IPM – Namibian Remuneration & Benefit Trends October 2015 www.pwc.com.na

www.pwc.com.na
IPM – Namibian Remuneration
& Benefit Trends
October 2015
Who is the Namibian People & Organisation team?
Change &
Culture
Strat Reward
& Rem
Analysis with
Payrolls &
Tax
IPM - Namibian Remuneration & Benefit Trends
PwC
- Leadership Systems
- People Strategies
- 5 yr. Strategic Bus Plans
- HR Analytics
- E-Learn, E-Perform, E-LMS
- HR Models
- Org Capability Diagnostics
- Org Design validation
October 2015
2
Agenda
1. Total Rewards Model
2. Remuneration Package Composition
3. Executive Remuneration
4. Market Benchmark
5. Benefits
IPM - Namibian Remuneration & Benefit Trends
PwC
October 2015
3
Total Reward Rewards Model
Big Picture – Where does it all fit in?
IPM - Namibian Remuneration & Benefit Trends
PwC
October 2015
4
IPM - Namibian Remuneration & Benefit Trends
PwC
October 2015
5
Remuneration & benefits defined
Pay provided by an
employer to an employee
for services rendered
Legally mandated:
• SSC / ECA
Pay for time not
worked:
• Annual / Sick leave
Benefits
Fixed Pay
Variable Pay
Retirement:
• Pension / Provident
Health & Welfare:
• Medical aid /
Disability
Remuneration
Short-term
Incentive Pay
Long-term Incentive
Pay
IPM - Namibian Remuneration & Benefit Trends
PwC
Programs to supplement
cash; designed to protect
employee and family from
financial risks
Source: World at Work : Global Remuneration Professional course content
October 2015
6
Remuneration Package Composition
Total Guaranteed Package; or not?
IPM - Namibian Remuneration & Benefit Trends
PwC
October 2015
7
How is Total Guaranteed Package used in the market?
Highly
influenced by
Union
involvement
Namibia
Market
Structure
IPM - Namibian Remuneration & Benefit Trends
PwC
General/
Executives/
Unionised
Management
Staff
Basic Salary
28%
56%
Total Package
72%
44%
Source: PwC Remchannel Online Salary Survey
October 2015
8
Total Guaranteed Package components & composition
The items that are included in total guaranteed package are all payments and benefits of a fixed and regular nature
and are capable of exact valuation. People are usually unconditionally entitled to such payments and benefits.
Basic Cash
Club Subscription
Annual Bonus (Guaranteed)
Holiday Accommodation
Pension / Provident Fund
Deferred Compensation
Medical Aid
Financial Counsel
Housing Subsidy/Allowance
Group Life
Free Cheap Housing
Overseas Travel
Company Car
Cheap Assets
Car Allowance
HOD Allowance
Entertainment Allowance
Market Premium
Telephone Allowance
Proto Team Allowance
Other Cash Benefits
(any other cash benefit or cash allowance, paid through the
payroll, which is not already catered for above)
Other Non-Cash Benefits
(any other non-cash benefit which can be converted to a cash
value and which is not already catered for above)
Retirement Scheme
8%
Medical Scheme
4%
Typical Management
TGP Distribution
Car Allowance
7%
Company Car
1%
Other Cash Benefits
4%
Housing Subsidy
Allowance
13%
Basic Cash
60%
Guaranteed Bonus
3%
IPM - Namibian Remuneration & Benefit Trends
PwC
Source: PwC Remchannel Online Salary Survey
October 2015
9
Executive Remuneration
Is it transparent, fair & responsible? – King III
IPM - Namibian Remuneration & Benefit Trends
PwC
October 2015
10
Align executive pay with company purpose
Aligning executive remuneration with the organisation’s changing business model will assist in attracting and
retaining the people it needs to take the organisation forward.
With this in mind, we look at how organisations can develop a more sustainable and strategically coherent approach to
pay and incentives:
• Engaging with stakeholders
• Aligning pay considerations with decisions over where and how you operate
• More realistic packages
• Fixed pay over the higher risk ‘gamble’ of a bonus
• Variable pay loses value the longer people have to wait
• Rewarding the behaviour you want
• Forging a new career bargain
• Money may not be the chief motivator for the people you need
• Rebuilding trust
IPM - Namibian Remuneration & Benefit Trends
PwC
Source: http://www.pwc.co.za/en/publications/non-executive-directors-report.jhtml
October 2015
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State-Owned Enterprises Governance Council
Remuneration Framework
State-owned Enterprises Governance Act, 2006 (Act No. 2 of 2006)
No 174, as amended 31 Dec 2014 (No 261)
“Directives in relation to remuneration levels for chief executive officers and
senior managers of state-owned enterprises and annual fees and sitting
allowances for board members”
Bands for Total Guaranteed Pay per annum inclusive of inflation rate of 6% and
excluding performance and incentive based pay in Namibian Dollars
(CEO)
Lower Quartile
Median
Upper Quartile
90th Percentile
Tier 3
752 305.32
921702.86
1 332 450.74
1 624 797.68
Tier 2
478 843.34
583 662.50
838 821.46
1 046 428.82
Tier 1
425 270.94
504 682.96
704 684.82
851 617.78
Bands for Total Guaranteed Pay per annum inclusive of inflation rate of 6% and
excluding performance and incentive based pay in Namibian Dollars
(Senior Managers)
Lower Quartile
Tier 3
Tier 2
Tier 1
472 605.24
394 702.66
288 800.18
IPM - Namibian Remuneration & Benefit Trends
PwC
Median
562 693.58
472 966.70
343 570.38
Upper Quartile
751 827.26
649 435.50
458 218.92
90th Percentile
925 012.18
784 030.06
563 697.40
October 2015
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Market Benchmark
Are your salaries externally competitive?
IPM - Namibian Remuneration & Benefit Trends
PwC
October 2015
13
Practical steps in determining a pay structure
Job Analysis
The breakdown of a job into its constituent tasks and processes
Job Documentation
A result of job analysis; an analytical statement of tasks, processes, etc.
The sequence as
well as
completeness of
these steps are
very important to
establish a healthy
pay structure
Job Evaluation
The systematic and objective ranking of jobs in terms of relative importance, value or difficulty
Grading Structure
A job worth hierarchy
Remuneration Philosophy
A set of beliefs which underpins the reward strategy of an organisation; it governs reward policies
Market Positioning
Determine organisation’s position through grade & job benchmarks based on remuneration philosophy
Base Pay Structure
Assigning monetary values (pay) to the hierarchy of jobs consequent upon grading & market positioning
IPM - Namibian Remuneration & Benefit Trends
PwC
Source: World at Work : Global Remuneration Professional course content
October 2015
14
Advantages:
•
Responsive to market
•
Transparent
•
Simple to administer
•
Not time consuming
•
IPM - Namibian Remuneration & Benefit Trends
PwC
Easy to explain
Challenges:
•
May be difficult to
obtain survey data
for some positions.
•
May not be aligned
with internal equity.
•
Any market inequity
are built in.
October 2015
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The drive behind annual increases
There is a very close correlation between CPI and the annual increases granted. However the
reality is that staff needs to consider the increases in the cost of living, the real increases not CPI.
A variety of elements are considered to
determine annual increases:
· Union negotiations;
· Individual & company performance;
Reported pay adjustments
Namibia National market:
Executive &
Management
Actual
reported %
Increase
2015
Anticipated
% increase
2016
· Economic forecasts & affordability;
Basic Salary
6.3
6.4
· Historic increases;
Total Package
6.3
6.9
Actual
reported %
Increase
2015
Anticipated
% increase
2016
Basic Salary
7.3
7.3
Total Package
6.8
7
· Industry comparisons; and
· Market benchmarks through salary surveys
such as REMchannel®
IPM - Namibian Remuneration & Benefit Trends
PwC
Unionised & General
Staff
October 2015
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Average comparisons to
Namibia:
South Africa 25% higher
Botswana 20% lower
Lesotho 5% higher
Swaziland 10% lower
Remuneration Trends 2015
SADC regional comparisons
2,500,000
2,000,000
1,500,000
South Africa: Economy 10 x larger
Botswana: Comprehensive benefit structure
Lesotho: Very steep pay curve
Swaziland: Relative flat pay structure
1,000,000
500,000
Values are:
Annual TGP
N$
Unskilled/Defined Decision Semi-Skilled/Discretionary
Skilled
Technical/Academically
Professionally Qualified/Mid
M
Senior Management
Namibia
South Africa
Bostwana
Lesotho
Swaziland
Expon. (Namibia)
Expon. (South Africa)
Expon. (Bostwana)
Expon. (Lesotho)
Expon. (Swaziland)
IPM - Namibian Remuneration & Benefit Trends
PwC
Source: PwC Remchannel Online Salary Survey
October 2015
17
Remuneration Trends 2015
Namibia industry circle comparisons
1,200,000
Mining is clear leader on average 45% above
Retail is lagging the market norm by about 50%
Finance is just above the market by 5%
1,000,000
800,000
600,000
400,000
Influencing
factors:
Economic
background
Affordability
Multi-Nationals
200,000
Values are:
Annual
TGP
N$
Unskilled/Defined Decision
Semi-Skilled/Discretionary
Skilled Technical/Academically
Professionally Qualified/Mid M
Nam Nat
Fin Serv
Retail
Mining
Expon. (Nam Nat)
Expon. (Fin Serv)
Expon. (Retail )
Expon. (Mining)
IPM - Namibian Remuneration & Benefit Trends
PwC
Source: PwC Remchannel Online Salary Survey
October 2015
18
Remuneration Trends 2015
Namibia Technical vs Support
2,000,000
1,800,000
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
Influencing Factors:
Scarcity,
Attraction,
Location,
Retention,
Succession,
Collective bargaining,
Leadership,
Outsourcing,
Regional competition.
40% premium
paid for technical
400,000
200,000
Values are:
Annual
TGP
N$
Semi-Skilled/Discretionary
Skilled Technical/Academically
Professionally Qualified/Mid M
Support
Technical
Expon. (Support)
Expon. (Technical)
IPM - Namibian Remuneration & Benefit Trends
PwC
Source: PwC Remchannel Online Salary Survey
Senior Management
October 2015
19
Remuneration Trends 2015
Namibia per job discipline
One generic pay
scale may not
accommodate all
900,000
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
Values are:Annual
TGP
N$
Professionally Qualified/Mid M
Distri & Supply
IPM - Namibian Remuneration & Benefit Trends
PwC
Education
Fin, Risk & Comply
HR
IT
Market & Sales
Source: PwC Remchannel Online Salary Survey
SHEQ
October 2015
20
Benefits
The somewhat poorer cousin of Total Reward
IPM - Namibian Remuneration & Benefit Trends
PwC
October 2015
21
Benefits
The Total Guaranteed Package concept is firmly entrenched in organisations for years.
The unintended consequence thereof however; reducing the perceived value & importance of benefits.
•
Manager TGP comprises around 40% benefits, these typically include: retirement, medical, housing, vehicle, and
in some instances, a guaranteed end-of-year bonus.
•
Employees focus on TGP, they do not always consider the value of these benefits and the real costs or
savings therein. I.e.: retirement funding at rates well below market costs, due to closed funds with significant
negotiating power.
•
A further contributor: Namibia does not have a comprehensive employee benefit guide to assist and
regulate or at a minimum provide a “checklist” of typical benefits utilised in the market.
This guide would provide the ability to benchmark the competitiveness of benefits such as leave, housing &
travel allowances, retirement funding, medical coverage and communicate the market practices effectively to
employees.
Introducing Namibia’s first National Employee Benefit Survey
IPM - Namibian Remuneration & Benefit Trends
October 2015
Publication end March 2016
PwC
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•
Typical benefits offered
Leave
• Annual, Compassionate, Maternity, Sick, Study, Sabbatical, Relocation, Sport,
Organisational Rights, Incentive, etc.
Retirement & life insurance
• Retirement, Provident, Disability, Group life, Group accident, Dreaded disease,
Funeral cover & Short-term insurance
Medical aid
• Membership, Plan options, Company contribution, Post retirement cover & Annual
check-ups
Travel
• Car allowance, Use of company car, Eligibility, Quantum of benefit, Running &
additional costs, Reimbursement & Subsidised transport.
Subsistence & overseas travel
• Qualifying levels, daily rates, typical expenses covered, both local and oversees travel
Housing & relocation
• Entitlement, Basis of calculation, Allowance, Loans, Subsidy, Collateral, Free or
cheap housing, Relocation
Circumstantial benefits
• Shift, Standby, Callout, Acting, Overtime, Other cash (tool, uniform, underground
allowances)
IPM - Namibian Remuneration & Benefit Trends
PwC
Source: PwC South African Employee Benefits Guide 2013
October 2015
23
Typical benefits offered
Non cash benefits
• Educational assistance, Professional body membership, Media subscriptions,
Club subscriptions, Cellular phone & contract, Free or cheap services,
Company credit cards for entertainment, Canteen/ meal benefit, Home
security, Gymnasium, Crèche/childcare, Parking, non-monetary recognition
awards, Counselling, Organisational Initiatives
Cash benefits
• Home office, Annual bonus, Staff loans, Market premiums, Deferred
compensation
General
• Hours of work, Training & development
Employer value proposition
– Work Life
• Flexible working arrangement, Working from home, Time-off, Employee Assist
Program, On-site facilities, Other initiatives
Assignments/ Secondments
• Employees on assignment within Namibia
Equal pay Equal work
• Policy and practise details
IPM - Namibian Remuneration & Benefit Trends
PwC
Source: PwC South African Employee Benefits Guide 2013
October 2015
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Interesting practises on leave
Annual - Buying of additional leave.
Study
Compassionate – Some granted per event and not per
annum.
Religious holiday - Other than public holidays
Maternity - Additional Maternity leave @ % base pay or
unpaid;
- % pay ranges for different levels;
- Moved to low risk work areas;
- Benefits in TGP maintained by companies;
- 20% of companies limit the number of
pregnancies.
Sick
- 7% reported that sick leave can be
accumulated
- 46% allow newly appointed employees to
utilise sick leave in advance
- 42% provide additional sick leave for life
threatening/dreaded diseases
IPM - Namibian Remuneration & Benefit Trends
PwC
– 1 day for the exam and 1 day for study prior
to the exam, with 10/12 days maximum;
- Limit to a field of study beneficial to the
organisation;
- Employee required to stay in service in lieu
of the study leave/assistance received, equal
to study period.
Long/ Sabbatical - 20% provide to employees
- Some form of restrictions related to the
period granted and or a minimum service
period;
- Could either be paid, partially paid or
unpaid.
Relocation/ Moving - 52% provide between 1 and 4
days.
Sport
- 51% provide sport leave to their employees.
Organisational rights - 39% provide to union
representatives and shop stewards.
Source: PwC South African Employee Benefits Guide 2013
October 2015
25
Reward responsibly...
Elria van der Merwe
Senior Manager: People & Organisation
Tel: 061 284 1201
Mobile: 081 445 6559
E-mail: [email protected]
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