Governance > Transformation

Transformation as a strategic imperative

Aveng is committed to the philosophy and ideals of transformation. Aveng promotes the transformation of the sector to address broad-based black economic empowerment (BBBEE), enhance capacity and increase productivity to meet world best practice. It will strive to stay ahead of its competitors in the field of BBBEE compliance in the knowledge that to do so will result in a competitive advantage for the Group.

The Aveng Group has continued to drive transformation as a business imperative during the year under review. The transformation plan of the Company is informed by the strategic plan and is regarded as a fundamental driver of change, growth and sustainability. Accordingly, black economic empowerment is an integral part of the overall growth strategy of the Group. As Aveng is a major contributor to the Construction sector it is incumbent on the Aveng Group to comply with the recently promulgated Section 9 Construction Charter.

Aveng views black economic empowerment as a business imperative, and an integral part of the Company’s growth and sustainability. In the period under review Aveng has reviewed its empowerment credentials and its future strategy in this arena in depth.

A detailed BBBEE strategy was developed in the period under review providing a macro strategy, an Aveng Transformation Vision, an implementation strategy at all levels in the Group, reporting requirements, responsible persons. It developed targets for Aveng (Africa) and its operating groups and Trident Steel based on the dti codes of good practice to 2014.

This process was completed during August 2008 and significant inroads into making BBBEE an integral part of the Group’s strategy and vision has been achieved to date. The Aveng CSI framework was also rolled out in the period under review and has proved to be extremely effective both in control of the CSI spend but also in developing and leveraging Group synergies.

Aveng (Africa) and Trident Steel’s performance against the dti codes of good practice over the past year is:

    Aveng (Africa)   Trident Steel  
    2008   2007   2008   2007  
Ownership   24,0   22,0   24,0   22,0  
Control   2,9   2,9   1,8   1,3  
Employment equity   4,1   4,1   2,4   2,8  
Skills development   10,0   5,6   4,4   2,8  
Procurement   8,7   8,3   5,7   0,01  
Enterprise development   10,8   10,0   5,0   0,0  
Socio-economic development   5,0   5,0   5,0   5,0  
Total   65,5   57,8   48,3   33,9  
Rating   4   5   6   8  


The five-year targets that were set in terms of the dti codes will be updated taking cognisance of the requirements of the Construction Charter in the third quarter of 2009.

In the measurement of our BBBEE progress, the measurement of ownership, board control and CSI is vested with the board of Aveng (Africa) and Trident Steel Holdings respectively. Aveng (Africa) and Trident Steel operating groups and business units focus their attention on senior management control, employment equity, skills development, preferential procurement and enterprise development and where appropriate their CSI efforts.

To enhance its corporate citizenship, remain competitive and ensure the Group’s sustainability, Aveng:
  • Will undertake a further updated detailed audit of the status of transformation in the Group.
  • Continue to broaden the diversity of its workforce, with a special focus on the development of black professionals and management.
  • Increase its use and development of empowered suppliers and sub-contractors.
  • Ensure comprehensive reporting of all our CSI spend.
  • Include transformation targets as key performance indicators for managers.
Aveng views the transformation initiative as a strategic opportunity to develop and partner with both internal and external stakeholders in tackling national challenges such as:
  • Improving the diversity profile of our organisation to begin to reflect the national demographics.
  • Enhancing skills development.
  • Facilitating technology transfer and development.
  • Transformation of suppliers and sub-contractors.
  • Small, Medium and Micro Enterprise (SMME) development.
  • Contributing to social investment.

Co-ordination of Group transformation efforts

The Aveng human resources director is leading the process of championing the transformation related interventions in the Aveng Group and positioning the operating businesses to ensure that they continue to develop and implement their transformation plans. The accountability of executing transformation initiatives, however, remains with line management. To ensure a common approach and understanding of the Group’s requirements, a training workshop on the codes was held for all the senior human resource professionals across the Group in May 2009. These employees have subsequently also in the period under review been presented with a BBBEE toolkit. This process is currently being cascaded down in the various operating entities.

Several activities have been initiated in the year under review following resolutions adopted at the Aveng human resources strategy session held in April 2009. These include:
  • An acknowledgement that the various businesses within the Group have been working in isolation on this matter and have, as a result, not benefited from leveraging economies of scale within the Group and the opportunity to share learning’s and experiences. This includes the possibility of leveraging economies of scale in respect of Group initiatives such as mentoring programmes, skills development initiatives, preferential procurement and corporate social investment programmes. The training of senior human resources and procurement leadership across the Group and the identification of transformation champions will be continued.
  • The establishment of a human resources team to facilitate the Group’s strategy development.
  • The selecting of an appropriate BBBEE Consulting partner.
  • The selection an appropriate BBBEE rating agency.
  • The development of an information system for tracking and reporting on BBBEE.

In line with the targets set at the human resources strategy session, EmpowerLogic was appointed to undertake the 2009 Verification of Aveng (Africa) and Trident Steel. EmpowerLogic is a Member of ABVA and is SANAS accredited.

In addition, Transcend, a BBBEE consultancy has been appointed in the third quarter of the year to partner with the Aveng Group as it redefines, updates and continues to develop a coordinated strategy and updated roll out plan for the Group. The intent is to review the transformation strategy of the Group, the operating groups, and business units and review their current transformation profile against the various pillars of the Section 9 Construction Charter.

Aveng BBBEE information management system

One of the key challenges currently identified as facing the Group is the lack of an integrated information system to facilitate the planning, execution and reporting on BBBEE. The Aveng Business Intelligence (BI) team has commenced working on an electronic dash board for the procurement element of the BBBEE codes. This process is at a high level of maturity and there is good coordination between the Aveng Procurement Department and the relevant personnel in the operations tasked with the BBBEE roll out.

Building organisational capability

A position to coordinate, amongst others, the Group transformation initiatives has been created at Group human resources and the recruitment of a suitably qualified manager has been initiated. Several business units within Grinaker-LTA have during the period under review appointed dedicated people to focus on the transformation process, whilst other operations manage the process within the human resource function. An appropriate resource plan for the operating groups will be developed going forward.

The businesses are also being encouraged to identify, train and empower transformation champions from within their operations at all levels. Part of the role of such champions, in addition to promoting BBBEE as a business imperative, will be to ensure the determination of the priority areas and subsequent interventions are managed appropriately by the relevant businesses. However, it is an accepted principle that ultimate responsibility and accountability for delivering on the BBBEE targets remains with the managing directors of the operating groups.

Target setting

The compliance targets as previously defined in the strategic sessions will largely remain unchanged. Where new compliance targets are required in terms of the Construction Charter these will be considered evaluated and incorporated in the future strategic BBBEE plan. Following the promulgation of the Construction Charter, transformation targets for the operating groups will be recalculated in terms of the Charter codes. It is envisaged that the conversion of the current dti targets to the Charter codes will be finalised in the third quarter of 2009 and will then be incorporated into the performance contracts of the various executives and relevant managers.

Governance

The Transformation Committee of the Aveng board will continue to provide oversight on the performance of the Aveng Group in this area by:
  • pro-actively reviewing management actions and efforts to comply with relevant legislation and charters, including the review and recommendation, for approval by the board, of policies, strategies and plans for management implementation, to ensure that the company complies with the Construction Charter;
  • guiding, monitoring, reviewing and evaluating Aveng’s decisions and progress on transformation with specific reference to the key elements of the Construction Charter scorecard for both Aveng (Africa) and Trident Steel Holdings; and
  • evaluating and formulating recommendations on major BBBEE initiatives.

Further details pertaining to the transformation committee, its purpose and objectives and what it has accomplished in the period under review is included the Corporate Governance section of this report.