The Importance of Training and Education on Employee Equity Ownership

1. The Importance of Training and Education on Employee Equity Ownership (What company information is supposed to be accessed by employees as stakeholders)

2. Questions to be asked in order to fullyappreciate the depth and magnitudeof this subject matter • Why is the training and education of employees, as equity stakeholders, important to the success and sustainability of the operating company? • What should be the content of the training required? • What are the direct and indirect benefits of trained and informed employees to the realisation of the strategic goals of the operating company? • What are the likely outcomes and impact of untrained and ill-informed employees, as equity stakeholders, to the success or lack there off, of the operating company?

3. Let’s ponder on the following statement We act in accordance with the “truth” as we believe it to be; And not on the REAL TRUTH Author: Unknown

4. The Broad Based Black Economic Empowerment Act No 53 of 2003 Key Objective: “.. to promote economic transformation and provide meaningful participation of Black people in the economy..” Section 2 of the Act makes specific mention of the desire to change the racial composition of ownership and management in the economy.

5. The summery of the “’Transformation” agenda • The reasons driving the need for “Transformation” in South African are based on the following key economic imperatives: • To correct the imbalance created by apartheid legacy • The acceleration of economic growth in order to reduce poverty among the majority citizens of South Africa • Increase the skills levels of Black labour, previously restricted through the apartheid policies, to generate value-added activities within the South African economy, in order to create more employment opportunities for the Black masses • To provide a mechanism and processes for equitable distribution of economic benefits (profits)

6. The roles and responsibilities of the Board of Trustees / Directors (King 3 Commission Report) • Act as the focal point for the company custodian of corporate governance • Ensure that the following issues are fully addressed in the operating company: • Approval of the company strategic plan • Minimise and control areas of risk • Ensure that the strategy will result in the long term profitability and sustainability of the company and its workers • Provide effective leadership based on ethical foundation • Ensure that the company is socially and environmentally responsible

7. The roles and responsibilities of the Board of Trustees / Directors Continue • To hold the company executives accountable for the performance of the company • To ensure that the company has an effective and independent Audit Committee • To ensure that the company complies with the applicable laws and industry codes of good practice

8. The roles and responsibilities of the Board of Trustees / Directors Continue • Monitor the perception of all its stakeholders about the company: • Investors • Shareholders • Employees • National Government • The community • Clients • Suppliers • Should always exercise independent and unbiased thinking • Should always act in the best inters of the company

9. What business items should be discussed in the regular board meetings • Quarterly and yearly operational performance of the company by each strategic division, and address any key issues arising from the reports • Overall financial performance of the company and the projected yearly results • Declaration of dividends distribution depending on the company’s financial results • Review the Human Resources reports based on the seven pillars of the DTI Codes of Good Practice: • Black share equity in the company • Black and gender representation in senior management positions • Employee training and development plans and progress report • The level of Black companies participation in the procurement supply chain of the company • Progress review on the Enterprise Development ventures • Feedback on the company's Social Responsibility projects • Appointment and removal of Directors / Trustees

10. What are the dynamics companies face when dealing with employees in board rooms • By and large, the existing dominant corporate culture set by the leadership of the organization, will determine the tempo and nature of the engagements and the relationship. e.g. • One man show business • Family business • Nature and type of business, product manufactured or sold and industry • The presence or absence of a strong Trade Union influence • Originally South African or international corporate company culture • The higher the level of individual employee’s educational and skills exposure, the more engaging will be the relationship • The lesser educational exposure on the part of employees the slower and longer will be the training process and skills transfer required

11. Dealing with information sharing with the employees as equity stakeholders • There are several levels of information sharing situations that should inform the appropriate rules of engagement • At board level, full and transparent disclosure is the key to a successful and fruitful dialog and sound collective decision making process. The issue of how to deal and handle confidential information should be emphasised where required. This is dealt with when discussing the Trustee or Director’s fiduciary duties and the associated individual responsibilities and accountability • At operational level, specific and relevant information should be shared with employees involved so that they can make informed decisions, taking into account the associated risks and benefits

12. Dealing with information sharing with employees as equity stakeholders continue • At general employee level, the following business information highlights should be shared once or twice per annum, in order to keep employees informed on the general issues that will affect them: • Key elements of the strategic direction of the company and what is required from them to make the business successful and sustainable • The current business performance success and threats that are facing the company • What are the individual departmental objectives and targets • What will be the benefits accrued to them when the company meets and exceeds its objectives and targets • The general financial performance of the company at year end, and what does that mean to them as shareholders, in terms of profit and dividend declaration and distribution

13. What are the potential benefits ofan informed and trained employeesas equity stakeholders • There will be a better understanding and appreciation of the mission and objectives of the company • Better involvement and participation in the pursuit of the shared company goals (value add) • They will take ownership and accountability of their actions • They will keep management on their toes in terms of the quality and impact of the decisions they make, • They are more likely to come up with innovative and helpful ideas to address the challenges facing the company (value add) • They will quickly understand when the company is experiencing some difficulties and co-operate with management in finding workable solutions to the problems, even when the suggested solutions are not pleasant to deal with • It will encourage the development of trust between the parties

14. What are the potential drawbacks and negatives of ill-informed and untrained employees as equity stakeholders • Ignorance is not a good base to start a good business relationship • The lack of appropriate information may lead to misinterpretation of actions and motives on the part of employees • Because of the historical poor workplace relationships between employer and employee’s, in some companies in South Africa, the employees are unlikely to change their view and feelings about management actions and decisions in a business partnership relationship • Where employees do not view themselves as business partners with co-responsibility for the success and failure of the company, unacceptable bad behaviour like poor working ethics will be prevalent • The environment of lack of trust between management and employees is likely to continue, resulting in different forms of industrial relations conflict which will be detrimental to the company’s success

15. This is it folks Thank you! Any comment or questions?