TRANSFORMATION REPORT
Transformation rating
The group increased its BBBEE score from 58.37 in 2010 to 76.99 in 2011, exceeding its target of 67.8 (level 4) and achieving level 3 status.| BBBEE element | Maximum | 2011 | Target 2011 | 2010 |
|---|---|---|---|---|
| Ownership | 20 | 11.71 | 0 | 0.49 |
| Management control | 10 | 7.97 | 8.8 | 7.85 |
| Employment equity | 15 | 11.01 | 10 | 10.43 |
| Skills development | 15 | 12.11 | 15 | 12.20 |
| Preferential procurement | 20 | 14.19 | 14 | 13.82 |
| Enterprise development | 15 | 15 | 15 | 8.66 |
| Socio-economic development | 5 | 5 | 5 | 4.92 |
| Total | 100 | 76.99 | 67.8 | 58.37 |
| BBBEE level | 3 | 4 | 5 |
Transformation and empowerment are critical areas of sustainability in the South African business environment. The group’s commitment to sustainable transformation is demonstrated through the continued improvement in the broad-based black economic empowerment (BBBEE) rating which has improved from level 7 in 2007 to level 3 in 2011.
Transformation is managed within a governance framework which includes the board transformation committee, the internal transformation committee in which both the chief executive and the group human resources director participate, and the business unit transformation forums which are responsible for implementation.
A transformation plan for 2011 to 2013, which is aligned to the Department of Trade and Industry’s (DTI) codes of good practice, has been developed to guide the implementation of the group’s transformation strategy.
Transformation related highlights for the year include:
- Achieved level 3 BBBEE status
- 7 965 staff were allocated shares through the employee share ownership scheme
- R47 million invested million in learning and development
- R 34 million committed to enterprise development projects
- R 9 million invested in social investment projects
- Launched the Clicks Helping Hand Trust
While pleasing progress has been made over the past year, transformation challenges facing the group include attracting and retaining senior black talent, obtaining BBBEE certificates from suppliers to verify procurement spending and managing the impact of regulatory changes relating to skills development.
This report outlines the group’s performance and progress against the seven elements of the BBBEE scorecard.
Ownership
A broad-based employee share ownership programme (ESOP) was implemented during the year to enable employees to share in the growth of the group. Through the ESOP scheme, 10% of the group’s issued shares have been placed in the Clicks Group Employee Share Ownership Trust for allocation to all full-time permanent employees. The scheme is governed by six trustees, the majority of whom are black, with two appointed by the board and four elected by employees.
Shares have been allocated to 7 965 permanent employees, with black staff receiving 71% and women 63% of the shares. Pharmacists comprise 4.9% of the ESOP beneficiaries. Refer here in the Remuneration Report for further detail on the objectives and operation of the ESOP.
Management control
While the group has performed well in terms of black female representation at the executive and non-executive director level, the key challenge is to improve the representation of blacks and females at the senior management level.
- Black staff represent 20.4% (2010: 17.8%) of senior and top management.
- Women account for 35.5% (2010: 34.7%) of senior and top management.
- 40% (2010: 40%) of directors are black and 30% (2010: 30%) women.
Employment equity
The group continues to create an increasingly diverse workforce through the advancement of previously disadvantaged people and the empowerment of women.
The following statistics demonstrate the diversity of the group’s employees:
- Black staff represent 84.8% (2010: 84.7%) of the total workforce.
- Women comprise 63.0% (2010: 62.7%) of all employees.
- Black staff accounted for 80% (2010: 81%) of new appointments.
Employee profile |
|||||||||
| Female | Male | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Occupational level | African | Coloured | Indian | White | African | Coloured | Indian | White | Total |
| Top management | 0 | 1 | 0 | 3 | 0 | 0 | 2 | 13 | 19 |
| Senior management | 2 | 4 | 4 | 19 | 3 | 2 | 1 | 39 | 74 |
| Professionally qualified | 25 | 40 | 25 | 122 | 20 | 41 | 19 | 118 | 410 |
| Junior management | 309 | 389 | 120 | 480 | 302 | 171 | 61 | 172 | 2 004 |
| Semi-skilled | 2 134 | 1 185 | 119 | 201 | 1 554 | 391 | 52 | 82 | 5 718 |
| Unskilled | 28 | 17 | 3 | 8 | 20 | 4 | 1 | 3 | 84 |
| Total employees | 2 498 | 1 636 | 271 | 833 | 1 899 | 609 | 136 | 427 | 8 309 |
| Non-SA-based employees | 81 | 14 | 1 | 0 | 58 | 13 | 1 | 0 | 168 |
| Employees with disabilities | 33 | 62 | 8 | 14 | 29 | 15 | 4 | 10 | 175 |
Skills development
The group invested R47 million (2010: R57 million) in learning and development, which equates to 3.4% (2010: 4.4%) of the basic payroll. A total of 4 356 employees participated in learning and development programmes, with black employees representing 82% (2010: 85%) of the total employees trained.
Learning and development programmes were mainly focused on investing in management development, internal transformation and pharmacy development.
| Skills development statistics | 2011 | 2010 |
|---|---|---|
| Training spend as a % of payroll | 3.4 | 4.4 |
| Training spend (R million) | 47 | 57 |
| Employees trained | 4 356 | 4 527 |
| Black employees as a % of total employees trained | 82 | 85 |
| Delegates on management development programmes | 319 | 47 |
| Delegates on retail learnership and skills programmes | 347 | 331 |
| Delegates on pharmacy learnership and skills programmes | 408 | 430 |
| Interns and graduates on workplace experience programmes | 40 | 54 |
Preferential procurement
The group’s procurement practices are focused on sourcing merchandise and services from locally-based and empowered suppliers. During the financial year 3.5% (2010: 3.5%) of the total procurement spend was from black-owned suppliers, with 48% (2010: 30%) of the procurement from level 4 and higher-rated BBBEE suppliers.
Enterprise development
The UPD independent owner-driver initiative demonstrates sustainable transformation. Established in 2003, the scheme has 50 contracted owner-drivers who deliver products for UPD to Clicks, independent pharmacies, hospitals and clinics. UPD paid R30 million (2010: R28 million) to independent owner-drivers and R0.8 million to the management company operating the scheme in the past year. UPD spent a further R2 million in employee time, insurance and other operating costs to improve the efficiency of the scheme.
The group has also invested in Style Studio, a specialist haircare and beauty chain, through an interest-free loan of R0.8 million and employee time totalling over R80 000 in the past financial year. Style Studio was established in 2004 and has four stores.
Socio-economic development
The group is committed to investing 1% of profit after tax in social development programmes through the Clicks Foundation. In the past year R9.0 million (2010: R9.8 million) was spent on community development projects, equating to 1.4% of profit after tax, and the group achieved the maximum points in this category in the BBBEE rating.
Health and well-being remain the focus of the group’s corporate social investment. Business units have identified and implemented projects over the last year in line with the group’s focus.
Clicks established the Helping Hand Trust which offers free clinic services to mothers whose babies were born in state hospitals and who do not belong to a medical aid. The free services offered through the Moms and Babies project include baby immunisation, growth measurement, feeding and nutritional advice, baby weighing and family planning advice. The project has been introduced into 41 stores and 5% from every Clicks-branded baby product is donated to the trust. The Clicks business unit also invested R735 000 in bursaries for previously disadvantaged pharmacy students in learning institutions across the country.
UPD continued to support the Topsy Foundation with over R350 000 in financial and product donations. More than R1.1 million in product and employee time was donated to organisations such as the Villa of Hope, Oasis Haven, Jordaan House and Leratong Hospital.
Musica supported the Carel du Toit School for the hearing impaired, Dance for All and Heal the Hood with over R300 000 in product donations.
The Body Shop donated R200 000 to Child Welfare SA to support the ongoing fight to end child trafficking. The funds donated have been generated from the nationwide sales of “Soft Hands, Kind Heart” hand cream. The Body Shop participated in a march to Parliament and presented a petition containing 43 000 signatures to the Chairperson of the Portfolio Committee on Justice and Constitutional Development calling for action to be taken against child trafficking in South Africa.
Transformation priorities in 2012
The group is assessing the impact of the changes in the employment equity and preferential procurement targets on the DTI scorecard for 2012 to determine the requirements to maintain a level 3 BBBEE rating. However, our transformation priorities for the forthcoming financial year will include attracting, retaining and developing black employees in middle and senior management, and reviewing the learning and development programme to support transformation across the group. The disability framework will also be reviewed to create a more conducive environment for employees with disabilities.
An enterprise development programme will be implemented in the Clicks business unit, and the group will continue to support the UPD owner-driver scheme and Style Studio projects. The major focus of the corporate social investment programme will be extending the Clicks Helping Hand Trust Moms and Babies project to further clinics in the year ahead.
Clicks Group Limited