PORTFOLIO COMMITTEE ON LABOUR – BRIEFING ON THE 2016/17 PRODUCTIVITY SA PRESENTATION TO THE PORTFOLIO COMMITTEE ON LABOUR – BRIEFING ON THE 2016/17 QUARTERLY PERFORMANCE (QPR 3 & 4) 28 June 2017 Presented by: Mothunye Mothiba Chief Executive Officer

PRESENTATION OUTLINE Mandate of Productivity SA Functions of Productivity SA Mission and Vision 2016/17 Quarterly Performance: Progress QPR 3 & 4 Performance Per Strategic Objective Key strategic objectives achievements Reasons for Deviations/Challenges and Remedial Actions QPR 3 & 4 Performance per Programme Financial Report (for Quarter 3 & 4) 2016/17 FY Audit Action Plan and Progress Chief Directorate Communication | 2011.00.00

THE MANDATE OF PRODUCTIVITY SA Productivity SA is established in terms of section 31 of the Employment Services Act, No. 4 of 2014 as a juristic person. Its mandate: To promote employment growth and productivity thereby contributing to South Africa’s socio-economic development and competitiveness.

THE FUNCTIONS OF PRODUCTIVITY SA Section 32 of the Act read together with sections 2 (1) (e) and (g), and 7 of the Act enjoins Productivity SA to amongst others, develop relevant productivity competencies and competitiveness in workplaces, with a focus on the following key functions: To promote employment and income growth, and workplace productivity. To improve the employment and re-employment prospects of employees facing retrenchments and retrenched workers. To provide productivity measures and evaluate productivity improvement and competitiveness in workplaces. To conduct Research on productivity and competitiveness related matters, and collection and supply of information. To promote social dialogue and inculcate a culture of productivity and competitiveness mind-set in the workplace and all spheres of the nation’s economic and community life.

Vision and Mission Vision To lead and inspire a productive and competitive South Africa. Mission To improve productivity by diagnosing, advising, implementing, monitoring and evaluating solutions aimed at improving South Africa’s sustainable growth, development and employment through increased competitiveness

2016/17 QUARTERLY PERFORMANCE (QPR 3 & 4)

LEGEND Implication: Achieved Performance Indicator is on track or reflects complete implementation. Target achieved  100% + Complete Implication: Not Achieved Performance Indicator behind schedule. Target not achieved  0% - 99% Complete

PERFORMANCE PER STRATEGIC OBJECTIVE OBJECTIVES ANNUAL PERFORMANCE INDICATORS PLANNED INDICATORS ACHIEVED NOT OVERALL PERFORMANCE PER QUARTER Q3 & 4 AGGREGATE PERFORMANCE Q3 Q4 Support initiatives aimed at preventing job losses (TAS) 9 0% Develop relevant productivity competencies (POS) 5 1 2 4 3 20% 40% 30% Undertake productivity related research (VCC Research & Knowledge Management) 6 80% 60% 70% Facilitate and evaluate productivity improvement and competitiveness in workplaces (WPC) 8 67% 50% 58% Promote a culture of productivity in workplaces (Marketing and Communication) 7 65% Human Resources Management 100% 83% Overall Performance 41 33 35 14 15 20 53% 49% 51%

QUARTER 3 PERFORMANCE PER STRATEGIC OBJECTIVE STRATEGIC OBJECTIVES PLANNED INDICATORS ACHIEVED NOT ACHIEVED AGGREGATE OVERALL ACHIEVEMENT Supporting initiatives aimed at preventing job losses (TAS) 9 0% Develop relevant productivity competencies (POS) 5 1 4 20% Undertake productivity related research (VCC - Research &Knowledge Management) 70% Facilitate and evaluate productivity improvement and competitiveness in workplaces (WPC) 6 2 67% Promote a culture of productivity in workplaces (Marketing and Communications) 3 50% Human Resource Management 100% TOTAL 33 14 20 53%

QUARTER 4 PERFORMANCE PER STRATEGIC OBJECTIVE STRATEGIC OBJECTIVES PLANNED INDICATORS ACHIEVED NOT ACHIEVED AGGREGATE OVERALL ACHIEVEMENT Supporting initiatives aimed at preventing job losses (TAS) 9 0% Develop relevant productivity competencies (POS) 5 2 3 40% Undertake productivity related research (VCC - Research &Knowledge Management) 60% Facilitate and evaluate productivity improvement and competitiveness in workplaces (WPC) 8 4 50% Promote a culture of productivity in workplaces (Marketing and Communications) 1 80% Human Resource Management 67% TOTAL 35 15 20 49%

KEY STRATEGIC OBJECTIVE ACHIEVEMENTS Productivity SA has experienced a progressive improvement in performance management, as well as overall performance of the organisation during the 2016/2017 Financial Year compared to the 2015/2016 Financial Year. 28 (68%) of the 41 KPIs were achieved, with poor performance experienced only in the TAS Programme due to challenges still experienced with funding received late (in July 2016) and not in full (only R24m of the R97m received) as per the funding agreement from the UIF. However, if the TAS target is revised taking into account that only R24m was received to cater for 33 companies, the overall performance improved to 87.5%, with 49 companies facing economic distress supported through Turnaround Strategies against a target of 33. This translated in 4760 jobs saved through this intervention against a target of 1 650. The financial performance for the year ended 31 March 2017 is a mixed bag of a positive and negative sentiment. The positive perspective is the fact that net results for the year reflect a surplus position of R820k, a significant improvement from the previous financial year loss of (R2.5m). However, the accounting adjustment provision for an impairment receivable amounting to R12m quickly obliterated the surplus. The end-results reflect a deficit for the year of (R11.9m). The financial results also reflect a 3% operational expenditure improvement year on year. The cost improvement is attributable to the implementation of cost containment initiatives. The cash position for the year sits at R22m

KEY STRATEGIC OBJECTIVE ACHIEVEMENTS - QUARTER 3 & 4 Total of 207 companies implemented the Workplace Challenge (WPC) Programme: 99 new entrepreneurs joined the WPC 108 companies implementing WPC Turnaround Solution Programme: 32 Future Forums were established to promote consultation and dialogue between management and workers on productivity improvement solutions. 27 companies facing economic distress were supported to prevent retrenchment of workers. 3080 jobs saved due to implementation of Turnaround Solutions. Research Agenda, with a focus on measuring and evaluating productivity improvement, and competitiveness in workplaces and the economy has reports completed in the following sectors: Report on Agro processing (in hide and skin) Report on Platinum Groups Metals (Metal exchange) Report on Fisheries: contribution to the blue economy Report on Abalone

CHALLENGES AND REASONS FOR DEVIATIONS Productivity SA is underfunded and undercapitalised for effective delivery of its mandate to promote employment growth and productivity in South Africa. Insufficient funding and/or late transfer of funds by the UIF makes it difficult to put in place measures and programmes to support companies facing economic distress, therefore, not being able to prevent job losses or minimise retrenchments as required in terms of s7 of the Act. The Turnaround Solutions Programme targets were based on R97million rand grant from the UIF, however, only R24million was transferred to Productivity SA. With the R24m received from the UIF Productivity SA could only support 33 instead of 200 companies in the 2016/17 Financial Year. There has been Governance Gaps in the TAS Programme, which led to poor monitoring and accountability. The departure of the Chief Economist impacted negatively on the completion of the Productivity Statistics in the reporting financial year.

REMEDIAL ACTIONS Regarding funding for the TAS Programme, the Board took this matter up with the Board of the UIF and the Minister, hoping that this will be rectified in the 2017/18 FY. Governance Structures were strengthened and the Terms of Reference thereof revised. This will monitor compliance with the Funding Agreement between Productivity SA and the UIF. The UIF has appointed Forensic Investigators to deal with the maladministration and irregularities experienced in the implementation of the Turnaround Solutions Programme. The report is awaited. The Cost Containment Measures have significantly improved budget management, with expenditure continually diminishing. Productivity SA Business Model is being reviewed to ensure that it support and is aligned with Government Strategic Programmes aimed at sustainable employment and income growth, as well as targeting high value projects and improved performance thereon to generate revenue. A bailout of R11m was requested and approved by the DG. This assisted to ensure that there are sufficient funds to pay salaries for February and March 2017. The position of Chief Economist was advertised and will be filled during quarter 2 02 2017/18 FY.

PERFORMANCE PER PROGRAMME QUARTER 3 & 4 2016/17

PROGRAMME 1: MARKETING AND COMMUNICATIONS QRT 3 PERFORMANCE No of media articles published 395 145 100 (45) Difficulty in securing media space due to lack of funding Circulate more media releases to ensure coverage in more publications Number of productivity awards held 7 2 1 (1) Set target was achieved in quarter 2 Number of annual reports produced N/a Number of Productivity SA magazines produced 4 +1 The magazine for the 2nd quarter was produced during 3rd quarter

PROGRAMME 1: MARKETING AND COMMUNICATIONS QRT 3 PERFORMANCE No of electronic newsletters produced 12 3 5 +2 Target for quarter 2 was achieved during quarter 3 Number of partnerships with stakeholders 9 2 (1) Set target was achieved in quarter 1 and 2 Number of workshop and seminars conducted 30 16 +11 Newly established strategic partners gave us access to seminars and workshops where service offerings are presented

PROGRAMME 1: MARKETING AND COMMUNICATIONS QRT 4 PERFORMANCE No of media articles published 395 70 30 (40) Difficulty in securing media space due to lack of funding A revised target will be set in line with the new Annual Performance Plan Number of productivity awards held 9 N/a Number of annual reports produced 1 Number of Productivity SA magazines produced 4 None

PROGRAMME 1: MARKETING AND COMMUNICATIONS QRT 4 PERFORMANCE KEY PERFORMANCE INDICATOR ANNUAL TARGETS QUARTER 4 TARGETS PROGRESS VARIANCE REASONS FOR VARIANCE CORRECTIVE MEASURE No of electronic newsletters produced 12 3 None Number of partnerships with stakeholders 9 2 Number of workshop and seminars conducted 30 5 10 +5 Newly established strategic partners gave us access to seminars and workshops where service offerings are presented

PROGRAMME 2: PRODUCTIVITY ORGANISATIONAL SOLUTIONS QRT 3 PERFORMANCE Number of emerging entrepreneurs trained 5500 1600 1606 +6 Newly established strategic Partnerships provided us access to opportunities to engage more SMMEs Number of educators trained 200 50 (50) Set target has been achieved during quarter 1 Number of workers trained 1000 100 22 (78) Set target has been achieved in quarter 1 Number of Skills Development Facilitators (SDFs) trained 40 18 (22) Set target has been achieved in quarter 1 and 2 Number of managers trained 170 20 5 (15) Set target has been achieved in quarter 1 and 2

PROGRAMME 2: PRODUCTIVITY ORGANISATIONAL SOLUTIONS QRT 4 PERFORMANCE KEY PERFORMANCE INDICATOR ANNUAL TARGETS QUARTER 4 TARGETS PROGRESS VARIANCE REASONS FOR VARIANCE CORRECTIVE MEASURE Number of emerging entrepreneurs trained 5500 1500 1572 +72 Newly established strategic Partnerships provided us access to opportunities to engage more SMMEs Number of educators trained 200 50 (50) Set target achieved in quarter 1, 2 and 3 Number of workers trained 1000 (200) Set target achieved in quarter 1 Number of SDFs trained 100 20 22 +2 Improved relationships with SETAs provided access to SDF groups and their participation rate increased more than anticipated Number of managers trained 170 26 (24)

PROGRAMME 3:TURNAROUND SOLUTIONS QRT 3 PERFORMANCE KEY PERFORMANCE INDICATOR ANNUAL TARGETS QUARTER 3 TARGETS PROGRESS VARIANCE REASPONS FOR VARIANCE CORRECTIVE MEASURE Number of companies nurtured 200 50 10 (40) The targets were based on R97million rand grant from the UIF, however, only R24million was transferred to Productivity SA.   With a budget of R24 million received in July 2016 (3 months into the financial year, only 33 companies could be supported impacting on 1650 jobs. Organisation-Wide resources have been mobilised and dedicated towards delivery and achievement of TAS targets – war room established Number of future forums established 90 12 (78) Number of work-plans developed 80 (68) Number of work-plans implemented 16 (64) Number of close out reports 150 7 (73) Number of impact assessment conducted 100 (50) Capacity building of future forums 6 (44) Productivity Champions Trained 4 (46) Number of jobs impacted 10000 3500 1582 (1918)

PROGRAMME 3:TURNAROUND SOLUTIONS QRT 4 PERFORMANCE Number of companies nurtured 200 150 17 (133) The targets were based on R97million rand grant from the UIF, however, only R24million was transferred to Productivity SA.   With a budget of R24 million received in July 2016 (3 months into the financial year, only 33 companies could be supported impacting on 1650 jobs, however, 49 companies were assisted with over 4760 jobs impacted on The Board took this matter up with the UIF Board as well as the Minister to ensure that funding is made available in full and on time. The DG and the UIF Commissioner made a commitment to ensuring that funding for the 2017/18 Financial Year will be received in full and on time. Governance Structures established to ensure accountability on the programme Number of future forums established 100 20 (80) Number of work-plans developed 80 14 (66) Number of work-plans implemented 15 (65) Number of close out reports 70 6 (64) Number of impact assessment conducted 50 (50) Capacity building of future forums 13 (37) Productivity Champions Trained 8 (42) Number of jobs impacted 10000 3500 1498 (2002)

PROGRAMME 4: VALUE CHAIN COMPETITIVENESS – RESEARCH AND KNOWLEDGE MANAGEMENT QRT 3 PERFORMANCE KEY PERFORMANCE INDICATOR ANNUAL TARGETS QUARTER 3 TARGETS PROGRESS VARIANCE REASONS FOR VARIANCE CORRECTIVE MEASURE Annual Productivity Statistics Report Draft report Draft report in progress in progress. None Annual Competitiveness indicators position for IMD WCY N/a Report published in quarter 2 Annual study of public sector productivity and performance and service delivery

PROGRAMME 4: VALUE CHAIN COMPETITIVENESS – RESEARCH AND KNOWLEDGE MANAGEMENT QRT 3 PERFORMANCE KEY PERFORMANCE INDICATOR ANNUAL TARGETS QUARTER 3 TARGETS PROGRESS VARIANCE REASONS FOR VARIANCE CORRECTIVE MEASURE Develop a report on the best way to manage performance, productivity and remuneration in the PES Report Draft Report None Reports conducted on identified relevant sectors as commissioned 3 Reports 2nd Draft reports Draft reports Number of Provincial seminars conducted on research reports 9 2 3 +1 Set target achieved in quarter1

PROGRAMME 4: VALUE CHAIN COMPETITIVENESS – RESEARCH AND KNOWLEDGE MANAGEMENT QRT 4 PERFORMANCE KEY PERFORMANCE INDICATOR ANNUAL TARGETS QUARTER 4 TARGETS PROGRESS VARIANCE REASONS FOR VARIANCE CORRECTIVE MEASURE Develop a report on the best way to manage performance, productivity and remuneration in the PES Report Publish Report Report published None Reports conducted on identified relevant sectors as commissioned 3 Reports Publish Reports Reports published Number of Provincial seminars conducted on research reports 9 3 2 (1) Set target achieved in quarter1

PROGRAMME 4: VALUE CHAIN COMPETITIVENESS – WORKPLACE CHALLENGE QRT 3 PERFORMANCE KEY PERFORMANCE INDICATOR ANNUAL TARGETS QUARTER 3 TARGETS PROGRESS VARIANCE REASONS FOR VARIANCE CORRECTIVE MEASURE Number of entrepreneurs that joined WPC programme 166 20 44 +24 Strategic Partnership with LEDET, North West Economic Development and SEDA enabled us to have more access to new entrepreneurs Number of capacity building workshops 30 8 12 +4 Number of companies implementing WPC 200 54 40 +14 Number of facilitators and interns coached 15 Facilitators & 3 Interns N/a

PROGRAMME 4:VALUE CHAIN COMPETITIVENESS – WORKPLACE CHALLENGE QRT 3 PERFORMANCE Number of enterprises in aftercare 359 6 (6) Set target achieved in Q1 Number of quarterly newsletters 4 1 None Research and development Implement green productivity toolkit in companies in 3 regions N/a Number of success stories 9 2 3 +1

PROGRAMME 4: VALUE CHAIN COMPETITIVENESS – WORKPLACE CHALLENGE QRT 4 PERFORMANCE KEY PERFORMANCE INDICATOR ANNUAL TARGETS QUARTER 4 TARGETS PROGRESS VARIANCE REASONS FOR VARIANCE CORRECTIVE MEASURE Number of entrepreneurs that joined WPC programme 166 66 64 (2) Set target achieved during quarter 3 Number of capacity building workshops 30 7 13 +6 Strategic Partnership with LEDET, North West Economic Development and SEDA enabled us to have more access to new entrepreneurs Number of companies implementing WPC 200 22 59 +37 Number of facilitators and interns coached 15 Facilitators & 3 Interns 13 Facilitators & (2) Change Facilitators Lack of funding to cover more change facilitators Revenue and funding strategy has been developed to enhance and grow the revenue as well improve cost effectiveness.

PROGRAMME 4: VALUE CHAIN COMPETITIVENESS – WORKPLACE CHALLENGE QRT 4 PERFORMANCE Number of enterprises in aftercare 359 65 19 (46) Set Target achieved in quarter 1 Number of quarterly newsletters 4 1 None Research and development Implement green productivity toolkit in companies in 3 regions 1 Region Implemented in 2 regions +1 Set target for quarter 2 was achieved in quarter 4 Number of success stories 9 3 2 (1) Annual Target achieved

PROGRAMME 5: HUMAN RESOURCES MANAGEMENT QRT 3 PERFORMANCE Generate paths discussions Conduct career paths discussions for 17 candidates 5 candidates 3 candidates (2) Set target was overachieved in quarter 2 thereby reducing the number of candidates participating during quarter 3 Individual Development Plans in place Reviewed IDPs N/a Performance Contracts in place 100% Completion of performance contracting Performance Reviews conducted 100% completion of performance reviews

PROGRAMME 5: HUMAN RESOURCES MANAGEMENT QRT 3 PERFORMANCE KEY PERFORMANCE INDICATOR ANNUAL TARGETS QUARTER 3 TARGETS PROGRESS VARIANCE REASONS FOR VARIANCE CORRECTIVE MEASURE Salary survey /benchmarking completed (Equate) 1 x Salary survey /benchmarking conducted (Equate) 1 x Salary survey /benchmarking conducted Equate 2016/17 salary benchmark conducted None Climate Team Development Charters in place 10 x Climate Team Charters in place N/a

PROGRAMME 5: HUMAN RESOURCES MANAGEMENT QRT 4 PERFORMANCE Generate paths discussions Conduct career paths discussions for 17 candidates 5 candidates 1 candidates (4) Set target was achieved in quarter 2 thereby reducing the number of candidates during quarter 4 Individual Development Plans (IDP) in place Reviewed IDPs N/a 92% Submission (8%) Not all employees completed IDP`s as they have embarked on tertiary studies IDPs will be factored into the Workplace Skills Plan in 2017/18 and implementation monitored Performance Contracts in place 100% Completion of performance contracting 100% Performance Contract 2016/17 submitted None Performance Reviews conducted 100% completion of performance reviews 100% staff reviewed 100% submitted

PROGRAMME 5: HUMAN RESOURCES MANAGEMENT QRT 4 PERFORMANCE Salary survey /benchmarking completed (Equate) 1 x Salary survey /benchmarking conducted (Equate) N/a None Climate Team Development Charters in place 10 x Climate Team Charters in place 9 x Climate Team Charters monitored 9 X team charters monitored

FINANCIAL REPORT FOR THE 2016/17 FY AND THE AUDIT ACTION PLAN

FINANCIAL RESULTS FOR THE YEAR ENDED 2016/17

FINANCIAL RESULTS FOR THE YEAR ENDED 2016/17

SUMMARY ON DEALING WITH AUDIT FINDINGS FOR THE 2015/16 FY

Thank You…