body, does not belong to and is not controlled by any political party, trade union or business.

The LRA makes provision for disputes that cannot be solved in the workplace.

If this process fails the dispute is referred to the Labour Court.

The Labour Court and the Labour Appeal Court

The Labour Court has the same status as a high court. The Labour Court adjudicates matters relating to labour disputes. Appeals are made to the Labour Appeal Court.

Strikes and lock-outs

If a strike does not comply with the provisions of the LRA, the Labour Court can grant an order to restrain any person from participating in such action. The Labour Court may also order payment to the employer for losses sustained as a result of the illegal strike or lockout.

Workplace forums

The main aim of workplace forums is to solve labour-related problems by establishing cooperative relationships between all workers (also non-trade union workers) and the employer. A workplace forum may be established in a business with more than 100 employees. Only registered trade unions may apply to the CCMA for the establishment of a workplace forum.

Unfair dismissal

    Dismissal is unfair if:

    • A worker intended to or did take part in or supported a strike or protest
    • A worker refused to do the work of a striking or locked out co-worker, unless his refusal will endanger life or health
    • A worker is forced to accept a demand
    • A worker intended to or did take action against an employer by –
      • Exercising a right; or
      • Taking part in proceedings; or
    • A worker is pregnant or intends to be pregnant
    • An employer discriminated against a worker because of race, gender, sex, ethnic or social origin, colour, sexual orientation, age, disability, religion, conscience, belief, political opinion, culture, language, marital status or family responsibility
    • An employer cannot prove -
      • A worker’s misconduct or inability
      • That the employer’s operational needs are valid
      • That the dismissal procedure was fair.

    Implications for businesses

    The LRA follows the principle of collective bargaining and puts structures in place with which disputes in the workplace can be settled. This has advantages for both employers and employees and promotes a healthy relationship between them. Non-compliance with LRA rules and regulations also poses a very real risk to employers because there is an effective and inexpensive (free) option to employees in the form of the CCMA and the Department of Labour.

    CCMA fees and costs

    When asked by employees, employers, or other interested parties for advice or training te CCMA will assist. In 2012 the fee was between R1 650,00 and R1 835,00 for each day or part of a day.


Natural of the BCEA

The Basic Conditions of Employment Act (BCEA) (No. 75 of 1997) outlines an employee's right regards work time, leave, appointment, remuneration and termination of employment, in order words, the minimum conditions required for employment.

Purpose of the BCEA

  • Ensures that working conditions comply with the minimum requirments
  • Removes ineffective regulation of minimum conditions of employment
  • Promotes flexibility
  • Promotes economic development and social jusitice
  • Regulates the right to fair labour practices

Provisions of the BCEA

    Work Time
  • Normal hours

    • Workers should work only 9 hours per day in a 5 day week or
    • 8 hours per day in a 6 day week
  • Lunch break

    • Workers must get a break of 60 minutes after 5 hours of work.
  • Overtime

    • Only by agreement; maximum 10 hours/week; paid 1,5 times the normal wage
  • Sundays and Public holidays

    • Workers are paid twice the normal wage
    Leave
  • Annual leave

    • Workers are entitled to 21 consective days' annual leave per year (1 day for every 17 days of work)
  • Sick leave

    • 6 weeks' paid sick leave in a period of 36 months
    • A medical cerficate may be required before paying an employee who is absent for more than two consective days
  • Maternity leave

    • A pregnant employee is entitled to four consective months leave.
  • Family responsibility leave

    • 3 to 5 days paid leave per year

Impact of the BCEA on Employers/Businesses and Employee

Employers/Businesses

    Positive impact

  • Promotes equal opportunity and fair treatment in employment
  • Promotes fair treatment of employees in business
  • Creates a framework of acceptable employment
  • Encourages consultation between the employer and employees
  • Prevents unfair discrimination, directly or indirectly against employees in and employment policy

    Negative impact

  • The process of ensuring that all employees have employment contracts can be time-consuming
  • Some employers and employees may view contracts as a negative restriction
  • The development of contracts is time-consuming
  • Businesses can no longer offer cheap labour
  • Businesses face penalty fees if they do not comply
Employees

    Positive impact

  • Employers cannot force employment to work overtime
  • Employees are allowed to join trade unions
  • Employees can submit complaints to labour inspectors, who will investigate

    Negative impact

  • Labour inspectors monitors compliance with the Act
  • The labour inspector has the power to inspect and question employers and employees, and copy any records or documents relating to a complaint
  • Under certain circumstances the employer can be taken to the labour Court for a decision
  • If the employer does not rectify the mistake, a fine can be imposed

Working time

A worker must NOT work more than:

  • 45 hours in any week
  • Nine hours a day if a worker works five days or less a week
  • Eight hours a day if a worker works more than five days a week.

Overtime

If overtime is needed, workers must agree to do it and they may not work for more than three hours overtime a day or ten hours overtime a week.

Overtime must be paid at 1.5 times the workers' normal pay or, by agreement, get paid time off.

Leave

    Annual leave

    A worker can take up to 21 continuous days' annual leave or by agreement, one day for every 17 days worked or one hour for every 17 hours worked. Leave must be taken not later than six months after the end of the leave cycle. An employer can only pay a worker instead of giving leave if that worker leaves the job.

    Sick leave

    A worker can take up to six weeks paid sick leave during a 36-month cycle.

    During the first six months, a worker can take one day's paid sick leave for every 26 days worked.

    An employer may want a medical certificate before paying a worker who is sick for more than two days at a time or more than twice in eight weeks.

    Maternity leave

    A pregnant worker can take up to four continuous months of maternity leave. She can start leave any time from four weeks before the expected date of birth OR on a date a doctor or midwife says is necessary for her health or that of her unborn child. She also may not work for six weeks after the birth of her child unless declared fit to do so by a doctor or midwife.

    A pregnant or breastfeeding worker is not allowed to perform work that is dangerous to her or her child.

    Family responsibility leave

    Full-time workers employed longer than four months can take three days' paid family responsibility leave per year on request when the worker's child is born or sick or for the death of the worker's spouse or life partner, parent, adoptive parent, grandparent, child, adopted child, grandchild or sibling.

    An employer may want proof that this leave was needed.

    Remuneration, deductions and notice of termination

    The employee must be paid according to the agreement with the employer and deductions must be agreed to by the worker in writing or if the employer is required to do so by law (e.g. Income tax and UIF). Notices must be given in writing.

    The employer may pay for the notice period instead of giving notice.

    The worker still has the right to challenge the fairness of the dismissal.

    The worker must be paid for any accrued annual leave.

    If the termination of employment is because of a change in business operations (retrenchment) then severance pay (one week for every full year worked) has to be paid to the worker.

Administrative obligations

Amongst other things employers must keep a record of at least:

  • The worker's name and job
  • Time worked
  • Money paid
  • Date of birth for workers under 18 years old

Implications for businesses

Employers should have a good understanding of their obligations. It has become essential for all companies to have access to a specialist who is familiar with this legislation and its principles. Failure to comply with this Act can lead to fines or criminal prosecution.


Nature of the COIDA

The Compensation for Occupational Injuries and Diseases Amendment Act (COIDA) (No. 61 of 1997) provides clear guidelines on how employees who are injured or get a disease in the course of performing their duties can claim comprehensive compensation.

Purpose of the COIDA

Ensures that employees receive compensated for any injuries or disease contacted at the workplace include death.

Rights of employees

  • If an employees is injured at work and it results in disablement or death, the employee or his/her dependants will receive benefits from the Compensation Fund
  • If sn employee works mainly in South Africa but is injured while temporarily working overseas, he/she still qualifies for compensation
  • An employee can qualify for more compensation if the injury or disease is the result of negligence by the employer or another employee

Responsibities and duties of employer and employees

  • register at the Compensation Commissioner
  • keep and submit a register of records
  • be evaluated to determine the level of risk employees are subjected to and to calculate the traiff that has to be paid
  • ensure that the premises, equipment, machinery or material are in safe, good working condition at the times.

Employees are responsible for:

  • ensuring that they are not injured as a result of serious and detiberate misbehabiour
  • notifying the employer as soon as possible about the injury or disease
  • submitting necessary medical reports to assess the injury or disease

Impact of COIDA on employers/businesses and employees

Employers/businesses

    Positive impact

  • Promotes safety in the workplace
  • Creates a framework for fair employment practices and safety regulations
  • Supply adminstative guidelines/mechanisms for dealing with and processing claims
  • Eliminates time and costs spent on lengthy civil court proceedings

    Negative impact

  • Claiming processes and procedures can be time consuming
  • Procedures required by this Act may be costly as paperwork places an extra adminstative burden on business
  • Employers have to register all their workers and make annual contributions to COIDA, which may result in cash flow problem
  • Employers may be forced to pay heavy penalties if they are found guilty of negligence/not enforcing safety measures
Employees

    Positive impact

  • Covers all employees at the workplace if both parties meet all the necessary safety provisions in the Act
  • Employees are compensated financially for any injury/disability resulting from performing their duties at their workplace
  • In the event of the death of an employee as a result of a work-related injury/disease, his/her dependants will receive financial support

    Negative impact

  • Workers who are temporarily/permanently employed in foreign countries are not covered
  • Domestic and military workers are not covered
  • If employee gets injuring working hours but outside the place he/she is npt covered

Procedure for compensation

The procedure that has to be followed to be compensated for an injury from compensation fund is as follows

  • The employee must report an incident resulting in an injury before the completion of his/her shift, either verbally or in writing
  • The employer must send the employee to a medical practitioner and request a medical report.
  • The Compensation Commissioner must issue a claim number to the employer
  • The Compensation Commissioner must determine if the claim is valid, and pay compensation if it is valid

Compliance with the COIDA

    Recommendations on ways to comply with COIDA

  • Businesses should provide a healthy and safe working environment
  • Businesses should register with the compensation Commissioner
  • Businesses are obliged to report all incidents causing injury, illness or death of employees
  • Levies must be paid to the Compensation Fund
  • Employers may not make deductions for COIDA from employees' remuneration packages

Businesses have the following responsibilities in terms of the Occupational Health and Safety Act of 1993:

  • The working environment must be made safe for workers and there must be no risks to their safety
  • Workers must receive information, instructions, training and supervision to ensure the health and safety of all employees.

Implications for businesses

  • All businesses must register their business with the commissioner of the Compensation Fund
  • Each year the business must provide the commissioner with information on the workers employed, the wages paid to them and the time they have worked
  • These records must also be kept safely by the business for a period of four years

Nature of the EEA

The Employment Equity Act (EEA) (No. 55 of 1998) is a South African law that promotes equity in employment situations and regulates affirmative action.

  • States that employees who do the same work must be paid equally
  • Ensures that no discrimination on grounds of gender in the workplace takes place
  • Promotes equal opportunity and fair treatment in the workplace
  • Protects employees from victimisation if they exercise the rights given to them by the EEA
  • Provides for employees to refer unresolved disputes to the CCMA

Affirmative action is the policy of favouring members of a disadvantaged group in employment situations.

Provisions of the EEA

  • Elimination of unfair discriminationEmployment policies and practices must support the elimination of unfair discrimination
  • Prohibition of unfair discriminationUnfair discrimination in the workplace is prohibited
  • Medical testMedical testing of employees is prohibited unless it can be justified
  • Affirmative actionEqualemployment plans must contain specific affirmative action measures in order to reach equal representation of people from designated groups
  • ReportingAll specified employers must report their fair employment plans and progress to the Department of Labour

Impact of the EEA on Employers/Business

    Positive impact

  • Promote equal opportunities and fair treatment in employment
  • Encourages consultation between employer and employees
  • Motivates employees because the workerforce is more diverse, representative and inclusive
  • Creates a framework of acceptable employment practices with affirmative action measures
  • Promote the implementation of affirmative action to address the imbalances of the

    Negative impact

  • Applying the employment equity quota may not allow employers to make the most suitable appointment
  • Productivity may decrease, as inexperienced employees may be appointed into positions where they may not be able to cope
  • Increased administration burden, as businesses must compile employment equity reports every two years
  • Diversity in the workplace may lead to conflict and unhappiness
  • Position may remain unfilied, because there are no suitable EEA candidates
  • Non-compliance with EEA may result in the payments of high fines

Compliance with the EEA

  • Labour inspectors can visit businesses, do inspections and questions workers
  • A disputes= can also be referred to the CCMA
  • If an employer is found guilty, a heavy fine can be imposed
  • If the employer does not comply with the order, he or she can be chargedin the labour

Nature of the BBBEE

Both BBE and BBBEE (No. 53 of 2003) aim to correct the inequalities caused by apartheid, through the promotion of new oppportunities for previously disadvantage people.

Purpose of the BBBEE

  • Distributes wealth morre broadly
  • Excludes inequality in the workplace and the economy
  • Ensures the participation of black people in the economy
  • Increases the provision of jobs to black people
  • Promotes equal opportunities

BBBEE is broad, because it also includes black women, disabled people, the youth and people in rural areas by way of socio-economic strategies.

Compliance of businesses with BBBEE

  • Increase the number of black employees participating in the management and ownership of the business
  • Promote skills development
  • Provide equal oppportunities to black people in all types of work and on all levels of management
  • Where possible, use suppliers that comply with BBBEE standards (preferential procurement)

A Scorecardis used to determine how well a business compiles with BBBEE principles.

    BBBEE compliance is measure in terms of seven BBBEE pillars:

  • Ownership:points are earned by the sale of shares to black people
  • Management and control:points are earned by the appointment of black top managers and directors
  • Equal employment:points are earned by the appointment of black managers, and in the case of smaller businesses, black employees
  • Skills development:points are earned through the training of employees by way of in-service training or formal training
  • Preferential procurement:points are earned by purchasing goods and services from businesses with a good BBBEE scorecard
  • Businss development:points are earned by helping smaller black businesses to grow
  • Socio-economic development:points are earned by supporting black social issues.

Impact of BBBEE on businesses

    Positive impact

  • Workers will become skilled because businesses are compelled to send them for skills training
  • Businssses that comply with BBBEE regarding the pillars may get government tenders
  • This encourages businesses to address the demands for redress and equity directly
  • A good BBBEE rating will improve the image of the business
  • It promotes enterprise development, by developing enterpreneurial skills of designated people who can then start their own businesses

    Negative impact

  • Businsses have to go through the process of having their BBBEE compliance measured by an independent BBBEE verification agency
  • Processes may lead to corruption/nepotism, if not monitored properly
  • Large penalties could be imposed on businesses if they do not comply to the BBBEE
  • Businssses will have to spend money in areas covered by the seven pillars of BBBEE to obtain a good BBBEE rating
  • Investment and ownership issues can cause unhappiness between existing shareholders

Advanatges of BBBEE for employees

  • Distributes wealth amongst all South Africans by encouraging businesses to employ black South Africans
  • Promotes access to finance for black economic empowerment
  • Ensures that black women are also given position of management
  • Empowers rural and local communities by enabling access to economic activities, land, infrastructure, ownership and skills

BBBEE addresses the following

  • Human rights
  • Inclusivity
  • Environmental issues

Human Rights

Basic human rights are defined in the South African Constitution and include the following:

  • Right to equality
  • Right to human dignity and respect
  • Right to education
  • Right to economic advancement
  • Right to social development

Inclusivity

  • Inclusivity means that everyone must be granted an equal opportunity
  • No discrimination against any person based on race, gender, language, belief etc..

Measures that a business can take to promote inclusivity

  • Include people who might otherwise be excluded through negative discrimination
  • Give all employees access to skills development programmes
  • Gives all employees access to company resources such as company holiday houses
  • Create a workforce that represents the demographics of the country and that works together in harmony to the benefit of the business and the community

Environmental Issues

  • A business' public and social responsiblilty with regard to the environment and human health also influence its BBBEE score
  • Businesses are encouraged to:
    • reduce their carbon dioxide emissions
    • reduce their industrial water consumption and thus save water
    • have measures in place to get rid of toxic substances in a safe way
  • Human health must be protected by the business, which must supply a healthly, safe and clean environment for employees to work in.

Measures that a business can take to protect human health

  • Ensure that the workplace has adequate lighting and ventilation
  • Store hazardous materials in a safe place
  • Ensure that rivers, lakes and groundwater are not contaminated
  • list ingredients on labels of products, as well as giving any necessary
  • Provide a safe environment for employees and customers.

Compliance with BBBEE

    Impact on business not complying with BBBEE

  • Fines can be given to:
    • whites businesses using black representatives to get government contracts
    • business not complying with fair labour ratios
  • Sectors such as the mining industry need a licence to do business. If they do not comply with BBBEE, the renewal of licences can be refused
  • Businesses not complying with BBBEE may find that fewer suppliers and customers are prepared to do business with them, and therefore their businesses will go downhill

Implications for businesses

BBBEE compliance is measured in the seven key BBBEE areas of the business. These are:

  • Ownership: points are earned by selling shares to black people
  • Management Control: points are earned by appointing black top managers and directors
  • Employment Equity: points are earned by employing junior/middle/senior managers and for smaller businesses black workers
  • Skills Development: points are earned by training employees through on the job training or formal training
  • Preferential Procurement: points are earned by purchasing goods and services from other businesses with a good BEE Scorecard
  • Enterprise Development: points are earned by assisting smaller black owned businesses to grow
  • Socio economic Development: points are earned by supporting black social causes.

Nature of the NCA

The Natioanl Credit Act (NCA) (No. 34 of 2005) provide guidelines to credit provides and credit applicants in terms of their rights and responsibilities.

  • A credit provider is a person or business that provides credit to another person or business
  • A credit applicant is a person or business that wants to borrow money.

Purpose of the NCA

  • Prevents discrimination and ensures that credit is avaliable to all consumers
  • Protects the consumer against against unfair or unjust credit agreements
  • Ensures that all credit providers and credit consumers are treated equally
  • Encourages responsible credit advancement/lending
  • Ensures just or fair rights and responsibilities for consumers and credit providers
  • Regulates the interest rate that credit providers can charge

The National Credit Regulator (NCR) applies the National Credit Act, educates consumers about their rights and ensures that the credit indusrty abides by new legislation.

Rights of consumers and credit providers

    Consumers

    The National Credit Act grants the following rights to consumers:
  • to apply for credit and to be from discrimination
  • to be given reason for credit being refused
  • to be given documents before the credit transaction is completed
  • to be given information in clearly understandable language
  • to access and challenge information held by a credit bureau
  • to fair and responsible marketing
  • to confidentiality of personal information

    Credit providers

  • The credit provider can issue a summons and apply for a sentence against the consumer
  • If there is no debt review application, the credit provider can take legal action against the consumer, provided that:
    • the consumer has not paid for at least 20 days;
    • and the credit provider has given the consumer written notice, by registered post, of at least ten days;
    • and the consumer has not reacted to it.
  • the consumer's residential or business address
  • the address where goods are stored
  • the name and address of any other person to whom the ownership of the goods has been transferred

Responsibilies of credit providers and consumers

Credit provider

  • Must register as credit provider with the
  • Must perform creditworkthiness checks on consumers before the agreement is signed to ensure that they are able to repay the debt
  • Credit agreements must be in simple, understandable language, and must be explained to consumers.
  • The cost of the credit offered must be clear

Consumers

  • Provide the correct, honest and complete information about income and debt
  • Pay the debt on time

Impact of the NCA on Credit Providers/Business and Consumers

Credit providers/Businesses

    Positive impact

  • Reckless granting of loans is eliminated as a credit check (creditworkthiness) must be done
  • Employees of the business know exactly what is permitted, and which requirements must be met before the contract can be signed
  • It protects the business against bad debts (ensures repayments), resulting in better cash flow
  • Leads to more customers through credit sales as they are now protected from abuse

Negative impact

  • More paperwork results in an administrative burden
  • Fewer sales because businesses may only sell to creditworthy consumers
  • Complex debt recovery procedures
  • Credit lent recklessly may not be recovered
  • Consumers can provide false information and then not pay
Consumers

    Positive impact

  • Protects consumers against unjust credit practices
  • Protects consumers against receiving credit that they cannot pay back
  • Protects consumers by limiting trading hours for direct sales
  • Makes provision for debt conunselling to help consumers to restructure their debt

    Negative impact

  • Consumers who appear on the blacklist cannot get access to credit
  • Refusal of credit may lead to a lowering of the standard of living
  • Consumers who are already deep in debt may pay extra for the services of debt counsellors
  • Consumers with alot of debt may be exploited by micro-lenders

Compliance with the NCA

  • The National Credit Tribunal can levy fines
  • Credit providers may not practise without being registered with the National Credit Regulator
  • Credit providers who do not comply with the Act can lose the money they lent to the consumer
  • If consumers provide false information or do not repay their debt.

Implications for business

Credit providers must do an affordability assessment to ensure that the consumer has the ability to meet their obligations in a timely manner.

Some of the requirements of the Act are:

  • All credit contracts must be in a language and form which are easily understandable and should be in at least two languages
  • All credit providers are obliged to do an analysis of the consumer’s profile, to ensure that the provider can afford the credit applied for
  • One of the main purposes of the Act is to prevent discrimination in the credit market and to ensure that credit is available to all South African citizens
  • The Act gives a consumer, whose application for credit was refused, the right to written reasons for the decision
  • A cooling off period is compulsory for all credit agreements
  • Consumers under credit agreements have the right to return the purchased goods, at any given time during the contract, to the provider to be resold.

Nature of the CPA

The Consumer Protection Act (CPA) (No.68 of 2008) protects consumers against exploitation by informing them about their rights and responsibilities

Purpose of the CPA

  • Promotes and protects the economic interests of consumers
  • Ensures that consumers have all the relevant information to make decisions
  • Protects consumers by providing national standards
  • Promotes responsible consumer behaviour

The National Consumer Commission (NCC) promotes a fair marketplace and prohibits certains unfair business practices

Rights of suppliers and consumers

    Suppliers

  • When a supplier acts as a consumer, it has all the right other consumers have
  • Suppliers can enforce consumer agreements if the agreements are in ordinary, understandable language
  • Suppliers have the right to ask for non-repayable deposits to protect them against cancellations

    Consumers

      Right to choose
    • Consumers a have the right to:
      • choose suppliers and goods
      • shop around for the best prices
      • cancel/renew fixed term agreements
      • request written quotations and cost estimate
      Right to privacy and confidentiality
      • Consumers have the right to restrict/stop unwanted direct marketing
      • They can object to unwanted promotional emails and telesales
      • They have the right to lodge complaints about sharing personal details
      Right to fair and honest dealings
      • Suppliers may not use physical force/harass customers
      • Suppliers may not give misleading/false information
      • Businesses may not promote pyramid schemes
      Right to disclosure and information
      • Contracts and agreements have to be in plain language and easy to understand
      • Consumers may request the unit and bulk price of the same product
      • Product labels and trade descriptions may not be misleading
      Right to fair and responsible marketing and promotions
      • Businesses may not mislead consumers on pricing/benefits/uses of goods
      • Consumers may cancel purchases, made through direct marketing, within five working days
      • All information related to the country of origin, expiry dates and ingredients of the products have to be disclosed
      Right to fair value, good quality and safety
      • Consumers may demand quality services and goods
      • Consumers have to receive an implied warranty or a written warranty
      • Consumers must have access to quality products that are in good condition
      Right to accountability from suppliers
      • Consumers have the right to be protected in lay-bye agreements
      • Businesses should honour credit vouchers and prepaid services
      Right to equality in the consumer market place
      • Business may not limit access to good/services
      • Business may not vary the quality of their goods/services supplied to different types of consumers
      • Different prices for identical goods and services may not be charged
      Right to fair just and reasonable terms and conditions
      • Businesses have to provide consumers with written notices of clauses that may limit consumer rights
      • Businesses may not market/sell goods at unfair prices
      Right to return goods / have goods replaced or claim a refund
      • Goods that are unsafe/defective must be replaced by the supplier
      • Faulty items may be returned for a full refund
      • Faulty items may be returned if the fault occurs within six months after purchasing the item

Impact of the CPA on Businesses/Suppliers and Consumers

Businesses/Suppliers

    Positive impact

  • Samller businesses are protected as they are seen as consumers
  • Businesses may gain consumer loyalty, if they comply with the CPA
  • Businesses may be safeguarded from dishonest competitors
  • Prevents large businesses from underminig smaller ones

    Negative impact

  • Items not working probably must be replace/repaired/money refunded which might affect the profitability of the business
  • Business must disclose more information about their products and processes/services
  • Consumers can take advantage of businesses and return goods when it is not necessary to do so
  • Penalties for non-compliance may be very high
Consumers

    Positive impact

  • Promotes consumers rights and ensure that businesses do not violate these rights
  • Allows all consumers fair access to the market for goods and services
  • Consumers are forced to make responsible and informed decisions
  • Encourages consumers to complain

Compliance with the CPA

    Ways to comply with CPA

  • Ensure that all goods and services offered are of the same quality
  • All agreements must allow for a five-day cooling-off period
  • Provide through trainingg to staff with regard to the CPA
  • Show the name of the business on all business documents

    Non-compliance with the CPA

  • The business can be asked to stop actions not in line with Consumer Protection Act
  • The business can be asked to pay interest or damages due to the consumer
  • The business can be fined or face a jail sentence

Impact of the Act on different aspects of business

Examples of the impact the Act may have on different aspects of doing business are:

  • The Act prohibits discriminatory marketing
  • The Act gives the consumer the right to select suppliers; to be given estimates; the right to choose or examine goods; the right to return goods and so-called unwanted goods.
  • Consumers are entitled to information in plain and understandable language
  • The Act prohibits unacceptable conduct; false or misleading representations.
Term 2 : Topic 2 Human resources function

The human resource function balances the need of a business and the needs of employees. It applies policies and procedures within a legal framework, such as those relating to recruitment and salary determination.

The human resource function

  • Recruits, selects, develops staff and determines and administers salaries
Human Resources activities

six key activities

  • Recruitment
  • selection
  • Interviewing
  • Employment
  • Placement and induction
  • salary determination and administration

The human resource department is involved in

  • professional development and training
  • health and safety conditions
  • communication with trades unions
  • motivation of workers
  • proceduces rlated to dismissals and retrenchments

Recruitment is tracing of the right worker with right qualifications, skills, capabilities and experience for a specific position

Recruitment methods

  • internal recruitment
  • external recruitment

Internal recuitment is the identification of workers already working for the business to fill a vacant post in the organisation.

Internal recruitment includes

    PROMOTIONS

  • promoting an employee to higher position

    TRANSFERS

  • moving an employee from one position to another of a similar level of responsibility

    INTERNAL REFERRALS

  • recommendations from existing staff members, often a supervisor

    INTER ADVERTISEMENTS

  • business circulars, notice boards, bulletins, verbal announcements or emails

ADVANTAGES of internal recruitment

  • Cheaper and quicker to fill post.
  • Placement is easy, as management knows the employee's skills, personality, experiance and strength.
  • Opportunities for promotion reward good work and this motivates current employees.
  • Current employees understand how the business operates.
  • Reliable/key satff members are retained if the are promoted/transferred within the business.
  • detailed, reliable information can be obtained from the supervisors/employee records.

DSIADVANTAGES of internal recruitment

  • Current employees may not bring new ideas into the business
  • Promoting a current employee may cause resentment or unhappiness amongst other employees.
  • The number of apllicants is limited to current staff only.
  • Employees who do not really have the required skills for the new job may be promoted
  • Current employees may need to be trained/developed before they can be promoted, which can be expensive.
  • Employees who are not promoted may feel demoitivated, which can affect productivity negatively.

External recruitment

External is when job applicants are recruited from outside the organisation order to fill a vacancy in the organisation.

External recruitment methods

  • Advertising in the media

  • newspaper, radio, internet, social networks
  • Staff recruitment agencies or consultants

  • recommendations or referrals from existing staff

  • education institutions

  • head hunting

  • walk in-applicants

ADVANTAGES of External recruitment

  • New candidates bring new talents, ideas, insight and experaince into the business.
  • it supports the implementation of affirmative action and BBBEE plans.
  • There are more candidates to choose from.
  • Chances are better of finding suitable candidates with the right skills, qualifications and competencies-reduces training costs.
  • Prevents unhappiness between existing employees who have also applied for vacant posts.
  • Recruitment agencies can find candidates and this saves the business time.

DISADVANTAGES of External recruitment

  • External sources can be expensive, e.g. recruitment agencies' fees and advertisements in newspaper/magazines.
  • The selection procees may not be effective and an incompetent candidate may be chosen.
  • Information on CV's or from references may not be reliable.
  • Recruitment process takes longer and is more expensive as background checks must be conducted.
  • New canidates generally take longer to adjust to a new work environment.
  • In-services training may be needed which decreases productivity during the time of training.
Recruitment Proceducer

A job description includes the job titled, a summary of the duties and resposibilities of the job, as well as a description of the requirements of the job.

A job Specification is description is of the requirements an employee must comply with to be suitable for a specific job. this includes the necessary qualifications, capabilities and experience an employee must have to fill the post successfully.

the recruitment procedure includes the following:

  • The human resource manager (HRM) should prepare the job description in ordern to identify recruitment needs.
  • The HRM should indicate the job specification to attract suitable candidates from within the business
  • If internal recruitment is unsuccessful, external recruitment should be considered.
  • If the external recruitment is done , the relevent recruitment sourec(S) should be selected, e.g. recruitment agencies, educational instituation,newspapers,etc.
  • Advertisment should be prepared with the relevent information , e.g. the name of the company, contact details, contact person, etc.

Selection is the process of choosing the best applicant for the advertised position.

Selection proceduren includes the following:

  • 1) Receive documentation Applicants submit the application form , curriculum vitae (CV) and certified copies of personal documents e.g. ID documents and proof of qualifications.
  • 2) Screen applicants Candidates who meet the requirments are separated from those who obviously do not.
  • 3) Evaluate CVs and create a shortlist Applicants are evaluated against pre-set requirements and ranked from most to less suitable candidates. Candidates with the highest ranked order are placed on the short list (3-5 candidates).
  • 4) Check information on CVs The candidates' qualifications and employment history are checked and confrimed. Referees are contacted to verify information on the CV and to testify to the persons character, abilities and skills.
  • 5) Conduct interviews Candidates who appear on the shorlist are invited to a personal interview, usually on the premises of tyhe business. The interview is a formal meeting between candidate and employer. Employer evalutes the candidate, candidate have the chance to assess their possible workplace and can get more information about the post and business.
  • 6) Assess the candidates Various assessments may need to be completed before the best candidates may be taken down. Shortlist candidates may be required to take dwon medical and skills test
  • 7) Offer employment a written offer(Letter of employment) is made to the selected candidate. The candidate must accept the offer in writing. An employment contract will be negotiated and signed by the new employee and employer. Unsuccessful candidates may be informed, unless otherwise stated in the job advertisement

Starndard screening tests

Screening means separating those who can do the job from those who cannot.

Standard screening includes the following

  • Skills test to test specific and general prodiciencies
  • Aptitude tset analyse the capability of an applicant to learn new skills for the job
  • Intergrity test analyse how honest and trustworthy a potential applicant is.
  • Medical examinations may only be required after a job has been offered and must relate to the job
  • Drug tests before appointment are one of the ways in which employers can protect the workplace against the negative effects of alcohol and illegal substances.

Interviewing gives employers the opportunity to meet the applicants in person and to evaluate their skills, qualities and suitability for a specific job.The applicant has the opportunity to ask questions about the job, salary and working conditions.

Role of the interviewer

  • Compile a list of key questions based on the based on the required skills, skills, knowledege and capabilities.
  • Check a applicants and CVs for anything that needs to be to be explained.
  • Set the interview date and ensure that all interviews take place on the same date, if possible.
  • Inform all shortlisted candidates about the date and place of the interview.
  • Allocate the same amount of interview time to each candidate, explain the purpose of the interview to panel to each and the interviewee.
  • Do not misinform/mislead the interviewee.
  • Avoid discriminatory or controversial types of questions, e.g. asking a female candidate about family planning.
  • Provide an oppotunity for the interviewee to ask questions.

Role of the Candidate/Applicant

  • Greet the interviewer by the name with solid handshake and a friendly smile and with respect.
  • Listen carefully to the questions before responding, make eye contact and have good posture/body language.
  • Know your strengths and weaknesses and be prepared to discuss it.
  • Be inquisitive and show interest in the business and ask clarity seeking questions/be assertive.

An employment contract is a written agreement between employer and employee and is legally enforceable

Content of an employment contract

  • Details of the employee (full name and surname, ID number and address)
  • Job title and discription
  • date of employment/starting date
  • normal place of work, working hours, overtime, leave and probation period
  • Salary/remuneration package, benefits/fringe benefits and employee deductions(complusary/non-compulsory)
  • nature of appointment, termination of contract, code of conduct/ethics and disciplinary policy

Legal aspects of emplyment contracts

  • An employment contract may not contain any requirements that are in conflict with the BCEA.
  • Aspects of the employment contract can be re-negotiated during the coursce of employment.
  • Employer and employee must agree to any changes of the contract
  • No party may unilaterally change aspects of the employment contract.
  • The employment contract should include a code of conduct/ethics
  • HR manager must explain the terms and conditions of the employment contract to the employee
  • Benefits must be stipulated clearly
  • Employee must be allowed to thorougly read through the contract before it is signed.

Termination of an employment contract

  • 1) Resignation. When an employee voluntarily ends his/her employment contract and leave the business.There must be a clause in the contract stipulating the resigniation process and lenght of notice.
  • 2) Retirement When an employee reaches a certain age usually 65 and need not work anymore
  • Dismissal When an employer tells an employee that the business will no longer be employing him/her. If an employee is dismissed, the employer must give him/her notice of between one and four weeks, depending on how long the employees has worked for the business, or longer if stipulated by the employment contract. the employer must show that the dismissal is because of the empoyees misconduction, incapacity, or because of the operational requirments of the business. If a person is dismissed without a good reason being given, that dismissal is unfair.
  • Retrenchment When businesses are obliged to retrench employees for operational reason. it is usually due to finacial reasons, but can also be because the business is closing down, or a specific job becomes redundant.

    Procedure

  • Determine the real reason for retrenchment of employees
  • Stakeholders are invited by the letter to discuss the following
    • reasons for retrenchment
    • alternative possibilities
    • number of workers affected
    • method of ending employment
    • when the retrenchment will start
    • severance packages

Types of employment contracts

  • Full-time employment contract: full-time employee works 40 or more hours per week
  • Part-time employment contract: Part-time employee works less tthan 35 hours per week
  • Fixed term contract: a job offered frp a fixed period, example, 1 year
  • Part-time/seasonal contract: offered for periods when the business is very busy

Procedures for placement

  • The specific responsibilities, expectations and skills with regard to the post must be set out.
  • The new employee's strong points, weak points, interests and skills must be determined by doing a series of psychometric tests.
  • The relationship between the post and the new employee must be dertermined.

Induction is the process during which new employees are introduced to the business and the people they are going to work with.

Purpose of the induction process

  • To make the employee feel at ease in the workplace.
  • To introduce him/her to their new collegues and work enviroment.
  • To famailiaries him/her with the business, including the products, services and customers
  • To inform him/her about the processes and proceduces of the business.
  • To impact important rules and codes of behaiviour.
  • To provide the employee with an overview of the business,.

The induction process starts from when an employee jions the business until he/she is fully intergrated into the system. Most large organisation have formal induction programmes

Induction Programme

  • Should include an introduction to the rules, regulations and code of conduct of the business
  • an oppotunity for the new employee to ask questions
  • the identification of an existing employee as the new employee's mentor

    New employees
  • are introduced to the company's policies, procedures, rules and regulation.
  • learn more about the business
  • increase productivity, quality of services/performance, motivation and engthusiasm
  • Reduces staff turnover, lateness and absenteeism.
  • develops leadership and guidance.

The lack of proper induction program can lead to employees: taking longer to adapt/become productive, resigning, feeling uncertain and unwelcome


Salary payment received on a monthly basis and is normally paid for higher level of qualification.

wage Payment recieved on a weekly/dailey basis.It is usually paid for no qualification.

Salary determination

Salary determination is the process of establishing what the approiated salary/wage is for a given position.

  • Determining the approriate salary for a position, a number of aspects must be considered, such as:

    • the conditions of the basic conditions of employment act
    • applicants' expectation
    • the number of people who are able to do the specific job and who are available in that location, and possibly also the cost of relocation for a distant applicant

Piecemeal and time-related work

Piecemeal work is where employees are paid for the article/services/product produced.

  • Advantage of a piece wage/rate: is that employees tend to finish work faster.The Disadvantage: is that the quality of production is not guaranteed.

Time-related workis where employees are paid for the time they spend at work.

  • Advantage of a time wage/rate: is that employees can calculate their salaries.The Disadvantage: is that all workers recieve the same wage irrespective of the quality of work.

Salary administraction

Salary administractionis the administrative procedure of determining, and then continuing to supervise, the levels of salaries and wages in an organisation

Deductions

  • Employee tax (SITE and PAYE)
  • Unemployment insurance fund (UIF)
  • Deductions as agreed on with union
  • Deductions authorised by a court order
  • Any other deductiions the employer wishes to do require the written permission of the worker

Employees tax

  • Standard income tax on employees (SITE)
  • Pay as you earn (PAYE)
  • provisional tax

The employer is legally bound to deduct tax from employees' remuneration on a monthly basis and oay it over to SARS.

Tax regulations are speciefied in Basic Conditions of Employment Act(BCEA)

Unemployment insurances fund (UIF)

Unemployment insurances fund (UIF) contributionare by law, a compulsory deduction. UIF pays a limited amount o money for a limited time to people who have contributed to the fund and have lost their work owing to circumstances beyond their control, such as retrenchment.

    When paying UIF, employers have to:

  • Deduct financial contribution 1% of salaries and add the company's contribution to these 1% of salaries which makes it a total of 2% payment to UIF
  • Keep a record of contributions

    The following persons cannot claim from the UIF:

  • People working for the government and working or less than 24 hours a month
  • contract workers, apprentices/learnerships who will leave the country after a certain period of time
  • people receiving compensation under the provisions of the Skills Development Act 97 of 1998

an employee's gross salary is the amount that the employee earns before deductions are made

an employee's net salary is the amount that the employee earns after deductions are made

fringe benefits

fringe benefits or employee benefitsare remuneration employees receive from the business in addition to their salaries/wages.

compensationis the total value of the salary ad other benefits the employees receives.

Examples of fringe benefits

  • Medical aid/ Health insurance
  • Provident fund
  • Car/ Travel allowance
  • Cell phone allowance
  • Clothing allowance
  • Bonus shares
  • Staff discount/ Free or low cost meals
  • Pension fund
  • Funeral benefits
  • Housing allowance
  • Holiday packages
  • Performance based incentives

ADANTAGES of fringe benefits to a business

  • Attractive fringe benefit packages may result in higher employee retention/ reduce employee turnover
  • Increases employee satisfaction and loyalty, as they are willing to work under pressure
  • Leads to higher productivity, as workers work for longer hours and more days

DISADANTAGES of fringe benefits to a business

  • Fringe benefits are additional cost for businesses and decrease profits
  • May create conflict or lead to corruption if it is allocated unfairly
  • Sometimes workers only stay because of fringe benefits, and may not be as committed and loyal to the business.

Labour Relations Act (LRA) No. 66 of 1995

This Act sets out the laws that govern labour in South Africa. It is guided by Section 27 of the Constitution, which entrenches the rights of workers and employers to form organisations for collective bargaining. Together with the Basic Conditions of Employment Act, it also ensures social justice by establishing the rights and duties of employers and employees. It also regulates the organisational rights of trade unions deals with strikes and lockouts, workplace forums and other ways of resolving disputes. It provides a framework for the resolution of labour disputes through the Commission for Conciliation, Mediation and Arbitration (CCMA), Labour Court and Labour Appeal Court.

Basic Conditions of Employment Act (BCEA) No. 75 of 1997

The BCEA is designed to protect employees against unfair labour practices and exploitation. It states the minimum conditions of employment that must be adhered to by both employers and employees. It is up to the employer to offer better conditions of employment than stated in the BCEA.

Employment Equity Act (EEA) no.55 of 1998

The purpose of the Act is to achieve equity in the workplace by:

  • Promoting equal opportunity and fair treatment in employment through the elimination of unfair discrimination
  • Implementing affirmative action measures to redress the disadvantages in employment experienced by designated groups, to ensure their equitable representation in all occupational categories and levels in the workforce.

Occupational Injuries and Disease Act (COIDA) No. 61 of 1997

The objective of Compensation for Occupational Injuries and Diseases Act no 61 of 1997 (COIDA) is to pay compensation out to an employee or his dependents, where, as a result of his activities in the work situation, he died or was partially or totally disabled or contracted an occupational disease. COIDA thus acts as insurance in order to safeguarded the employer from any claims by an employee in this regard, as long as the employer has complied with the provisions of the Act.

Employment contracts

The contract of employment is a legal document signed between employer and employee. The contract:

  • Regulates the terms and conditions of employment between the employer and the employee.
  • Stipulates what the employer will provide in terms of benefits, and in terms of labour legislation
  • Regulates the behaviour of the employee in the workplace - because all company policies and procedures, as well as the disciplinary code, form a part of the employment contract.

Interviewing, selection and induction procedures

The HR department must follow the process of recruitment, interviewing, selection and induction to ensure effective hiring and also to ensure all procedures comply with policies, such as

Salary Determination

The wage board sets minimum rates and other conditions of employment for all trades. Different jobs are paid different amounts of money because some jobs, such as top management positions, require a higher level of skill and responsibility, and also some jobs have a higher risk or require relocation.

Employee benefits

Depending on the policy of the business, the employee may receive benefits other than payment for doing his/her job. Such benefits may include:

  • Contributing towards the employee's pension fund, or medical aid
  • Travel allowance
  • Housing subsidy
  • Mobile phone allowance
  • Annual bonus
  • Death and funeral benefits
  • Shares issues by employer to employee's.

The Skills Development Act (SDA) No.97 of 1998

The SDA and SAQA provide for the training and development of all people in South Africa and are intended to help overcome a serious shortage of trained and skilled people in the country. The aims of the SDA are to:

  • Develop the skills of all workers
  • Encourage employers to use their workplace as a learning environment
  • Encourage employees to participate in training programmes
  • Provide opportunities to learn new skills
  • Assist people from previously disadvantaged backgrounds by offering training and education.

The aims of the Skills Development Act are carried out by the following institutions:

  • The National Skills Authority
  • The South African Qualifications Authority(SAQA)
  • Sector Training Authorities(SETAs).

South Africa Qualifications Authority (SAQA)

The SAQA is an official body appointed by the Ministers of Education and Labour to oversee the development of the National Qualification Framework (NQF) in South Africa. SAQA is responsible for developing and maintaining learner's records and providing information on registered qualifications, minimum standards, moderating bodies and learner's achievements.

Six aspects applicable to Human resources

  • Labour relation Act(LRA)66 of 1995
  • Basic conditions of employment(BCOE)75 of 1997
  • Employment Equity Act(EEA)55 of 1998
  • Compensation for Occupational injuries and diseases Act(COIDA)
  • Skills Development Act(SDA) 97 of 1998
  • South African Qualifications Authority Act(SAQA)55 of 1995

    South African Qualification Authority Act (SAQA)

    • made provision for the development and application of the National Qualifications Framework(NQF) and establishment of the South African Qualifications Authority(SAQA).

      NQF is integrated system that classifies all South Africans qualifications into levels.

      SAQAis the organization that develops and implements the NQF.

    • NQF levels range from level 1 (Grade 9) to level 10(university doctorate).

    • Learnerships enable employees to obtain credits towards an NQF qualification.

Term 3 : Topic 3 Ethics and Professionalism

The term ethics refers to the moral set of rules that a group of people would consider important and also how these values are applied.

The term business ethics refers to these principles and practices that are considered morally appropriate within a business context.

Ethical behaviour

  • Ethical behaviour includes the acceptable/moral principles of right and wrong.
  • It determines human behaviour.
  • It has a positive influence on business and communities-workers have greater job satisfaction.
  • Good ethics make business more competitive.
  • Unethical behaviour can lead to legal action and may damage the name of the business.

Ethical behaviour and business practices occur when a business makes good moral decisions in its daily decision-making.

Equality:Acknowledge equal rights for all.

  • Honesty:be accurate and transparent in all transactions.
  • Truth:do not tolerate misleading behaviour.
  • Intergrity:be lawful and avoid plans that will exploit peoples good faith.
  • Co-operation:support an open,ethical workplace for all.
  • self-regulatory:fulfil obligations and guarantees,sell safe products.
  • responsibility:(to the environment)use natural resources judiciously.
  • fairness:pay fair wages to employees.

  • The term professionalism refers to the ethical and skilled behaviour that is regarded as appropriate within a particular work environment

    Professional behaviour

    • Exactly what professional behaviour entails will depend on the specific work context.
    • There are many professional boards that dictate specific behaviours for people working within particular professions(eg.doctors and lawyers)
    • However,even when a persons behaviour is not constrained by a professional board,he/she is still expected to apply the general principles of professional ethics.

    Principles of professionalism

    • Respect yourself and dignity and rights of others e.g. respecting other languages/cultures.
    • Respect the image of the business/your profession,e.g adhere to the dress code of the business/profession.
    • Act with inergrity/honesty/reliability e.g. keep to working hours even if no other workers are around/do not use the business resources for personal gain.
    • Be committed to quality and apply your skills and knowledge to the benefit of the business/society at large.
    • Adhere to confidentiality measures by not disclosing sensitive information about customers/the business.
    • Remain objective and act fairly and in honest manner to all without being biased or showing favouritism
    • Continually improve/develop your skills and knowledge e.g. attending refresher courses and seminars.
    • Share your knowledge and experience by investing your time and expertise in junior staff members,e.g. uplifting/empowering others.

    Difference betweeen ethics and profesionalism

      Ethics

      • conforms to a set of values that are morally acceptable.
      • applying a code of conduct set by a professinal or business.
      • focuses on upholding the reputation of a business/profession.
      • involves following the principles of right or wrong in business activities/practices/dealings.

      Professionalism

      • sets of standards of expected behaviour.
      • forms part of a code of conduct to guide employees to act professionally
      • focuses on developing a moral compass to use in decision making.
      • includes guidelines on employees appearance/communication etc..

    Difference between professionalism and unprofessionalism

    Professionalism

    Respect

      PROFESSIONALISM

      • Use polite language towards colleagues.
      • Help others and listen to advice from others.
      • Acknowledge differences in background/culture/religion.

      UNPROFESSIONALISM

      • Use rude/impolite language
      • Swearing at a colleague
      • Ridiculing differences in language, culture or religion
      • Inappropriate

    Intergrity

      PROFESSIONALISM

      • look after equipment.
      • keep to the working hours.
      • not bending the law to suit oneself.
      • engage in open dealings.

      UNPROFESSIONALISM

      • Use business's resources for private purpose
      • Make feeble excuses for work not done
      • Accept bribery

    Competency

      PROFESSIONALISM

    • Do the best possible job.
    • Work overtime if necessary
    • Go beyond job descriptions.
    • Coach and mentor colleagues.

      UNPROFESSIONALISM

      • Take shortcuts with tasks
      • Not meeting deadlines
      • Not taking pride in completing tasks thoroughly

    Confidentiality

      PROFESSIONALISM

      • keep clients inforrmation private and confidential.
      • refrain from criticisng clients in front of colleagues and vise versa.
      • not using clients information to own advantage.

      UNPROFESSIONALISM

      • Gossip about clients
      • Discuss confidential client information with colleague
      • USe client information for own advantage

    Objectivity

      PROFESSIONALISM

      • treat people equally.
      • apply laws/rules consistently and properly
      • remain objective at all times.

      UNPROFESSIONALISM

      • Have special perference for own benefit
      • Have one-side views
      • Support destructive/negative ideas.

    Development

      PROFESSIONALISM

      • attend skills development programmes.
      • learn from senior/experienced colleagues.
      • improve knowledge through reading and continuosly conducting research.

      UNPROFESSIONALISM

      • Refuse to attend skills development programmes
      • Have a know it all attitude
      • Refuse to work in a team

    • Businesses realise that they cannot exist in isolation,and have to interact with various environments.
    • Many institutions in south africa have have their own code of conduct and/or code of ethics and a commitment to ethical and professional behaviour.
    • A code of practice usually addresses professional behaviour/professionalism,whereas a code of ethics contains ethical actions/what is right and acceptable in business.
    • A code of conduct is a set of guidelines on how employees should behave in the workplace.
    • A code of ethics is a set of guidelines that outline the businesses and stakeholders commitment to ethical and professional behaviour,and guide the morals and ethical practices of the business and its employees.
    • Stakeholders are those who have an interest in the business and are affected by it,such as the businesses owners or shareholders,managers and other empoyees ,suppliers,clients,or customers,intermediaries,and members of the community.

    Businesses not started at the expense of someone else

    • The aim should never be profit at all cost,as it will always be to the disadvantage of others.
    • Businesses should not use other peoples ideas/business to enrich themselves.
    • Putting someone else out of business for own gain,is unethical and a poor moral choice.

    Payment of fair wages/salaries

    • Workers must not be exploited with low salaries just because it is difficult to find a job.
    • Workers rights and dignity should be respected.
    • Workers must be remunerated for working overtime and on public holidays.

    Appointing honest and trustworthy accountants/financial officers with good reputations.

    • Businesses should only appoint accountants who are known for their ethical and professional reputation and who can prove it with documentation.

    Regular payments of taxes

    • Businesses should complete tax returns in detail and on time.
    • Business should not evade tax and honesty declare all income earned.
    • Business should pay tax to avoid government penalties and fines.

    Transparent process and procedures

    • Staffing and other processes should be open and transparent.
    • Employees should be aware of employment policy of the business.
    • All laws that govern employment should be communicated workers.

    Draw up of code ethics

    • Ethical codes of conduct should be drafted and communicated to workers,so that they know what is expected and what the company stands for.

    On going development and training for all employees

    • Continuous and regular training is necessary to explain the importance of ethical and professional conduct.
    • Employees should understand that certain conduct actions have certain consequences.
    • Employees should be encouraged to attend training courses and upgrade their knowledge and skill.

    Managers must set an example

  • Senior managent members must act as role models by ensuring that their actions and decisions are in line with the codes of conduct and ethics.

    Honesty,accountability and transparency in relationships and transactions.

    • Transactions/relatinships with all stakeholders e.g.suppliers,staff,etc.should always be honest and open.
    • Properly documented transactions create a paper trail that supports accountability.
    • Information technology should never be used to manipulate the database or make transactions look so complicated that they cannot be properly inspected.

    Protection of environment

    • Laws and regulations should be adhered to so that profits are not generated at the expense of the enviroment.
    • Pollution and other environmental issues should always be considered in all business activities,e.g safe disposal of waste/dumping of toxic waste,etc.
    • Businesses have to become involve in enviromental awareness programs
    • Physical working conditions should always be worker friendly and safe and should promote occupational health.

    Internal control

    • The business should monitor how all its resources are used. Employees should understand the reasons for these internal controls

    Performance Management

    • Businesses should evaluate each employee's performance against his/her job describtion. if the employee needs training in any area. the business should provide the training.

  • The King Code is a set of guidelines for good business practice laid out by the three King Reports on Corporate Governance, which were published in South Africa in 1994, 2002 and 2009.

    The King code is called after the committee s chairperson, Mervyn E, King, who compiled the report

    King l, the report published in 1994, promoted an integrated approach to good corporate governance

    King II, the report published in 2002. referred to seven characteristics (or principles) of good corporate governance:

    Discipline

  • It is the responsibility of leaders to act in a correct way and to execute their duties in the correct way

    Transparency

  • Conduct business activities in an open manner without hidden motives or withholding information

    Independence

  • Ability not to be influenced and to act in an honest manner

    Accountability

  • Recognise and accept responsibility for your actions. duties and decisions

    Responsibility

  • Accountable for your decisions and actions

    Fairness

  • all actions and decisions must be impartial and free from preference, dishonesty and bias

    Social responsibility

  • Take cognisance of the needs of the community

    King III, the report published in 2009, has sections that deal with the governance of risk, and ethical leadership and corporate citizenship, among others.

    Reasons for the implementation of the King Code

    • The Code presents a framework within which corporate risk can be addressed.
    • The Code gives a complete description of how to deal with corporate issues.
    • To prevent the occurrence of corruption and unethical business practices.

  • TAX

    • Company tax, VAT and personal income tax are some of the main sources of income for the government

      Tax evasion is the process of unlawfully paying less tax through committing fraud

    • Tax evasion is illegal in South Africa and is regarded as a crime punishable with a fine or even a prison sentence
    • A business must ensure that no tax evasion takes place It must be honest about how much tax it owes and must pay taxes regularly
    • Each transaction must be documented property All financial records must be audited controlled

    SEXUAL HARASSMENT

    Sexual harassment is unwelcome sexual advances in the workplace, or the inappropriate promise of rewards in exchange for sexual favours.

    • Sexual harassment is illegal according to the Employment Equity Act, and is a violation of basic human rights. It usually occurs when people abuse their positions of power.
    • A code of conduct/ethics must be in place containing a framework of corrective action and procedures
    • Formulate a clear policy on sexual harassment.
    • Educate employees to use/understand the policy/procedure contained in the code of conduct/ethics.
    • Encourage employees to report cases of sexual harassment.

    PRICES OF GOODS IN RURAL AREAS

    • It is professional and good business practice to have the same prices for goods in urban and rural areas
    • Large businesses are hesitant to open outlets in rural areas because it does not yield good returns on the investment
    • It is common practice to pay higher prices for lower quality goods in rural areas
    • People in rural areas do not always have the means (for example, the Internet) to compare prices and usually have to buy at one local shop.
    • Some businesses exploit customers by adding much more to prices than necessary

    UNFAIR ADVERTISING

    • The Advertising Standards Authority (ASA) regulates advertising and protects the interests of the general public.
    • Businesses can make foolish/wrong advertising decisions under pressure.
    • Advertisements should be honest and not abuse consumers' trust or lack of knowledge.
    • Advertisements may contain discriminatory conditions that exclude a certain section of the community, for example, an advertisement for a indicating that "this position is not suitable for women."
    • Misleading advertisements are sometimes used to let customers believe that they get better value for money if they support certain products.
    • Consumers are encouraged to submit written complaints to the ASA to report unethical advertising practices.
    • Businesses advertise some products at very low prices to attract customers, but when customers look for it, it is no longer available
    • Advertisements offering free products do not always show the hidden costs payable by the customer for the product
    • An example of unethical practice is to advertise second-hand products as new.

    UNAUTHORISED USE OF FUNDS

    • The unauthorised use of business funds is a criminal offense.
    • This includes activities such as theft and fraud.
    • Fraud can cause financial loss to the business, lack of interest from investors, and lack of consumer faith in the business.
    • It affects consumer pricing as the company has to compensate for losses, and so can also affect Competitiveness
    • The business must have strict control over business funds.
    • Only authorised and trustworthy employees should have access to business funds.
    • Regular internal audits must be carried out.
    • Clear policies must be in place with regard to the use of funds so that workers are aware of what is considered to be theft.

    ABUSE OF WORK TIME RESOURCES

    • Workers are paid for the time spent at work.
    • It is unethical to use work time for personal business.
    • The code of conduct/ethics should contain clear rules about abusing work time.
    • The codes of conduct and ethics should be signed by all employees so that they are aware of its Content.
    • Employees should be monitored and work towards realistic goals to get work done.
    • Structure working hours in such a way that employees have free/flexible time for personal matters.
    • Create a culture of responsibility towards the business,

    There are two ways to address issues that challenge ethical and professional behaviour:

    • The first is to prevent them from happening.
    • The second is to address them if it has happened.

    It is more effective to put measures in place to prevent them.

    Therefore a business should:

    • read King III and be informed by it
    • establish a corporate value system
  • create a code of conduct, drawing on established principles of ethical and professional conduct for employees
  • create a code of ethics that outlines how the business and stakeholders should do business and make decisions in an ethical and professional manner
  • familiarise employees with the code of conduct and the code of ethics

    However, when a business finds that instances of unethical and unprofessional behaviour have taken place, it should take action to fix this situation as far as possible.

    Effective business practice means making sure that the business operates at maximum profitability, while still addressing issues of professionalism. responsibility and ethics.

  • Term 2 : Topic 4 Creative thinking

    People often use past decisions to guide them in their decision making. This is called routine thinking and it saves time and energy.

    However, in order for businesses to grow, develop and obtain maximum productivity, it is important for their managers to think 'outside the box'. This means that they need to explore new and different ways to do things to obtain better results.

    This process is also known as creative thinking or lateral thinking.

    Creative thinking is a way of looking at problems from a fresh perspective that leads to unusual solutions.

    Creative thinking requires new and useful ideas, dynamic thinking and critical thinking. lt often requires taking risks.

    Entrepreneurs and managers are constantly required to use creative thinking in problem solving and decision making.


    ADVANTAGES OF CREATIVE THINKING IN THE WORK PLACE

    • Starts the process of problem solving, as there are usually more problems than solutions.
    • lmproved quality solutions are achieved.
    • May give businesses a competitive advantage if unusual or unique solutions or ideas are implemented.
    • Complex business problems may be solved
    • Productivity increases as time is utilised more effectively
    • Managers/employees have more confidence as they live up to their full potiential
    • Managers will be better leaders as they will be able to handle/mane change(s) positively and creatively
    • lmproves motivation amongst staff members.
    • Management/employees can keep up with fast changing technology.
    • Stimulates brain function of managers/employees, as they are continuously pushed out of their comfort zone.
    • Creativity may lead to new inventions which improve the general standard of living.
    • Complex business problems may be solved
    • Productivity increases as time is utilised more effectively
    • Managers/employees have more confidence as they live up to their full potiential
    • Managers will be better leaders as they will be able to handle/mane change(s) positively and creatively
    • lmproves motivation amongst staff members.
    • Management/employees can keep up with fast changing technology.
    • Stimulates brain function of managers/employees, as they are continuously pushed out of their comfort zone.
    • Creativity may lead to new inventions which improve the general standard of living.

    BARRIERS TO CREATIVE THINKING

    • Barriers to creative thinking include:
      • lack of creativity
      • financial barriers
      • poor working conditions
      • lack of resources/infrastructure
      • social barriers
      • ack of motivation / low morale
      • lack of skilled managers / employees
      • encountering problems with supervision of staff working flexible hours
      • flexible working hours can cause delays in meeting deadlines
      • Complex business problems may be solved
      • Productivity increases as time is utilised more effectively
      • Managers/employees have more confidence as they live up to their full potiential
      • Managers will be better leaders as they will be able to handle/mane change(s) positively and creatively
      • lmproves motivation amongst staff members.
      • Management/employees can keep up with fast changing technology.
      • Stimulates brain function of managers/employees, as they are continuously pushed out of their comfort zone.
      • Creativity may lead to new inventions which improve the general standard of living.

    BARRIERS TO CREATIVE THINKING

    • Barriers to creative thinking include:
      • lack of creativity
      • financial barriers
      • poor working conditions
      • lack of resources/infrastructure
      • social barriers
      • lack of motivation / low morale
      • lack of skilled managers / employees
      • encountering problems with supervision of staff working flexible hours
      • flexible working hours can cause delays in meeting deadlines

    HOW TO CREATE AN ENVIRONMENT THAT PROMOTES CREATIVE THINKING

    • A business can promote creative thinking by:
      • doing research and providing data
      • setting up suggestion boxes
      • encouraging the breaking of habits that constrain innovation
      • educating and training employees
      • changing employees‘ perspectives
      • exposing employees to different cultures
      • focusing employees on the needs of the consumers
      • giving employees time to experiment with new ideas
      • encouraging employees to think big but start small
      • being prepared for mistakes to happen
      • rewarding and celebrating successes
      • Complex business problems may be solved
      • Productivity increases as time is utilised more effectively
      • Managers/employees have more confidence as they live up to their full potiential
      • Managers will be better leaders as they will be able to handle/mane change(s) positively and creatively
      • lmproves motivation amongst staff members.
      • Management/employees can keep up with fast changing technology.
      • Stimulates brain function of managers/employees, as they are continuously pushed out of their comfort zone.
      • Creativity may lead to new inventions which improve the general standard of living.

    HOW TO CREATE AN ENVIRONMENT THAT PROMOTES CREATIVE THINKING

    • A business can promote creative thinking by:
      • doing research and providing data
      • setting up suggestion boxes
      • encouraging the breaking of habits that constrain innovation
      • educating and training employees
      • changing employees‘ perspectives
      • exposing employees to different cultures
      • focusing employees on the needs of the consumers
      • giving employees time to experiment with new ideas
      • encouraging employees to think big but start small
      • being prepared for mistakes to happen
      • rewarding and celebrating successes

    Generating Ideas

    Idea generation is when you cause yourself or others to have ideas.

    • Ideas can be triggered through:
      • asking questions
      • reading books
      • using search engines (e.g. Google) > watching relevant documentaries
      • talking to people about the issues
      • listening to social conversations
      • relaxing in a different environment

        While we can come up with ideas by focusing intently or thinking hard, it is often when we are relaxing that the best ideas come to us.


    Problem solving:

    • is a process to analyse a situation, identify strategies and to make changes.
    • is a process requiring creative or critical thinking.
    • that is effective, leads to good decision making.

    Decision making occurs when the best solution to a problem is chosen after considering various alternatives.

    The problem solving cycle

    • 1) IDENTIFY the problem
    • 2) Define the problem
    • 3) Identify alternative solutions
    • 4) Select the best solution
    • 5) Develop and implement an action plan
    • 6) Monitor the implementation of the action plan
    • 7) Evaluate if the problem is sloved

    PROBLEM SOLVING VS DECISlON MAKING

    Problem solving and decision making have many similarities. For example, both processes start by defining the problem, and both end their first cycle by evaluating whether the problem has been solved. However, in practice there are many differences between these processes, as shown in the table below.

    Problem Solving

    • More complex problem-solving techniques are often used to formulate the one action plan that will be implemented.
    • Understood to be an ongoing process
    • One person or a group
    • Mostly occurs through consultation and discussion

        Decision Making

        • A choice is made between the various solutions, but this is usually not a very reflective process.
        • Aims to achieve closure on the problem
        • Normally one person
        • Often happens in an autocratic way
    MORE ADVANCED PROBLEM SOLVING techniques
    • Delphi Technique
    • SCAMPER Technique
    • Force Field Analysis
    • Empty Chair Technique
    • Brainstorming
    • Forced Combinations Technique
    • Nominal Group Technique
    • Mind Mapping

    A Force Field Analysis is a technique where the advantages and disadvantages of a decision are considered, by iooking at all the forces for and ail the forces against the decision.

    Steps in force field analysis

    • Identify all the forces influencing the decision
    • Weight up the advantages and disadvantage by looking at the forces for and against the decision
    • Give each force a score from 1 (weakest) to 5 (Strongest)
    • Add the total scores for forces both for and against the decision
    • Weigh the positives and negatives up against each other
    • Analyse the restraining forces and determine the best way to address it
    • Analyse the driving forces and determine the best way to address it
    • Identify priorities and create a plan of action

    Positive aspects

    • lt leads to a well-considered and balanced solution.
    • When used in a group, it makes people who did not agree with the decision feel that their opinions have at least been considered.

    Negative aspects

    • Peopie can base their scores on assumptions rather than facts.
    • To be an effective group technique it requires full participation.

    Brainstorm

    The brainstorming process is where a group of people try to generate a large number of creative ideas that could solve a problem.

    Process

    • Participants are divided into groups smaller than ten.
    • Sessions are limited to an agreed time limit (for example, 60 minutes).
    • Problem to be solved must be very well defined. , Participants should feel free to suggest any idea that pops up quickly.
    • Evaluation or criticism of any idea during a brainstorming session is not allowed.
    • Facilitator writes down all suggestions made on a notice board.
    • Many ideas are given, some unpractical, others more usable/suitable.
    • At the end of the brainstorming session, participants work through all the ideas and the usable ones are selected.
    • The most suitable idea is chosen.

      Positive aspects

    • Non-critical discussion takes place, where all ideas are considered.
    • Team members can build on each other's ideas.
    • Stimulates creative thinking.
    • Allows team members to look at a problemfrom a different perspective.

      Negative aspects

    • Discussions can be dominated by one strong team member.
    • Shy people may not give their input
    • The team may lose out on brilliant ideas from shy people.
    • Team members may criticise one another's ideas and this may create conflict.

    NOMINAL GROUP TECHNIQUE

    The nommat group techmque is a brainstorming process where partrcrpants suggest solutions and vote thereafter

    it is calied the nominal group technique as, while it is a group technique, there is iittie discussion between team members.

      Think of ideas

    • Each team member silently writes down as many . ideas/solutions as possible.

      Report ideas

    • Team member shares one Idea/solution WIth Report ideas it the group. Someone writes the ideas/solutions

      Clarify idea

    • Team members discuss ideas/solutions openly and explain, if necessary

      Rank ideas

    • Team members, individually and anonymously, arrange the suggestions in order of importance by rating from 1-10

      Choose best idea

    • The idea/solution with the highest score/number of Choose best Idea votes is chosen.

      Positive aspects

    • it limits the influence of domineering personalities.
    • Each team member has a chance to participate without interference from other team members.
    • Voting on the ideas is anonymous and may be more reliable/honest.

      Negative aspects

    • Ideas made by team members may not converge and cannot be developed further.
    • Suggestions may not be as creative as when a group throws ideas around.
    • it is time consuming, as each team member must make a presentation.
    • The process may seem very mechanical and lacking in spontaneity.

    Scamper Technique

    The SCAMPER Techmque requires a person to0 ask directed questions regarding a problem in order to come up With new Ideas .

      Substitute

    • (people/products/processes/material)

      Combine

    • (to put things together in a creative way)

      Adapt

    • (to change in response to changes in the environment)

      Magnify

    • (to make bigger or to make new/renew)

      Put to other uses

    • (to find a new purpose for an existing product)

      Eliminate

    • ( to get rid of or to omit)

      Rearrange
    • ( to approach things in a different way)

      Positive aspects

    • It encourages suggestions for solutions from many different perspectives.
    • It leads to new ideas.

      Negative aspects

    • It can be a long process.
    • To be an effective group technique people must fee| that they are in a supportive environment.

    Empty chair Technique

    The Empty Chair Techniques is a form of role play that is used to explore human relationships from more than one viewpoint.

    • A person is required to sit on a chair facing another empty chair.
    • The person is asked to express one side of an argument (or point of view).
    • The person then has to switch to the other chair and express the other side ot an argument (or point of View)

      Positive aspects

    • it explores the problem in depth.
    • it creates an opportunity to get rid of emotional tension.

      Negative aspects

    • It does not provide a specific solution.
    • It can be limited by the imagination and empathy of the person.

    Forced Combinations Techniques ('Force-Field')

    The Forced Combinations Techniques is a way of combining existing Ideas to generate new ideas.

    This technique is often used during or after a brainstorming session.

      Positive aspects

    • It encourages team members to be open to new ideas.
    • It Ieadsto new ideas.

      Negative aspects

    • The ideas that are mentioned can be unrealistic.
    • It requires a lot of creative input from the people involved.

    Mind Mapping

    Mind maps are creative diagrams where ideas and concepts are connected to a focal point

    • A mind map has four main elements:
      • There is a central focus (picture key words)
      • Various branches, representing concepts, are added.
      • These branches have numerous, thinner branches, showing sub-concepts.
      • In turn, these branch off into even thinner branches, which contain more detail.

      Positive aspects

    • it allows free association to stimulate creativity.
    • It creates an opportunity for analysis and synthesis.

      Negative aspects

    • It can be difficult for people to decide what to include;
    • it does not provide a specific solution.

    Conventional Versus Non-Conventional Solutions

    A Conventional Solution draws on common valuable experience to solve a problem.

    A Non-Conventional Solution is a solution that has not yet become established as a common practice.


    Creative solutions that are unaffordable or in some other way unrealistic will not solve a business's problems. Creative solutions must be assessed in terms of what is realistic in a particular business environment.

    To assess whether a business uses creative soiutions to its business probiems given the reality of Its busmess environment, you couid ask questions such as:

    • Does the business have a unique seliing proposition?
    • Does the business market goods or services effectively and in a unique way?
    • Does management know how it plans to make a profit?
    • Does management know how it is going to get the capitai that is needed?
    Term 3 : Topic 5 Macro environment: Business Strategies

    STRATEGIC MANAGEMENT

    A strategy is a plan of action to solve a problem or to take advantage of an opportunity.

    Strategic management is the process of formulating, evaluating and monitoring business strategies in response to the challenges of the macro environment and in light of the mission of the business

    PURPOSE OF STRATEGIC PLANNING

    • Distribute Skills and resources equally throughout the business.
    • Focus on all activities to ensure that the vision and mission of the business are fulfilled.
    • Enable the business to adapt to changes in the business environment.
    • Focus on the business as a whole, because strategic planning is done by the whole business.
    • Focus on the long term
    • Focus on the long term.

    Businesses should conduct a strategic management process to “Identity challenges and come up with strategies to overcome these challenges. the strategic management process consists of five stages.

      Stage 1:
    • Set a clear vision, mission statement and realistic goals.
      Stage 2 :
    • identify weak points/strong points/opportunities/threats by doing an environmental exploration and environmental analysis of the 3 business environments. Make use of a SWOT analysis/PESTLE analysis/Porter's Five Forces model.
      Stage 3 :
    • Formulate a strategy to react to the exploration results- develop a plan of action.
      Stage 4:
    • implement the strategy-communicate to all the stakeholders
      Stage 5 :
    • Continuously evaluate and monitor the strategy to take corrective steps, it necessary.
    STAGE 1: SETTING THE VISION, MISSION STATEMENT AND OBJECTIVES OF THE BUSINESS
      This stage invoives:
    • determining the business' vision and mission statement existin ones or adapt the existing ones
    • setting the business's short and long-term goals
    • incorporating financial goals (sales, growth etc.)
    • incorporating strategic goals (market share, reputation etc.)
    STAGE 2: ENVIRONMENTAL SCANNING AND ANALYSIS OF THE 3 BUSINESS ENVIRONMENTS

    This stage involves identifying challenges from the business's environments. Three of the tools that can be used in doing this are:

    • SWOT analysis for internal (Micro) and external (Market and Macro) business environments
    • PESTLE analysis for external (Macro) business environment
    • Porter‘s Five Forces model for external (Market) business environment.

    The acronym "SWOT stands for

    • S Strength of the business
    • W Weaknesses of the business
    • O Opportunities of the business environment
    • T Threats of the business environment

    A SWOT analysis is a wwy of evaluating the strengths and weaknesses af a business, as well as the opportunities and threats facing the business

    Strong and weak points are internal and the business has control over it. Opportunities and threats are external and the business has no control over it.


    A PESTLE analysis looks at the impact of six factors from the macro (external) environment on the business.

    • P Political impact (BEE) OR Physical factors
    • E Economic impact (the rise in oil and petrol prices)
    • S Social impact ( some areas being socailly disadvantage areas)
    • T Technological impact ( changes in technology)
    • L Legal impact ( the Consumer Protection Act)
    • E Environment impact ( effects of a flood) OR Ethical impact

    Porter's Five For model is based on five important forces that have an infiuence on the competitiveness of a business in its rmarket environment

    Porters Five Forces model helps the business to understand its present competitive position, as well as the advantages of a position t wishes to occupy in the market

    The model is used to determine which role-players have the most power

      The five forces can be graphically illustrated as follows :

      Power of competitors

        A business must be aware of who its competitors are. and how strong they are.

      • Competitors in the industry refer to businesses selling the same or similar goods or services.
      • The power of a business is influenced by the number of competitors as well as the capability of the (The more competitors. and the stronger they are, the weaker a business own power.)
      • If a consumer can get a product easier from another business, the business does not have much power
      • Some consumers are loyal towards a business, which, in turn strengthens its power
      • If a business offers unique products or services, its market strengthened

      Bargaining power of suppliers

      • All businesses need suppliers to provide goods and services.
      • Suppliers refer to the businesses that supply raw materials/equipment/delivery services; as well as those that supply support services
      • A business must determine the power of suppliers to influence prices.
      • A business can identify the power of its suppliers in terms of their products/services, reliability and punctual deliverirs
      • Suppliers who regularly supply goods of high quality, can increase their prices and so exert more power over the business.
      • The smaller the choice of suppliers, the more dependent the business is on a supplier and the greater the suppliers power.
      • The more power the supplier has, the less control the business has.

      Bargaining power of buyers

        The buyers (customers or clients) are the people or businesses that buy a business's goods or services.

      • A business should do market research to gain more information about its buyers
      • A business should determine how easy it is for buyers to force down prices
      • The number of buyers determines the power buyer as well as the cost of switching to another supplier of the product.
      • A few influential buyers have the power to influence the pricing of goods and services.
      • If buyers are prepared to make do without a product, they have more power to determine prices and sales terms,
      • The more power the buyer has, the less control the business has over them

      Threats of substitute goods or services

      Substitute goods or services are different goods/services that can replace other goods and can satisfy. partially or completely, the same consumer needs

      • Substitute products become a threat, especially if the price is lower than the price of the original product.
      • The power of the business decreases if a large number of substitutes are available and easily accessible to the buyer.
      • If the products of a business are unique, it will not be threatened by substitutes.

      Threat of new entrants to the market

        New entrants are other businesses selling the same or similar products for the first time in the present market

      • A business is influenced by the ability of other businesses to enter the market.
      • If a business is highly profitable, it will attract potential competitors who also want to benefit from high profits.
      • Obstructions that make it difficult for other businesses to enter the market (for example patent rights, high costs, access to resources) protect the business.
      • If there are only a few suppliers of the product/service, but many buyers is easy to enter the market.
      • New competitors can easily enter the market if it can be done with little time or money.

    There are certain types of business strategies that can be used when a business is formulating its main strategy, such as:

    • I Integration strategies
    • D Diversification strategies
    • I Intensive strategies
    • D Defensive strategies
    • O Other strategies

    Integration strategies

    Integration strategies focus on improving the efficiency of the business's processes by extending the business's activities.

    Integration strategies include:

    • vertical integration strategies (both backward and forward)
    • horizontal integration strategies

    Vertical integration refers to a business taking on a role that was previously performed by another business in its supply chain A supply chain is the system of businesses involved in producing a product and delivering it to customers.

    Vertical integration can be divided into backward vertical integration and forward vertical integration.

    Backward vertical integration involves the business buying a supplier.

    For example, a car manufacturer could buy a steel producer. Backward vertical integration helps to prevent problems with the supply of raw materials and other inputs.

    Forward vertical integration involves the business buying another business, further down the supply chain.

    For example, a car manufacturer could buy a car retailer. Forward vertical integration allows a business to increase its profits by cutting out the "middle man" between the business and the customer.

    Horizontal integration refers to a business acquiring a competitor or a business that produces complementary goods or services

    For example, a car manufacturer could buy another car manufacture, or it could buy a petrol company.

    Diversification strategies

    A diversification strategy entails a business entering a new market or a new industry, or somehow extending itself beyond its core business.

    Diversification strategies include the following:

    • concentric diversification
    • horizontal diversification
    • conglomerate diversification

    Concentric diversification is when a business uses the same technology to produce a new product that is related to its core business.

    Horizontal diversification is when a business enters a new industry or creates new products using new technology to create new products that will appeal to its existing customers.

    An example of horizontal diversification would be a bakery starting to make fruit juice.

    Conglomerate diversification is when a business starts to produce a new and totally different product for a new market.

    An example of conglomerate diversification would be a bakery buying an online gift card business.

    Intensive strategies

    Intensive strategies focus on improving the market share of existing products and of new products for the same market.

    Intensive strategies include the following:

    • market penetration
    • market development
    • product development

    Market penetration is when a business increases the market share of products in existing markets.

    An example of market penetration would be a bakery selling its bread rolls at a low price to attract buyers

    Market development is when a business explores/finds new markets for existing products.

    An example of market development would be a baker advertising in the newspaper of a neighbouring town every day for two months.

    Product development is when a business develops new products for its existing market.

    An example of product development would be a bakery starting to bake raisin bread for the first time.

    Defensive strategies

    A defensive strategy is one that is implemented by businesses when they want to reconstruct and/or rationalise, because of economic reasons Rationalising a business means making it more efficent by getting rid of unnecessary employees and assets.

    Defensive strategies include the following:

    • retrenchment
    • divestiture
    • liquidation

    Retrenchment is when a business stops employing some of its employees It is usually done to reduce costs during tough financial times.

    Divestiture is when the owners of a business sell a part of the business or some of its assets. It is usually done to obtain more financial security

    Liquidation occurs when a business that cannot pay its debts closes down and sells its assets to pay its debts.

    Other strategies

    There are other ways in which a business can reposition itself, e.g.

    Replacing one or more individuals

    • This may change the way the business operates, or change the skills that the business has on offer. This may also bring creative and diverse thinking into the business. Those individuals that don't do their job properly or don't fit in with the business often hold the business back.

    Changes in allocating resources

    • A business can cut costs by allocating its resources in a new way

    Developing new policies

    • Business policies should be revised on a regular basis to ensure that they keep up with the latest legal requirements or new trends, such as technological and international trade advancements. If the business is experiencing problems cash-flow problems absenteeism) micro environment, should also revise its policies that deal with the relevant areas

    Issuing new stock to raise more capital

    • Issuing stock means selling shares in the company to get money for the company to spend on necessary items
    • Raising capital in this way often assists a company to achieve new goals

    Revising the vision and mission statement

    • There are times when it is necessary to revise a business's mission statement, such as when the business grows or manufactures new products.

    Determining or revising goals and objectives

    • It is sometimes necessary to revise a business's objectives, such as when the business has new targets and needs to take steps to meet these targets.

    Appointment of additional sales personnel

    • Often a business needs to increase the number of sales staff to improve sales

    Development of new performance incentives

    • Motivating employees with different rewards can improve productivity.
    Term 2 Topic 1 Social responsibility and corporate citizenship/CSR

    Social responsibility is a theory that a business or individual has an obligation to act to benefit of society. Social responsibility is a duty every individual or business has to perform so as to maintain a balance between the economy and the ecosystem.

    Corporate social responsibility (CSR) means that a business takes responsibility for the social and environmental resources it uses, and puts something back into society and the environment.

    A shift in thinking in recent years has led to businesses aiming to not only make a profit but to be socially responsible and to be environmentally sustainable.

    REASONS WHY BUSINESSES GET INVOLVED IN PROJECTS AND SPONSORSHIP

    • Some businesses will donate money towards events or activities that will give them more exposure.
    • Some give sponsorships for activities that will give them recognition.
    • Other businesses will become involved with cultural, environmental, educational and social issues.
    • Other businesses make a contribution and a bigger effort to rectify the inequalities of the past.

    WAYS IN WHICH BUSINESSES CAN CONTRIBUTE TO EMPLOYEE DEVELOPMENT AND WELL-BEING

    The mental and physical wellbeing of employees are very important. Businesses must create and maintain a healthy workplace with the necessary support structures

      The well-being and performance of employees can be improved by:

      promotions

    • which improve employees' confidence, skills and strengths

      performance appraisal

    • which identifies employees' successes and development areas

      motivation

    • which lifts employees' morale

      stress reduction

    • which makes employees feel more in control of their lives

      rewards and incentives

    • which encourage and recognise good performance

      training programmes

    • which ensure employees have the necessary skills to do their jobs

      staff development programmes

    • which allow employees to further their skills

      counselling

    • which helps employees to overcome challenges in their lives

      rehabilitation for substance abuse and Aids

    • which restores employees to functionality and effectiveness

      team building

    • which helps employees communicate and perform as a team

      fair wages and salaries

    • which allow employees to live comfortably and accumulate assets

      employee benefits, such as leave/retirement annuities

    • which allow employees to take a break/prepare for their future

      the inclusion of employees in decision-making that affects them

    • which makes employees feel like they have a say in their work environment

      recreational facilities

    • which encourage employees to maintain their health

      childcare facilities

    • which allow working parents to leave their young children in a safe place where they will be taken care of

      flexible working hours

    • which allow employees to adapt their work schedules to the demands of thier lives

    TO WAYS IN WHICH BUSINESSES CAN CONTRIBUTE TO STAKEHOLDER DEVELOPMENT

    Stakeholder development is where a business improves the skills, resources and knowledge of any individual or organisation Who is affected by, or who affects, the busmess.

      For example, businesses can help stakeholders by:

    • creating safe financing opportunities
    • assisting in marketing a good product
    • ensuring suppliers of a fixed market for raw materials or semi-processed items.

    Stakeholders include any individual or organisation that has some or other connection to the business, or is influenced directly or indirectly by the activities of the business.

    WAYS IN WHICH BUSINESSES CAN CONTRIBUTE TO COMMUNITY DEVELOPMENT

    Community development involves the social and economic upliftment of a group of people living in the Same area.

      A business's general responsibility to its community includes the following:

    • providing quality goods and services to people that improve their quality of life
    • ensuring that the production process has no negative impact on the environment.
    • make charitable contributions to non-profit organisations
    • become involved in community guidance/counselling
    • provide training in entrepreneurial skills
    • present/offer skills development courses
    • assist with the development of infrastructure (such as building health clinics)
    • sponsor educational material (such as textbooks)
    • sponsor school feeding schemes
    • employ local people where possible
    • clean up a polluted area
    • form partnerships with the government (or non-governmental organisations (NGOs) or community organisations) to develop sustainability.

    Definition of Social Responsibility

    Social responsibility means that a business or individual has an obligation to act in a way that benefits society. Social responsibility is a duty every individual or business has to perform so as to maintain a balance between the economy and the ecosystem.

    Meaningful (as an individual) contribution of time and effort to advancing the wellbeing of others in a business context

    Although it would be naïve to think that we can change the world by ourselves we still have an obligation and a duty to try and do the right thing.

    Corporate Social Responsibility

    Definition

    CSR is a form of corporate self-regulation whereby a business monitors and ensures its compliance with the spirit of the law, ethical standards, and international norms. The goal of CSR is to embrace responsibility for the company's actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere.

    CSR can be divided into two main categories: primary social responsibility and broad social responsibility. The primary responsibility refers to those connected directly to the business whilst the broad social responsibility refers to the community as a whole.

    Nature and process of Corporate Social Responsibility

    Businesses are encouraged to be more socially responsible both by government, business stakeholders and the community as a whole.

    In order that the CSR activities of a business are meaningful and make a positive contribution the following processes must be put in place:

    • A CSR programme or activity must be planned
    • Employees have to be put in charge and divided into teams to drive the planned CSR activity
    • The activity must have identifiable and measureable impacts on the community
    • The CSR programme must be monitored and evaluated for improvements.

    Benefits: business and community

    CSR can have the following benefits for businesses:

    • Win new business
    • Increase customer retention
    • Develop and enhance relationships with customers, suppliers and networks
    • Attract, retain and maintain a happy workforce and be an Employer of Choice
    • Save money on energy and operating costs and manage risk
    • Differentiate yourself from your competitors
    • Generate innovation and learning and enhance your influence
    • Improve your business reputation and standing
    • Provide access to investment and funding opportunities
    • Generate positive publicity and media opportunities due to media interest in ethical business activities.

    Problems/challenges for the business and community

    • Increased costs of production leading to higher prices or reduced profits and so decreased competitiveness
    • The sums of money spent by firms on CSR are often dictated by few directors and may not reflect how shareholders want their money spent
    • Consumers of CSR products often have to pay higher prices, reducing their ability to consume
    • Acting in a CSR manner can mean that workers in less developed economies are sometimes further disadvantaged
    • Smaller organisations that do not have significant resources to undertake extended CSR programmes may find themself at a competitive disadvantage
    • Loss of tax revenue for the Government as CSR some activities can be ‘written off’ against tax.

    Components of Corporate Social Responsibility

    The components of CSR include:

    • Using sustainable practices that take care of the environment
    • Using ethical corporate social investment and showing a real concern for all stakeholders in the business
    • Taking into account the health and safety of all stakeholders in the business.
  • The triple bottom line refers to:

  • generating profit
  • upliftment of people and their communities
  • conservation of the environment (planet)
  • Profit (the financial aspect of the business)
  • People(the social aspect of the business)
  • Planet(the environmental aspect of the business)

    The link between the triple bottom line and the social responsibility of a business:

      Profit

    • Triple bottom line means that businesses should not only focus on proiit or to charge high prices. but should also invest in CSR projects
    • Businesses should not make a profit at the expense of the community.

      People

    • Business operations should not have a negative impact on people, employees or customers.
    • Businesses should engage in sustainable community programmes/ projects that will benefit communities.
    • Businesses should improve the quality of life of their human resources (employees).

      Environment/Planet

    • Businesses should not exhaust resources or harm the environment for production purposes.
    • Businesses may support energy-efficient and eco-friendly products/ programmes.
    • Businesses can recycle/re-use waste, e.g. packaging made from recycled material.

    Benefits for the community

    • Job opportunities provide jobs for unemployed members of the communities.
    • Educational bursaries employees' family and/or community members receive bursaries to further their studies.
    • Welfare of workers/community provide rehabilitation centres to employees/ community members who have addiction problems.
    • Medical facilities improve the health of workers/communities by providing or upgrading medical infrastructure, e.g. building of clinics.
    • Upliftment of the standard of living skills should be developed that will lead to the empowerment of previously disadvantaged communities.

    CHALLENGES OF CSR FOR A BUSINESS AND THE COMMUNITY

      Challenges for the business

    • The community may not support the enterprise, i.e. may not buy the products of the enterprise.
    • Difficulty in adherence to legislation governing CSR.
    • Small and medium enterprises find it difficult to implement CSR programmes.
    • It is difficult to determine the exact needs of the communities.
    • Most managers are not trained and lack experience to handle or manage social programmes.
    • CSR activities can distract businesses from their core business functions.
    • Employees may spend more time working on CSR programmes instead of focusing on their core duties.
    • Social spending reduces a company's economic efficiency and makes it less competitive.
    • it can increase financial risk, as programmes cost money and may impact negatively on profits.
    • Company directors are accountable to shareholders, not to the communities.
    • Shareholders, as the only real stakeholders, may suffer as their profits are spent on CSR.

    Challenges for the community

    • Businesses are not always equipped to address social problems.
    • Outreach programmes discourage locals from taking their own initiatives by making them dependent on CSR programmes.
    • Distribution of scarce CSR resources to selected beneficiaries in the community may cause problems such as discrimination.
    • Some businesses only participate in CSR programmes to raise profit and do not really care for the community in which they operate.
    • Businesses cannot meet the long term needs of the community.
    • The benefits of the programmes may not filter through to the intended persons within the community.
    • Spending money on CSR means the business has to recover expenses in some way and this leads to higher prices and inflation which have a negative impact on the economy and therefore the community.
    • Less money is available for community projects during unfavourable economic conditions.
    • Consumers are not easily convinced that a business is acting in the best interest of the community and the environment.

    HOW INDIVIDUALS CAN CONTRIBUTE TO CSR

      Individuals can become involved in CSR by:

    • getting involved in their businesses' existing CSR projects; the more employees involved, the greater the impact
    • being aware of the needs of the community
    • providing time. money, knowledge and skills
    • encouraging their businesses to donate goods or funding to a local community project

    All these ideas could be implemented as individuals, small groups or as part of a larger initiative.

    COMPONENTS OF CORPORATE SOCIAL RESPONSIBILITY

      The components of CSR include:

    • Protecting and caring for the environment
    • Ethical corporate social Investment
    • Health and safety considerations

      Protecting and caring for the environment

    • protecting natural resources
    • recycling initiatives
    • reducing carbon emissions in the air
    • switch from non-renewable resources to renewable resources

      Ethical corporate social investment

    • labour considerations, such as training and incentives for employees; good working conditions
    • ethical practices, such as good accounting practices

      Health and safety considerations

    • ensure safe and hygienic conditions for employees
    • supply of safe products
    • inform clients of ingredients that is possibly harmful to their health

    Corporate Social Investment

    Definition

    CSI is about how a business spends its money. CSI is primarily about money, time, skills and expertise that are invested to help communities or the environment.

    Social development in a community is the development of services such as healthcare, sanitation, education, housing and water supply.

    Economic development is the development of a community’s economy through jobs, skills and infrastructure.

    Nature of Corporate Social Investment

    The nature of CSI depends on the business in question. Businesses are to link their Corporate Social Investment initiative with their business practices, especially when making use of the skills, expertise and equipment available within the business.

    Corporate Social Investment projects

    Corporate Social Investment projects are aimed at improving social and environmental conditions. Some businesses finance NGOs as part of their CSI programmes.

    Responsible business practice

    Responsible business practice towards stakeholders such as employees, suppliers and customers is important. Examples are following appropriate employee dismissal procedures, fair treatment, and fair remuneration.

    Challenges to the business

    Challenges to meet the longer-term needs of the society within which they operate Legislation changes in South Africa and businesses need to take into account the following (this was covered in term 1):

    • Employment Equity Act (EEA)
    • Skills Development Act (SDA)
    • BEE (Black Economic Empowerment) and compliance
    • The National Skills Development Strategy (NSDS).

    Another challenge is that businesses need to draw up and submit skills plans to SETAs for permission for training to take place. If it fails to meet the requirements, the training plan will not be approved.

    Human Resource Development Strategy (HRDSSA)

    The following eight commitments have been made by HRDSSA II and will need to be reflected in SETA and NSF training plans:

      1. Overcome shortages in the skills needed for the successful implementation of current strategies to achieve economic growth.

      2. Increase the number of skilled people to meet the demands of our current and emerging economic and social development priorities.

      3. Implement skills development programmes that are aimed at equipping recipients/citizens with skills to overcome related poverty and unemployment.

      4. Ensure that young people have access to education and training that enhances opportunities and increases their chances of success in further vocational training and sustainable employment.

      5. Improve technological and innovation capability and outcomes within the public and private sectors.

      6. Ensure that the public sector has the capability to meet the strategic priorities of the South African developmental state.

      7. Establish effective and efficient planning capabilities in the relevant departments and entities for the successful implementation of the HRDSSA.


  • Human rights are rights inherent to all human beings, whatever our nationality, place of residence, sex, national or ethnic origin, colour, religion, language, or any other status. We are all equally entitled to our human rights without discrimination. Human rights are inalienable. They should not be taken away, except in specific situations and according to a legal process.

    Human rights issues as defined in the Constitution of the Republic of South Africa

    The Bill of Rights is the cornerstone of South African democracy and is found in Chapter 2 of the National Constitution.

    It enshrines the rights of all people in our country and affirms the democratic values of human dignity, equality and freedom.

    Some of the more important points include:

    • Equality: everyone has the right to be treated equally in the workplace and may not be discriminated against on grounds of race, gender, pregnancy, marital status, ethnic origin, colour, age, disability, religion, culture, sexual orientation and birth
    • Human dignity: everyone has dignity and the right to have their dignity respected and protected
    • Freedom of expression: this includes the right to have the freedom of the press and other media, to receive or impact information or ideas
    • Environment: everyone has the right to an environment that is not harmful to their health.

    Diversity in the business

    Employees may come from different cultures, genders, religious orientations, race groups, and age groups. These factors may impact on how they interact with one another and other stakeholders in the business. Here are some issues that contribute to the diversity of the workforce:

    • Poverty
    • Inequality
    • Race
    • Gender
    • Language
    • Age Disability
    • Disabilities
    • Personalities
    • Culture
    • Religious orientation.

    Environmental protection and human health

    We have the right to live in an environment that is safe from harm. Environmental issues can cause health and other problems that could threaten the survival of the human race.

    Things that you can do to help the environment include:

    • Pay attention to how you use water
    • Walk or ride your bike to work, school and anywhere you can because this helps reduce greenhouse gases
    • Providing sanitation facilities to improve household hygiene
    • Recycle
    • Reuse
    • Calculating the carbon footprint of the business and putting measures in place to reduce it.

    Issues of equality, respect and dignity

    People of different races, languages, genders, etc., as mentioned in the Bill of Rights, are regarded as equal in the eyes of the law and have the right to equal opportunities in the workplace.

    Respect is defined as ‘due regard for the feelings, wishes, rights or traditions of others’.

    Dignity means that one has the right to respect and ethical treatment because we are equal.

    Other economic, social, and cultural rights

    Other rights may include:

    • Economic rights
    • Social rights
    • Cultural rights.

    Criteria for measuring human rights issues

      1. Does the business uphold affirmative action policies, employment equity and black economic empowerment?

      2. Does the business support the development of women into leadership positions?

      3. Does the business recognise women’s abilities to do jobs that were traditionally considered men’s work, such as engineering and construction?

      4. Does the business uphold the rights of women in pregnancy, as detailed in Chapter 3 of the Basic Conditions of Employment Act?

      5. Does the business offer equal opportunities to employees, regardless of their marital status?

      6. Does the business offer equal opportunities to employees, regardless of their ethnicity or social origin?

      7. Does the business discriminate against employees or potential employees on the basis of sexual orientation? For example, does it refuse to employ homosexual people, or prevent homosexual employees from advancing to positions of leadership?

      8. Does the business discriminate against employees or potential employees on the basis of age? For example, does it refuse to employ older people, or force older employees to leave?

      9. Does the business discriminate against employees or potential employees with disabilities? For example, does it refuse to employ such people, or refuse to accommodate the needs of the people with disabilities whom it does employ?

      10. Does the business discriminate against employees or potential employees on the basis of their religion? For example, does a business run by a Muslim owner refuse to employ Jewish or Christian people?

      11. Would the business treat employees differently if it found out about issues of conscience (for example, if employees were anti-war) or belief?

      12. Does the business discriminate against employees or potential employees on the basis of culture?

      13. Does the business discriminate against employees or potential employees on the basis of language, to the extent that fluency in a particular language is not a requirement for doing the job properly?


    It is very important that people in a business work in collaboration with one another to help achieve the businesses objectives. The word collaboration means very simply working together to achieve a goal.

    Criteria for successful team performance (recap)

    In grade 10 you learnt about the criteria that need to be met in order for a team to be successful:

    • Clear objectives
    • Openness
    • Mutual respect
    • Support and mutual trust
    • Commitment
    • Interpersonal relationships
    • Individual development opportunities
    • Reviewing the team’s progress.

    Self-assessment and team performance assessment according to team criteria

    The following guidelines can be used to effectively perform a specific role within a team:

    • Identify each individuals behavioural strengths and weaknesses so that they can be given a suitable role in the team
    • Clearly define each member in the teams role with clear boundaries and instructions, in order to minimise conflict related to role ambiguity
    • Role and work overload needs to be avoided to ensure effective performance. When circumstances call for it members should take on more than one team role to accomplish shared objectives.

    The characteristics of successful teams:

    • The team has a clear sense of purpose with a clearly defined mission and objectives that every team member understands.
    • The objectives of the team are broken down into clear goals for each team member to achieve and fulfil.
    • The team must have a clear set of processes and procedures for their work. This will allow work to be co-ordinated and organised.
    • The team members must have a sense of individual responsibility towards the values, goals and objectives of the team. This creates an important sense of belonging and value within the team.
    • The team must have a balance of the necessary skills, knowledge, experience and expertise to achieve the objectives.

    Grievance and disciplinary procedures along with other in house company procedures can be used to deal with problems that arise.

    In Grade 11 you learnt about The Thomas-Kilnmann model for conflict management. This can be used when problems arise or to allow third-party intervention where the parties involved express their concerns in the presence of a conciliator (no judgement is formed) or a mediator (suggestions are made that are non-binding).

    Correct procedures to deal with grievances

    If a member of a team is unable or unwilling to cooperate to resolve a problem then the correct grievance procedure needs to be followed.

    Stage 1:

    • The employee should approach their immediate superior to report the grievance
    • The grievance should be addressed as soon as possible – no later than three working days after it is reported. If not resolved, the aggrieved employee should proceed to the next stage.

    Stage 2:

    • A meeting should be requested with the immediate superior and a grievance form drawn up to indicate the nature of the grievance
    • The superior may respond in writing or set up a meeting. If a meeting is held, the employees involved are allowed to bring representatives and witnesses
    • The responsible person (supervisor) who deals with the grievance must attempt to resolve the grievance in ten working days. The decision of the arbitrator is final
    • If the aggrieved employee finds it necessary they may resort to an external dispute resolution mechanism such as the CCMA.

    Different ways of dealing with difficult people (personalities)

    You can try the following:

    • Be calm and in control of the situation
    • Try to understand the person's intentions and why they have reacted In this way
    • Get input from others
    • Let the person know what your intentions are and the reasons for your actions
    • Build rapport by re-establishing personal connection with colleagues instead of relying on emails, messaging and computers
    • Treat the person with respect
    • Ask someone in authority for their input into the situation
    • If you have already tried everything above and the person is still not responding, ignore them.

    The primary sector (agriculture, fishing, and extraction such as mining) makes direct use of natural resources, the secondary sector (roughly the same as manufacturing) and the tertiary sector (also known as the service sector) are the different economic sectors in which businesses operate.

    Try to remember the following points about the business environment:

    • The business environment is multifaceted
    • The components of the business environment are interdependent
    • The business environment is very uncertain
    • The business environment is dynamic
    • Changes that occur in the business environment have both short-term and long-term effects, which can be either positive or negative.

    Although businesses have very limited control over the environments within which they operate they can try and exert some control.

    Control over the micro environment

    The micro environment includes all the internal factors of the business. Via an internal control system management of a business should have full control over all the elements of its micro environment. The micro environment of a business is divided in to 8 business functions. It is the role of management and entrepreneurs of a business to ensure the full and effective operation of these functions. In this way, the micro environment can be fully controlled. These 8 functions are described below:

    Business Functions

      Purchasing is the process whereby raw materials are obtained in order to make the product or deliver a service.

      Human Resource Management involves the managing of current staff and the employing of new staff in a business.

      Production is the process whereby the product is made or the service is delivered.

      General Management determines the direction of the business.

      Finance ensures all resources are available for the operation of the business.

      Marketing means understanding and satisfying the needs of the customers

      Public Relations involves maintaining a favourable public image by, and of the business.

      Administration needs efficient and organised systems to ensure the smooth running of the business.

    Internal control consists of five inter-related components:

    • Control environment
    • Risk assessment
    • Control activities
    • Information and communication
    • Monitoring.

    Control over the market environment

    The market environment exists just outside of the business and includes elements like customers, suppliers, etc… An individual business has limited control over the elements of the market environment and can at best try to influence the market environment in order to benefit from opportunities and limit the impact of the threats.

    Management need to look at:

    • Suppliers
    • Competitors
    • Intermediaries
    • Customers
    • Civil society.

    Within the three businesses sectors, primary, secondary and tertiary, each business will have to be aware of its market environment and ways to deal with it.

    Control over the macro environment

    The macro environment is the environment directly outside the market environment. The macro environment consists of all the external elements that exist outside of a company's control that can significantly impact its performance and ability to compete in its marketplace. Examples of macro environment elements are the economy, government policy-making, technology, social conditions, and nature. For companies with a global foot-print, their exposure to macro environment elements is magnified.

    Although a business cannot control the macro environment it can try to have some involvement or input into it in order to benefit the business. Examples may include lobbying political groups, social responsibility initiatives, etc…

    Macro economic factors

      Physical Climate change(s) can affect the success of the primary sector and therefore, all the business sectors.

      Political Political events worldwide can threaten a business

      Economic The economic environment changes all the time, and it is vital that businesses watch key economic indicators.

      International International trade, (for example, imports and exports),and competition are factors affecting the success of businesses worldwide.

      Technological Changes in technology can have a great affect on the micro and market environments of a business.

      Social The business location, its accessibility, its suitability to customers is important.

    Indicators in the macro environment, such as economic indicators, may provide the opportunity to make changes in a business, but many changes that occur are unpredictable. Natural disasters are definitely unpredictable events. A business must try to

    • participate in identifying new opportunities and reducing risk
    • more accurately predict future events
    • contribute to a healthier, protected, more skilled and more productive workforce
    • protect natural resources and meet consumer needs in a sustainable way

    Globalization and competitiveness

    • Business networks are becoming increasingly globalized as more and more companies compete internationally.
    • Globalized markets intensify competitive pressures and causing the center of economic gravity to shift to new regions.
    • South Africa needs to ensure our global competitiveness by capturing long-term, leading positions in tomorrow's markets.
    • To succeed in today's global economy, companies must think and act internationally.

    Effective leadership and effective management are needed for a business to be successful. Let’s look at the characteristics of leadership and management.

    Leadership

    Leadership is a process by which a person influences others to accomplish an objective and directs the organization in a way that makes it more cohesive and coherent.

    A leader should:

    • Be visionary, giving orders, inspire people and provide them with direction
    • Look for opportunities and encouraging change and innovation
    • Communicate effectively and have good listening skills
    • Motivate people and have good people skills
    • Set an example for others to follow
    • Encourage effective team work.

    Management

    You previously learnt that the main tasks of a manager are planning, organising, leading and control.

    Differences between leadership and management

    • Leadership is setting a new direction or vision for a group that they follow, ie: a leader is the spearhead for that new direction
    • Management controls or directs people/resources in a group according to principles or values that have already been established.
    Leadership Management
    Is about inspiring, helping, listening, developing
    and communicating.
    Managing through planning, organising,
    commanding, controlling and disciplining.
    Is a process. Is a position.
    Natural authority and influence. Delegated authority and influence.
    Interdependent decision-making Independent decision-making.
    Collaborative and cooperative. Competitive.
    Manages people by managing emotions,
    relationships and communication.
    Manages things like processes, procedures and
    resources.
    Embraces change as an opportunity for growth
    and development.
    Perceives change as a threat to productivity and
    planned objectives.

    There are many different leadership styles. We are going to focus on four.

    Democratic/Participative style

    This leadership style takes into consideration the needs and input of followers and encourages group involvement. This type of leader includes employees in decision making but has the authority to make the final decision.

    Autocratic style

    This leadership style involves telling employees what to do and how they should carry out their tasks without asking them for input or ideas. These leaders have all the authority and make all the decisions themselves.

    Bureaucratic style

    This leadership style involves relying on organisational rules and policies.

    Laissez faire/delegative style

    This leadership style involves telling employees what to do but giving them leeway to decide how to carry out their tasks.


    Leaders may have to change their approach and style from time to time. As such it is important for them to be aware of some of the different leadership theories.

    The leader follower theory

    This is a leadership theory that focuses on the interactions between leaders and followers. The interaction between leaders and followers helps to shape the success or failure of an organization. The very concept of a team-oriented workplace, commonality toward goals and a productive work environment stem from the leader-follower interaction.

    Situational leadership

    This involves using a combination of leadership styles to suit a particular situation. They are able to look at a situation and consider various factors, such as time limits, relationship with subordinates and the skills and capability of subordinates when choosing a particular

    leadership style.

    Transitional and transformational leadership

    This is where the leader inspires followers with a shared vision, and motivates and empowers them to do more than they would usually do or thought they could do.

    Charismatic leadership

    In many ways this is similar to transformational leaders, in that they are also enthusiastic and inspire and transform (change) the people they lead. They guide people by using charm and self-confidence and their personality attracts attention.

    Transactional leadership

    This approach is where the leader creates clear structures, roles and responsibilities so that subordinates know exactly what is expected of them and what rewards they will get for following orders.

    Servant leadership

    The servant leader focuses more on his followers than on him- or herself and argues that the most effective leaders are servants of their followers.


    Attitude can be defined as being A settled way of thinking or feeling, typically reflected in a person's behaviour. Success in leadership will depend on your personal attitude. Positive attitudes that are important for successful leadership include:

    • Enthusiasm
    • Belief
    • Drive
    • Courage/persistence.

    Quality is important to businesses but can be quite hard to define. A good definition of quality is:

    “Quality is about meeting the needs and expectations of customers”

    Customers want quality that is appropriate to the price that they are prepared to pay and the level of competition in the market.

    Key aspects of quality for the customer include:

    • Good design
    • Good functionality
    • Reliable
    • Consistency
    • Durability
    • Good after sales service
    • Value for money.

    When managers manage a business well, they control the following functions: purchasing, production, marketing, finance, administration, personnel (also known as Human resources), public relations and general management.

    Some of the advantages of good quality are:

    • customer loyalty
    • strong brand reputation for quality
    • as the product is perceived to be better value for money, it may attract a higher price
    • fewer returns and replacements lead to reduced costs
    • attracting and retaining good staff.

    SABS

    The South African Bureau of Standards (SABS) is a South African body that was established by the government in 1945 to promote and maintain quality and standardisation of goods and services. Having their logo on products such as electrical appliances ensures that certain regulations regarding safety have been met.


    Quality in the human resources function

    A healthy working relationship between employer and employees, good working conditions and proper discipline and motivation will improve the performance of employees.

    Some tasks of the Human Resources function that will ensure continuous quality improvement:

    • Setting up an effective organisational structure
    • Organise training programmes and continuous skills development
    • Promote employee motivation to ensure job satisfaction and improve performance levels
    • Implement an employee and management performance management system (PMS).

    Quality in the purchasing and production functions

    Purchasing and production functions coincide because the production department needs materials to work with. The materials are purchased by the purchasing dept.

    They need to know each other's timelines and deadlines, e.g. prod. needs to know how much lead time to give purchasing to get the materials.

    The principal procedures in a purchasing department can be listed as follows:

      1. Receive purchase requisitions 2. Review and evaluate requisitions 3. Aggregate and place orders 4. Follow-up and expediting 5. Payment authorization 6. Record-keeping.

    Quality in the financial function

    Finance is critical to any business. All areas of the business need to have up-to-date information about its financial health. Financial reporting is a major part of this function.

    Financial accounting

    This is the process of summarising historical financial data taken from the accounting records of the business.

    Management accounting

    Management accounting provides accounting information relating to the future, which helps managers make decisions that will affect the future of the business.

    Quality in the marketing and public relations function

    A business needs to co-ordinate and combine all seven marketing policies in order to maximise their impact:

    • Product
    • Price
    • Place
    • Promotion
    • People
    • Processes
    • Physical environment.

    Quality in the administration function

    Effective systems will help ensure the smooth running of the business.. Quality information is information that is accurate, complete, meaningful, easily understood and available when needed by users.

    Quality in the general management function

    Strategic planning, which is the responsibility of top management, is crucial to ensure quality performance. The management function is involved in all the other business functions and is ultimately responsible for the overall performance of the business.


    Small businesses

    In small businesses (e.g. sole trader), most, if not all, of the business functions can be combined.

    Factors that might affect the quality of the product or service of a small business include:

    • One business function is ignored due to time constraints
    • Inability to negotiate good prices when buying trading stock or raw materials
    • While quality systems and quality control in small businesses could be effective, they are not always documented. This means that errors or deviations could re-occur
    • Failure to keep sufficient stock levels as a result of lack of storage facilities or lack of funds
    • Limited funds to spend on marketing
    • There is limited budget for human resources
    • Lack of expertise in any other function will affect the overall quality of performance of the small business
    • High cost to outsource certain functions to experts.

    Large businesses

    Large businesses may have individual departments with special skills and training that deal with the different business functions. Other factors that may affect quality in a large business may include:

    • Ability to afford specialised and skilled employees
    • Ability to afford quality equipment and machinery and implement advance technological processes and procedures to ensure quality products and services
    • Ability to implement well-planned quality systems which describe the policies and procedures for business performance and ensure quality products and services
    • In large business with tall organisational structures, it often takes longer to detect problems or respond to weaknesses.

    Total Quality Management (TQM)

    TQM is a management system that focuses on continuous quality improvement throughout the whole business.

    The three basic principles of TQM are to:

    • focus on achieving customer satisfaction
    • look for continuous improvement in all the business's processes, products and services
    • ensure the full involvement and co-operation of the all employees in improving quality.

    The elements of TQM include:

    • Continuous skills development
    • Teamwork
    • Total client satisfaction
    • Continuous improvements to processes and systems
    • Organisational culture
    Human Rights

    Human rights are the basic nghts to which every person is entitled and which are listed in the United Nations Universal Declaration of Humah Rights.

    Bill of Rights in South Africa

    • 1 Equality
    • 2 Human dignity
    • 3 Freedom from slavery, servitude and force labour
    • 4 Privacy
    • 5 Freedom of religion belief and opinion
    • 6 Freedom of expression
    • 7 Freedom of assembly, demonstration, picket and petition
    • 8 Labour relations
    • 9 Environment
    • 10 Children
    • 11 Just administrative action
    • 12 Access to courts

    In business Diversity refers to the differences between people based on race, gender, age, language, culture, religion etc

    Inclusivity means to treat everyone equally without discrimination, regardless of race, gender, age, language, culture, religion etc...

    Discrimination is when people are treated unfairly and differently to other employees based on their membership of a particular group.

    DIVERSITY IN THE WORKPLACE

    • Diversity in the workplace exists when the business employs workers from different backgrounds and experiences.
    • Many businesses view diversity in the workplace as an investment to improve the business.
    • Although diversity in the workplace has many advantages, it also presents employers and managers with a number of challenges.
    • To experience the advantages of diversity in the workplace, employees and managers have to understand the challenges and know how to handle it effectively.

    Advantages of diversity in the workplace

    • Increased productivity: diversity and inclusivity bring a variety of talents and skills together so that a common goal can be reached.
    • Increased creativity and problem solving.
    • Helps to build co-operation in teams and strengthens communication skills, which contribute to new attitudes and processes in the entire team.
    • It increases market share and creates a satisfied, diverse client base that can associate with people from different backgrounds.
    • Attracts and retains talent that contribute to the competitiveness of any business.
    • To feel appreciated and part of an organisation, increase loyalty and the sense that you belong somewhere.

    Diversity issues and strategies to address it

      Poverty
      • Supply free uniforms or working clothes.
      • Provide low priced meals at canteens/tuck shops.
      • Offer training to improve skills for better positions in the business.
      Inequality
      • Consider equal opportunities when promoting staff.
      • lmplement an employment equity plan for the business.
      Race
      • Implement affirmative action policies as required by law.
      • No discrimination should be made based on skin colour.
      Gender
      • Pay male and female workers the same salary/wage for equal work performed.
      • Make all posts accessible to male and female workers. > Set targets for gender employment.
      Language
      • A business may specify that all communications must be in one
      • specific language only and could expect employees to have a certain level of fluency in that language.
      • It may sometimes be necessary to employ an interpreter so that everyone can fully understand what is being said in a meeting.
      • All business contracts should be available in easy-to-understand language and in the language of choice for the parties signing.
      Age
      • Link promotions to specific skills and not to age.
      • Don't employ children younger than 16 years.
      • The ages of permanent workers should vary from 18 to 65 to include all age groups.
      Disability
      • Provide employment opportunities for people with disabilities
      • Accommodate people with disabilities by providing facilities/ramps for wheelchairs, etc.
      • Ensure that workers with special needs do not feel excluded from work-related activities. ‘
      Culture
      • Be sensitive to special requirements for different cultural groups, e.g. allow day(s) to take leave for cultural holiday/festivals.
      • Cater for special food/preparation methods in the workers' canteen.

    Businesses need to ensure that they act in an ethical manner in terms of their impact on the natural environment and on human health.

    ENVIRONMENTAL PROTECTION

    Environmental protection is the steps taken by individuals organisations and ccmmumties to protect their natural surroundings.

    How a business can protect the environment

    • Busrnesses can base its environmental strategies on the National Environmental Management Act (No. 107 of 1998) and the Environment Conservation Act (No. 73 of 1989), as well as on any other Acts that apply to its specific sector and activities.
    • Businesses should constantly re-evaluate and adjust their strategies and production processes to ensure that they are in line with the latest environmental impact surveys.
    • Businesses should take an active role in environmental sustainability initiatives organised by the government or by communities, for example by funding these initiatives.
    • Businesses should promote sustainability through minimising pollution, and be actively aware of the importance of recycling.
    • Businesses should also try to use alternative sources of energy rather than coal-fired electricity in order to reduce their impact on the environment.
    • Businesses should get rid of waste materials in the correct manner so that it is not harmful to the environment or human health.

    Positive impact of environmental protection on the business

    if a business protects the environment this business could benefit in the following ways:

    • a higher rating in terms of BBBEE compliance
    • an increase in employees‘ satisfaction and loyalty
    • increased approval from customers, that could lead to improved profits and greater market share
    • increased approval from suppliers and intermediaries
    • inclusion on the Socially Responsible Investment (SRI) Index (if the business is a public company listed on the JSE).
    • increased capital investment from environmentally aware investors
    • sustainable access to resources
    • long-term savings

    Human Health

    Human health refers to the overall condition and functioning of a human being in his/her entirely. It includes the mental, physical and social well-being of people and the society inwhich they live.

    How a business can protect human health

    • A business can ensure that its workplace procedures conform to the Occupational Health and Safety Act (No. 85 of 1993).
    • It should eliminate potential dangers in the workplace.
    • It should ensure that it avoids the use of harmful substances, but if necessary, takes safety precautions to protect employees.

    How promoting human health impacts on the business

    • Sick or dying workers have a negative impact on a business. However, if a business promotes the health of its workers it could benefit in the following ways:
      • healthy workers do not require sick leave
      • long-serving workers will remain in service for a long time and will not need to be replaced
      • happier workers and better morale in the workplace

    Equalityis when people have the same staus, rights and opportunities.

    Respectis when people show a regard for the feelings and rights of others.

    Dignityis when people have the right to be respected and treated ethically, because everyone is equal.

    A business should respect the dignity of each employee, and protect it by instituting appropriate guidelines for behaviour in the workplace.

    Corrective action should be taken when equality and respect for the dignity of each person are not present in a workplace.

    By ensuring that employees are treated equally, and with respect and dignity in the workplace, businesses will benefit in the following ways:

    • employees will be more motivated
    • employees will feel that they get equal opportunities
    • employees will respect the business‘s values
    • employees will respect their managers
    • employees will come from diverse backgrounds and will therefore help the business engage with and succeed In a diverse market place

    • The Labour Relations Act (No. 66 of 1995) addresses the economic rights of both employees and employers.
    • These rights include the right to fair labour practices and labour processes.
    • Economic rights of workers include:
      • free from forced labour
      • fair wages
      • reasonable limitation of working hours
      • safe and healthy working conditions
      • right to join trade unions
      • right to participate in a legal strike
    • Social rights include the right to clean water, food, housing, sanitation, education, health services, privacy, freedom from discrimination, and the right to have a family.
    • Ways of promoting social rights in the workplace:
    • employees have access to health care (e.g. site clinics for basic medical examinations)
    • opportunities for skills training/basic education
    • register workers at UIF (provide protection in the event of unemployment/ illness)
    • Cultural rights include a person's right to dress appropriately according to his/her culture and religion, and to take part in cultural and religious activities.
    • According to the Bill of Rights businesses may not discriminate against anyone based on gender, culture, religion or belief.
    Team Performance

    Employees need to collaborate with one another In order to achieve the businesses objectives. This often means working in teams.

    A team is a group of people working together interdependentiy to realise a common goal.

    When a team works together efficiently, it can be very effective way of achieving goals. Being able to work in a team is one of the most important skills needed to succeed in the business environment.

    The word 'role' has a few meanings. One of these meanings refers to an individual‘s ‘typical behaviour‘. For example, one person could be a good listener, while another person might be difficult to work with.

    When team members have different strengths that compensate for each other's weaknesses. they are playing compiementary roles

      CRITERIA FOR SUCCESSFUL TEAMS

    • Clearly defined and realistic goals are set, so that all the members know exactly what is to be accomplished.
    • Commitment by members to the common goal.
    • Agreement on methods/ways to get the job done effectively without wasting time on conflict resolution.
    • A clear set of processes/procedures for team work will ensure that every team member understands his/her role.
    • The team should operate as a co-ordinated/organised unit.
    • All members take part in decision making.
    • Ability to communicate well and make quick decisions.
    • Team leader should acknowledge/give credit to members for positive contributions.
    • Team members to respect and trust each other.
    • Passionate/committed/focused members will ensure positive results despite problems/distractions.
    • Good/sound interpersonal relationships could ensure job satisfaction and increased productivity of the team.
    • Respect the knowledge and skills of other members.
    • New skills acquired by members may contribute to the success/ effectiveness of the team.
    • A balanced composition of skills. knowledge, experience and expertise will ensure that teams achieve their objectives.
    • Continuous review of the team's progress will ensure that team members can rectify mistakes or act pro-actively to ensure that goals are reached.

    CRITERIA FOR INDIVIDUALS TO ASSESS THEIR TEAM CONTRIBUTION

    When people work together they can learn from one another and achieve more than they can as individuals. Individuals can use the following four criteria to evaluate themselves with regard to team performance:

      Interpersonal attitudes and behavior

    • is positive and supports and motivates other team members.
    • is positive and passionate to achieve shared team objectives.
    • Sets clear objectives and agreed goals.
    • Shows commitment, together with team members. to achieve team objectives.
    • Supports team members by acknowledging each other's good work.

      Shared values

    • Shows loyalty and respect towards team members despite differences.
    • Performs team work with integrity and responsibility and meets the team's deadlines with the necessary commitment to team goals.
    • Trusts and supports team members.
    • Shares and believes in the same attitude/ethical cuiture/ behaviour that the team and business may use to reach objectives.

      Communication

    • Speaks clearly and listens attentively.
    • Communicates with team members and allows for feedback.
    • Encourages discussions about problems so that solutions can be found.

      Co-operation

    • Willing to co-operate in the team to achieve team objectives.
    • Willingness to co-operate with management to achieve team and business objectives.
    • Agrees on methods/ways to complete work effectively without wasting time on conflict resolution.
    • All members participate in decision making.

    TEAM PERFORMANCE ASSESSMENT

    To determine whether a team has reached its objectives, the following steps can be followed:

    • 1) Develop a set of criteria to measure the team's achievements.
    • 2) The team is evaluated by every team member, the team itself and the relevant manager.
    • 3) identify areas that can be improved.
    • 4) Design a strategy to prevent similar mistakes from being repeated in ' d t co-o erate future. If necessary, the team member/members who fail to co-operate could be removed from the team.

    • Each team member should contribute towards the success of the team.
    • Successful teams go through different stages of team development in order to become more successful or effective.

      Forming

    • A team is formed consisting of different individuals, who will have to work together towards a common goal.
    • Team members voluntarily to work together.
    • A team is formed to solve a problem.
    • Each team member is driven by the desire to be accepted by the other team members.
    • Team members gather information about each other or the objectives of the team.
    • This is a good opportunity to see how each member performs as an individual and how he/she responds to pressure.

      Storming

    • After the team has been formed, it goes through a period of uneasiness or discomfort known as storming.
    • Different ideas are suggested for consideration.
    • Team members open up to each other and confront each other‘s ideas.
    • This stage is necessary for the growth of the team.
    • Team members have to be tolerant of and patient with each other to survive this stage.

      Norming

    • Team members agree on a mutual plan for the team.
    • Team members consider their own ideas, but agree with others to make the team perform well.
    • Team members address difference of opinions and conflicts are resolved.
    • There is evident trust and motivation in the team.

      Performing

    • Team members know each other and the team can function as a unit.
    • Ways are found to get the job done smoothly without conflict.
    • Processes and structures are established.
    • The decision making process is handled in the team.
    • Make the most of necessary decisions to work towards a common goal.

      Adjourning

    • The focus is on the completion of the task.
    • Breaking up or adjourning the team may be traumatic as team members may find it difficult to return to a stage of performing as individuals.

    Team dynamics are the interactions that occur between people working in a team

     

      Berlin's team role theory

      The word ‘role‘ does not always refer to an individual‘s typical behaviour‘. Sometimes we use the word to refer to an individual‘s designated function in a group. For example, being a manager is a role and being a secretary is a role.

      Meredith Belbin examined team roles while studying the effectiveness of groups According to Belbin, in order to perform effectively within a team. each individual needs to function in the role that suits him/her best, and every team needs a balance of different role players. He suggested that succesle teams should consist of individuals fulfilling nine essential roles.

    Jungian theory

    Carl Jung suggested that people could be categorised based on their:

    • source of energy, perception style, decision-making style and lifestyle

    Jung observed that while some people were energised by being alone, others were energised from being with people.

    SOURCE OF ENERGY

      lntrovert

       
    • Gathers to from being alone, tends communicate less with other people

      Extrovert

    • Gathers energy from being with people, gets along well with other people.

    Jung observed that while some people perceived facts through their senses, others preferred to be more abstract in how they saw things and looked at patterns and models.

    PERCEPTION STYLE

      Sensing

    • Pays attention to physical reality and facts, reacts well to personal experience.

      Intuition

    • Likes to see patterns, senses things and think of possibilities.

    Jung observed that some people made decisions based on logic, while others made decisions based on their emotions.

    DECISION-MAKING STYLE

      Thinking

    • Decisions are based on strength of logic and reasoning.

      Feeling

    • Depends on intuition and makes decisions based on emotions.

    Jung observed that some people like to live life where other people take decisions on behalf of them, while others like to be open to new information.

    FOCUS ON THE WORLD/ LIFESTYLE

      Judging

    • Lifestyle is structured and ordered with fixed ideas and plans.

      Perceiving

    • Lifestyle is adaptable and flexible

    MTR-i approach

    The nine team roles in this model:

      Warrior

    • focuses on the main objective; looks further than the immediate circumstances

      Curator

    • questions information and gathers ideas; uses ln-depth knowledge to provide clarity

      Coach

    • builds relationships and creates a positive stable atmosphere, avoids conflict

      Crusader

    • has strong values and convictions; can prioritise and provide leadership on ethical issues

      Innovator

    • looks at new, unusual and creative opportunities and imagines new perspectives

      Conductor

    • organises and plans processes; uses logical structure to achieve goals

      Sculptor

    • keeps the group focused and achieves timeous completion of tasks; provides practical solutions

      Explorer

    • explores new ideas and improvements; positive about change

      Scientist

    • explains how things work; gains intellectual understanding with the aid of theories and thought diagrams

    GROUP CONSENSUS

    Consensus means agreement.

    A group consensus is an agreement Within a group that is acceptable to all the members of that group.

    Consensus decision-making is a group decision-making process where all the members of the group must find a solution that is acceptable to all

    A number of cultures, such as the San, have a long tradition of consensus decision-making. Many modern psychologists have studied traditional approaches like these in order to create a standard process for reaching  group consensus

    The steps taken to reach a group consensus are as follows:

    • 1) identify and discuss the problem or issue.
    • 2) Brainstorm all the possibie alternatives (no ideas are thrown out at this point).
    • 3) Discuss each proposal.
    • 4) Determine how many group members agree on a particular proposal.
    • 5) Modify this proposal to make it acceptable to other people.
    • 6) Make a decision.
    • 7) Ask the group members that still don‘t agree to test the decision for a certain period of time.

    THE MARGERI5ON-McCANN TEAM MANAGEMENT PROFILE

    Cheries Margerison and Dick McCann developed the Margerison-McCann Team Management Profile to help managers to assemble teams of people with complementary strengths.

    According to this approach, every person has different strengths, and these should be recognised when determining group roles.

    The eight roles in this system are as follows:

      Explorer-Promoter

    • persuader in the team, sells idea to the rest, likes variety and excitement, gets bored easily, extrovert

      Assessor-Developer

    • breaks up ideas into manageable parts, objective, develops ideas, enjoys project work, likes experimentation

      Thruster-Organiser

    • organises and implements ideas, makes quick decisions, focuses on results, creates systems

      Concluder-Producer

    • practical and production oriented, likes schedules and plans, values efficiency

      Controller-inspector

    • strict about control and detail oriented, little need for people contact, inspector of standards and procedures

      Upholder-maintainer

    • caring and supportive, uses emotions. motivated to achive goals

      Reporter-Adviser

    • gathers information, supports others and is tolerant, does not like being pressurised. has knowiedge and is flexible

      Creator-lnnovator

    • creative, designs new systems, future oriented, enjoys difficult problem, uses imagination, enjoys research .

    Problem solving is the process of finding solutions to difficult issues.

      The different kinds of problems that may need to be solved are:

    • how to correct something that has gone wrong
    • how to take up an opportunity so that the business can improve

        To solve problems you can apply the problem solving steps.

      • IDENTIFY the problem
      • DEFINE problem
      • IDENTIFY alternative solutions
      • SELECT the best solution
      • DEVELOP and implement best solution an action plan
      • MONITOR the implementation of the action plan
      • EVALUATE if the is solved the problem

    Conflict is a state of struggle or disagreement over opinions/ideas in the workplace.

    Managers need to ensure that conflict between employees does not impact on the productivity of the business.

    There are three types of conflict.

      lntrapersonal conflict

      is conflict within one person.

      Interpersonal conflict

      is conflict between two or more people.

      lntergroup conflict

      is conflict between two or more groups.

    POSSIBLE CAUSES OF CONFLICT WITHIN A TEAM

      Different personalities

      • Conflict is inevitable when people from different backgrounds/cultures values/races/gender have to work together in the same environment.
      • Different personality types within a team can cause conflict because some employees may be introverts while others are extroverts resulting in different perceptions.

      Poor communication

      • Poor communication can lead to all types of misunderstanding and can become very destructive.
      • if employees or management decide to sidestep each other's opinions. team members may become unhappy.

      Competition

      • Although competition may be a good motivator, it can become negative if the focus is on competition only and team members lose their team spirit.
      • Unhealthy workplace competition may spark conflict as it demoraiises employees who cannot always meet targets.

      Ignoring rules or procedures

      • Employees who do not follow the rules or procedures can cause conflict as tasks may not be performed according to the business's specification.
      • Team members who ignore rules or procedures may delay the completion of tasks.

      Poor systems and procedures

      • Poor systems and procedures cause stress to workers and make them frustrated.
      • If there are not enough guidelines for team members, they will be unorganised in their work.

      Workload and stress/Unrealistic expectation

      • When employees are overloaded with work, they become stressed or burnt-out.
      • Unrealistic deadlines and heavy workloads lead to stress that can cause conflict.

      Confusion about scheduling and deadlines

      • individual team schedules and deadlines that are not clearly communicated can cause conflict.
      • it can be a challenge to reach deadlines.

      Unclear responsibilities

      • Employees who are not clear about their responsibilities are more likely to avoid duties and blame others for work not done.

      Distracted by personal objectives

      • Some employees may pursue their own personal objectives and they could perhaps try to force their own desires onto the team.

      Insufficient resources

      • Team members may fight over the limited resources available to accomplish their/the team's tasks.

      Constant changes

      • Constant changes in a business may cause a lack of clarity regarding the roles and responsibilities of each team member.

    CONFLICT RESOLUTION PROCEDURE

    • Identify and acknowledge that there is conflict.
    • Analyse the cause of conflict.
    • Arrange a meeting between conflicting team members.
    • Arrange a time and place for discussions where all members are present
    • Give each member the opportunity to express his/her own opinionslfeelings.
    • Conflicting members may recognise that their views are different
    • Brainstorm possible ways of resolving the conflict.
    • Conflicting members agree on criteria to evaluate the suggested and alternative solutions.
    • Select and implement the best possible solution.
    • Evaluate the implementation of the solution(s).
    • Monitor progress to ensure that the conflict has been resolved effectively.

    • A worker with a grievance must first bring it to the attention of the supervisor who must then try to solve the matter within one working day after it has been reported.
    • if the worker is not satisfied with the supervisor's decision, the worker can submit a fennel complaint in writing.
    • A Formal Grievance Form is completed and submitted to the relevant management level.
    • The manager involved will call a meeting within one working day. The time period may be extended if both parties agree to it.
    • The manager ensures that minutes are taken If the worker is not satisfied, he/she can report it to the next management level.
    • The manager will advise top management on who should organise the meeting, comprising of the aforementioned parties.
    • The decision is indicated on the Formal Grievance Form.
    • if the worker is still not satisfied with the outcome, he/she can make use of any statutory dispute resolution procedures, including bargaining councils or the CCMA.
    • A worker can appeal if he/she is not satisfied with the outcome.

    • Do not judge the employee, but try to understand him/her. Understand the person's intentions and why they react in a certain way.
    • Get perspective from others who have experienced the same kind of situation, to enable you to understand the difficult employee.
    • Act pro-actively if possible, as a staff/personnel problem is part of a manager's responsibility.
    • Regular meetings with supervisors should help to identify problem behaviour.
    • ldentify the type of personality which ls creatlng the problem.
    • Emloyees should be told what specific behaviours are acceptable by giving details about what is unacceptable and also an opportunity to explain their behaviour
    • A deadline should be set for improving bad/difficult behaviour. Guidelines for improvement should be given.
    • The deadline date should be discussed with the employee and his/her progress should be monitored prior to the deadline.
    • Keep communication channels open and encourage employees to communicate their grievances to management.
    • Build rapport by re-establishing interpersonal relationships with colleagues instead of relying on e-maiis and text messages.
    • Help difficult employees to be realistic about the task at hand.
    • Remain calm and in control of the situation to get the person to collaborate.
    • Sometimes it may be necessary to ignore and just monitor a difficult person.
    • identify and provide a support program to address areas of weakness.
    Business sectors

    The Three Economic Sectors

    The Primary sector is the part of an economy that extracts, cultivates and gathers natural resources from the physical environment and sells these raw and unprocessed materials to businesses in the secondary sector for processing.

    The Secondary sector (industrial sector) is the part of an economy that buys raw materials from the primary sector and processes these into finished products.

    The Tertiary sector is the part of an economy that is involved in providing finished goods and services to other businesses or to the end consumer.


    THE THREE BUSINESS ENVIRONMENTS

    The micro environment is internal and refers to the business itself and includes its vision, mission statement, aims and goals, its management structure, its resources and its culture.

    The market environment is external and refers to the environment just outside of the business, and includes the business's customers, suppliers and competitors, as well as intermediaries, strategic allies and trade unions.

    The macro environment is external and refers to the environment beyond the market environment, such as the social, physicalnatural, economic, political, technological and international sub-environments.


    Each business environment presents challenges to businesses. Businesses to identify the challenges and then develop strategies they will respond them. The businesses in each sector will do this slightly differently. How businesses will do this will also depend on how much control they have over the relevant business environment.

    CONTROL OVER THE MICRO ENVIRONMENT

    A business can control its micro environment completely. because the micro environment is the business itself. Management should have complete control with the help of internal control systems over its micro-environment.

    How businesses in each sector can control their micro environment

    Primary Sector

    • train and develop employees sector
    • find employees with more skills
    • use technology for greater efficiency
    • research current trends
    • take precautionary measures against natural disasters (e.g. drought)

    Secondary Sector

    • change prices to influence demand
    • find employees with more skills
    • use technology for greater efficiency
    • use different raw materials
    • adjust the products that they are making
    • diversify the range of products and services
    • take precautionary measures against accidents (e.g. fire)

    Tertiary Sector

    • train and develop employees
    • find employees with more skills
    • use technology for greater efficiency
    • change and adjust the type of service offered
    • improve service delivery
    • take precautionary measures against accidents

    CONTROL OVER THE MARKET ENVIRONMENT

    A business can control its market environment (which consists of customers, suppliers, competitors, etc.) to some degree.

    A business also needs to respond to its market environment. For example, it should do market research, and respond to this research by adjusting products to suit the market and also by adjusting how it markets its products.

    How businesses in each sector can control their market environment

    Primary sector

    • change prices to influence supply and demand
    • expand into other markets
    • outsource certain aspects of the business
    • diversify the range of products and services

    Secondary sector

    • change prices to influence supply and demand
    • expand into other markets
    • outsource certain aspects of the business
    • do market research adjust products and services to suit the market
    • diversify the range of products and services
    • improve marketing and the image of the business

    Tertiary sector

    • change prices to influence supply and demand
    • select the types of customers/clients
    • expand into other markets outsource certain aspects of the business
    • do market research
    • adjust products and services to suit the market
    • diversify the range of products and services
    • improve marketing and the image of the business
    • improve service delivery

    MACRO ENVIRONMENT

    Most businesses have no control over their macro environment (the social, physical/ natural, economic, political and technological sub-environments). However, very large companies can control their macro environment to a degree by lobbying governments regarding laws and implementing CSR programmes that have a large impact.

    In most cases businesses simply have to choose how to respond to their macro environments. For example, they need to respond to climatic BBBEE and conditions, keep up with technological change, comply with environmental legislation, and watch global trends and adapt accordingly.

    How businesses in each sector can control their macro environment

    Primary sector

    • obtain exclusive rights to mine, fish or farm in a certain area
    • lobby governments for anti-dumping legislation
    • get a good BBBEE rating to benefit from complying with BBBEE laws
    • enter into fixed-term contracts that will continue despite economic fluctuations
    • influence society and the natural environment through CSR Programmes

    Secondary sector

    • obtain exclusive rights to manufacture certain products
    • lobby governments for anti-dumping legislation
    • get a good BBBEE rating to benefit from complying with BBBEE laws
    • enter into fixed-term contracts that will continue despite economic fluctuations
    • develop new technologies and use existing technologies in new ways
    • influence society and the natural environment through CSR Programmes

    Tertiary sector

    • obtain exclusive rights to sell certain products
    • get a good BBBEE rating to benefit from complying with BBBEE laws
    • develop new technologies and use existing technologies in new ways
    • influence society and the natural environment through CSR programmes
    Leadership and Managemnt

    Although leadership and management are very similar, there are also many differences. Both effective leadership and business to be successful.

    • Leadership is a relationship or social interaction whereby the leader influences other people by motivating and inspiring them. Leaders have a vision for their businesses and are always looking for new businesses.
    • Management is a tasklfunction performed by a manager. Managers are in charge of the running of a business. Their most important tasks include: planning, organising, leading and controlling (POLC).

    A Leader is someone who sets goals and inspires his/her followers to achieve these goals.

    A manager is someone who directs operations so that his/her staff members achieve the set goals.

    Differences between leadership and management

    A leader :

    • Establishes vision and objectives for a business.
    • Inspires and influences people to become achievers
    • Strives to empower employees.
    • Focuses on individuals/groups (people oriented)
    • Focuses on the motivation of employees help with the implementation process.
    • Is always looking out for new business opportunities.
    • Ensures that profit targets are reached

    A manager:

    • Steers operations in a direction to realise the vision and objectives.
    • Wants to be in charge demands respect and authority
    • Issues orders/ instructions.
    • Focuses on task (task oriented)
    • Focuses on the implementation of policies.
    • Reduces and control risks.
    • Develops strategies to increase profitability.

    Leadership styles are different approaches followed by leaders to fulfil their roles as leaders.

    Types of Leadership Styles

    Autocratic leader

      Description

    • Leader has all the authority and makes the decisions on his/her Own
    • Gives instructions on how tasks must be executed
    • Strict rules, with no input from employees

    When to this style

    Situations where the leader has all the necessary information and time is limited, such as in a crisis situation, e.g. a fire

    Advantages

    • Decisions can be made quickly, without consultation with employees.
    • Work can be finished on time/schedule.
    • Effective in a crisis situation
    • Direct supervision and strict control ensure high-quality products/services.

    Disadvantage

    • Employees can become demotivated if their opinions/ideas are not considered
    • Demotivated workers have a negative impact on productivity
    • Followers may feel they are not appreciated, which could lead to high absenteeism and staff turnover.

    Bureaucratic leader

      Description

    • Leader relies on the rules and regulations of the business.
    • Leads by setting up processes and procedures Ensures that employees stick the rules without fail

    When to this style

    Suitable for routine work or situations where health and safety are a priority

    Advantages

    • Employees know what is expected of them receive detailed instructions.
    • Helps businesses to comply with laws and regulations.
    • Minimum standard of quality is reached

    Disadvantage

    Strict regulations could delay the achieving of objectives. Teamwork, creativity and innovation are not encouraged Employees could be frustrated by inflexible rules.

    Democratic leader

      Description

    • Leader allows employees to participate in the decision- making process Employees give a variety of ideas/input before a final decision is made by the leader Two-way communication ensures group dedication to the final decision.

    When to this style

    Situations where the leader does not have all the necessary information to make a decision, and employees have valuable eader. information or know-how (skills and knowledge) to contribute

    Advantages

    • A variety of ideas can lead to innovation
    • Authority is delegated, which could motivate workers to be more productive
    • Complex decisions can be made by using input from skilled employees.
    • Workers feel empowered because they are part of the decision-making process.

    Disadvantage

    • Erroneous decisions could be made if employees are inexperienced.
    • Decision making can be time consuming.
    • Leaders may depend too much on the input of followers and fail to make the final decision.
    • Not always effective in times of emergency when quick decisions have to be made.

    Laissez-faire leader

      Description

    • Employers have maximum freedom and work independently. Leader motivates workers by trusting them to do things on their own. Leader supports workers by providing advice and resources Regular checking of work feedback and style are important for this to work effectively.

    When to this style

    Businesses where employees are experienced and skilled and can be trusted to do the work. Effective in businesses requiring flexibility, creativity and innovation

    Advantages

    • Workers are allowed to make decisions concerning their own policies/methods.
    • Authority is delegated, which is motivational for competent workers.
    • Individual team members can improve/ develop leadership skills.

    Disadvantage

    • A lack of giving clear direction can demotivate some workers
    • Employees can be held responsible for their own work may lead to under- achievement.
    • Productivity can be low if workers do not have the necessary knowledge/skills.

    Leaders and Followers

    • Loyal followers are very valuable to leaders, but most people will only follow a person whom they respect, who inspires them, who is open and honest with them, and who acknowledges and values their suggestions and input.
    • According to the Theory of Leaders and Followers, not all employees are followers, just as not all managers are leaders, but a business will benefit when its managers are also leaders, and their staff members are also their followers.
    • Successful relationships between leaders and their followers will lead to dedicated followers; effective teamwork; the achievement of objectives; high productivity and a business that performs well

    TRANSACTIONAL LEADERSHIP

    • According to the Transactional leadership theory, the leader creates clear structures, roles and responsibilities.
    • The leader communicates clearly what is expected of his subordinates and what rewards they will receive for the successful completion of tasks
    • The leader, therefore, enters into a 'transaction' with his subordinates and negotiates an agreement whereby subordinates are to be afforded full responsibility for tasks they receive and rewarded for its successful completion.
    • Subordinates are held personally responsible for a mistake or when things go wrong.
    • Subordinates are punished for failure to complete tasks
    • Usually, a formal disciplinary system is in place
    • This theory assumes that people are motivated by reward and punishment.
    • This type of leadership is not flexible, because it is based on standardsl policies/procedures/correctness of performance

    SITUATIONAL LEADERSHIP

    • According to the Situational leadership theory, different situations require different leadership styles.
    • Different leadership characteristics are needed for different situations.
    • The taskusituation dictates the leadership style that should be applied, thus leaders have to be adaptable.
    • Relationships between leaders and employees are based on mutual trust/ respect/loyalty/ integrity/honesty.
    • Leaders have the ability to 'read' the situation and to place the most suitable people in the right positions to complete tasks successfully.
    • It enables leaders to use different leadership styles to accomplish their goals.
    • Leaders analyse group members/objectives/time constraints, then adopt a suitable leadership style.
    • Its success depends on the kind of relationship that exists between the leader and his followers.

    CHARISMATIC LEADERSHIP

    • According to the Theory of Charismatic leadership, charismatic leaders will have a particularly big influence on organisations where staff members do not have a strong sense of belonging and where they feel uncertain, anxious and vulnerable
    • This leadership style is often used when a low morale is identified among employees.
    • The leader uses personal charm and inspiration rather than power and authority to influence or lead subordinates.
    • Charismatic leaders believe in themselves; that is why they inspire their subordinates
    • They are focused on themselves, not on change
    • They may not always be objective in the assessment of an employee's ability because they are focused on making the employee feel good
    • Usually, this style is used by politicians, religious leaders and business teams

    TRANSFORMATIONAL LEADERSHIP

    • According to the Transformational leadership theory, these leaders inspire followers with a shared vision to change their insights/ expectations in order to work towards a shared objective.
    • Transformational leaders are strategically thinking leaders who develop a longterm vision for the organisation and sell it to followers
    • They motivate and empower followers to do more than they think capable of.
    • Followers trust and respect the leader.
    • They encourage their followers to explore opportunities and try new things

    SERVANT LEADERSHIP

    The servant leadership theory focuses more on the followers than the leaders, in that leaders are the servants of their followers.

    A servant is someone who is employed help others in a humble way.

    These leaders look after their followers' needs, empower and inspire them them and emphasise teamwork, trust and empathy.

    A servant-leader helps others grow rather than seeking power and wealth.

    Advantage and Disadvantagd

      Transactional leadership

        Advantages :

      • Employees know what is expected of them.
      • Those that work hard are rewarded
      • Disadvantages :

      • Creativity is discouraged
      • Punishments reduce morale

      Charismatic leadership

        Advantages :

      • Morale improves and stress is reduced in the workplace
      • Employees are inspired to produce better quality Work
      • Disdvantages :

      • Employees become too reliant on the leader
      • The leader may be unaware of real threats facing the business

      Transformational leadership

        Advantages :

      • Employees are loyal and dedicated
      • The employees perform to the best of their ability
      • Disdvantages :

      • leader may not be good at managing details
      • The leader may not want to recognise uncomfortable truths
      • about the business

      Servant leadership

        Advantages :

      • Employees fulfil their true potential
      • Employees deliver excellent customer service
      • Disdvantages :

      • This approach takes a long time to deliver results
      • The cultural and regligious values of the lesder may create a hidden agenda that guides the service he/she offers to employees

    An attitude is the positive or negative view that has towards something and which determines someone their response.

    • A positive attitude releases leadership potential.
    • A positive attitude is critical for good leadership because good leaders will remain task-focused regardless of difficulties.
    • Leaders with a positive attitude know that there is always more to learn and space to grow
    • A leaders positive or negative attitude can influence the successifailure the business.
    • Leaders must know their strengths and weaknesses to apply their leadership style effectively.
    • Great leaders understand that the right attitude will set the right atmosphere.
    • Leaders' attitude can influence employees lteams thoughts and behaviour.
    • Leaders should model the behaviour that they want to see in team members.
    • Leaders must know and understand their teams to be able to allocate tasks/roles effectively.
    • Enthusiasm produces confidence in a leader.
    Quality of Performance

    Quality is a state of meeting high standards, and, in a business context quality implies that consumer expectations are met or even exceeded.

    Quality performance is the level at which an individual division, team or business performs, and the extent to which they are productive.

    Quality assurance is the process of ensuring that during and after the production process required standards are reached/have been met during each step of the process.

    Quality control is the process that checks the finished product to ensure that the required levels of quality have been met.


    GENERAL MANAGEMENT FUNCTION

    • Develop, implement and monitor effective strategic plans.
    • Organise in an effective manner by ensuring that all departments have the necessary resources.
    • Ensure that structured standards and norms are in place so that control mechanisms can be implemented.
    • Learn about and understand changes in the business environment on an on-going basis.
    • Set direction and establish priorities for their business.
    • Communicate and share vision, mission statement and values effectively.
    • Be proactive and always seek to improve comparative advantage over competitors.
    • Take disciplinary steps against employees when the need arises by following the correct disciplinary procedures.

    PURCHASING FUNCTION

    • Buy raw materials in bulk at lower prices.
    • Select reliable suppliers that render the best quality raw materials/capital goods at reasonable prices.
    • Ensure effective co-ordination between purchasing and production departments so that purchasing staff understand the requirements of the production process.
    • Implement and maintain stock control systems to ensure the security of stock
    • Maintain optimum stock levels to avoid overstockingltoo much outdated stock.
    • Involve suppliers in strategic planning, product design, material selection and quality control processes.
    • Ensure that there is no break in production due to stock shortages
    • Establish relationships with suppliers so that they are in alignment with the business's vision/mission statement/values.
    • Ensure that the management has a thorough understanding of the supply chain.

    PRODUCTION FUNCTION

    • Provide high quality goods and services according to specifications.
    • Conduct the production/operating processes of a business properly through proper production planning and control
    • Products and services should be produced at the lowest possible cost to allow for profit maximisation.
    • Communicate the roles and responsibilities clearly to the production team.
    • Ensure that products meet customers' requirements by being safe, reliable and durable

    HUMAN RESOURCES FUNCTION

    • Find the most suitable person for a position.
    • Appoint a person in a position where he/she is able to use their skills to the advantage of the business.
    • Ensure continuous training and development of staff.
    • Provide suitable training and development programmes that can lead to a stable workforce and low employee turnover.
    • Make use of learnership programmes.
    • Offer attractive remuneration packages.

    FINANCIAL FUNCTION

    • The financial team and management should be able to account for all costs and justify the quality provided to the process
    • Implement a policy with regard to the granting of credit and se limits.
    • Draw up realistic budgets and implement good budget control.
    • Determine the need for funds.
    • Acquire funds from suitable sources.
    • Effective application of funds.
    • Keep debt within acceptable limits.
    • Take legal action against debtors and customers who do not pay

    MARKETING FUNCTION

    • Acquire a greater market share through good customer service
    • Win customers' loyalty by satisfying their needs/wants and build positive relationships.
    • Adhere to ethical advertising practices when promoting products/services
    • Identify competitive advantage by conducting regular market research
    • Differentiate products to increase target market and profitability
    • Constantly review value issues.
    • Communicate effectively with customers to get feedback about their experiences of the products/services sold.
    • Co-ordinate distribution with the production and advertising strategies
    • Use pricing techniques to ensure a competitive advantage

    PUBLIC RELATIONS FUNCTION

    • Deliver goodslservices that promote the brand/image with key stakeholders, e.g. ment/service providers,
    • Publish regular positive press releases.
    • Achieve a positive image and a respected position in society through thorough publicity.
    • Handle negative publicity speedily. Implement sustainable Corporate Social Investment (CSI) programmes.
    • Compliance with recent legislation, e.g. BBBEE compliant.

    ADMINISTRATIVE FUNCTION

    • Acquire a fast and reliable data capturing and processing system.
    • Supply reliable information to management on time.
    • Make relevant information available for quick decision-making.
    • Handle complaints quickly and effectively.
    • Use modern technology efficiently.
    • Implement effective risk manage policies to minimise business losses.
    • Record evaluation of quality assurance and control evaluations accurately.

    Quality Management encompasses both quality control and quality assurance, as well as quality planning and quality improvement.

    A quality management system is a framework that a business uses to manage key processes to ensure that it maintains a certain standard of quality.

    A quality management system is a belief :

    • in the employees' ability to solve problems.
    • that people doing the work are capable of improving their work.
    • that everyone is responsible for quality.

    BENEFITS OF A GOOD QUALITY CONTROL SYSTEM

    • Effective customer services will be rendered, resulting in an increase in customer satisfaction.
    • Time and resources are used efficiently.
    • Productivity increases through proper time management and the use of high quality resources.
    • Products and services are constantly improved resulting in increased levels of customer satisfaction.
    • Vision, mission statement and business goals may be achieved.
    • The business may achieve competitive advantage over its competitors.
    • Regular training will continuously improve the quality of employees' skills and knowledge.
    • Employers and employees will have a healthy working relationship resulting in happier workers.
    • Increased market share and profitability.

    Continuous improvement refers to the constant improvement of systems, processes, products and services

    CONTINUOUS IMPROVEMENT CYCLE

      Plan

      • Identify the problem.
      • Develop a plan for improvement to systems and processes.
      • Answer questions such as what to do' and 'how to do it'.
      • Plan the method and approach.

      Do

      • Implement the plan on a small scale.
      • Implement the processes and systems.

      Analyse/Check

      • Use data to analyse the results of change.
      • Determine whether it made a difference.
      • Check whether the processes are working effectively.
      • Assess, plan and establish if it is working/if things are going according to plan

      Act as needed

      • Implement the improvement.
      • Devise strategies for continuous improvement.
      • If the change was successful, implement it on a wider scale.
      • Continuously revise the process.

    Total quality management (TOM) is an integrated system and methodology that is applied throughout the business. It helps to develop produce and provide quality products/services to customers/clients.

    ELEMENTS OF TOTAL QUALITY MANAGEMENT

    TOM encompasses the following elements:

    • Total client satisfaction
    • Continuous improvement of processes and systems
    • Continuous skills development
    • Involvement of top management
    • Involvement of all employees
    • Adequate financing and capacity
    • Planning
    • Teamwork
    • Management of facts
    • Monitor and evaluate quality processes

    Total client satisfaction

    Total client satisfaction occurs when the customerlclient is happy with the product or service purchased, it meets his/her requirements, and he/she experiences all interaction with the business as positive.

    • Provide quality products and services to satisfy customer's/client's needs and expectations.
    • Understand the needs of current and future customers.
    • Conduct effective market research to determine customers' needs or to develop products and services that will meet or exceed those needs
    • Implement efficient, friendly customer services and customer care systems.

    Continuous improvement of processes and systems

    Processes and systems are the flow of activities implemented to create or deliver products/services to customers/clients.

    • Businesses that have quality processes and systems in place produce good quality products and can provide excellent customer service
    • Processes should be easy to understand so that customers do not waste their time with long and/or complicated procedures.
    • Employees need to understand the operating and service delivery systems in order to render effective customer service
    • Identify problem areas in the business to be able to devise relevant solutions
    • Give detailed and specific instructions regarding the improvement of systems and processes.
    • Encourage team work and delegate responsibilities.

    Continuous skills development

    • Empower employees through skills development and in doing so improve their achievements as individuals and as teams.
    • Conduct a skills audit to determine the qualifications and skills of staff that can influence the quality of products/processes.
    • Train workers who lack skills, in line with their job descriptions
    • Evaluate training material regularly to improve the effectiveness of the training
    • Implement suitable induction programmes that promote quality
    • Use quality guidelines for managers to monitor continuous skills development

    Involvement of top management

    • Set a clear vision and mission statement with regards to TOM
    • Give strategic guidance with regards to quality management.
    • Support all TQM activities.
    • Appoint managers/supervisors to control and supervise all stages of TQM processes.
    • Act on customer feedback and complaints.
    • Ensure that quality reviews are regularly conducted.
    • Ensure that shareholders are totally satisfied with the quality standards.

    Involvement of all employees

    • Ensure that all employees are involved in quality management.
    • Ensure that employees are totally satisfied with the quality standards.
    • Encourage effective meetings at all times.
    • Ensure high quality standards through effective communication tools.
    • Maintain high quality standards through regular internal quality audits.
    • Have regular reviews/inspections to ascertain whether non-compliance of standard is evident, in order to be pro-active or to take remedial action

    Adequate financing and capacity

    • adequate funds available for proper quality management processes, e.g. systems to prevent errors in the process or to detect defects in raw materials.
    • Keep funds available for market and product research to gather information on quality improvement.
    • Have suitable equipment available for testing and maintaining high quality standards.
    • Use funds only to buy the best quality raw materials to avoid faulty products
    • Have funds available for regular internal and external testing of products and processes to maintain high quality.

    Planning

    • Put proper planning for quality assurance in place before production commences
    • Have enough staff quality assurers available at key production points to ensure the quality of products and processes.

    Teamwork

    • Teamwork TQM requires everyone to work effectively as an individual and as a team member within a department of a business or across different departments
    • Quality circles is an initiative that works well to improve quality within groups
    • A quality circle is a group of employees with a variety of skills and experience coming together to solve problems related to quality and to implement improvements.
    • They givelsuggest solutions to top management.

    Management of facts

    • Management should be kept informed of all quality processes.
    • Facts should be measurable or should be based on observation and experiments
    • Analysis of data and information should be accurate.
    • Accurate data and information would assist the management with making informed decisions.
    • Regular quality feedback meetings between management and employees should be held discuss ways of improving quality

    Monitor and evaluate quality processes

    • Monitoring and evaluation systems as well as quality assurance processes should be in place to prevent product defects and wastages.
    • Allow for quality control checks and procedures at key production points.

    NEGATIVE IMPACT oF POORLY IMPLEMENTED TQM

    • Setting unrealistic deadlines
    • Lack of training and skils development may lead to poor quality products
    • High staff turnover, because of poor skills development.
    • Decline in productivity, because of interruptions.
    • Investors might withdraw investment, if there is a decline in profits.
    • Bad publicity due to poor quality products supplied.
    • Decline in sales, as returns from unhappy customers increase.
    • Undocumented quality control systems and processes could result in errors or deviations from pre-set quality standards.

    RECOMMENDATIONS FOR REDUCING THE COST OF QUALITY

    • Suggest quality circles or small teams of five to ten employees, who meet regularly to discuss ways of improving the quality of their work.
    • Schedule activities to eliminate duplication of tasksfactivities.
    • Share responsibility for quality output amongst management and workers.
    • Train employees at all levels, so that everyone understands their role in quality management
    • Develop work systems that empower employees to find new ways of quality improvement.
    • Work closely with suppliers to improve the quality of raw materials/inputs.
    • Improve tion about quality challenges/deviations, so that everyone can learn from experiences.
    • Reduce investment in expensive, but ineffective inspection procedures in the production process.
    • Implement pro-active maintenance programmes for equipment/machine production breakdowns.

    IMPACT OF TOM ON SMALL AND LARGE BUSINESSES

      Small businesses

    • In small enterprises, such as sole traders, the business functions can be combined, or one person can be responsible for more than one business function.

      A sole trader (sole proprietorship) is a type of business that is owned and run by one person.

    Positive impact

    • The owner of a small business is usually actively in in the business; which makes it easier for him/her to see the benefits of TOM and support the process.
    • It is easier for small businesses to involve all its employees in TQM.
    • In a small business team work is easier because everyone knows each other well, and have a good understanding of each job description team work improves performance, products and service.
    • The owner often has more direct contact and a closer relationship with customers, which makes it easier to attain total customer satisfaction.
    • Problems and weak points are identified and addressed quickly, for example, complaints about poor-quality products/services.
    • There is a more holistic approach to training due to a limited number of workers.

    Negative impact

    • One or more of the business functions may be ignored, because too much time is spent on management and other business functions.
    • Small businesses do not have HR divisions that can implement skills programmes and training consultants may have to be used at high cost.
    • It is not possible for employees to specialise since they are involved in various business activities.
    • Small businesses often do not have formal systems to monitor and evaluate quality processes, which can lead to mistakes and products/services of poorer quality
    • A small business has limited funds to spend on marketing which could lead to the business not reaching its target market.
    • A lack of expertise with regard to any of the business functions will have a negative impact on the total quality of a small business.

      Large businesses

    • In large businesses, such as companies, a specific person or an entire department with sufficient experience and skills performs each of the business functions.
    • A company is a type of business that is owned by its shareholder(s) and managed by its director(s)

    Positive impact

    • Large businesses use market research to analyse customer needs and measure their level of satisfaction in order to attain total customer satisfaction.
    • Large businesses use monitoring and evaluation systems to ensure quality products and services.
    • Have sufficient funds to afford specialist and skilled employees.
    • Have the ability to afford quality equipment and to implement advanced technological processes and procedures to ensure quality products and services.
    • The HR department is dedicated to skills training and skills development which improve the skills and knowledge of employees.
    • Productivity increases through good time management and high quality resources
    • Products and services are continuously improving.
    • Increased competitiveness as high quality products/services are provided.

    Negative impact

    • Employees of a large business often have limited contact with customers and often do not have an understanding of customer needs.
    • Large quality management structures may become ineffective or difficult to control
    • Mass production may complicate quality control.
    • Large TQM systems are costly and may require additional administrative duties staff
    • A poor communication system can prevent efficient training from taking place.
    Term 3 : Investment securities

    Distinguish between assurance and insurance

    The term insurance refers to cover for a possible event such as theft or a fire. Assurance is cover for an event that is certain to happen such as retirement or death. Pension and provident funds are forms of assurance.

    Compulsory and non-compulsory insurance

    Non-compulsory insurance is any insurance that is not compulsory to have. Compulsory insurance is any form of insurance required by law such as U.I.F, unemployment insurance.

    Viability and relevance to both individuals and businesses

    It is important that businesses and individuals have protection against possible risks and losses. Insurance companies sell protection in the case of loss or damage in the form of an insurance policy.

    Viability and relevance for individuals

    Insurance and assurance products offer many benefits for individuals. They can be forms of saving, protect people and their dependants against loss of income and restore them back to the same financial position they were in before an unexpected event occurred. In some cases individuals can borrow against policies.

    Viability and relevance to businesses

    Insurance and assurance products offer many benefits for businesses. They can be forms of saving, protection for the firm and its employees against loss of income and can restore it back to the same financial position it was in before an unexpected event occurred. In some cases businesses can borrow against policies. Insurance can protect the business from claims made by members of the public.


    An investment is an asset or item that is purchased with the hope that it will generate income or appreciate in the future.

    Investments can be categorised as low risk, moderate risk or high risk. The rule of investing is that the bigger the risk you take, the greater the possible reward.

    Examples may include:

    • Shares
    • Property
    • Savings
    • Stock options.

    Business investments

    You can invest in an existing business by buying shares or by starting a new business.

    The Johannesburg Stock/Security Exchange

    The Johannesburg Stock Exchange (JSE) is a world class securities exchange. It has operated as a market place for the trading of financial products for more than 120 years to connect buyers and sellers in four different markets: equities, equity derivatives, commodity derivatives and interest rate products.

    The JSE is one of the top 20 exchanges in the world and is a member of the World Federation of Exchanges (WFE).

    The JSE also provides companies with the opportunity to raise capital through its boards: Main Board, Africa Board and AltX. In addition the JSE is a major provider of financial information. The JSE is a fully electronic, efficient, secure market.

    Types of shares

    The basic types of shares are:

    • Preference shares

      These shares are more expensive because the owner is entitled to preferential dividends. In the first instance the shareholder is guaranteed a fixed dividend based on the par value of the share. In the second instance, preferential shareholders receive dividends first.

    • Ordinary shares

      Ordinary shares are less expensive than preferential shares. Shareholders of ordinary shares receive dividends after preferential dividends have been paid.

    • Founding shares

      These shares are assigned to the founding members and promoters of the company. They will only receive dividends after everyone else is paid.

    • Bonus shares

      Sometimes a company will decide to retain the profits for expansion of the business. In this situation they will not pay shareholders a dividend, but they may issue bonus shares in place of the dividend. This means that shareholders own more shares and will collect more dividends in the future.

      Unit trusts

      Unit trusts offer a simple, and effective way of saving money. Unit trusts are collective funds that allow private investors to pool their money in a single fund, thus spreading their risk across a range of investments, getting the benefit of professional fund management, and reducing their dealing costs. Unit trusts are open-ended in contrast to investment trusts, which are closed funds. Different trusts have different investment objectives: investing for income or growth, in small companies or large, and in different geographical regions.

      Reasons for investing in unit trusts include:

      • They are already well-diversified : Unit Trusts buy into a good variety of shares and bonds thus, risks are well diversified
      • Less Stress : They are managed by professional Fund Managers.
      • You can invest all over the world. unit trusts are invested all over the world in various business sectors, giving more opportunities
      • You only need a small amount of investment to start with
      • Redemption is immediate. If you sell your stocks, it joins the queue awaiting to be bought by other investors.
      • It is relatively safe. Because they are well diversified, thus risks are smaller. Fixed Income unit trusts are very safe and in the long run, these still perform better than your fixed deposits.
      • Good returns. Over the long term, unit trust investment can reap very handsome returns.

      Government retail bonds

      Investing in government retail bonds means the investor lends money to the government for a number of years, and the government promises to pay the money back at a certain interest rate on a specific date. Fixed interest rates are offered on these bonds. These interest rates are usually higher than the interest rates offered on fixed deposits and money market accounts.


    Return on investment (ROI) measures the profitability of an investment.

    Dividends

    Dividends are a taxable payment declared by a company’s board of directors and given to its shareholders out of the company's current or retained earnings. Dividends are usually given as money, but they can also take the form of shares or other property. Dividends provide an incentive to own shares in companies even if they are not experiencing much growth. Companies are not required to pay dividends.

    Interest

    Interest is a charge (at a particular rate) for the use of borrowed money. If you borrow money, it comes at a cost. Similarly, you can make investments and receive interest.

    Capital gain

    An increase in the value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price. The gain is not realized until the asset is sold. A capital gain may be short term (a year or less) or long term (more than one year). A capital loss is incurred when there is a decrease in the capital asset value compared to an asset's purchase price.


    Interest

    Compound vs simple interest

    Simple interest is calculated as a simple percentage of the principal amount over an agreed period of time. Once this time has elapsed the calculation is reset to the principal amount.

    Interest is calculated as follows:

    Capital amount/1 x Interest rate (p.a.)/100

    Compound interest is interest calculated on interest already earned. Therefore when compound interest is calculated the principal changes all the time as interest is added to it. Interest can be compounded annually, monthly or even continuously (daily or hourly).

    Dividends

    Dividend yield (DY)

    A financial ratio that shows how much a company pays out in dividends each year relative to its share price. In the absence of any capital gains, the dividend yield is the return on investment for a stock. Dividend yield is calculated as follows:

    Annual dividends per share/Share price

    Earnings yield (EY)

    The earnings per share for the most recent 12-month period divided by the current market price per share. The earnings yield (which is the inverse of the P/E ratio) shows the percentage of each Rand invested in the share that was earned by the company.

    Earnings per share/Share price


    Simple interest

    Simple interest is defined as interest paid on the original amount only, and not on the interest accrued.

    Compound interest

    Compound interest is the interest earned not only on the original capital (principal) amount invested, but also on all interests earned previously.


    Insurance is a form of risk management used to hedge against the risk of a possible future, uncertain loss. Insurance is defined as the transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the insurance; the insured, or policyholder, is the person or entity buying the insurance policy. The amount to be charged for a certain amount of insurance coverage is called the premium. Risk management, the practice of appraising and controlling risk, has evolved as a field of study and practice.

    An insurance contract can decline a risk because of:

    • a unsatisfactory claim history
    • a policy having been cancelled by other insurers
    • a history of unpaid debit orders
    • the potential client being a moral risk
    • non-disclosure of information that would affect the risk.

    The following are important terms used with regard to insurance:

    Cession - cession is the transfer of a policy from one person to another. A policy can be ceded in two ways:

    • Outright cession

      In this case, all rights in terms of the policy are transferred to the new owner (cessionary). The proceeds of the policy are paid directly to the cessionary and not to the previous owner or his/her estate.

    • Collateral security cession

      In this type of cession, the policy serves as security for a loan, for example. The cessionary's claim to the policy is limited to the amount of the cedent's liability.

    Excess - An excess is the first amount payable by you in the event of a loss, and is the uninsured portion of your loss.

    Subrogation - A term denoting a legal right that is reserved by most insurance carriers. Subrogation is the right for an insurer to pursue a third party that caused an insurance loss to the insured.

    Surrender - The early termination of an insurance product by the policyholder.


    Life insurance

    This is a contract between the insured (policy holder) and the insurer, where the insurer promises to pay the beneficiary a sum of money upon the death of the insured person. Depending on the contract, other events such as a terminal illness may also trigger payment. The policy holder pays a premium, either regularly or as a lump sum. Other expenses (such as funeral expenses) are also sometimes included in the benefits.

    Life insurance is sometimes called long-term insurance because it covers long-term risks.

    Other forms of long-term insurance:

    Endowment assurance is a life insurance contract designed to pay a lump sum after a specified term (on its 'maturity') or on death. Typical maturities are ten, fifteen or twenty years up to a certain age limit. Some policies also pay out in the case of critical illness. Endowments can be cashed in early (surrendered) and the holder then receives the surrender value.

    Term assurance is life insurance which provides coverage at a fixed rate of payments for a limited period of time, the relevant term. After that period expires, coverage at the previous rate of premiums is no longer guaranteed and the client must either forgo coverage or potentially obtain further coverage with different payments or conditions. If the insured dies during the term, the death benefit will be paid to the beneficiary.

    Disability cover covers you against loss of income should an unforeseen event happen that might cause you to become disabled and permanently unable to earn an income.

    Trauma cover will pay you a lump sum in the event that you suffer from a number of specified critical conditions, such as cancer or a heart attack.

    Funeral cover will pay out a lump sum on the death of the person insured which helps to pay for funeral costs. This may form part of a life insurance policy.

    Retirement annuity (RA)

    A retirement annuity (RA) is a long-term method of saving for your retirement to ensure you have enough income in retirement to enjoy a comfortable life.

    A retirement annuity will convert the lump sum amount in an employer or individually owned retirement plan into a regular monthly income stream. A retirement annuity may be offered as part of a company's retirement plan as a possible payment option. Retirees can also purchase a retirement or immediate annuity with their retirement funds from a life insurance company.

    Advantages of RAs are:

    • Guaranteed income
    • No market fluctuation
    • Tax efficiency
    • Disciplined way to save
    • Creditors cannot touch RAs
    • Survivor benefits.

    Goods and assets can be insured. In certain cases this may be compulsory and in other cases non-compulsory.

    Compulsory insurance

    Compulsory insurance is required by law before individuals or businesses may engage in certain activities.

    Examples of compulsory insurance in South Africa include:

    Road Accident Fund (RAF) is a state insurer established by statute. It provides insurance cover to all drivers of motor vehicles in South Africa in respect of liability incurred or damage caused as a result of a traffic collision.

    Unemployment Insurance Fund (UIF) as prescribed by the Unemployment Insurance Act provides protection to workers who become unemployed. It prescribes claiming unemployment benefits for unemployment, maternity benefits, illness benefits, adoption benefits and dependents' benefits.

    Compensation for Occupational Injuries and Diseases Act (COIDA) The Compensation for Occupational Injuries and Diseases Act (COIDA) states that employers must pay a certain amount of money into a central fund each month. The amount depends on how dangerous it is to work in the particular industry, how many workers are employed in the company and the wages paid to the workers. COIDA ensures that employers insure their employees against death or disability due to accidents at work.

    Public liability insurance protects businessmen (as owners or landlords) against loss due to legal liability for injury or damage to the persons or property of the public.

    Non-compulsory insurance

    Although not required by law it can provide additional protection for you and your property or business. Insurance companies need to determine the probability of the risk that needs to be insured, also known as the insurable risk.

    Insurable risks

    Examples of insurable risks include:

    Vehicle insurance is purchased for cars and other road vehicles. Its primary use is to provide financial protection against physical damage and/or bodily injury resulting from traffic collisions and against liability.

    Fidelity insurance is a type of insurance which is designed to protect a firm from losses caused by the dishonest acts of its employees.

    Money in transit insurance is a policy in which the insurance company will pay if money is stolen or lost when it is being moved between two places, for example between a shop and a bank.

    Theft insurance covers the insured for losses incurred during breakins and robberies.

    Fire insurance is insurance against loss due to fire.

    Storm damage insurance insurance indemnifies the insured against losses due to storms.

    Non-insurable risks

    It is important to note that not all risks can be insured. A risk that cannot be insured, either because the probability of a loss is too high, or because it cannot be measured actuarially.

    Examples of non-insurable risks include:

    • Nuclear war
    • Changes in fashion
    • Technological advances.

    The Average Clause in an insurance policy that restricts the amount payable to a sum not to exceed the value of the property destroyed and that bears the same proportion to the loss as the face of the policy does to the value of the property insured.

    Under-insurance

    Under insurance may result in economic losses to the policy holder, since the claim would exceed the maximum amount that can be paid out by the insurance policy. While underinsurance may result in lower premiums paid by the policy holder, the loss arising from a claim may far exceed any marginal savings in insurance premiums.

    For example if a business is insured for R50,000 but should have been insured for R100,000 then if the business makes a claim the insurance company will only pay out half of the claim because the business is underinsured by 50%.

      Claim: R10 000

      Insured For: R50 000

      Replacement Value: R100 000

      Under-Insurance Calculation: R10 000 X R50 000

      R100 000

      Claim Payment: R5 000

    Over-insurance

    Property or assets that are insured for more than their market value or book value then they are over-insured.


    The Unemployment Insurance Act provides protection to workers who become unemployed. It prescribes claiming unemployment benefits for unemployment, maternity benefits, illness benefits, adoption benefits and dependents' benefits.

    The Unemployment Insurance Act and Unemployment Insurance Contributions Act apply to all employers and workers, but not to:

    • workers working less than 24 hours a month for an employer;
    • learners;
    • public servants;
    • foreigners working on contract;
    • workers who get a monthly State (old age) pension; or
    • workers who only earn commission.

    Domestic employers and their workers are included under the Act since 1 April 2003.

    Money is deducted from the employee’s remuneration (monthly salary or weekly wages) and paid into the Unemployment Insurance Fund (UIF). The contribution that employers must deduct from a worker’s earnings is 1% of total gross remuneration or earnings. In addition, the employer also contributes an equivalent 1% for every employee. The total contributions are calculated at 2 percent of your gross earnings.


    The Road Accident Fund is a state insurer established by statute. It provides insurance cover to all drivers of motor vehicles in South Africa in respect of liability incurred or damage caused as a result of a traffic collision. Liability incurred in relation to property damage (such as damage to vehicles, buildings, vehicle contents) is excluded from cover.

    The RAF provides compulsory cover to all users of South African roads, citizens and foreigners, against injuries sustained or death arising from accidents involving motor vehicles within the borders of South Africa. This cover is in the form of indemnity insurance to persons who cause the accident, as well as personal injury and death insurance to victims of motor vehicle accidents and their families.


    Characteristics, advantages, disadvantages and comparison of forms of ownership

    Sole Traders

    A sole trader is a business that is run and owned by one peorson.

    • Advantages of being a sole trader:
      • Easiest and least expensive form of ownership to set up
      • Quick and easy decision making
      • Owner takes all the profits made by the business
      • The business is fairly easy to dissolve, if desired
      • Owner gains experience in all aspects of business
      • Reporting of financial information easy and straight forward
      • Sole traders offer a more personalised approach.
    • Disadvantages of being a sole trader
      • Owner has unlimited liability and is legally responsible for all debts of the business
      • Capital is limited to the creditworthiness of the owner
      • Business has no continuity
      • Not always possible to pay high salaries
      • Owner could concentrate on strong points and neglects other functions
      • Limited capital limits possibility for growth and expansion.

    Partnerships

    A partnership is a type of business that is run and owned by 2-20 people.

    • Advantages of a partnership:
      • Easy to establish
      • Easier to raise funds because there is no limit on the number of partners allowed in a partnership
      • Partners are motivated to work hard, because they share in the profits of the business
      • Prospective employees may be attracted to the business if given the incentive to become a partner
      • Partners share responsibilities and management of the business
      • Partnerships are not forced by law to prepare audited financial statements.
    • Disadvantages of a partnership:
      • Partners are jointly and individually liable for the actions of the other partners
      • Profits must be shared
      • Decision making process can be complicated
      • Partners have unlimited liability for the businesses debts.

    Close Corporations

    A close corporation is a type of legally registered business that is run by 1-10 people.

    • Advantages of a close corporation:
      • Registering is simple and inexpensive
      • There are fewer legal and accounting requirements
      • A CC is a legal entity and has continuity
      • A CC can be converted to a private company
      • More capital can be raised
      • Members have limited liability
      • Owners’ interest in the CC does not need to be in proportion to their capital contribution
      • CC may be exempted by CIPC form auditing its financial statements.
    • Disadvantages of a close corporation:
      • Cannot be more than ten members
      • A member of a CC can be held personally liable for the losses of a CC if the member acts carelessly or is incompetent
      • When applying for a loan, audited financial documents must be presented. Funds will not be given until auditing has been completed
      • A CC is taxed as if it were a company, which may be higher than personal tax rates
      • Difficult for members to leave the CC or to pay a member their portion, as all members must agree to dispose of a member’s interest
      • Like a company, a CC is taxed on its income and Standard Tax of Company (STC) based on member’s dividends.

    Companies

    We must differentiate between profit companies and non-profit companies. In this topic we are looking at companies whose aim is to make a profit.

    There are four types of profit companies:

    • private company (Pty Ltd)
    • personal liability company (Inc.)
    • public company (Ltd)
    • state-owned company (SOC Ltd).
  • Advantages of a private company:
    • Unlimited number of shareholders.
    • The company has continuity
    • Shareholders have limited liability.
    • Adaptable to small and large businesses.
    • Private company is a legal person and can therefore sign contracts in its own name.
    • The new act forces personal liability on directors who knowingly participate in carrying out business in a reckless or fraudulent manner.
    • A private company is not required to file its annual financial statements with the commission.
    • Financial statements are private and not available to the general public.
    • Board of directors with expertise/experience can be appointed to take decisions and delegate responsibility.
  • Disadvantages of a private company:
    • Subject to many legal requirements.
    • Difficult and expensive to establish compared to close corporation and sole proprietorship.
    • The MOI forbids a private company to transfer its shares to any member of the public because the company is not listed on the JSE.
    • A private company’s annual financial statements must be reviewed by a qualified person, which is an extra expense to the company.
    • Pays tax on the profits of the business and on declared dividends.
    • Must prepare annual financial statements.

    Advantages of a public company:

    • Company has continuity of existence.
    • Company is a separate legal person.
    • Public company can be owned and managed by only one shareholder and three directors.
    • This allows individuals to start a public company.
    • Shareholders have limited liability.
    • Additional capital can be raised by issuing more shares or debentures.
    • Shareholders can sell/transfer their shares freely.
    • The public have access to the company’s information and this could motivate them to buys shares from a company.

    Disadvantages of a public company:

    • Shareholder may be allowed little or no input into the affairs of the company.
    • Due to legislation, decisions take longer and there may be disagreements.
    • Huge expenses when setting up a company (legal, accountants, taxes, consultants, etc.)
    • More people to share profits with (less income).
    • Financial affairs must be made known publicly (this information could be used to competitors’ advantage).
  • FORMS OF OWNERSHIP

    business can exist in one of the following nine forms:

    • 1 Sole trader
    • 2 Partnership
    • 3 Close corporation
    • 4 Private company
    • 5 Public company
    • 6 Personal liability company
    • 7 State-owned company
    • 8 Non-profit company
    • 9 Co-operative

    Restrictions on the name refer to words that cannot be used in a name and in particular to the letters that some businesses must include in their name to indicate what form of business they are.

    Composition of ownership refers to how many people own the business and if there is more than one owner, whether these owners can have unequal percentage ownership in the business

    The formation of the business refers to the process of starting up the business.

    The management of the business refers to who manages the business, rather than who owns it. Some owners do manage some forms of businesses.

    The capital refers to the amount of money and other assets that are invested in the business.

    The division of profits refers to how the profits of a business are split up between the owners of the business.

    The continuity of a business refers to the lifespan of a business.

    Liability refers to who can be held responsible for debts.

      Limited liability means shareholders/owners' possessions/assets are protected in the event that the business becomes insolvent or is liquidated. Shareholders cannot lose more than what they have invested in a business.

      Unlimited liability means that the owners are responsible for all the debts of the business. The owners assets are attached to those of the business. The owner(s) can lose everything and even more than what they have invested in a business. If the business cannot pay its debts, the owners' personal assets can be taken to pay these debts.

    Taxation refers to the taxes that a business and/or its owners must pay to the government.

    Other legal requirements refer to other things that a business is legally required to do, other than go through a particular formation process and pay tax.

    The capacity of the business refers to the maximum amount of goods and services that it can produce which i is linked to how much capital it can raise


    SOLE TRADER

    A sole trader (sole proprietor) is a business that has unlimited liability with one owner who pays personal income tax.

    People who have small retail busmesses or who supply services often operate as sole traders.

      Name and restrictions on the name

    • The owner can choose the name himself/herself.
    • There are no specific requirements regarding the name.

      Composition of ownership

    • A sole trader has only one owner.

      Formation

    • No legal formalities are necessary to start a sole proprietorship; the owner simply starts doing business.

      Management

    • The owner has a personal interest in the management of the business.
    • He/she may not have all the managerial skills required of a good manager, and can appoint a manager.

      Capital

    • The owner contributes his/her own capital.
    • He/she can also borrow capital the amount depends on his/her creditworthiness.

      Division of profits

    • The owner receives all the profits from the business, after the tax has been paid.

      Continulty

    • A sole proprietorship has no continuity
    • When the owner dies or stops working, the business ceases to exist
    • The owner can sell the business at any time.

      Liability

    • The business has no legal personality.
    • Therefore the owner has unlimited liability which means that he/she is responsible for all the debts of the business.

      Taxation

    • A sole proprietorship has no legal personality and therefore does not pay tax as a business.
    • The owner is taxed in his/her personal capacity on the profits of the business as well as any additional income.

      Other legal requirements

    • The auditing of financial statements is not compulsory by law, but optional.

      Capacity

    • A sole trader has a limited capacity to supply goods and services.
    • it can hire employees, but can't always pay high salaries.

      Advantages

    • it is the cheapest form of business little capital is required to set it up.
    • The owner makes all decisions and can manage the business as he/she sees fit.
    • The owner receives all the profits of the business, after the tax has been paid.
    • Customers appreciate the personal touch that the owner gives the business.

      Disadvantages

    • The owner has unlimited liability and therefore responsible for all the business debt
    • The business has no continuity.
    • Usually, there is limited capital (dependlng on the owner's creditworthiness), whlch could hamper growth or expansion
    • The business cannot always pay high salaries.
    • Cash flow can be a problem if there is a long waiting period for lncoming payments.

    A partnership is a business that has unlimited liability, and which is owned by two or more people

      Names and restrictions on the name

    • The owner can choose the name himself/herself
    • There are no specific requirements regarding the name.

      Composition of ownership

    • The owners are called 'partners'
    • A partnership consists of two or more partners (it can be unlimited number of people)
    • New partners can be added at any time.

      Formation

    • The partners must have a legal agreement, known as a partnership agreement, covering the following:
      • the amount of capital contributed by each partner
      • how profits and losses will be divided
      • the responsibilities of each partner
      • salaries payable to partners
    • it can be a written or verbal agreement, but a written document is recommended to solve possible future conflicts between partners.

      Management

    • The partners are usually involved in the management of the business.
    • As they have a personal interest in the business, the partners are usually motivated to manage the business well.

      Capital

    • The capital is contributed by the partners only-it is limited to amounts they have saved or borrowed.
    • Partners can make contributions in terms of money. assets or special skills

      Division of profits

    • Partners share the profits of the business according to the partnership agreement.

      Continuity

    • A partnership has no continuity.
    • if one of the partners dies, withdraws from the partnership or is declared insolvent, then the partnership must dissolve.
    • The remaining partners can form a new partnership.

      Liability

    • The business has no legal personality.
    • Therefore the partners have unlimited liability.
    • They are jointly and severally liable for all of the debts of the business.
    • The debt is divided between the partners according to the partnership agreement.

      Taxation

    • A partnership has no legal personality and therefore does not pay taxes as a business.
    • The partners pay tax in their personal capacity on the part of the income (profits) they receive from the business as well as on any other additional income.

      in South Africa. we have a progressive tax system, which means that the more people earn, the more tax they pay, up to a maximum of 40%. Therefore the more each partner earns in total from all his/her sources of income, the more tax he/she will have to pay on his/her earnings from the partnership (up to 40%).

      Other legal requirments

    • The auditing of financial statements is not compulsory by law, it's optional

      Capacity

    • The capacity of the business will depend on its size
    • Mostvl partnerships are small and therefore have limited capacity.
    • However, they can be larger and have a larger capacity if there are more partners.

      Advantages

    • A partnership is easy and inexpensive to establish, it only requires a partnership agreement.
    • The business benefits from the partner's pooled knowledge and skills
    • The workload and responsibility are shared.
    • More partners can be added.
    • Together the partners can provide more capital.
    • The partners are motivated to work hard because they share in the profits of the business (have personal interest).

      Disadvantages

    • The partners have unlimited liability, they are jointly and severally responsible for all the company?s debt.
    • There is limited capital, the amount of capital invested by the partners is limited by the savings or creditworthiness of the partners
    • The business has no continuity.
    • There may be uneven distribution of responsibilities of or contributions by partners, some partners may do more or spend more time in the business than others.
    • Partners may have different personalities. which may lead to conflict.

    A close corporation (CC) is a business with limited liability where there can be a minimum of one and a maximum of ten members.

    Under the Companies Act (No. 71 of 2008). close corporations may no longer be registered. Existing close corporations may continue, but may in future be converted into private companies.

      Name and restrictions on the name

    • The most important restriction is that the name of a close corporation must end with the letters 'CC'.

      Composition of ownership

    • The owners are called 'members'.
    • A close corporation can be owned by a minimum of one and a maximum of ten members.
    • The percentage of the business that each member owns can be based on the capital, skills and/or time he/she brings to the business.

      Formation

    • Close corporations can no longer be formed.

      Management

    • The term 'close' indicates that all members are involved in the running of the business.
    • All members are involved in the business operations and decision making.
    • The is often more than one manager, and different members can contribute different aspects of management.
    • The members decide among themselves who will fulfil which roles.

      Other legal requirements

    • The auditing of financial statements is not required by law, but is optional.
    • The statements have to be checked only by an accounting officer.
    • The transfer of a member's interests must be approved by all members.

      Capacity

    • The capital invested in the business by members is restricted by what the members are willing and able to offer. This restricts the size and long-term growth of the business.

      Advantages

    • Members have limited liability.
    • A close corporation has its own legal personality and has continuity.
    • It has a simple management structure.
    • The business benefits from the members' collective knowledge and skills.
    • More members and their capital can increase the capacity of the business.
    • The business pays company tax at a fixed rate, and this is not dependent on how much profit the business makes. Businesses can also take advantage of company tax allowances.

      Disadvantages

    • Members have to pay tax on the dividends they receive after the business has already paid company tax.
    • If one member leaves the business, the other members have to agree about what happens to his/her membership.
    • New close corporations cannot be established anymore, and existing ones may have to convert to private companies in the future.
    • A close corporation cannot exceed 10 members, which can hamper long-term growth and expansion.

    A private company is a business with limited liability that can have an unlimited number of shareholders, but which cannot sell its shares on a stock exchange or publicly advertise its shares.

      Name and restrictions on the name

    • The most important restriction is that the name of a private company must end in 'Proprietary Limited' or '(Pty) Ltd'.

      Composition of ownership

    • The owners of a private company are known as 'shareholders'.
    • The shares of a private company can be held by one or more shareholders.
    • The company can invite investors to buy shares, and there is no limit on the number of investors who can hold shares.

      Formation

    • The paperwork required to form a private company is time-consuming. it includes:
      • a Memorandum of incorporation (MOI), showing how it will be manage
      • a list of directors
      • the written agreement of each person who will act as a director
      • the receipt that shows that the company has paid to register with the Companies and intellectual Property Commission (ClPC).

      Management

    • A private company is managed by a board, consisting of one or more directors.
    • The directors are chosen by the shareholders.
    • The directors do not necessarily have a personal interest in the business.

      Capital

    • The start-up capital is contributed by the promoters (founders).
    • Further capital can be generated by the issuing of shares.
    • These shares are not offered to the public and must be sold privately (not on a stock exchange).
    • The business can also borrow money to access further capital.

      Division of profits

    • The profits are distributed between shareholders in the form of dividends. according to the number and type of shares owned by each shareholder.

      Continuity

    • A private company has unlimited continuity because it is a legal entity that is separate from its shareholders.
    • Therefore, the company continues to exist even if a shareholder dies or resigns.
    • The company will only close down if it is liquidated or involved in illegal activities.

      Liability

    • A private company is a separate legal entity and its shareholders have limited liability.
    • This means that creditors can claim the assets of the business if there are unpaid debts, but they cannot necessarily claim the personal assets of the shareholders or the directors.
    • However, the directors of a private company are individually liable if there is negligence, or if there is a breach of the Memorandum of incorporation.

      Taxation

    • A private company, just like all other companies, pays a fixed rate of 28% tax on its profits, although it can reduce this if it takes advantage of certain company tax allowances.
    • The company deducts a further 15% tax before the dividends are paid out to the shareholders.

      Other legal requirements

    • A private company must have its financial statements independently reviewed by a qualified person, and pay for this process, unless all the shareholders are also directors of the company.
    • However, these financial statements do not have to be published; it is private.
    • When shares are sold they must first be offered to the other existing shareholders.

      Capacity

    • By selling shares the private company can raise capital to increase its capacity.
    • in this way a private company can grow into a very large business with the capacity to provide a large quantity of goods and/or services.

      Advantages

    • Sharehoiders have limited liability.
    • it is possible to raise a lot of capital by selling shares, which increases the potential capacity of the business.
    • A private company can have an unlimited number of shareholders.
    • Private companies need not have their financial statements checked independently if all the shareholders are directors.
    • Private companies need not publish their financial statements; it is private.
    • The business pays company tax at a fixed rate even if it makes a huge profit, and it can take advantage of company tax allowances.
    • A private company has continuity.
    • A private company has a legal personality separate from its sharehotders and can therefore enter into contracts in the name of the company.

      Disadvantages

    • The founding of a private company is more complex and subject to many legal requirements.
    • Compared to a sole proprietorship and close corporation, a private company is expensive to register.
    • Shares may not be issued to the public in other words, shares may not be traded on the stock exchange.
    • The shareholders have to pay tax on the dividends they receive after the business has already paid company tax.
    • The financial statements of private companies should be checked independently, by a qualified person, unless all the shareholders are directors. This is an additional expense.

    A public company is a business with limited liability and can have an unlimited number of shareholders and can trade its shares on a stock exchange or make them available to the general public.

      Name and restrictions on the name

    • The most important restriction is that the name of a public company must end in 'Limited' or 'Ltd'.

      Composition of ownership

    • The owners of a public company are known as 'shareholders'.
    • The company can have one or more shareholders.
    • The more shares a person has, the greater his/her influence on the company.
    • Shareholders can sell their shares freely or transfer it to other persons.

      The shares of a public company can be traded on a stock exchange, so the ownership of a company can change fairly easily.

      Formation

    • The paperwork required to form a public company is time-consuming. it includes:
      • a Memorandum of incorporation (MOI), which shows how the company will be managed
      • a list of directors
      • the written agreement of each person who will act as a director
      • the written agreement of the auditor who will audit the financial statements
      • the receipt that shows that the company has paid to register with the Companies and intellectual Property Commission (ClPC)
      • a prospectus, which summarises the financial situation of the business for investors who might buy shares in the business in future.

      Management

    • A public company is managed by a board consisting of three/more directors.
    • The shareholders usually have no personal interest in the management of the company.
    • The board of directors can then apoint managers to help with the management.

      Capital

    • The start-up capital is generated by selling shares on the stock exchange.
    • When the company wants to expand and generate more capital, it can issue a prospectus to the general public.
    • Unlimited capital can be generated because there is no maximum number of shares that could be sold to the public.
    • The company can also issue debentures and borrow money from a bank because it is a legal person.

      Division of profits

    • The profits are distributed between the shareholders in the form of dividends based on the number and type of shares each shareholder owns

      Continuity

    • A public company has unlimited continuity because it is a legal entity that is separate from its shareholders.
    • Therefore, the company continues to exist even if a shareholder dies or resigns.
    • The company will only close down if it is liquidated or involved in illegal activities.

      Liability

    • A public company is a separate legal entity and its shareholders have limited liability.
    • This means that creditors can claim the assets of the business if there are unpaid debts. but they cannot necessarily claim the personal assets of the shareholders or the directors.
    • However, the directors of a public company are individually liable if there is negligence, or if there is a breach of the Memorandum of incorporation

      Taxation

    • A public company, as all other companies, pay tax at a fixed rate of 28% on its profits, although it may be reduced if certain company tax allowances are used
    • The company deducts a further 15% tax before the dividends are paid out to the shareholders.

      Other legal requirements

    • A public company is obliged to have its financial statements audited annually by an auditor.
    • These financial statements must be published and be available to shareholders and the public.
    • A public company must hold an Annual General Meeting (AGM) where the shareholders vote for who will sit on the board of directors in the year ahead.

      Capacity

    • A public company can easily increase its capacity to provide goods and services, because it is easy for it to raise capital.
    • Public companies are capable of becoming extremely large businesses.

      Advantages

    • Shareholders have limited liability.
    • Lots of capital can be generated by selling shares on a stock exchange; it increases the capacity of the business and improves long-term growth.
    • Additional capital can be generated by issuing more shares or debentures.
    • The business pays company tax at a fixed rate even if it makes a huge profit.

      Disadvantages

    • The founding at a public company is more complex and subject to many legal requirements
    • There are high costs linked to the registration of a public company.
    • The annual audits of the financial statements are expensive.
    • Public companies have to publish their financial statements, whtch can give their competitors information that the company would have preferred to keep secret.
    • The sharehotders have to pay tax on the dividends they receive after the business has atready paid company tax.
    • Various factors can cause an impersonal company culture.
    • The shareholders can sometimes have very little control over how the company is managed (depending on the Memorandum of incorporation)

    A personal liability company (PLO) is simiiar to a private company and also has limited liability. Provided there has been no negligence, the directors are jointly and severally liable

    Like partnerships, personal liability companies are normally formed by groups of professionals such as doctors, lawyers, accountants, engineers and architects.

      Name and restrictions on the name

    • The most important restriction on the name is that it must end in 'Incorporated' or 'lnc.'.

      Composition of ownership

    • The owners of a personal liability company are known as 'shareholders.
    • The company can have one or more shareholders.
    • There is no maximum number of shareholders.

      Formation

    • The paperwork required to form a private company is time-consuming. it includes:
      • a Memorandum of incorporation (MOI), showing how it will be manage
      • a list of directors
      • the written agreement of each person who will act as a director
      • the receipt that shows that the company has paid to register with the Companies and intellectual Property Commission (ClPC).

      Management

    • A private company is managed by a board, consisting of one or more directors.
    • The directors are chosen by the shareholders.
    • The directors do not necessarily have a personal interest in the business.

      Capital

    • Capital is contributed by the shareholders.
    • As the company becomes more successful, the value of its shares will increase and the company will be able to attract more investors, sell more shares and raise more capital.
    • personal liability company is also likely to get a bank loan, because banks know that the directors can be held liable if they do not manage the company in a responsible way.

      Division of profits

    • The profits are distributed between shareholders in the form of dividends. according to the number and type of shares owned by each shareholder.

      Continuity

    • A private company has unlimited continuity because it is a legal entity that is separate from its shareholders.
    • Therefore, the company continues to exist even if a shareholder dies or resigns.

      Liability

    • A personal liability company Is a separate legal entity and its shareholders have limited liability.
    • However, the directors are Jointly and severally liable if there has been negligence, or a breach of the Memorandum of Incorporation.

      The company as well as all directors (present and former) are Jointly and severally liable for any accumulated debts or liabilities.

      Taxation

    • A private company, just like all other companies, pays a fixed rate of 28% tax on its profits, although it can reduce this if it takes advantage of certain company tax allowances.
    • The company deducts a further 15% tax before the dividends are paid out to the shareholders.

      Other legal requirements

    • A private company must have its financial statements independently reviewed by a qualified person, and pay for this process, unless all the shareholders are also directors of the company.
    • However, these financial statements do not have to be published; it is private.
    • When shares are sold they must first be offered to the other existing shareholders.

      Capacity

    • The capacity of a personal liability company is related to the amount capital that is contributed by its shareholders.
    • As the company becomes more successful. it can attract more shareholders and increase its capacity.

      Advantages

    • Sharehoiders have limited liability.
    • it is possible to raise a lot of capital by selling shares, which increases the potential capacity of the business.
    • A private company can have an unlimited number of shareholders.
    • Private companies need not have their financial statements checked independently if all the shareholders are directors.
    • Private companies need not publish their financial statements; it is private.
    • The business pays company tax at a fixed rate even if it makes a huge profit, and it can take advantage of company tax allowances.
    • A private company has continuity.
    • A private company has a legal personality separate from its sharehotders and can therefore enter into contracts in the name of the company.

      Disadvantages

    • The founding of a private company is more complex and subject to many legal requirements.
    • Compared to a sole proprietorship and close corporation, a private company is expensive to register.
    • Shares may not be issued to the public in other words, shares may not be traded on the stock exchange.
    • The shareholders have to pay tax on the dividends they receive after the business has already paid company tax.
    • The financial statements of private companies should be checked independently, by a qualified person, unless all the shareholders are directors. This is an additional expense.

    A state-owned company is a company that has been established by the state and where the state is the main shareholder.

    SAA and?ESKOM are examples of state-owned companies.

    State-owned enterprises (SOE) or state-owned companies (SOC) are listed as public companies on the JSE.

      Name and restrictions on the name

    • The name of a state-owned company must end in '(SOC) Ltd'.

      Composition of ownership

    • There is no limit on the number of shareholders.
    • However, the government must own at least 50% of the shares for the company to remain a state-owned company.

      Formation

    • The paperwork required to form a state-owned company is time-consuming. It includes:
      • a Memorandum of Incorporation (MOI), which shows how the company will be managed
      • the receipt that shows that the company has paid to register with the Companies and Intellectual Property Commission (CIPC)

      Reasons for the formation of a state-owned company

    • Profits may be used to finance other state departments or reduce taxes.
    • Jobs are created for all levels of skills.
    • Offer essential services which are not offered by the private sector.
    • Wasteful duplication of services is eliminated.
    • Planning can be co-ordinated through central control.

      Management

    • A state-owned company is managed by one directors.
    • These directors are carefully selected and can term a high-quality management team. but they do not have the same level of personal interest in the business as on owner would.

      Capital

    • Capital is contributed by the state via the treasury and sometimes also by private investors who buy shares.
    • When more capital is needed the state can buy more shares. if it has received enough money through taxes. selling government bonds. etc.

      Division of profits

    • The private shareholders receive dividends and the remaining profits are reinvested in the company.
    • Continuity

    • A state-owned company has unlimited continuity because it is a legal entity that is separate from its shareholders.
    • Therefore, the company continues to exist even if a shareholder dies or resigns.
    • The company will only close down if it is liquidated or involved in illegal activities.

      Liability

    • A state-owned company is a separate legal entity and its shareholders have limited liability.
    • The directors are subject to additional audits and scrutiny.

      Taxation

    • State-owned companies are taxed at a fixed rate of 28% on their profits.
    • The company deducts a further 15% tax from the dlvldends of prlvate shareholders before paying out the dividends.
    • However, they can take advantage of the allowances available for companies to pay less tax.

      Other legal requirements

    • State-owned companies must submit audited financial statements to the Department of Public Enterprises.
    • They are subject to company audits and government audits

      Capacity

    • A state-owned company can issue shares at any point to tncmase its capacity, so long-term growth is easily achieved.

      Advantages

    • Shareholders have limited liability.
    • A state-owned company will not necessarily need to close down if it is not profitable because the government can invest more money in it.
    • it can benefit from tax allowances for companies.

      Disadvantage

    • Financial statements must be audited.
    • Management is not always effective.
    • State-owned companies are not always protitable.
    • Politics may interfere with the initial vision and mission of the company.

    A non-profit company is one that is not established with the intention to make a profit.

    The Peninsula School Feeding Association is an example of a non-profit company.

      Name and restrictions on the name

    • The main restriction on the name of a non-profit company is that it must end in 'NPC'.

      Composition of ownership

    • A non-profit company must have at least three shareholders.

      Formation

    • The paperwork required to form a non-profit company includes:
      • a Memorandum of Incorporation (MOI), showing how the company will be managed
      • a list of directors
      • the written agreement of each person who will act as a director
      • the receipt that shows that the company has paid to register with the Companies and Intellectual Property Commission (CIPC)
      • the document showing that the company has registered with the South African Revenue Service (SARS) for tax exemption

      Management

    • A non-profit company is managed by three or more directors.

      Capital

    • A non-profit company relies on donations, corporate social investment programmes, and subsidies from the Department of Social Development.

      Division of profits.

    • There are no profits. All benefits go to the nominated beneficraries.

      Continuity

    • A non-profit company has unlimited continuity because it is a legal entity that is separate from its shareholders.
    • Therefore, the company continues to exist even if a shareholder dies or resigns.
    • The company will only close down if it is liquidated or involved in illegal activities.

      Liability

    • A non-prolit company is a separate legal identity with limited liability.

      Taxation

    • Most non-profit companies register for tax exemptions and therefore do not fall under the company tax regulations.
    • But if a non-profit company has not applied for tax exemption, it will be expected to pay company tax at a rate of 28%.
    • Donations are tax deductible.

      Other legal requirements

    • A non-profit company must have its financial statements independently reviewed, and pay for this process.
    • The financial statements must be made available to SARS.

      Capacity

    • A non-profit company is able to grow in the long term provided it has the necessary sponsors and donors.

      Advantages

    • Non-profit companies receive tax benelits if it meets the requirements prescribed by SARS.
    • Donors who make donations to a non-profit company also receive tax deductions and this will encourage people to make donations to these companies.
    • The organisation has continuity as it continues even if it's members die or retire.
    • Profits are used solely or entirely for the primary objective of the organisation.
    • They provide services to various communities. such as providing fully trained gurde dogs to blind people and disabled people, etc.
    • Directors may be liable for any losses/costs/damages sustained by the company if they were acting in the name of the company This forces them to always act ethically and professionally
    • They are legally required to appoint ,three directors. which may reduce the chances of management.

      Disadvantages

    • Rely on donations as they are not always able to generate their own profit
    • Members/Donors may not receive any bonuses from the company although they provide the organisation with capital or donations.
    • It needs professional assistance to set the organisation up and this can be costly.
    • Non-registered non-profit companies will struggle to raise money because donors will not always be willing to donate to such organisations.
    • The liability of the members is limited therefore the organisation is responsrble for the debts.
    • They are compelled to prepare financial statements. and this can become a burden for them

    A (to-operative is a business operated as a private company and owned by members working together to satisfy their economic and common needs.

    Small independent farmers often form cooperatives. It helps them in their production and sales activities.

      Name and restrictions on the name

    • The most important restriction on the name is that it must end in 'Co-operative Limited? or '(Co-op) Ltd.'.

      Composition of ownership

    • The owners of a co-operative are known as 'members'.
    • The co-operative is owned by a minimum of five members, who have joint ownership.

      Formation

    • The founding members must draw up a constitution for the co-operative.
    • if they want the co-operative to have limited liability. then this must be stated in the constitution.
    • The co-operative must also be registered with CIPC.

      Management

    • The co-operative is managed by one or more directors.
    • All members participate in decision-making. Each member has one vote irrespective of the number of shares he/she owns.

      Capital

    • The capital is invested by the members when they buy shares in the cooperative.
    • it is not easy for a co-operative to obtain additional funding.
    • More members can be introduced. and when they buy shares this will inject capital into the business.
    • A co-operative does not need a lot of capital as it is based on currently established businesses.

      Division of profits

    • The profits are shared between members based on the amount of business each one has done with the co-operative in the last nnancial year.

      Continuity

    • A co-operative has unlimited liability because it is a legal entity that is separate from its shareholders.
    • Therefore, the co-operative continues to exist even if a member dies or resigns.
    • The co-operative will only close down if it is liquidated or involved in illegal activities.

      Liability

    • A co-operative is a separate legal entity and its members have limited liability for the debt of the co-operative if this is stated in the co-operative's constitution.

      Taxation

    • If the annual turnover is below a particular amount, the co-operative only has to pay small business corporations tax, which is less than company tax.
    • If its turnover is above this amount it will have to pay company tax at a rate of 28%. The same is true for each individual business that forms part of the co-operative.

      Other legal requirements

    • A co-operative must have its financial statements audited each year. unless it is granted an exemption.

      Capacity

    • The capacity depends on the efforts and inputs of members. It is difficult for a co-operative to expand because this requires new members to be introduced.

      Advantages

    • Formed by persons with a common interest to allow more members to work as a team.
    • Members may cast their votes to elect the most trustworthy committee representatives that will deal with day-to-day administration.
    • Personal properties of members are free from risk because of limited liability.
    • There is no middleman between the co-operative and its suppliers/clients which may lead to profit maximisation.
    • it is easy and less complicated to form this business as there are simple legal requirements.
    • Registered co-operatives formed by previously disadvantaged peopIe may obtain support from the government in the form of government tenders.
    • it is a legal identity apart from its members and can enter into contracts in its own name.

      Disadvantages

    • The annual auditing of financial statements could be expensive.
    • It is often difficult for a cooperation to come to a decision because all the members have an equal say.
    PRESENTATION AND DATA RESPONSE

    • Businesses transfer business information daily to stakeholders, which include the following:
      • the management of the business
      • employees
      • shareholders (e g financial statements)
      • the government (e.g. fair employment plans)
      • the media (e g a press statement)

      Business information is all information concerning a business Management decisions are based on business information

    • The efficient presentation of business information plays an important role in this communication process

    Business information is presented in the following ways:

    • Verbal : verbal information, which includes both the words of the presenter and the words in any support material
    • Non-verbal: information that is not expressed verbally which includes tables, graphs, diagrams and illustrations.

    • Decide on the purpose of the presentation
    • List the objectives
    • State aims in the introducton of the presentation
    • Make sure that information is relevant and accurate Make sure that you are fully conversant with the content and the objectives of the presentation
    • Consider the background diversity sizelpre-knowledge of your audience to be able to choose the appropriate audio-visual aids
    • Plan the format of your presentation with a logicalstructure with an introduction, body and conclusion.
    • Summarise the key facts in the conclusion to show how they relate to the objectives
    • create visual aids that will consolidate the information to be conveyed
    • Enquire about the venue for the presentation, e g what equipment is available appropriate, a of generators during load shedding
    • Consider the time frame for each aspect of the presentation. e g. the time allowed for the introduction/body/conclusion
    • Rehearse so that you are confident and that you wil use your time effectively
    • Prepare for the feedback session providing possible questions by Comments

    USING VISUAL AIDS

      Advantages

      • Emphasises the main points of the topic.
      • Makes a presentation easier to understand and remember.
      • Summarises large amounts of facts to keep the presentation short and to the point.
      • Eye-catching visual aids can attract the audience's attention.
      • Conveys key points of a presentation e g. the contact details of the presenter can be given via hand-outs/business cards, etc.
      • Very useful when presenting financial information to management.
      • Stimulates more than one sense of the audience during a presentation, e.g. seeing and hearing, to keep their attention.
      • Improves the professional quality of the presentation when suitable visual aids are used.

      Disadvantages

      • If visual aids are not carefully selected and composed, they can distract or confuse the audience.
      • Speakers sometimes read from visual aids with too much text, or let audience read them, instead of the actually speaking to the audience.
      • If the presenter does not know how technology properly, then the technical problems can distract from the presentation.
      • The audience can be distracted by a visual aid rather than concentrating on the presenter who moves onto new point.

    Visual aids in verbal format

    Trans parancies. on overhead projector (OHP)

      Advantages

    • Summaries/simple graphs/diagrams/ processes are easily explained on transparencies
    • It can be prepared by hand (OHP pens) or electronically with the computer/ photocopier
    • If the electronic equipment does not work or is unavailable, it is a usefu substitute
    • Transparencies should be effective that is, clear and visible, e.g. letter types, few words/lines.

      Disadvantages

    • Transparencies not in sequence or not well organised, can create an unprofessional impression
    • It can be replaced easily with a PowerPoint presentation
    • Not easy to combine with sound.
    • Most effective if lights are dimmed or switched off, making it difficult for the audience to make their own notes
    Interactive white board/smart board

      Advantage

    • Images are projected directly from a computer, therefore, no external projector is needed.
    • Special pens allow the presenter to write on the board while prepared images are being shown.
    • Additional notes added during the presentation, can be captured on the computer after the presentation
    • It can be controlled by touching it with your finger, so the presenter can move away from the computer during the presentation
    • It is easily combined with sound or other visual aids.
    • Useful to capture feedback and new ideas

      Disadvantage

    • Should only be used by a presenter who knows how to use the unique qualities of the interactive white board and who can use it to its full potential
    • It cannot be linked to any computer, as special software licences are needed to use it
    • Technical challenges can make it ineffective for example, losing the signal during the presentation
    Hand-outs/ Pamphlets/ Brochures

      Advantages

    • It can be handed out at the end of the presentation as a reminder of the essential facts of the presentation.
    • Relevant hand-outs can be distributed at the beginning of the presentation to draw attention.
    • Additional information can be distributed, for example, contact details/price lists/questionnaires to get feedback.

      Disadvantages

    • Hand-outs cannot be combined with sound, so it only focuses on the visual aspects of support material.
    • The distribution of material at the beginning of the presentation may distract the audience's attention.
    • It summarises only the key information, therefore some details/information may be omitted or lost.
    PowerPoint

      Advantages

    • Graphic programmes have the capacity to convey ideas and support what the presenter says.
    • Easy to combine with video inserts.
    • Less crowded slides can keep the audience's interest.
    • Most suitable for illustrations and demonstrations during presentations.
    • Variation of colour and background immediately capture the attention of the audience and retain their interest throughout the presentation.
    • Presentations can be e-mailed and stored on a computer.

      Disadvantages

    • Unprofessional handling of PowerPoint presentation material may result in the audience losing interest.
    • Less effective to some people e.g. those with audio visual impairments.
    • Cannot be used when there is no power/ electricity
    • Presentation can be lost or worthless if the computer breaks down.

    Non-verbal visual aids include : tables, graphs, diagrams and illustrations:

    Tables

    • Tables consist of columns and rows
    • Columns are vertical and rows are horizontal.
    • Tables are mostly used to:
      • present information clearly
      • draw up graphs compare information

    Graphs

    • A graph is a visual representation of data.
    • Graphs are mostly used to:
      • identify trends
      • make comparisons
      • make assumptions
    • Types of graphs include:
      • line graph
      • histogram
      • bar graph
      • pie chart

    Diagrams

    • Diagrams are mostly used to:
      • illustrate a process
      • present information in a logical way
    • Types of diagrams include:
      • flow charts
      • organisation charts

    Illustrations

    • Illustrations include drawings, pictures, symbols, photos and charts that can be used to support written information

    • After the presentation, the presenter should ask the audience if they have any questions. If someone asks a question. the presenter should repeat it to ensure everyone hears it.
    • The presenter should respond to the question calmly and politely (n a non- aggressive and professional manner), showing respect to the person who asked the question
    • A presenter should answer all the questions asked, if possible
    • If a presenter cannot answer a question, he/she should note it down with the name of the person who asked it and give a response to that person at a later date
    • A presenter should not argue with a person who disagrees with him/her but rather accept that the person disagrees with him/her on a certain point
    • If a member of the audience points out a mistake that the presenter made, he/she should apologise for making that error and thank the person for finding it

    FEEDBACK

    Feedback refers to the audience's response to a presentation.

      • Feedback can be positive if the audience enjoyed and understood the presentation
      • However, it can also be negative if the audience feels the presentaton could have been better.

      Importance of feedback

      • Feedback helps a presenter to determine where he/she can improve
      • It enables the presenter to modify the presentation

      Identifying areas of improvement

    • Future presentations can be designed in the light of the feedback given in past presentations
    • Mistakes that could be improved on may nclude the following:
      • being unprepared
      • old incorrect information
      • unreadable slides/transparencies
      • wandering off the topic
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