Aligning skills development to your business strategy By Marion Bell ( marionbell@mweb.co.za )

1. Aligning skills development to your business strategy By Marion Bell (marionbell@mweb.co.za) on behalf of HRD Training and Consulting

2. AGENDA Skills development and business strategy Pivotal Grants BBBEE and skills development

3. QUIZ – Question 1 • The role of the SDF is to: • Develop a Workplace Skills Plan (WSP) • Promote, co-ordinate and implement training interventions • Report on skills development activities in the Annual Training Report • Option 1 and 3 • Option 1, 2 and 3 • None of the above

4. QUIZ – Question 1 Option 1, 2 and 3. Some SDF’s don’t realise that they are also responsible for the implementation of the training – the SDF function does not end with the submission of the WSP/ATR . Training must be promoted, co-ordinated and implemented by the SDF.

5. QUIZ – Question 2 The training year runs from: 1 July to 30 June 1 April to 31 March 1 January to 31 December

6. QUIZ – Question 2 1 April to 31 March This allows 3 months for the WSP/ATR to be completed and submitted to the relevant SETA

7. QUIZ – Question 3 How many employees must a company have before they are required to establish a training committee: 50 100 250 500

8. QUIZ – Question 3 50 Employees The training committee must be representative of all employees, unions and management.

9. QUIZ – Question 4 A Training Needs Analysis is used to determine the skills requirements for a particular job or position True False

10. QUIZ – Question 4 False A Training Needs Analysis is used to determine the training needs of the job incumbent, after the skills requirements of the position have been determined through a Skills Analysis.

11. QUIZ – Question 5 • Which of the following methods could be used during a Training Needs Analysis? • Review of the Sector Skills Plan • Questionnaires sent to managers • Interviews with employees • Review of the Employment Equity Report • Analysis of the Organisation’s Strategic Goals

12. QUIZ – Question 5 All the above Don’t forget to also include the: Operational Objectives BEE Requirements Possible Staff Movements (Succession Plans) Skills Priorities Scarce and Critical Skills Job Descriptions Personal Development Plans Training Committee Minutes

13. QUIZ – Question 6 • Which of the following questions should NOT be included in the Questionnaires or Interviews: • A SWOT Analysis of the department • Scarce and Critical Skills in the department • New Technologies planned by the department • Employment Equity requirements • BEE requirements • Learnerships required by the department • Learning culture in the department • Understanding of job requirements and how these link to Strategic and Operational Objectives • Training required • Attitude towards training

14. QUIZ – Question 6 All the questions should be included in the questionnaires and interview sheets, Once the document analysis, questionnaires and interviews are completed the SDF prepares a Training Needs Analysis Report.

15. QUIZ – Question 7 • The Training Needs Analysis Report does not need to be approved by the Training Committee – only by top management. • True • False

16. QUIZ – Question 7 False The Training Committee must approve the Training Needs Analysis Report. The Training Committee should also approve the Training Providers used, the training budget (in conjunction with the Finance Department) and the Training Priorities, identified in the Training Needs Analysis.

17. QUIZ – Question 8 What date is the WSP/ATR due each year?

18. QUIZ – Question 8 30th June

19. Compliance vs. Strategy • Most organisations go through the motions of completing the WSP/ATR for reasons of compliance – and to get 50% of their Skills Development Levy returned • The prime objective should rather be – “How can we use this process to assist the organisation to achieve it’s Strategic Goals and Objectives?”

20. Stakeholders Managers Strategic Objectives Operational Objectives Organisation Vision Stakeholders and Directors Development of Organisations

21. Operational Objectives • Managers (and HR) have a responsibility to INTEGRATE the Strategic and Operational Objectives into the actual work to be performed by employees. • This crucial step is often missed – Strategic and Operational Objectives are added or tacked on as “Quarterly Objectives” or “Key Performance Areas”, that are never translated formally to an employee’s job description. • If the job description is updated, then the Skills and Training Needs Analysis process is easily facilitated.

22. Establishing Training Priorities • Establish what training most supports the organization priorities… consider: • Organisation’s Vision • Strategic Objectives • BBBEE Reporting • Alignment to Employment Equity Plan • Improved performance • Improved motivation • Alignment to the skills priorities identified by the SETA • Scarce skills • Critical skills

23. Matrix for Training Priorities

24. Promote, Co-ordinate and Implement Training • Promote a learning culture in the organisation • Provide managers and employees with training related information • Schedule training interventions • Co-ordinate training interventions and logistical arrangements • Evaluate training interventions • Keep all training records for possible audits • Liaise with the relevant SETA

25. Discussion Point Do you face any obstacles when performing your SDF functions? How do we bridge these challenges?

26. Pivotal Grants • 12 January 2012, Blade Nzimande, Minister of Higher Education and Training announced his intention to repeal the SKILLS DEVELOPMENT ACT, 1998 (ACT NO. 97 OF 1998) • Changes include • Introduction of Pivotal Grants • Tighter control of monies not paid out for mandatory and discretionary grants

27. New Grant Structure

28. What are Pivotal Grants • Mandatory Grants are being reduced from 50% to 40% of the Skills Development Levy. • The balance of 10% of the Skills Development Levy can only be claimed if “formal” study is completed. • Formal study includes university and FET courses that include structured learning at work – e.g. apprenticeships, learnerships, internships, skills programmes. Please refer to your SETA. • Formal study excludes short courses and non-unit standard aligned training. • Open to all race groups, employed and unemployed.

29. Additional Pivotal Funds • A SETA must allocate a pivotal grant to an employer for a learning programme at a level determined by the Director General through a general circular to all SETAs to fund learners on pivotal programmes inclusive of funding of University of Technology students and FET College graduates subject to verification by the SETA to a maximum of 10% of total levies paid by the employer. • In addition, subject to sub regulation (1), a SETA may allocate additional pivotal grant funds to an employer for pivotal programmes, should the employer have spent more than 3% of their payroll on training as reported in the pivotal training report and verified by the SETA.

30. Other conditions of the Act • With effect from 31 March 2013 all surplus funds in a SETA for each financial year must be transferred to the pivotal grant fund within 10 working days after 31 August annually. • With effect from 31 March 2013 all surplus funds in a SETA for all previous financial years must be transferred to the pivotal grant fund within 10 working days. • If the employer does not claim a mandatory grant within the time period specified in sub regulation (2), the SETA must transfer the employer's unclaimed mandatory grant funds to the pivotal grant fund.

31. More conditions… A SETA must not pay a mandatory grant and pivotal grant to an employer who is liable to pay the skills development levy in terms of section 3 (1) of the Skills Development Levies Act, unless the employer- has registered with the Commissioner in terms of section 3 (1) of the Skills Development Levies Act; has paid the levies directly to the Commissioner in the manner and within the period determined in section 6 of the Skills Development Levies Act; is up to date with the levy payments to the Commissioner at the time of approval and in respect of the period for which an application is made; has submitted a Workplace Skills Plan and pivotal training report (PTR) that contributes to the relevant SETA sector skills plan as contemplate in section 10 (1) of the Act within the timeframes prescribed in regulation 5 (2) of these Regulations; with effect from 1st April 2012, has submitted and implemented its workplace skills plan for the previous financial year to the extent that it satisfies the criteria for implementation that must be established and approved by the SETA Accounting Authority based on guidelines provided by DHET; and the WSP and ATR are approved by relevant organised labour structures.

32. When will this come into effect? • The legislation is apparently on hold until next year • Some of the SETA’s are implementing for the current training year (2012/2013), others have said they would wait for the 2013/2014 training year. • Check with your SETA!

33. What do you, as the SDF, need to do… to claim maximum BBBEE points through skills development?

34. What is BBBEE? • Broad-Based Black Economic Empowerment is a process of assisting and educating previously disadvantaged black individuals to enable them to contribute to the economy. • Black individuals is a generic term which means Africans, Coloureds and Indian people who are South African citizens. • A scorecard is a verified report on your current BBBEE status according to the DTI (Department of Trade and Industry) Codes of Good Practice.

35. Elements of the BBBEE Scorecard

36. 4. Skills Development • This is money spent developing black individuals to increase their knowledge and skills in the business environment. • To score points: • The organization must be registered with the relevant SETA. • The organization must have workplace skills plan in place. • The organization must have implemented a programme targeted to developing priority skills generally and specifically for black employees. • Any bursaries to be repaid by employees, partially or completely, do not constitute expenditure by the organization for Skills Development

37. Learning Programme Matrix

38. Learning Programme Matrix • The Learning Programme Matrix serves as a comprehensive guide on the types of Training Programmes that should be embarked upon • The Learning Programme Matrix is not an exhaustive list of such Learning Programmes • Training should be accredited by a local or international accreditation body • Only expenditure on learning programmes as per the Learning Programme Matrix are considered. Category G may only account for 15% (Informal workplace programmes.)

39. Recent and suggested changes to the Skills Development Component • Broadened the beneficiary base to include external skills development initiatives • Broadened the learnership sub-element to include apprenticeships and internships • Provided definitions for learnerships, apprenticeships, internships and absorption and other supporting definitions • Removed work-based training that does not require a formal contract from the Learning Programme Matrix (namely: categories F and G)

40. The Skills Development Elements • The Skills Development Scorecard comprises 3 elements • Skills Development Expenditure on Learning Programmes specified in the Learning Programme Matrix for black employees as a percentage of the leviable amount using adjusted recognition for gender • Skills Development Expenditure on Learning Programmes specified in the Learning Programme Matrix for black employees with disabilities as a percentage of the leviable amount using adjusted recognition for gender • Number of black employees participating in Learnership or Category B, C and D Programmes as a percentage of total employees using the adjusted recognition for gender.

41. The Skills Development Scorecard

42. Adjusted Recognition for Gender (ARFG) • Black women • ARFG is applied to the calculation for black women in Learning Programmes • Black representation is halved and the black female representation is added • Black female representation is limited to 50% of the prescribed target for that element

43. Disabled Employees • Disabled employees have … • A physical or mental impairment • Which is long-term or recurring and • Which substantially limits their ability to work • Only expenditure on black disabled people can be claimed • The target is only 0.3% of the leviable amount

44. Leviable Amount… • The BEE auditor will audit a claim by the measured entity in terms of Skills Development Expenditure for black employees. The final accepted result will be expressed as a percentage of the “leviable amount”. • The “leviable amount” bears the meaning as defined in the Skills Development Levies Act of 1999 as determined using the Fourth Schedule to the Income Tax Act and is essentially the entire payroll of the measured entity in the financial year under review. • Only expenditure on learning programmes as per the skills matrix is accounted for and can be claimed. The claim for “Category G” training is limited to 15% of the total claim.

45. Skills Development Expenditure • 100% of Certified Learning Programmes (Uncertified are capped at 15%) • Facilitator costs • Venue costs • Administration and Stationary costs • Meals and Refreshments • Costs not included: • Employee’s salary and travel expenses • Scholarship/Bursary costs to be reimbursed by the employee

46. Example of a Schedule for Element 1 and 2

47. Documentation and Information Required • Internal Training: • Attendance registers • Certified copies of ID’s • Proof of costing of internal training • Bursary agreements • Might ask to interview trainee • External Training: • Proof of payment • Proof of attendance • Certified copies of ID’s • Might ask to interview trainee

48. Types of Enterprises • 1. Exempt Micro Enterprise (EME) – (Small Entity) • Annual turnover is less than R5 million. These organizations automatically 100% BBBEE compliant to a BBBEE level 4. • If there is 50.01% or more black ownership, then automatically 110% BBBEE compliant to a BBBEE level 3. 2. Qualifying Small Enterprise (QSE) – (Medium Entity) • The Annual Turnover is between R5 million and R35 million. • The QSE can use four of the seven elements to determine the BBBEE status. (Suggestion for 2012 – all 5!) 3. Generic Entity (Large Entity) • A generic scorecard will be completed annually for all organizations with an annual turnover of more than R35 million – on an annual basis. • The organization will be required to be verified on all seven of the BBBEE elements.

49. BBBEE Levels • The BBBEE levels are broken down in 9 levels by an Accredited Verification Agent. • Level 1 being the highest ranking contribution level and Non-Compliant Contributor being the lowest. • Based on the overall performance of a Measured Organization • The BBBEE points are as follows:

50. BBBEE Points and Levels