Disclosure on management approach
Exxaro’s approach to its people is guided by a comprehensive suite of policies that covers employment, labour/management relations, occupational health and safety, training and education, and diversity and equal opportunity.
For a number of reasons, South Africa is particularly challenged by the shortage of specific skills and a national plan is in place to address this. Known as critical or scarce competencies, attracting, retaining and developing these skills is a focal area for all mining companies and a competitive point of difference. Supported by the leading practices developed in recent years, Exxaro concentrates on exceeding compliance targets in South Africa by training and development to maximise individual potential, equality and safety in the workplace, meeting our employment equity targets and improving standards of living in our stakeholder communities. Collectively, our initiatives are also contributing to reducing the shortage of skills in our industry.
Exxaro follows a total remuneration approach with guaranteed and variable components. The group’s vision, mission, business strategy and culture drive this philosophy and strategy, in tandem with governance structures and external statutory regulations (SA Revenue Services, King III and IFRS II). The components include guaranteed pay, short-term performance incentives and long-term incentives such as share schemes and other benefits linked to longer-term targets to ensure sustainability. All components are benchmarked against the external market to ensure Exxaro remains competitive.
Wage agreements on remuneration are in place at all group employers, while formal processes determine remuneration for non-unionised employees. Six-monthly market surveys ensure total remuneration is market related.
At all levels, minimum conditions of employment exceed the requirements of South Africa’s Basic Conditions of Employment Act.Through Exxaro’s human resource development policy, we aim to:
- Develop and sustain core competencies and maximise human resources to meet the group’s strategic objectives and improve operational performance
- Create a learning culture by assisting and facilitating the process in which employees and their dependants take responsibility for improving their own educational and competency levels, to the mutual benefit of the individual and the organisation
- Ensure integration and uniformity in all learning and development processes by leveraging technologies
- Support and reinforce our values through various learning and development initiatives
- Ensure learning and development initiatives are career-focused and aligned with business objectives
- Establish life-long learning as the major thrust of learning and development.
Diversity and equal opportunity
When we created Exxaro - the largest black-owned mining company in the country - we stated our intention of being the best example of how South African companies could and should be run. We made a commitment to our people to ensure their progress and to build the skills base we needed to fulfil our vision. Employment equity is just one of the ways in which we are doing this.
While employment equity is certainly a legal issue, with strict targets imposed by both the mining charter and the government’s black economic empowerment codes, for Exxaro it is also a moral imperative.
At the heart of our employment equity strategy are detailed plans developed by each business unit in consultation with its employees and unions. These are updated and progress reported to the board quarterly and government annually.
By following these plans, each unit ensures that recruitment and skills development are conducted responsibly, encouraging transformation without affecting existing positions in the company. Each business unit has a formally assigned senior manager for employment equity, and an employment equity forum responsible for ensuring appropriate plans are developed, executed, monitored and communicated to employees.
- New R3 million assessment workshop opened in April at Grovos training centre in Lephalale
- 201 learners enrolled in 2010
Exxaro’s staff complement was 10 937 at 31 December 2010, split into employees in bargaining units and the management and specialist category. In the bargaining units, there are 8 597 employees, with 1 913 employees in the management and specialist category. Regional distribution is shown below:
|Limpopo||2 395||480||16||2 891|
|Mpumalanga||3 552||294||153||3 999|
|Western Cape||771||253||35||1 059|
|Total||8 597||1 913||427||10 937|
|* Australia office.|
The HR management system introduced in March 2009 is providing the group with end-to-end business process integration, including e-learning and medical surveillance. This advanced environment has enhanced Exxaro’s ability to monitor, control and enforce compliance (medical and induction expiries, overtime and statutory leave). It also ensures accurate and timely business information, and effective forecasting of people-related information (employees and contracting workforce).
There were again no reported incidents of discrimination in the group during the year. As collective agreements determine specific guaranteed minimum salaries, there is no discrimination between salaries of men and women in this category. In the management and specialist category, all employees are on performance contracts and individual salaries are based on performance, not gender or race.
The breakdown of employees by gender and age is shown below.
|Bargaining unit||Management and
|Limpopo||2 144||251||416||64||8||8||2 891|
|Mpumalanga||3 110||442||250||44||113||40||3 999|
|Western Cape||673||98||204||49||25||10||1 059|
|Total||7 533||1 064||1 495||418||304||123||10 937|
|Bargaining unit||Management and special||Temporary employees|
|Mpumalanga||302||1 079||910||1 014||246||1||20||87||91||82||14||44||69||27||6||4||2||3 999|
|Western Cape||103||326||262||73||7||10||60||102||70||11||17||10||2||1||4||1||1 059|
|Total||730||2 697||2 259||2 290||620||1||74||532||661||499||147||140||126||71||39||41||9||10 937|
The challenge of finding suitable skills to staff new projects is ongoing. Exxaro has an active retention programme to maintain scarce skills that accounts for 5-6% of total payroll. Equally, considerable attention is given to building a sustainable talent pipeline of skills in critical or scarce competencies.
Between 1 January and 31 December 2010, Exxaro’s average employee turnover rate was 6% (2009: 4%), primarily because of death, resignation, dismissal and disability. The turnover rate by employee group is show below:
|Employment equity – occupational levels||Terminations January – December 2010|
|% of workforce||Number|
|Professional, specialist and middle management||0||13|
|Skilled technical, academically qualified and junior management||1||74|
|Semi-skilled and discretionary decision making||5||475|
Breakdown of turnover statistics
|Turnover numbers||Gender||Race||Reasons for terminations|
Turnover by age groups
The breakdown of Exxaro’s annual employment equity reports, as submitted to the Department of Labour, is shown below. As these reports are for the period 1 August 2009 to 31 July 2010, totals differ from year-end numbers.
|Professional, specialists and middle management||217||29||33||491||72||9||22||131||9||2||1 015|
|Skilled technical, academically qualified and junior management||1 206||213||42||1 251||228||51||24||358||11||2||3 386|
|Semi-skilled and discretionary decision making||3 536||447||11||272||317||79||9||59||71||4 801|
|Unskilled and defined decision making||929||30||159||2||3||6||1 129|
|Total permanent||5 899||692||91||2 110||778||141||56||559||98||4||10 428|
|Total||5 940||694||91||2 142||794||144||58||579||98||4||10 544|
A – African, I – Indian, C – Coloured, W – White.
Literacy and numeracy
Exxaro’s target is to provide all employees with qualifications below NQF level 1 the opportunity to become functionally literate. Exxaro employees with a qualification of below NQF level 1 now form 21% of the total workforce.
Exxaro offers sponsored, voluntary adult basic education and training (ABET) programmes at all commodity businesses and carries the full cost of these programmes. This initiative amounted to R1,9 million in 2010, a significant increase on the prior year (2009: R1,3 million).
To ensure informed decisions, candidates are screened and counselled, and an incentive scheme for each level completed encourages more employees to become functionally literate and numerate. Almost 1 200 employees have passed one or more ABET levels since the inception of this programme.
Percentage of employees with NQF
In 2010, 180 employees completed various ABET levels successfully (14 passed ABET level 4, 53 passed level 3, 34 level 2, 59 level 1 and 20 pre-ABET). Over 150 non-Exxaro employees completed different ABET levels during the year.
Exxaro has accredited ABET training centres at Grootegeluk, Tshikondeni, Matla and Arnot mines. An ABET centre was launched at North Block Complex in September 2009, while Tshikondeni centre introduced full-time classes in 2010. The group’s annual training reports and workplace skills plans, approved by the MQA, reflects the number of ABET candidates completing various levels as well as those planned for the years ahead.
|Functionally literate and numerate|
|Number of people|
|Total staff count||10 510*||11 180|
|Employees below ABET level 3||1 683||2 236|
|Employees on ABET level 3||511||345|
|Employees above ABET level 3||8 316||8 599|
|* Number of full-time employees.|
Training and education
Material issue: Training and development
The critical shortage of artisans in South Africa, and around the world, is affecting virtually every aspect of our economy from municipal service delivery to routine maintenance.
At the heart of the issue lies the lack of suitably qualified candidates with the necessary entry skills, particularly in science and mathematics. These subjects are the basis of many trades. The situation is compounded by emigration, significantly reduced corporate training because of the government’s SETA learnership programme, and the fact that almost half our existing artisan population is over the age of 50.
South Africa is currently producing around 5 600 qualified artisans each year - well below the target of 12 500 set by the Department of Higher Education and Training. Estimates of the country’s requirement range from 50 000 to 80 000 artisans - our current artisan workforce is estimated at 1 340.
In 2010, Exxaro had 379 people at different stages of their artisan qualifications. To put this contribution into perspective, Exxaro alone accounts for a sizeable portion of all engineering learnerships registered with the MQA. This training will lead to full artisan status in trades such as electrician, fitter, plater, diesel mechanic and millwright. All these trades appear on South Africa’s scarce skills list.
Exxaro’s human resources development professionals also contribute significantly to the national and sectoral transformation process by participating in bodies such as Business Unity South Africa, Chamber of Mines’ education advisory committee, and the MQA’s sector skills planning committee and standards-generating bodies.
At Exxaro, we believe that empowering all staff with the knowledge and skills they need to develop personally will also help us grow the company. In 2010, 7 013 Exxaro employees successfully completed some form of relevant development training. Exxaro’s policy is to invest an appropriate amount of total payroll each year on human resource development. In 2010, this was 5,1% or an investment of R140 million (2009: 5% or R126 million).
In 2010, the group continued its broader focus on skills development, moving from engineering learnerships to include other learnerships and skills programmes. During the year, Exxaro enrolled 166 new engineering learners, 17 mining learners, 12 operator learners, seven administrative learners and 18 plant learners for the Grootegeluk Medupi expansion project.
The ratio of learnerships in the pipeline to the number of artisans employed in various trades is monitored as part of our artisan retention strategy. This ratio is currently 1:3.
E-learning is an integral part of our training delivery approach and implemented across the organisation.
Portable skills training is provided to assist employees in managing career termination as part of the social and labour plan for each mine.
To preserve technical and engineering competence in the group, aggressive retention and succession-planning strategies are in place for technical and other categories. Comprehensive training and growth opportunities provide continual rotation and exposure of talent to multi-disciplinary teams.
Across the group, training and development is based on a comprehensive needs analysis, incorporating business strategy, identified skills deficiencies via the performance management process, succession-planning requirements, employee career progress and employment equity plans.
All employees outside bargaining units receive formal performance and career development reviews bi-annually. Management members are assessed throughout the year as the basis for individual succession plans and talent management. These assessments are also linked to reward and remuneration.
New management and specialist-category employees undergo training on the performance management process to reinforce the concept that reward is driven by performance. Performance management is also included in a web-based induction programme.
Employees in the bargaining unit are not part of Exxaro’s formal performance management system. Their development is guided by individual development plans based on the job profile, formal career path and individual preference.
We encourage our people to accept joint responsibility in managing their career growth. Exxaro financially assists permanent employees with potential to continue their education through part-time studies of recognised, approved courses and programmes. Employees nominated by the company to attend courses or programmes are fully sponsored for tuition, examinations, travel, accommodation costs and study leave.Specific strategies to ensure the accelerated learning and development of black people, women and people
with disabilities include:
- Fast-tracking employees with leadership and management potential
- Accelerated development for occupation-based skills
- Formal study assistance
- Adult basic education
- Life skills programmes
|Total leviable amount (payroll)||2 736||2 045|
|Total training spend||140||126|
|Total training spend on black people||115||89|
|Total training spend on black women||21||11|
|Total training spend on white women||11||9|
|* Numbers as per skills development plan submitted to Department of Labour on 31 March 2010|
To ensure solid learning foundations, further skills development only takes place once employees have been declared competent in their current positions. In most cases, further development is focused on a career path in the department in which the employee is currently working.
Exxaro’s strategy is to ensure 75% of all new appointments are made internally. Our integrated process is therefore aligned with both our strategy and industry needs to provide a steady flow of qualified talent for our growth and expansion projects.In 2010, there were 221 participants on programmes supporting internal advancement. The overarching objective is
to ensure that trainees entering the group are empowered, challenged and appropriately rewarded:
- Exxaro people development initiative
Exxaro granted 30 bursaries in 2010 to school leavers interested in technical disciplines such as engineering, geology and mine surveying. Candidates must be grade 12 students from Exxaro mining communities who want to study for a technical degree or diploma. On completing their studies, candidates are considered for an Exxaro bursary.
- Bursary programme
There are currently 118 bursars studying at South African institutions at a cost of R11 million: two-thirds are historically disadvantaged South Africans and 30% are women.
- Professionals-in-training programme
In this three-year programme that blends academic theory with the work environment, each professional-in-training has a mentor who supervises exposure to the various commodities, leadership and management training, and formal training from professional bodies. In 2010, there were 73 professionals in training throughout Exxaro in a R40-million programme: 65% are from designated groups and 29% of those are women.
Getting the golden ticket
In 2009, Exxaro introduced a programme to help employees obtain their government certificate of competence (GCC) in electrical or mechanical engineering. Given the pass rate of around 20%, obtaining the GCC offered by the Department of Mineral Resources has been a formidable obstacle to many engineers in the past.
The Exxaro programme, developed by a manager in the engineering field at Matla, prepares qualifying employees by building on the practical engineering exposure and training they have received in the years prior to registering for the GCC examination.
Since the introduction of the course, Exxaro’s pass rate has risen from 20% to 50%.
Grovos conducting trade tests
Trainee electricians, fitters and millwrights are enjoying the benefits of the new R3-million assessment workshop that opened at the Grovos training centre in Lephalale in April. This is in line with legislation that requires training providers to conduct their final trade tests at a different venue to where learners were trained.
The launch of the assessment centre follows a series of improvements over the past four years, in which Grovos has increased the intake of new learners by 56%, while setting a record with an 89% qualification rate in 2009. In 2010, the qualification rate dropped slightly to 85%.
The centre is now equipped to train 180 learners per year, many of whom will be placed at Grootegeluk to support its expansion plans.
Case study - Exxaro learner management programme has industry-wide benefits
Exxaro’s learner management programme is instrumental in designing skills programmes for the engineering and mining disciplines in the coal industry. Once approved by the MQA, courses are loaded onto the MQA database for national use. In addition, Exxaro loads course material onto its own e-learning platform for other business units to use. During the year, two more groups of gas-testing and flame-proofing learners graduated. To date, 72 employees have been trained in gas-testing 720 unit standards and 38 employees in flame-proofing 141 unit standards.
Formal leadership development initiatives, mentorship programmes and succession-planning workshops involving senior management and employees are ongoing. Building and retaining a pool of current and future leaders is a priority for the group and appropriate initiatives include a comprehensive succession-planning process and enhancing strategic leadership competencies.
The professionals-in-training programme supports the success of critical skills in the management and specialist categories. The programme also assists in achieving the group’s employment equity targets.
New leadership programme - (In)Credible Leadership
Exxaro has developed a unique leadership philosophy dedicated to strategic business objectives and personal improvement on all levels. Hundreds of leaders in Exxaro have contributed to developing a sound philosophy that encourages leadership credibility first and incredibility to follow.
Competence: Leaders have basic functional and managing competencies to lead.
Self: Leaders have a value-centred, accountable and reflective character.
People orientated: Leaders have basic rational skills including diversity, respect and constructive discipline.
Communication: Leaders have foundational communication attitudes such as openness, listening and positive attitude.
Involved: Leaders create a context for meaningful participation of teams through diversity, trust and alignment.
Inspire: Leaders connect people with the dream and maintain motivation for the vision.
Invest: Leaders facilitate knowledge and understanding of people.
Influence: Leaders influence achievement of goals through respect, understanding and openness to change.
Communities of practice
Exxaro has communities of practice for effective development and sharing of knowledge, best practices and lessons across the group. The focus is primarily on core competencies required for Exxaro’s sustainability. In practice, these communities have lowered the risk of losing key knowledge workers, and brought new people up to speed more rapidly.
Almost 70% of Exxaro’s employees are represented by affiliated unions, predominantly National Union of Mineworkers (NUM) (54,5%), and Solidarity (10,7%). Other recognised unions are Mineworkers Union of Namibia (MUN), National Union of Metalworkers in South Africa (NUMSA), and United Association of South Africa (UASA).
Negotiations for improved wages and conditions of employment are conducted in various in-house forums and through the Chamber of Mines.
In September 2010, members of NUM employed in the bargaining unit at Exxaro Sands operations in KwaZulu-Natal went on strike over a wage dispute. The strike was resolved after three weeks. Labour relations at all other Exxaro operations are managed in such a way that they facilitate progress towards amicable and mutually beneficial resolution.
Exxaro has a disciplinary code that is used when necessary. The code is based on the principle of fairness as required by labour law. Supervisors have the skill to implement the code.
Employee benefitsThrough collective bargaining, full-time employees receive a range of benefits - many
exceeding legislative stipulations for South Africa’s basic conditions of employment - including:
- Retirement fund membership including contributions by the employer
- Medical aid membership subsidised by the employer
- Housing allowance and/or company accommodation
- Guaranteed annual holiday bonuses/ 13th cheque for bargaining unit employees
- Travel/commuting allowances
- Standby and call-outs as well as payment for overtime worked
- Annual leave, sick leave, maternity leave, family responsibility leave
- On-target short-term incentive schemes
- Long-term incentives - either based on share price appreciation or the achievement of
longer-term targets aimed at sustainable operations.
Retirement and other benefits for all permanent employees are provided by independent defined contribution funds. The employer contribution to retirement funds in the group ranges from 10% to 18% of employee pensionable earnings, and is expensed as it occurs. All retirement funds are governed by the South African Pension Funds Act (1956), with no members on defined benefit plans.
In 2010, employees participating in Exxaro’s Mpower (empowerment scheme holding around 3% of Exxaro’s shares to broaden share participation among workers) received their fifth dividend payment. Since inception in November 2006, each of the Mpower beneficiaries (9 289 at year end) has received some R5 670 in dividends.
Exxaro continues to focus on home ownership. To comply with the mining charter and our own business needs, a new long-term housing strategy was developed two years ago.
In 2009, the group introduced a five-year subsidy for first-time homebuyers who are permanent employees. This was particularly welcome given the unprecedented scarcity of bank mortgage finance at that time. To date, 232 employees have benefited from this subsidy to make home-ownership more affordable.
While Exxaro’s housing policy focuses on home ownership, employees receive a housing or living-out allowance to assist them in obtaining accommodation. The total value of these allowances in 2010 was over R137 million.
|Number of employees|
|Home owners (bought company property)||948||929||822|
|Single quarters||1 505||1 343||1 336|
|Rental and other||8 017||8 314||7 588|
|Total||10 510||11 180||10 135|
The steady increase in the number of home owners reflects the group’s commitment to facilitating affordable ownership. At all operations, except Tshikondeni due to the current life of mine, there is only one person per room in the hostels; at Tshikondeni some rooms have two occupants.
Exxaro provides meals at Matla and Tshikondeni where the quality and nutritional value are determined by a dietician. Qualified staff continually monitor adherence to contractual obligations. Employees have accessible mechanisms to engage both management and suppliers on food issues.
Women in mining initiatives
Although Exxaro already exceeds prior mining charter targets of having 10% of the workforce staffed by women, attracting women to work in the group’s core business remains a focus area.
In 2010, five women aiming to become miners began their training programme at Tshikondeni. By the end of November, they had completed the first phase of their studies at the Colliery training college and will train for another 12 months on-site before qualifying as miners.
Exxaro complies with labour legislation in South Africa and International Labour Organisation guidelines. As a signatory to the United Nations Global Compact, the group encourages freedom of association and collective bargaining, ensures child labour is not tolerated and that forced or compulsory labour is not practised.
Induction programmes educate employees about human rights. Policies on discrimination, harassment and racism are in place, as are structures to protect employees’ human rights in the workplace. All security personnel are fully trained after appointment on human rights aspects relevant to each operation. Refresher courses also cover human rights issues.