RESOURCES FOR: Chapter 23 Management in Action in Developing Countries, TERENCE JACKSON
CASES FROM SOUTH AFRICA*
The following two mini cases are referred to in the chapter. The third (Germiston City Council may also be informative. They are extracted from Jackson, T (2002) International HRM: A Cross-cultural Approach, London: Sage.
Eskom: Turning Operating Constraints into Opportunities
The 'parastatal' organization Eskom, is the main supplier of electricity in South Africa with 40,000 employees. It is governed by the government appointed Electricity Council, which determines overall policy, planning and objectives. It also appoints the management board. Whilst a monopoly, it has a brief to encourage domestic competition for itself, and at the same time position itself towards the global market place as a key player beyond southern Africa. It has a strong commitment to the development of its people, not least because of the recognized need for an educated workforce to operate and maintain its sophisticated technology, and appropriate management to take it into the future. Its development focus is therefore towards basic education, opportunities and the ability to manage change. Its policies reflect this. Affirmative action is seen as central to its objective for at least 50% of managerial and supervisory staff to be black South Africans by 2000. This stood at 6.1% in 1994..
It is also involved in a number of community projects, and plays an important part in the RDP led initiatives such as electrification. It has a policy to enable its employees to own their own home. Eskom already owns some 14,500 employee houses. With this stock, and the conversion of its single men’s hostels for married people, it is encouraging workers to bring their families to live permanently with them. All employees receive a housing allowance based on their salary band. It also runs its own medical scheme with 28,540 members and over 43,000 dependants subsidized within the scheme. Management-union relations are being built through encouragement of more participative management by establishing forums at a number of levels from the strategic level through to business unit forums and work team sessions where issues are addressed locally. Joint tasks forces have been established to look at Eskom's long-term viability as a top performing utility; trade union involvement in decision-making; business training and development of shop stewards; trade union representation on the Electricity Council; education, training and development; optimal sharing of information and financial disclosure; and, accommodation.
Currently its investment in education and training amounts to about R450 million. The emphasis is mainly on technical skills. It is also aiming to employ 370 black trainees on bursaries each year, although this does not exclude other trainees on these schemes. In addition, Eskom planned to spend R90 million over a two-year period in order to minimize illiteracy among the estimated 11,000 employees without basic education.
Its Organizational Department operates a number of management development programmes:
The Manager’s Challenge Programme which is designed to stretch and challenge the company's most promising managers, and to address the more contextual and business issues;
The Business Leader's Programme addresses the needs of the changing roles of newly appointed managers and professionals, and develops business understanding and leader skills in the changing environment.
The Accelerated Development Programme focuses on developing business leaders from people who are identified as being able to help Eskom achieve its business objectives, and is focused particularly on the benefits of self-development for black employees.
Despite these positive steps, there may still remain a basic mistrust towards a predominantly white management. There may also be concerns from white employees of the effects of affirmative action. Inefficiency may be a result of over-staffing, and the necessary downsizing of the company may provide cause for concern for the future.
Question for discussion
Eskom is a state owned enterprise that has now gone through various stages of liberalization and privatisation. In view of the increased pressures to make profits and to make savings on the costs of its human resources, how can it best balance the instrumental needs of short-term competition in the global marketplace, and the humanistic needs of developing human potential for the future well-being of the South African society?
AECI Explosives Ltd: Motivating the Workforce and Encouraging Participation
AECI Explosives Ltd is a joint venture between ICI plc and AECI Ltd, with ICI holding a 51% interest, with the joint venture company being incorporated within ICI's explosives division, and the chairman based in London. It is a leader in explosives products (detonators, packaged explosives, bulk explosives, initiating systems and ammonium nitrate) within the continent of Africa, and its main customer is the mining, quarrying and construction industry.
Its major business objectives are: market driven innovation of products; winning in quality growth markets worldwide; inspiration and reward of talented people; exemplary performance in health and safety; responsible care for the environment; and, pursuit of operational excellence.
Its people policy objectives include: providing a safe working environment; equality of opportunity; attractive compensation packages; emphasising training and development; developing an atmosphere of trust and mutual respect; encouraging innovation; fostering open communication; implementing management processes to support these policies; conforming with the relevant laws.
The company is rule driven with formal written instructions at all levels: company directives, company standards, departmental procedural instructions, job descriptions, quality plans, operating instructions and test methods. The company has embarked on an internal literacy project with a target of full literacy by 2005. However, a very clear policy on affirmative action seems not yet to be formulated. There also seems to be little or no involvement in community or social obligation projects, although an environmental remedial project is underway where land that the company has contaminated is being cleared up.
A management competencies model has been adopted, which is supported through various management training and development activities. This is based on four clusters: ‘thinking’ (conceptual, strategic, innovativeness, and analytical thinking); ‘self management’ (learning, self-development, adaptability, flexibility, self-image, self-control, tenacity, thoroughness, interpersonal awareness and independence); ‘influencing’ (impact, persuasion and strategic influencing); and, ‘achieving’ (critical information seeking, efficiency, development, concern for standards, results orientation).
The company still has vestiges of high power distance and mistrust from the past. With old labour intensive technologies and increased competition, there may be a need to reduce waste and increase efficiencies. This may involve further downsizing, which in turn could lead to a flattening of hierarchy, and a move towards more participation in decision-making. In the meantime this seems to be creating uncertainty in job security, which could contribute to lower productivity.
Question for discussion
In view of downsizing, how can AECI Explosives now gain the confidence of its staff?
Germiston City Council: Towards Affirmative Action
The amalgamation of Germiston, Palm Ridge, Bedfordview and Katlehong local authorities in 1994 produced the Transitional Local Council of Greater Germiston. It has 40 elected councillors. Members drawn from their ranks sit on an executive committee of 10 councillors, and some 59 section committees. The Chief Executive Officer acts as liaison between the 13 different departments. These cover such functions as engineering services (basic utilities such as water, electricity and sewerage) social services, community services and law enforcement. Operational objectives that are pursued across the departments are: uniformity in standards of service provision; rendering prompt, efficient and effective service; involving residents at all levels in the process; and, winning the trust of residents and ensuring that the culture of non-payment for services is discontinued within the foreseeable future.
The transitional council is currently investing substantially in developing and training its employees, and is attempting to move away from an autocratic style of management to a more participative approach. Currently it is facing a number of challenges. A strong commitment to affirmative action seems to be causing a feeling of threat to previously entrenched employees, and expertise is being lost in some areas. This has been to the detriment of the efficiency and effectiveness of some of the departments who are short of skilled staff. Services are also being affected by strikes in some areas.
The communication of decisions, taken by central government and the provincial government, which influences the work of council seems to be a subject of shortcomings and perhaps a certain mistrust among employees. With the amalgamation of a number of local authorities with large communities from disadvantaged sections of the community, some under-funding is apparent, with subsequent effects on areas such as additional resources, personnel and training.
The council has a well-developed system for recruiting and inducting employees at two levels: general orientation, and departmental orientation. However, there is no well-defined appraisal system, and poor performance is addressed more by sanction and disciplinary procedures rather than through a well-developed appraisal system.
Question for discussion
What else shouldGermiston City Council be doing to redress the inequalities of the past, while creating a climate of trust and stability?
Colgate Palmolive: Accommodating the Interests of Multiple Stakeholder
Additional case material referred to in the chapter: Beaty, D. T. (1998) Colgate Palmolive in Post-Apartheid South Africa, reprinted in G. Oddou and M. Mendenhall, Cases in International Organizational Behavior, Malden, Massachusetts: Blackwell, pp. 136-42.
Question for discussion
Learning from some of the measures taken by Eskom, AECI and Germiston City Council, what could a foreign company like Colgate Palmolive do to contribute to the development of human potential within Africa? How could it balance this with the requirements of its shareholders, and with the contingencies of operating in a difficult social and economic environment?
See also: Jackson, T. (2004) Management and Change in Africa: A Cross-cultural Perspective, London: Routledge.