“Leadership and learning are indispensable to each other.” (John F. Kennedy)
The world of work is changing, rapidly. With more teams made up of diverse people from a wide variety of locations, leadership these days has become less about personal relationships and more about managing across distance and effective organisation. Leaders in this world need skills they had never considered previously, and companies need to train them.
Despite companies spending hundreds of billions of rands in leadership training globally, 63% of millennials feel their leadership were letting them down and only 27% of leaders believe they are equipped to lead hybrid teams.
Here’s what you should be thinking about when implementing leadership development in your organisation.
In order to build leadership capacity for the future, the first thing you should do is look at your organisation’s unique values, challenges, and priorities. Are you looking to increase profits, cut costs, improve employee retention or mitigate risks? Remember, your analysis needs to focus not only on what’s happening now, but on the coming changes in your industry and your goals for where you want to be in the future.
Doing this will then allow you to take a closer look at the skills of your leaders as they currently stand and determine which leadership skills are most lacking.
In order to ensure you are getting the best possible course you should evaluate the course material and format and research the course instructors. Who is offering this course? Do they have the requisite experience?
When it comes to making a difference, instructors with a strong educational foundation and relevant qualifications will always trump the charismatic author with multiple tattoos and a matric. As your accountants, we are able to help you build a training budget, which can help prioritise training and ensure you get the most impact from your spend.
This will also help you too. By taking part you will also be aware of the course content and can more easily spot teachable moments during the day-to-day running of the company, reinforce the lessons in their mentorship sessions and better spot those who are implementing the lessons in their own personal development.
Attendees need to understand the future company goals and recognise the skills they will need to perfect if they want to be part of the future leadership of the company. This way you’ll give them the motivation to engage with it as thoroughly as possible. Nothing inspires people quite like seeing the personal benefits.
Some training sessions and companies will even incorporate evaluation and feedback into their sessions so you as a leader can analyse who is performing well in the course and who needs added focus. All of this will help you to adjust future training content and goals and ultimately ensure you get the most long-term impact and leadership growth.
“Fraud and deceit are anxious for your money. Be informed and prudent” (John Andreas Widtsoe, scientist, author and religious leader)
While accountants have become adept at spotting and preventing financial fraud simply by analysing a company’s books, there is another kind of fraud that needs alert leadership, record keeping and careful analysis to completely snuff out. Time fraud sounds like a concept from a sci-fi movie, but in reality, it’s actually quite a simple concept. Like with those who commit regular fraud, a time fraudster is purposefully stealing from the company, but what they are stealing is a much less tangible asset – time.
Time fraud is any kind of employee behaviour that knowingly steals time from a company. It could be as minor as taking an extra smoke break, or purposefully arriving late, but can also involve using extended company time for side projects, and even illegally clocking in for shifts that weren’t worked.
The 10-10-80 rule of business fraud says that 10% of employees will never cheat a company, 80% will cheat a company under the right circumstances and 10% are always actively looking for ways to cheat the company. This means that if it is unchecked time fraud can become a companywide problem that chokes profitability, irritates customers and destroys team morale. Here are our tips for making sure it doesn’t destroy your company.
Spotting time fraud
Detecting time fraud is about watching patterns. An employee who comes in late occasionally is not a fraudster, one who comes in late every day just might be. Catching a time fraudster therefore requires you to pay close attention to the employee’s behaviour. Sometimes honest employees can be guilty of one or more of these things, dependent on their skill level or job requirements, but if they are adding up, you are likely looking at a thief.
Is the employee regularly claiming they worked long hours, but getting very little done? Do they frequently miss deadlines? Are there inconsistencies in their time tracking or billable hours records? What are the employee’s colleagues saying about their efforts?
Fraud criminologist Donald R. Cressey has developed what he calls the Fraud triangle, a tool businesses can use to determine which employees are most likely to commit any kind of fraud, including time theft.
As the name suggests, the fraud triangle asks managers to pay particular attention to employees who exhibit any of these three components:
How to prevent time fraud
Your communications should also show the downsides to time fraud such as overtime for teams to meet deadlines, bad relationships with clients and declining profitability which could lead to layoffs. Stripped of their ability to rationalise their theft, 80% of people will stop engaging in any time fraud and others will be incentivised to report colleagues who do still engage.
It is important to keep a record of these things so that if it is ever necessary to meet up with an errant employee there is some kind of record of their wrongdoing to show them they are being watched.
Those who fail audits should be invited to time management training and be advised that if their behaviour does not correct itself, there may be consequences.
At the end of the day, those who are determined to scam the system will find ways to do it. For these employees nothing short of hearings with the threat of eventual dismissal will likely work to prevent their behaviour. If, however, you simply implement the rules above, the 10-10-80 rule suggests that 80% of all time fraud should vanish, leading to a much more productive, happy and profitable company.
“The employment tax incentive is aimed at encouraging employers to hire young and less experienced work seekers.” (SARS Employers ETI Guide)
With Youth Day celebrations around the corner, business owners have an opportunity not only to consider unlocking the benefits of having young workers in their teams, but also to make a difference to South Africa’s dismal youth employment rate.
What are the benefits of hiring young employees?
Source: Unicef
One option businesses should consider to enable them to take on more young workers into their companies is to use the ETI incentive from SARS.
This incentive offers a wide benefit. Employers are financially incentivised to hire more young people, and young people gain valuable work skills and experience, benefiting the wider economy.
Who qualifies for ETI?
Employers operating within a Special Economic Zone will, provided they meet certain criteria, not be subject to the age limitation highlighted in the second bullet.
How does ETI work?
ETI can be claimed for a 24-month period for all employees who qualify. The monthly value for the ETI reduces the amount of Pay-As-You-Earn (PAYE) due by the company and is claimed by correctly completing the ETI field on the employer’s monthly EMP201.
The value of the incentive amount is not static but depends on the value of the monthly remuneration paid to the qualifying employee and must be calculated each month for each qualifying employee using the table below.
Source: SARS
Examples of ETI savings
The amount of the rebate reduces in the second 12-month period. In addition, as the monthly remuneration increases, the amount of the rebate reduces: at the upper limit with a monthly remuneration of R6400, the monthly rebate is just R75 per month.
The ETI can only be claimed in the months in which the employee was a qualifying employee (i.e. the employee may, due to the remuneration paid to them, be a qualifying employee in the first three months but not in the fourth and fifth months. If the employee is a qualifying employee in the sixth month, the sixth month is month number four as far as the 12-month period is concerned). Further to the above, should the number of hours worked by the employee in the relevant month be less than 160 hours, the ETI claimed is to be apportioned accordingly.
However, there is no limit to the number of qualifying employees for which a company can claim ETI, and especially in labour-intensive environments, these rebates will add up on a monthly basis, and certainly stack up over two years.
Claiming the incentive may however not result in the employer’s EMP201 monthly declaration reflecting a negative amount. Should this be the case, the employer should reflect a net PAYE amount of R Nil.
ETI pitfalls
How to take advantage of this incentive
When correctly calculated and administered, ETI is a significant opportunity for businesses, especially smaller companies, and those with large labour forces, to scale their activities at potentially lower costs.
Sadly, many small companies are not taking advantage of this incentive, and according to research done by Sage, the top reasons include concerns surrounding increased admin and a fear of claiming ETI incorrectly.
We are ready and able to assist you to determine whether ETI is suitable for your business and to correctly calculate and administer this tax benefit for you, ensuring your business can enjoy all the benefits of young workers as well as a potentially substantial tax reduction over the next two years.
“It is imperative that ALL companies and close corporations ensure compliance with the beneficial ownership filing requirements, to ensure good corporate governance and business continuity.” (CIPC)
Following changes to the Companies Act on 24 May 2023, company directors and members of close corporations are obliged to lodge and maintain a detailed Beneficial Ownership (BO) Register, along with a list of supporting documents with the CIPC (Companies and Intellectual Property Commission). This register and documents must also be kept up to date within tight timelines and verified annually.
Pre-existing companies with their anniversary date after the promulgation of the amended Companies Regulations were required to file their beneficial ownership information with their annual returns. Registers for new companies and amendments must be lodged within 10 days. This means that all entities in CIPC’s register must have filed their beneficial ownership information by 24 May 2024 – one year since it became mandatory.
The Commission, citing a huge number of non-compliant entities that are yet to file their beneficial ownership and/or securities register information, is enforcing compliance by implementing more serious consequences.
Consequences of non-compliance
What is required for compliance?
Top tip for hassle-free compliance
Our assistance will prove invaluable in ensuring your business remains compliant with both CIPC’s beneficial ownership requirements and annual return requirements, particularly following the hacking of the CIPC website and the problems and delays that followed.
We can also guide you through the complexities of CIPC compliance, manage the tedious processes and take care of the ongoing maintenance requirements, thereby eliminating your risk of non-compliance, which constitutes an offence and can incur administrative penalties.
Employers must submit their annual reconciliation declarations (EMP501) with accurate and up-to-date payroll information about their employees by 31 May this year.
This is among the requirements imposed on employers by the Fourth Schedule to the Income Tax Act:
A SARS focus area
The employer-reconciliation process is a focus area for SARS, not only to ensure compliance among employers, but also because it enables SARS to issue individuals with income tax auto-assessments.
SARS uses the IRP5/IT3(a) certificate information submitted by employers through the annual reconciliation process to prepopulate the employees’ annual income tax returns (ITR12), and employees cannot change this information.
This means the employer-reconciliation process is also a key phase in the Income Tax Filing Season, because incomplete or incorrect information will make it difficult for employees to fulfil their tax obligations and because employees require IRP5 and IT3 certificates to file their income tax returns in time during tax season.
As such, SARS says it vigorously pursues employers that fail to comply and, where necessary, aims to make tax non-compliance hard and costly through hard enforcement, for example, court action, asset seizure and criminal prosecution.
What needs to be done?
Consequences of non-compliance
Any person found guilty of one of these offences is liable, on conviction, to a fine or imprisonment for up to two years.
We can help!
Let us help you review your employees’ tax obligations and prepare for submission of the Annual Reconciliation Declaration. Similarly, if penalties and interest have already been imposed on your business, we can assist in requesting remission from SARS.
“Failure is simply the opportunity to begin again, this time more intelligently.”- (Henry Ford, founder of Ford Motor Company)
Data from StatsSA has shown that more than 1,500 businesses closed their doors for good in South Africa last year. This can come as no surprise to anyone who conducts business in South Africa at the moment, with spiralling costs, high interest rates and other tough market conditions that include frequent load shedding at short notice.
It is therefore highly likely that all business leaders will go through tough times and for those with start-ups they can often seem insurmountable. If your start-up is one of those failing businesses the first thing you need to do is determine if the company is worth the extra energy, investment and effort required to save it, and if the answer is yes, then take our steps below to ensure that happens.
Save or close?
The first step to deciding whether to save a company is to work out the root cause of the troubles. Often this will take a team of outsiders, but a conversation with us as your accountants should be the first step. We can help you quickly assess whether your troubles come from external issues such as competition, market conditions or new regulations, or whether they are from internal issues such as poor management, a high level of debt, bad hires or inadequate equipment.
Next you need to be brutally honest with yourself. What was it that made you enter the market? What made you unique? Are these things still true? Is your product obsolete? And is your business still capable of turning a profit? Assuming you believe profit is still achievable, then the next step is a full evaluation of the finances, from assets to debits and invoices outstanding, so you can find out just how bad things are.
From there, we can help you work out the costs of necessary adjustments. Do you need restructuring? New equipment? Or new staff? What will it cost to fix, and do you have the ability to go through the necessary changes? You will need to carefully consider all these steps. You have invested a lot of effort and emotion into this company, and making these decisions rationally can therefore be hard. Having brought advisors onboard, you now need to actually listen to what they have to say.
If you have completed all the steps before this and still want to go on, then ask yourself one final question. Are there alternatives? Is there anyone who would buy the company? A competitor who might consider a merger? And why would one of these options not be better than you keeping things going? It is important to consider all of these options, so that when you commit you know you are on the right path. If, after all of this, you are still determined to save the business, here is what you need to do:
Depending on the size of your staff it may help to meet with each employee, to ask them what they need and what they think is missing. Often employees may offer insights that can be missed at the top level. Making sure everyone is given the skills they need, feels valued and understands their role will be essential if you want to save your company.
Just as important is making sure that those who are hired by your business are all offering value. If your company is struggling, then it is not the time to keep someone on who cannot perform or be retrained to fill a more beneficial role. Many roles these days can be outsourced to freelancers where you only pay for the work that is done. Carefully consider which roles may benefit from this.
From social media to remote selling and data-driven sales, there are new ways to get the most from your sales professionals. Customer Relationship Management (CRM) systems allow your staff to track and analyse customer behaviour, better targeting the client’s needs. If your competition is making the most of these sorts of strategies and you are not, then it’s time to rethink the way you close the deal.
Don’t give up
Turning around a business can be emotionally draining and thankless work. Now that you have done the evaluation and committed to fixing things, this is not the time to give up. Each time you tick off one of your list of challenges is a step closer to success, and as Steve Jobs always said, “I’m convinced that about half of what separates successful entrepreneurs from the non-successful ones is pure perseverance.”
“The Internet is a worldwide platform for sharing information. It is a community of common interests. No country is immune to such global challenges as cybercrime, hacking, and invasion of privacy” – (Lu Wei, the head of the General Office of the Central Leading Group for Internet Security and Informatization from August 2013 to June 2016)
On the 1st of March 2024, the CIPC admitted it had been hacked. The CIPC said in a statement that, “Our ICT technicians were alerted, due to extensive firewall and data protection systems in place at the CIPC, to a possible security compromise and as a result, certain CIPC systems were shut down immediately to mitigate any possible damage.”
While they referred to the incident as “an attempt” to hack their systems they also added, “Unfortunately, certain personal information of our clients and CIPC employees was unlawfully accessed and exposed.”
A few days later MyBroadband.co.za said they had been contacted by the hackers who allegedly proved they had access to the site since 2021 and the CIPC could be understating the damage done. Whether the claims made to MyBroadband are accurate or not, the possibility this hack has leaked private information from many or all of South Africa’s registered businesses and presumably given outside access to company registrations which potentially allows the hackers to make alterations to core business areas.
Together with a long-standing issue at SARS that periodically sees clients receiving an email or SMS stating, “unauthorised changes were made to your personal details on eFiling”, it is clear that South African businesses need to be aware of the risks of online attacks at key government organisations and more importantly, know what to do about them.
These are the main concerns:
Private information leaked
According to reports, the hackers may have gained access to the private credit card information used to make payments to the CIPC. MyBroadband quotes the alleged hackers as saying the CIPC was “processing and storing credit cards in the clear.” While most banks require access to an app as verification, the exposure of CVVs and expiry dates of cards is a risky proposition. When combined with other information stored on the site, such as the names, addresses and signatures of directors there is a real risk that company clients and contacts may be open to being scammed through fake profiles or other contacts generated by malicious third parties.
Access to Company registrations
If, as is alleged, hackers have gained unfettered access to the company registrations section and the login details for multiple clients, companies risk potential changes in their core information. Directors can be changed, addresses altered and critically, key documentation can be downloaded.
The latter is of great concern as these documents could allow a fraudster to open bank accounts in a company’s name. After that it becomes simple to contact clients saying that bank account details have changed, and even offer them the proof that they are speaking to legitimate company representatives. From there money could easily be siphoned into these phoney accounts and it may take weeks or even months to uncover.
What should you do?
With every company vulnerable it’s critical to take a number of steps immediately to mitigate the risk and potential damage.
Don’t stop being cautious. These sorts of hacks can often come back to haunt a company months after they happen. Assume you will need to be careful for at least a year as the hackers work their way through their haul and try to make the most of it.
