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The inefficiency scourge

May 13 2013 07:25
*Catherine Wijnberg

Inefficiency is entrenching non-delivery as a norm. (Sapa)

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A RECENT article by Sue Blaine (Business Day 20 March 2013) entitled “Nearly 40% of water lost en route to customers” provides a stark metaphor for the cost of inefficiency.

That this water loss costs the country an estimated R7bn in unrecovered billing (not to mention the environmental cost) shines the light on a tiny portion of the billions lost to the country due to inefficiency and poor service generally.

In fact, it is probably fair to say that 40% of the value of most things is drained away between intention and actual delivery.

There is the intention to provide housing, and the actual delivery of it, the intention to provide world class education and the delivery of it, the intention to provide sanitation and its reality, the list goes on.

That the government is concerned is very clear – the current efficiency campaign by Minister of Public Service and Administration Lindiwe Sisulu is an illustration that they have moved from silent worry to intent to act.

However, it is not just a government problem, it is a problem that sinks far deeper into the very fabric of our society.

Inefficiency and sub-standard delivery in SA is prevalent throughout the corporate world and even bumps its nasty head against the small business sector, which prides itself on efficiency, cost effectiveness and the ultimate scorecard in lean production.

Inefficiency in the corporate sector is expressed through the lens of bank managers who don't return calls, cellphone companies that systematically overcharge and then do not refund the monies and in mines whose poor production methods cause acid water that destroys whole swathes of land.

Closer to home in the small business sector, in which I both live and operate as a specialist, inefficiency eats into the fabric of the day through unanswered emails, sloppy correspondence and average expectations.

Does a handyman ever arrive on time?

As illustration, think back to the last time you needed a repairman or handyman in the house.

Typically, only half will arrive on time for their appointment (if they arrive at all), half of those will deliver the promised quote and the chances that the completed job is done on time and to specification is extremely unlikely.

This is not a finger-pointing problem. This is a deep systemic challenge that is seeping into the soil of our country and draining away both our ability to create the future we dream of, and the belief that we will ever get there.

Where does it come from, and how do we solve it?

There is an old saying that a fish rots from its head, and certainly in the public sector one doesn't have to look far for illustration of this.

People frustrated by inefficiency and poor service attitude in Telkom only have to look up to the Minister of Communications Dina Pule to see where that problem lies – in a country that epitomises the struggle of the common man, we must not be surprised when the lowliest worker follows the lead of the lavish.

Sadly, this is a real problem when the leader is not one that emulates best practice.

However, this is just the tip of the iceberg, for we have created a labour force that is starting to expect to be rewarded no matter their ability to produce the goods.

In the public sector we see repeated examples where underperforming CEOs are ‘retrenched’ with massive payouts (how many at SAA and SABC alone?), department heads who are redeployed when clearly they should be fired, and general incompetence that is rewarded by silence.

Again, this is not only in the public sector – corporations who promote managers in order to fix their BEE scorecard rating and then do not train, mentor, guide or address incompetence and poor performance are just as complicit.

The result is layer upon layer of people in managerial positions who are managers in title but lack the critical skills to do the job effectively, and who are left ignorant of their own shortcomings because these are never addressed.

There is a real and alarming situation in the country, where people who are not qualified are being promoted to meet scorecard challenges and those around them are fearful of speaking out, for the consequences of doing so appear to outweigh the cost of having to work around them.

Why, you may ask, would a company or individual shy away from addressing an incompetent manager?

Herein lies the conundrum, for in our quest to be the fairest of countries, protecting the weak against the strong, we have created a system that often protects such incompetence.

The Commission for Conciliation, Mediation and Arbitration (CCMA) has been established to help the employee fight the employer.

Unfortunately, although legally the CCMA is “an independent body, does not belong to and is not controlled by any political party, trade union or business,” in practice, its very flaw is that it is designed by default to protect the employee, as only the employer ever pays.

At the CCMA the worst-case scenario for an employee is nil payout, while for the employer the best case scenario is nil payout!

For those of you who have not been to the CCMA, let me illustrate the problem with a recent case.

A small company discovered to their dismay that, despite having more than two years experience as senior branch manager in a well-known bank, the new manager they employed had little or no actual competency to do a senior managerial job.

As a result, his services were terminated during the contractually-agreed probation period.

Disgruntled by this, he took them to the CCMA. At the first conciliation phase, despite the clear evidence that he by his own admission was unable to do the job, the small business owner was faced with two choices – cut your losses and negotiate a payout (in the commissioner’s words “consider your time, your HR manager’s time, the stress, etc”) or take the matter further to arbitration and at best receive nothing.

No compensation for the loss of delivery, no compensation for the cost of employment and re-employment, in fact no compensation at all.

The small business owner paid out several thousands in compensation to a man who, by his own admission, was unable to do his job and who had misrepresented his ability to do so, just to get rid of the irritation.

Why is this important, you may ask?

A system that stands in the way of job creation

It is important because we have created a system that in practice rewards inefficiency, makes peers and managers afraid to tackle incompetence and perpetuates a belief that the employer is by default the one that ends up paying.

In fact, the CCMA claims a 70% settlement rate – meaning that in 70% of cases the employer is encouraged to simply settle to get rid of the problem, whether justified or not.

We seem to have created a system that encourages companies to ignore poor performance rather than risk the consequences of dealing with it, and more disconcertingly a system that stands in the way of job creation.

While big business may be reluctant to employ staff because of the unions, I believe that many SMEs are reluctant to employ new staff because of their fear of the CCMA.

Unfortunately the commissioner's question “Is it worth the time and effort?” reflects more than the simple matter of fighting a case.

It reflects the feeling every small business owner faces when needing to recruit another staff member, and with the threat of a CCMA payout standing over their shoulder the answer to the question “Is it worth the time and effort?” is often No.

When you create an environment where people are promoted but not called on to perform at that level of effectiveness, you perpetuate an expectation that poor performance is acceptable.

When you build into the system a mechanism that protects this poor performance and entrenches non-delivery as a norm, you give birth to a situation where the pain of creating a new job outweighs the pleasure of growing a business.

Without business growth, there is no tax income for the country to fix leaky pipes.

In South Africa inefficiency will grow faster than the economy does unless we reject incompetence.

In the SME sector that means demanding work performance, and if needs be standing up to the unbalanced system of the CCMA and fighting for your employer rights.

Next time an employee takes you to the CCMA, don't settle for “getting rid of the irritation” - demand a refund of salaries, the cost of recruitment and training, and compensation for your time and that of your staff spent attending the matter.

However, this stand is all in vain unless corporates also start demanding efficiency and performance right across their management team, and unless Sisulu does the same from her highest management, including fellow ministers.

Unless we all make a stand now, it will be our future, not just water that leaks into the sand.

 - Fin24

* Catherine Wijnberg is director and founder of Fetola and serves on our panel of experts.

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