HUMAN RESOURCES - Telkom

1 VodacomAnnual Report 2006 65 HUMAN RESOURCES Lungi NdlovuChief HUMAN RESOURCES OfficerVodacom Group (Proprietary) Limited The branding of Vodacom as anemployer of choice and offeringa great working experience areas important as delightingour customers. Key focus of activitiesHR s strategic thrust is underpinned by the objective of attracting,retaining and developing employees to meet the growth need ofthe organisation. The Group s focus over the past year was theenhancement of executive and management skills; successiondevelopment; the training of our technical staff with regards tothe latest technology; expanding the use of our e-learningmethodology; introducing a programme to expand the pool offemales in core areas of the business; continuing to address theHIV/Aids challenge through pro-active treatment andcare;strengthening our employee wellness programme; the rolling outof learnerships and other skills development initiatives.

2 Refiningour recruitment and selection processes and the continuousenhancement of our reward upswing in the South African economy, the convergence oftechnologies and the publication of the draft BEE Codes of GoodPractice are only a few of the external factors that continue topresent the Group with numerous challenges and this competitive environment the branding of Vodacom as anemployer of choice and offering a great working experience areas important as delighting our customers. Without the bestavailable talent the Group will be unable to deliver on ourstrategic objectives and therefore, the HUMAN RESOURCES functionfocuses on the implementation of an integrated approach to themanagement of our HUMAN primary strategic objective of Group HUMAN RESOURCES ( HR ) is to leverage HUMAN capital competitiveness as a coredriver and differentiator for business performance in this highlycompetitive industry.

3 Group HR plays a pivotal role in facilitatingan institutional people framework that is conducive to attractingand retaining the best talent who continue to be enthused andexcited about the challenges provided at and movementsThe Group continues to manage headcount to ensureoperational effectiveness and efficiencies and containadministration overheads. Actual headcount increased in theGroup in the last financial year by only to 5,459(2005: 4,993). The increase in headcount is conservative incomparison to the increase in the Group s subscriberbase to million customers. The South African operationsexperienced a headcount increase of over the last in the South African headcount (including holdingcompanies) are 34 employees in Vodacom International Limited(Mauritius) (seconded to Vodacom s African operations), 206 employees in the Smartphone Group and 49 employees inCointel.

4 Group-wide customers per employee, as a measureof organisational efficiency, increased to 4,308 (2005: 3,101)in 2006, which represents a increase in employeeproductivity for the annualised voluntary turnover for the Group stands at (2005: ) as at end of March 2006. However, the labourturnover is still within our target of 12%. The average age in theGroup is 34 years, 66% of employees are between the ages of21 and 35 years, a relatively young population. This impactsman-power planning, as well as employee benefits and retentionstrategies in creating the right appeal to attract and retain RESOURCES continuedVodacomAnnual Report 2006 66 HEADCOUNTYear ended March 31% change20042005200605/0406/05 Number of employees including temps and contractors4,6094,9935, Africa including holding companies3,8483,9544, African countries7611,0391, customers per employee2,4343,1014, disadvantaged individuals( HDI ) actual versus target%HDI actualHDI target757975808077200420052006 ActualTarget556955725570 Black female as a % of total femaleactual versus target%Employment equityThe Employment Equity ( EE ) Act continues to be an integralpart of the Group s strategy and is viewed by the Board andsenior management as a driving force in ensuring that the Groupretains its competitive edge in the market place.

5 The Group alsostrongly supports the objectives of the Broad-based BlackEconomic Empowerment ( BBBEE ) Act and recognises theimportant role that the Codes of Good Practice will play in themeeting of these objectives through the provision of clearguidance to all stakeholders on the implementation of theBBBEE Act. As the need to understand, accept and embracediversity has definitely become a strategic business imperative inthe South African business environment, the Group also placesconsiderable emphasis on the management of diversity. A largepart of the business has undergone diversity managementworkshops which focus on assisting individuals to understand thepast and present as well as the need to deal with prejudices andstereotypes. Furthermore, all new employees to theGroup undergo training on EE issues as part of the Grouporientation programme.

6 Success in meeting this vital imperativeis expected to maximise future opportunities and long-termshareholder s progress in the area of EE continues to be closelymonitored by the Board. Over the last few years there has beena trend of exceeding our overall EE targets, with the exceptionof the disabled. This trend has largely continued through thisfinancial year with the exception again of the disabled as wellas HDI at some management Group has made considerable progress in ensuring that itsemployee profile is highly representative of the demographicprofile of South Africa. To facilitate the achievement of EE plans,during the year 77% (2005: 88%) of Vodacom s newappointments were from the previously disadvantaged group. Asat March 31, 2006, 68% (2005: 67%) of our workforce wasfrom this Group, excluding white EE and gender representation at certain senior levels anddisability targets continue to be a challenge, advancements havebeen made over the last year in this regard with the appointmentof highly regarded senior black executives in corporate strategy,commercial and a new venture company.

7 Vodacom is confidentthat, with emphasis on executive development, focus on anexecutive pipeline, targeted resourcing at senior levels andstretch assignments, it will meet its objectives. At the end ofMarch 31, 2006, Vodacom has made significant progresstowards achieving its target at all management positions in anenvironment where there is very low labour turnover, a youngexecutive profile, lucrative opportunities created by the telecomsconvergence and where headcount restraints Report 2006 67200420052006 Disabled actual versus target%Disabled actualDisabled target414141 Senior executivesExecutivesManagersHDI at management level 2006%HDI actualHDI target505165516562 Employee rewardsVodacom reward strategy is integral and in harmony with theoverall business strategy to create a high performance workforcethereby ultimately increasing long-term shareholder Group has a Remuneration Committee ( REMCO )

8 That ischarged with the responsibility of overseeing, on behalf of theBoard, the Group s compensation policy, reward strategy as wellas the compensation and benefit programmes of seniormanagement. The REMCO seeks to provide rewards andincentives that are highly leveraged to performance and clearlylinked to the Group s results and individual performance. Thethrust is to ensure that our compensation and benefits are atlevels that enable the Group to attract and retain talent. TheGroup has introduced remuneration philosophy and practiceswhich aim to codify our approach to employee rewards tosolidify our position as an employer of Group upholds internal remuneration equity, as well asexternal equity to remain market competitive. This is achievedthrough participation in a range of niche salary ensure the retention of skills and the alignment of Groupgoals with those of individual employees, the Group offershort-term and long-term incentive schemes.

9 The Group, as partof its annual remuneration strategy review, introduced variousinitiatives such as a lease company car benefit to lowermanagement levels as well as the introduction of variableretirement funding contributions to address the need forflexibility. These initiatives are aimed at meeting differentemployee needs as far as benefits are concerned, in line with theGroup s remuneration philosophy. The Group also approved thepayment of a special bonus to employees for achievingexceptional financial results. This bonus payment is in additionto the annual performance incentive that is based on the short-term incentive scheme RESOURCES developmentGeneralThe continuous development of the Vodacom brand is supportedby the Group s dedication and investment in the training anddevelopment of staff. The total talent management effort iscomplemented by providing staff with the opportunity to developand grow.

10 At the same time, we are realising a strong return oninvestment for the business with increased productivity and costsavings as a result of the training and development initiatives. Anexample of this would be the cost saving of nearly R3 million asa result of the implementation of a call centre Group s HR development strategy is driven by the passion tobe the best in whatever we do. We believe that the focus onbuilding capacity through the development of managerial,leadership and functional competencies achieves this andcreates a sustainable competitive advantage for Vodacom. TheGroup s commitment to employee development is demonstratedby the increased investment it has made in this regard. The pastfinancial year, the Group invested R23 million or 2% (2005: 2%)of payroll in HR Development Act and learnershipsThe Group is committed to the implementation of the spirit of theSkills Development Act and has gone beyond compliance in itsimplementation of skills development initiatives.