Integrated Annual Report 2014
Creating a high-performance culture
Key to this report.

Creating a high-performance culture

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Our survival depends on the company’s ability to create a culture in which every employee performs to his or her potential and maximum productivity, a culture that values safety, teamwork, innovation and quality.

The culture of a company is sometimes considered a “soft” issue, one that is not material to the achievement of the business’s strategic objective.

In 2014 ArcelorMittal South Africa’s workplace culture moved to centre stage, to the extent that creating a high-performance culture is now one of just four key strategic objectives.

Management has clearly articulated its belief that our survival depends on the company’s ability to create a culture in which every employee performs to his or her potential and maximum productivity, a culture that values safety, teamwork, innovation and quality.

This year our board flagged its concern that the company was steadily losing scarce technical skills because the prevailing culture was not one in which individuals felt valued. As much as we seek to achieve a highperformance culture, we also aim to create a culture in which employees feel valued and rewarded, a culture in which people take pride in working for ArcelorMittal South Africa. Our new CEO has clearly communicated to management, employees, unions and government his commitment to transformation and to changing the ArcelorMittal South Africa culture.

Our culture is not a soft issue but a key strategic imperative.

Creating a high-performance culture in which all employees feel motivated and empowered will be achieved by addressing these most material issues:

  1. Defining and communicating a compelling employee value proposition (EVP);
  2. Developing our people so that they can work productively and safely;
  3. Retaining and growing scarce skills; and
  4. Rapidly improving our performance on employment equity.

The general manager: human resources is a member of the ArcelorMittal South Africa executive committee and regularly briefs fellow executives on employment, recruitment and skills development issues. The board’s remuneration, social and ethics committee is briefed at its quarterly meetings on such issues – or as the occasion may require.

LINK For more on the Remuneration report, click here.

The general manager: human resources, reporting to the CEO, holds ultimate responsibility for driving the human resources agenda. Through it we are committed to the fair, equitable and non-discriminatory treatment of all employees including equal remuneration for men and women, and to building an inclusive and diverse workforce. We align our people management strategy with our business goals, to drive cost competitiveness and sustainable productivity, and develop and sustain a skilled and capable organisation.

We are guided by a group-wide health and safety policy, which includes our safety principles and highlights the imperative of shared responsibility for the safety of employees and contractors. Within ArcelorMittal South Africa we also have a safety, health and wellness policy, and comply with relevant local occupational health and safety legislation including the Occupational Health and Safety Act (1993).

The CEO holds ultimate responsibility for the health and safety of employees but the group manager: safety, health and wellness, reports to the CEO and manages day-to-day health and safety issues. This function also reports to the safety, health and wellness committee which meets on a monthly basis and is chaired by the CEO. The committee comprises the group manager: safety, health and wellness, the chief operations officer, the general managers of each operational site and union representatives.

Every work shift starts with a health and safety “toolbox” talk and issues of health and safety are covered by formal agreements with trade unions. Union representatives also sit on site safety committees and are involved in any investigations regarding safety incidents.

Our culture

In 2013 we conducted a Barrett Culture Transformation Journey survey among employees. The response was extremely heartening; 63% of employees responded, including those who have limited literacy or computer-illiteracy skills.

The survey probed the alignment between individuals’ personal values and desired corporate values. Survey results and the values emanating from it were shared with employees throughout the company with 27 focus groups examining the results and discussing practical ways of committing individuals and teams to living the ArcelorMittal South Africa values. The executive committee took a pledge to live the desired values and to communicate clearly and consistently a “winning” message of filling our plants, selling products and containing costs. The CEO communicated a compelling values message to all staff.

Relations with organised labour were mostly cordial this year, the company not suffering any significant labour disruption as a new one-year wage agreement was successfully negotiated in Q2. (Regrettably, other parts of the steel and metalworking sector endured four weeks of industrial action which had a significant impact on our South African customers and on markets for our products.)

In 2014 voluntary staff turnover amounted to 4%, the same percentage recorded in the previous two years.

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Labour productivity

We are closely monitoring overall productivity improvements with specific targets to be achieved by 2016. This year our total cost of employment (TCOE) was within budget and total Full Time Equivalent (FTE) employment decreased by almost 5%.

A key priority in 2015 will be to reduce overtime, hired labour and contractor costs by filling vacancies. This process is essential to improving our TCOE/HRCe from USD67 in 2013 to the planned USD49 by 2016. (The figure for 2014 was an encouraging USD56.)

Developing our people

We are committed to world-class production, safety and customer service. Only our people can deliver these outcomes. Despite our strained financial circumstances and a reduction this year in the amount of skills development expenditure that can be claimed back, in 2014 we continued to invest heavily in skills development – conducting 381 908 hours of training at a cost of R151 million.

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In partnership with ArcelorMittal University, a leadership academy has been developed with Duke University that will be rolled out in 2015. This academy is aimed at developing rising stars, emerging talent and leaders of the future.

As part of our focus on future leadership, we have localised a number of extremely successful group leadership development training programmes. These include Explore, which focuses on managers who will lead a major project or a substantial team within the next two years, and the Challenge career development programme which is for individuals who will move up to “manager of manager” level, also within the next one or two years.

The Pioneer programme is a top-of-therange career development programme for those who have the potential to occupy business leader or general manager positions. Those taking part in Pioneer will develop a global mindset, acting as ambassadors who will leave a lasting legacy at ArcelorMittal.

In addition to the above, ArcelorMittal University functional academies are focused on specific functional disciplines including temporary exchange programmes to apply functional knowledge. For Human Resources, three exchange programmes were completed in 2014.

These academies have been set up to contribute to the implementation of best practices and to engender an in-depth knowledge of group values and best business practices.

Academies are:

  • Steel Academy
  • Finance Academy
  • Internal Assurance Academy
  • Human Resources Academy
  • IT Academy
  • Purchasing Academy
  • Sales and Marketing Academy
  • Legal Academy
  • Risk Management Academy

In December 2014, the first “talent meets management and management meets talent” session was held when a member of the ArcelorMittal group management committee, Henri Blaffart, met with 21 ArcelorMittal South Africa emerging talents. Held in line with the group’s “lunch and learn” initiative, the session identified opportunities to motivate and engage employees.

In 2014, 4.2% of total payroll, an amount of R151 million (2013: 4% and R138.1 million), was spent on fostering the highperformance culture that is essential to our sustainability. Some 91% of all candidates within our skills development pipeline are from historically disadvantaged South African (HDSA) groups.

The focus of our skills development efforts continued to be on engineering and technical. There was a decrease in the technical pipeline from 1 822 in 2013 to 1 148 in 2014. The main reasons for this decline were budget constraints, changes relating to grant regulation and alignment with our five-year workforce plan.

Over the past five years our training pipeline declined from 3 097 to 1 148 in the year reported.

In previous years a major portion of the pipeline was aimed at rejuvenating our operational workforce, the pipeline being managed on a six-year workforce planning cycle that is aligned with ArcelorMittal South Africa’s needs. The 1 148 individuals registered this year remained more than sufficient to meet our needs for competent, qualified people.

ArcelorMittal South Africa’s policy is to train more skilled candidates than the business itself requires as a contribution to the steel and engineering industry. ArcelorMittal South Africa was instrumental in efforts aimed at increasing the number of artisans in our industry. In fact, it was largely thanks to our efforts that the national artisan pipeline, which had reached an all-time low of just 1 800 apprentices in 2013, improved to 22 000 apprentices in 2014. During the year 472 pipeline candidates were absorbed either by the company or industry as they were declared competent.

Recently ArcelorMittal South Africa was accorded platinum training status by the Manufacturing, Engineering and Related Services Seta (merSETA). This was largely in recognition of the role the company had played in dramatically increasing the number of apprentices, a national achievement that was largely based on adaptations of programmes implemented by ArcelorMittal South Africa.

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Employment equity

Integral to executing our commitment to transforming our culture will be our efforts to address the demographic imbalances in our employee and management profile.

We aim to align our employment profile with that of the national economically active population. The scale of the challenge we face in meeting this objective was borne out by advice recently received from the Department of Labour that, as we compile a new Employment Equity Plan (the previous three-year plan expired in September 2013) we should adopt a five-year plan. This plan will be submitted to the authorities in Q1 2015.

The new Employment Equity Plan makes clear our commitment to fundamental, far-reaching and transformative change in the make-up of our employee complement. In terms of the plan, we undertake, by 2018, to not only have transformed the demographic composition of our top and senior management but to have fundamentally changed and improved the numbers of AIC (African, Indian and Coloured) employees in the mid-ranking employment categories.

In 2014 there was only one AIC individual in the “top management” category. By 2018 the plan envisages this there being seven such designated members of the top leadership of our company.

Whereas the plan envisages that total overall permanent employment will be little changed in just three years’ time, the numbers of AIC employees in the categories “professionally qualified and experienced specialists and mid-management”, “skilled technical and academically qualified workers, junior management, supervisors, foremen and superintendents” and “semi-skilled and discretionary decision-making” will increase by 31.8%, 9.2% and 16.8% respectively.

Five employment equity committees were established this year and training implemented for committee members. Improving our employment equity performance is vital to achieving our objective of a Level 5 B-BBEE rating in the new year. For detail on our B-BBEE objectives, see the “Engaging with government and local communities” section.

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Numerical 2018 goals in terms of our new Employment Equity Plan

In pursuing an improvement in our management control rating, clear policies have been implemented to promote and recruit 80% ACIs (Africans, Coloureds and Indians) to management levels A to G. ACI candidates will be given preference for all new vacancies at these levels as well as vacancies arising from retirement or resignation. In order to address “equal pay, equal work” legislation, in 2015 the remuneration, social and ethics committee approved a pay adjustment as a first step towards our market gap closure strategy.

This year amendments to the Labour Relations Act stipulated that the employees of labour brokers should enjoy the same rights and conditions of employment as full-time employees if they earn under a specified threshold and have been in employment for more than three months. We have completed an impact study and implemented measures to effectively manage this change in legislation.