Sustainability and stakeholder review  
 

Transformation from an employee perspective

The Group supports the empowerment of previously disadvantaged individuals and is committed to its own transformation in order to meet the country’s need to transform the economy. Its transformation policy and practices are aligned with relevant legislation, codes of good practice and general best business practices. A Board director oversees the Group’s programme of transformation, which focuses on addressing the inequalities of the past in respect of race, age, disability and gender in the workplace. Monthly monitoring is conducted across the Group and reported to the Executive Committee (Exco). Almost 88% of the total positions in the Group are occupied by Previously Disadvantaged Individuals (PDIs).

Transformation from a Broad-Based Black Economic Empowerment (B-BEEE) perspective

The Group has not entered into a B-BBEE ownership transaction as yet and the current economic situation is not conducive to such a transaction. Consequently, the current ownership score is derived from indirect shareholding, using the mandated investment principles as contained in the B-BBEE Codes.

From a scorecard ‘management’ perspective, one PDI female currently serves on the Board, whilst three PDI males also hold directorships. The total PDI representation on the Board amounts to 31%.

In an effort to redress the current inequalities with regard to race, gender and disabilities, ongoing monitoring takes place of all recruitment and appointments, especially at senior management levels. Non-compliance statistics are reported to the Director of Transformation and to the Group CEO on a monthly basis.

The Group has a targeted procurement strategy and on an ongoing basis increases its procurement from companies that have made significant progress in the area of B-BBEE. The Group continues to engage with its suppliers and assist them in becoming B-BBEE compliant or increase their status.

The following scorecard as verified by Empowerdex (2009/2010), reflects the Group’s consistent progress in the area of B-BBEE:

Group B-BBEE score

       
2007/2008  
 
2008/2009  
  2009/2010    
  Ownership     0     1,8     1,9    
  Management     1,2     2,9     3,8    
  Employment equity     5,5     7,9     5,7    
  Skills development     6     7,5     4,3    
  Procurement     9,2     12,2     15,1    
  Enterprise development     0     4,3     15    
  Socio-economic development     1,7     5     5    
        23,6
level 0
  41,6
level 7
  50,8
level 6
 

Employee relations, ethical conduct and human rights

The Group acknowledges the fundamental rights of employees to freedom of expression, association and representation. Through its ethics policy and other related value-based policies, practices and processes, the Group has engendered among its employees the upholding of fundamental human rights, integrity and ethical practices, which are regarded as the way business is conducted across the Group and not as a legislative requirement. Altogether 4,45% of total employees have received an aggregate of 15 192 hours of training on aspects such as diversity, the Group’s Disciplinary Code and processes, human resources administration, industrial relations, employee relations and other related subjects. In addition, 18,7% of the total population of employees have collectively received 101 196 hours of training in the organisation’s anti-corruption policies and procedures relating to fraud detection and prevention, the National Credit Act (NCA), Financial Intelligence Centre Act (FICA), whistle-blowing procedures and other brand-relevant internal risk policies and procedures relevant to operations. Employees are expected to maintain high ethical values and in this regard the Group follows a zero tolerance approach in respect of corruption or fraud incidents. Perpetrators are subjected to the Group’s disciplinary procedures and practices. The Group applies the disciplinary procedures in a consistent manner.

During the year, the Group was targeted by various fraud syndicates. In order to analyse the fraud incidents, these are split into three sections, namely fraud, suspected fraud and attempted fraud (see table below). Suspected fraud refers to a suspected loss to the Company. Many of these, relate to customers who disappear after taking delivery of a product purchased on credit. Attempted fraud refers to minor losses where the fraud was prevented. The main category of fraud relates to identify fraud perpetrated by deceitful customers and/or syndicates.

Summary of fraud incidents

  Cases   Total value    
  Fraud   521   R12 950 012    
  Attempted fraud    51   R151 727    
  Suspected fraud    641   R17 707 770    

Whistle-blowing statistics

Crime Call is a whistle-blowing facility used in the JD Group since April 2002. There are two methods of reporting crime whilst remaining anonymous, ie via an anonymous dedicated Crime Call telephone line or online via a web interface. During the financial year, 125 incidents were reported and investigated. The investigations gave rise to disciplinary enquiries with the following results:

  • 26 dismissals;
  • nine final written warnings;
  • four written warnings;
  • nine counselling sessions and verbal warnings.

Insufficient evidence was obtained on the remaining 77 incidents, resulting in no action being taken.

The Group was a party to 153 CCMA cases during the year of which 90 of the cases were won, 18 cases were lost and 45 were settled.

The Group’s policies do not discriminate on grounds of race, age, disability, gender or religion and are monitored, tracked and reported on through the EE&TC. Given the Group’s stance against abuse and violation of human rights, the Group has not experienced or received any reported or recorded incidents of discrimination, child labour, forced or compulsory labour or any other violation involving discrimination or rights of people. The Group is not aware of, and will not support, any suppliers who conduct any such practices. None of the Group’s operations restrict employees’ right to exercise freedom of association or collective bargaining. No incidents of violations involving rights of indigenous people have been reported or recorded.

Employee communication

The Group communicates regularly and in a transparent manner with its employees. Communication takes place through one-on-one formal and informal on-the-job interactions, committee meetings, informal and social gatherings, work-related corporate, Chain or service department memoranda, Face-to-Face written communication bulletins, Group Directives and Operational Instructions, promotions-related telecasts, employee and business performance achievements and bi-annual Chain road shows, where information on business performance and strategies are shared, among others. The channels and mechanisms of information dissemination are selected with the aim of ensuring effective reach, absorption and understanding of the communication messages. All employees are subjected to a two-day induction programme after joining the Group, where they are introduced to the culture and workings of the Group. As part of the Art of Service initiative, all employees are regularly invited to take part in independent and anonymous employee engagement surveys. Over and above the aforementioned, all permanent employees have access to the Group’s intranet site where policies, directives and a host of other general information is stored. Employees in office environments also enjoy the use of internet connectivity during working hours and the related messaging services linked to the specific application they use. The Group has adopted and maintains an Electronic Communications Policy and practices that preclude employees from accessing offensive sites on the internet and sending discourteous messages to colleagues and third parties. During the past year the Group launched an in-house publication called Thumbs Up, which serves not only as a channel through which the core focus of the Art of Service initiative is communicated, but is also a mechanism to share knowledge, information and informal commentary between divisions and Chains.

Organised Labour and consultations

More than 60% of the Group’s employees are covered by collective bargaining agreements and are therefore party to the associated benefits negotiated between the Group and Organised Labour on behalf of the Bargaining Unit employees. The Group continues to reap the rewards of solid, sound and ethical relationships with the trade unions representing employees in South Africa, Botswana, Swaziland and Namibia. The stable relationship, in particular with the South African Commercial Catering Allied Workers Union in South Africa (SACCAWU), has been conducive for both parties throughout the years. The Group is committed to open, transparent and proactive communication and engagement with Organised Labour, and the fact that the Group has enjoyed 16 consecutive years without general strike action is evidence of the good relationship and trust that exists between management, the unionised staff and the unions. This sound relationship has been established and fostered through annual substantive negotiations, quarterly National Negotiation Committee (NNC) meetings, Shop Steward meetings, operational requirements consultations, information-sharing sessions (with trade union leadership) and EE&TC meetings.

Operational requirements exercises have to be embarked on from time to time and in such instances the Group strictly abides by the collective bargaining agreements’ requirement of a 60-day notice period in respect of layoffs. During 2009 and continuing in the review period, the Group was forced to embark upon the restructuring of its Traditional Retail and Financial Services divisions within the framework of the new business and operating model that was implemented.

Customers

The Group has a large base of credit and cash customers.

JD Group is fortunate to be able to service the mass middle market in South Africa via numerous Chains. When considering the product width, customers from LSM3 to LSM10 can be satisfied with merchandise relevant to the home environment. As the market becomes more sophisticated, the Group is able to migrate customers through the spectrum of brands.

Customer rights and consumer complaints

The implementation date of the Consumer Protection Act (CPA) 2008, has been deferred to 1 April 2011. The driving force and motive of the CPA is the protection of the consumer’s interests and rights. The CPA will have a significant impact on the relationship between consumers, the Group and its suppliers of goods and services. In particular it will affect JD’s rights and obligations as a supplier of goods and services. In order to prepare for this situation, the Group is reviewing its business practices, policies, procedures, repairs and return warranties, systems, complaints-handling procedures, as well as the trading terms with its suppliers (and manufacturers). Furthermore, there is a Group Project in place to ensure the smooth implementation and alignment of business practices, processes, policies, etc to the CPA regulatory requirements. The CPA Steering Committee meets once a month, whilst the CPA Working Committee meets bi-weekly. Development of a staff training manual has progressed well and the development of a system to facilitate compliance management is on schedule.

As can be expected from a business that has a large customer base, several queries concerning products, health and safety, information disclosure, sales processes, interest rates, charges, fees and Credit Bureau listings procedures have been escalated to the National Credit Regulator, the Credit Information Ombud, the Ombud for Long-term Insurance, the Ombud for Short-term Insurance, the Ombud for Financial Services Providers, as well as to the Department of Trade and Industry’s Consumer Investigations Directorate, however, each matter has been resolved amicably.

The Group has received four requests for access to information under the Promotion of Access to Information Act and has made the necessary disclosure in each case. No material incident of non-compliance with regulations or voluntary codes have been recorded that gave rise to regulatory penalties, sanctions or fines that have been imposed on the Group for any contravention or non-compliance with statutory obligations.