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1 Trends and themes in the “temporary” employment industry March 2009.

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Presentation on theme: "1 Trends and themes in the “temporary” employment industry March 2009."— Presentation transcript:

1 1 Trends and themes in the “temporary” employment industry March 2009

2 2 Perception and myth in the flexible staffing industry © 2009 Adcorp Holdings Limited. All rights reserved. Myth #1: Flexible staff are not adequately protected against unlawful labour practices Myth #2: Flexible staffing companies “exploit” workers, earning an abnormal profit from their activities Myth #3: Flexible staffing companies are causing the “casualization” of the labour market Myth #4: Flexible staffing companies erode the permanent employee base in organizations Myth #5: Flexible staff are less loyal, and perform less well, than their permanent counterparts Myth #6: Flexible staffing companies undermine trade unions’ power in the workplace Myth #7: Flexible staffing is a South African phenomenon, arising from the high unemployment rate and job scarcity in South Africa Myth #8: Flexible staffing companies do not invest in their employees Myth #9: Jobs provided by flexible staffing companies are unskilled and “dispensable” Myth #10: Flexible staffing companies resist regulation

3 3 Client’s client Candidate Client All other intermediaries Traditional role as recruitment and placement agents with some management of day-to-day affairs Responsibility for career development and advancement Responsibility for training and ongoing on-the-job performance Economy Efficiency Effectiveness Consistency Responsiveness Recognition Progression Fairness Labour market context Responsible intermediation © 2009 Adcorp Holdings Limited. All rights reserved.

4 Labour productivityJob creation and capital formation 40 50 60 70 80 90 100 110 120 19901992199419961998200020022004 Labour productivity in manufacturing (index, 1980=100) Index: 1980 = 100 13.0% 8.3% 17.7% 10.3% 12.4% 4.5% 14.0% 1.1% -0.7% 3.3% 8.1% 33.8% 9.0% -1.5% -5% 0% 5% 10% 15% 20% 25% 30% 35% 40% Mining Manufacturing Construction Trade Finance All private sector All public sector Average percent change (2000-2005) Capital formation Job creation Industry megatrend #1 Increasing technology adoption 4 © 2009 Adcorp Holdings Limited. All rights reserved.

5 Industry megatrend #2 Outsourcing of all kinds 5 Short-term tactical projects, generally 3 to 9 months duration Temporary scale-up of longer contracts, e.g. seasonality such as southern hemisphere December & January Flexible contracts where client can vary volumes on a quarterly basis Large contracts with short notice periods, e.g. rolling 3- or 6-month periods Pilot projects, especially for new offshore customers (e.g. “try before you buy”) Evaluate the employee, as not all potential employees are suitable to the contact centre industry or view it as a career Enable the employee to get to know the organisation, (e.g. Is there a fit to corporate culture?) Outsourcers’ needs*: All employees receive the same training (“soft skills” and product-specific) Pay rates are aligned between perm and flex staff Opportunities exist to convert to permanent status, based on performance, but not all eligible flex staff exercise the option to convert All operations management and support positions are staffed by permanent employees Talented people get opportunities to advance, irrespective of employment contract Attrition patterns are similar across permanent and flex teams The reality is that the contact centre industry does not suit everyone, shift work in particular puts a number of people off a long-term career Flex and permanent staff participate in all team- building and social activities Flex staff develop careers, e.g. we have a number of people who started as flex staff agents, who are now senior managers Responsible outsourcing*: * Cited with permission of The Merchant Group, a Dimension Data company. © 2009 Adcorp Holdings Limited. All rights reserved.

6 Industry megatrend #3 Rapid growth of employee mobility 6 Staff turnover is expected to increase significantly in future Companies are increasingly concerned about how little they engage with their employees © 2009 Adcorp Holdings Limited. All rights reserved.

7 Industry megatrend #4 Employees’ desire for flexibility 7 Boomers Generation X Generation Y Generation statistics Percent of population41%20%14% Ave. no. of hours spent at work per week42.639.135.4 Percent reporting that their job 'severely' or 'very severely' interferes with their family life14%29%36% Percent of 'leavers' (people considering leaving their jobs) who cite work/life imbalances as a key reason12%45%48% Percent who would like additional responsibility in the workplace60%39%23% Percent of men who would like more flexible working arrangements23%69%75% Percent of women who would like more flexible working arrangements65%83%85% Percent of men who predict that they will work on a part-time basis in the next 5 years1%12%19% Percent of women who predict that they will work on a part-time basis in the next 5 years15%19%36% Percent reporting that they would leave their jobs for greater control over their work schedules1%66%85% Percent reporting that they would leave their jobs for greater flexibility2%59%92% Percent reporting that they would leave their jobs for the ability to work fewer hours1%48%64% Percent reporting that they would leave their jobs for the ability to telecommute0%50%75% Percent who expect to leave their current employers in the next year43%52%70% Workplace statistics 1998 2001 2005 Percent of employers allowing some flexibility in starting and ending times 24% 29% 31% Mandated shifts Chosen shifts Annual staff turnover among shifted employees 16% 7% Men Women Percent of people working part-time 18% 32% Percent of part-time employees doing so voluntarily 51% 68% © 2009 Adcorp Holdings Limited. All rights reserved.

8 Relationship to the economy Adcorp’s “α” measure of staffing flexibility 1 Actual 2 Optimal 3 “α” (%) (%)(%) Retail Network 27.1 62.543.4 Home Loans 12.5 38.132.8 Customer Contact Centre 8.7 58.514.9 Card Processing Centre 11.1 62.917.6 Collections 4.5 43.310.4 Back Office Administration 9.1 45.719.9 Weighted average 21.5 58.835.7 Notes: 1 Adcorp’s “α” measure is a percentage indicator defined as the actual proportion of flexible staff vis-à-vis the optimal proportion of flexible staff in a particular environment. For instance, areas operating at fully optimal flexibility score 100%. 2 The actual level of staffing flexibility is given by the number of fully optimized hours (i.e. less-than full-time hours) divided by the total number of hours worked in a particular environment. 3 Optimal levels of staffing flexibility are based on cyclicality, seasonality and other periodicity in customer arrival patterns. 8 Industry megatrend #5 Employers’ need for flexibility © 2009 Adcorp Holdings Limited. All rights reserved.

9 9 The state of regulation The workplace of the future Key changes over the coming 10 years: Organizations will “dematerialize”, and organizational boundaries will collapse Simultaneously work for multiple organizations in multiple jobs Not limited to a specific office or site Output will become the key basis of reward Hierarchical structures will collapse and be replaced by “social” networks Many existing skills will become obsolete A dramatic shift in mindset needed among employers, driven by: changes in employees’ needs and expectations changes in organizational design related to economic liberalization, the impact of technology, serving customers at midnight, etc. A dramatic shift in dispensation needed among regulators. Regulations designed for “old-style” working arrangements will make large segments of the labour market redundant and obsolete Key characteristics: Job security Employment security © 2009 Adcorp Holdings Limited. All rights reserved.

10 10 Greece 1) Germany 2) Spain 4) Austria Italy France Luxembourg Portugal Belgium Denmark Norway Finland Sweden Netherlands U. Kingdom Ireland South Africa United States China Brazil India Notes: 1) Greece prohibited PrEAs until September 1998. Since then, the creation of private job counselling agencies has been allowed. 2) In 2004 the law changed in Germany with the interdictions of equal pay right many restrictions were removed. 3) Detachment, re-employment and fixed term employment allowed once per employee. 4) Following the legal recognition of the industry in 1994, the regulatory framework was tightened in 1999, with the requirement that agency workers be paid equal wages to non-agency workers in user companies. However, over the whole period 1989 to 1999, the aggregate Spanish regulatory environment has become less prohibitive. Sources: ADECCO, Deloitte & Touche, Bakkenist, Morgan Stanley Dean Witter Research, McKinsey & Company, Prodigy. Prohibited Restrictive Liberal The state of regulation South Africa in context Between 1996 and 2006, the number of flexible staff more-than-doubled, from 1.5m to 3.3m 669,000 extra jobs were created, more than 80% of which would not have been created without the private employment agency 87% of these extra jobs were filled by employees who were previously unemployed The amount of “undeclared” work declined by 2% over the same period European Union experience: © 2009 Adcorp Holdings Limited. All rights reserved.

11 11 The state of regulation Labour market efficiency Since 1998, 15 substantial new labour market laws and regulations (governing employment conditions, labour relations, skills development, employment equity, among others) In 1998, laws and regulations were one- dimensional, focused on worker rights, and generally enforcement-related (“bedrock” rights) (LRA, BCEA, BC, UIF, OHSA, COID) In 2008, laws and regulations are multi- dimensional, focused on employer outcomes, and directly regulate the supply of and demand for skills (“new world of work” rights) (ASGISA, JIPSA, SDA, NSF, SAQA, EEA) Velocity of labour market circulation* * Note: Velocity of circulation in the labour market is defined as the number of people changing jobs, divided by the total number of employed persons, in a given period. Source: Adcorp Holdings. Increasing number of regulations: Increasing scope of regulations: Causes of reduced market efficiency: © 2009 Adcorp Holdings Limited. All rights reserved.

12 12 The value of the market Selected statistics Flexible employment Flexible working arrangements represent 31.6% of the global employment base In South Africa, only 13% of the employment base is characterized by flexible working arrangements In 10 years’ time, on a global basis, flexible work will grow to 64% of the employment base Skills shortages Worldwide, 7.3 out of 10 managers report that skills shortages are their most pressing problem In South Africa, 9.1 out of 10 managers report skills shortages are their most pressing problem Of the 11 million people formally employed in South Africa today, 2.5 million will have fully redundant skills within 10 years South Africa’s greatest skills shortage is in supervisory and first-line management staff, where wage rates in technical supervision categories rose by 46% during 2007 © 2009 Adcorp Holdings Limited. All rights reserved.

13 13 The value of the market Job creation and skill obsolescence Supervisor- level staff © 2009 Adcorp Holdings Limited. All rights reserved.

14 14 Workforce optimization Scientific scheduling techniques Purpose: Optimize the balance of staff costs and service levels Environment: Branches, call centres, and central processing and fulfillment areas Relevance: Allows central monitoring and control of staff costs and service levels Talent Acquisition Scientific recruitment methods Performance Enhancement Scientific performance management Workplace readiness Donor funding to support business outcomes Purpose: Effectively identify talent Environment: Customer service, sales and processing environments Relevance: Scientific assessments lead to unbiased recruitment, which assists particularly with previously disadvantaged candidates who tend to have limited prior working experience Purpose: Maximize staff performance through measure- ment and reward Environment: All Relevance: Allows central monitoring and control of staff performance Purpose: Maximize return-on- investment in training Environment: All Relevance: Reduces training costs through donor funding mechanisms, and increases return on training through alignment with business outcomes Career Progression Personalized, individualized career paths Adcorp initiatives The human capital value chain © 2009 Adcorp Holdings Limited. All rights reserved.

15 15 Adcorp initiatives Innovation: Talent acquisition Case study 1: Amalgamated Beverage Industries (ABI) Scope: Unemployed learnership recruitment for ABI. Delivery: National advertising in 7 publications 4,066 application calls taken through the call centre 1,698 applications accepted following telephone screening Outcome: All proposed candidates were accepted Case study 2: Gauteng Provincial Government (GPG) Scope: Trainee recruitment for 600 bursaries offered by GPG Department of Health Delivery: National advertising. Assessment processes held for screened applicants 26,000 applications received of which 7,000 were invited to attend assessments Outcome: 1,800 interviewed and 600 granted training bursaries © 2009 Adcorp Holdings Limited. All rights reserved.

16 Adcorp initiatives Innovation: Performance enhancement 16 Cost per compliant call declined 91.6%* In-source vs. outsource performance* * Cited with permission of MTN South Africa. © 2009 Adcorp Holdings Limited. All rights reserved.

17 Adcorp initiatives Innovation: Career progression 17 Predicting an individual’s risk of leaving an organization Proactively offering an employee career progression opportunities © 2009 Adcorp Holdings Limited. All rights reserved.

18 18 Adcorp initiatives Responsible corporate citizenship Rank Company BEE score (%) Voting Rights Economic Interest Ownership Board Participation Black Executive Directors Management Employment Equity Skills Spend Skills Development BEE Spend Preferential Procurement Contributions Enterprise Development Contributions Socioeconomic Development 1Adcorp Holdings81.732.0 2Merafe Resources79.251.2 3Hosken Consolidated76.851.1 4Tongaat-Hulett75.643.237.021.634. 5Metropolitan Holdings73.030.7 17.646.437.59.510.21.16.739. 6Investec72.325.1 7Oceana Group70.930.2 21.145.0256. 8Super Group70.734.3 9Standard Bank70.118.7 10FirstRand69.914.815.212.738.925.06.811.21.95.344.314.034.815.01.05.0 © 2009 Adcorp Holdings Limited. All rights reserved.

19 Summary 19 The private employment industry offers a superior value proposition It is the largest employer in the country – larger than the agriculture, hunting and fisheries, electricity, water and gas sectors combined It promotes responsible corporate citizenship It cooperates proactively with government and social partners It engages in a constructive dialogue with trade unions Professionalization of the industry ensures member compliance Within the industry, Adcorp is a leading light: The largest single employer outside the government and mining sectors More than 165,000 people introduced into the world of work each year More than 80% of these employees have no formal work experience 7% of the 3.6m jobs created in the financial services industry since 2001 were filled by a single Adcorp company With a diversified portfolio – spanning blue- and white-collar work, permanent and flexible staff, in-house and outsource recruitment – we aim to turn no job-seeker away Facilitated 3,210 (or 46% of the total) learnerships in the Services SETA Founding member of key industry bodies A responsible corporate citizen

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