Adversarial Relationships

11 Nov 2019


Article No.2

In the World Economic Forum (WEF) rankings for relationships between employee and employer South Africa ranks 137th out of 137 countries, at the bottom, this in 2018. No doubt this arises from adversarial attitudes. So, do we have adversarial relationships both between the users and suppliers and between employees and employers?

I recently met with some Swiss industrialists at a social function in Europe. South Africa is of concern to Switzerland and Germany.  South Africa is popular with German speaking countries. The WEF is a Swiss based international forum.

Maybe as a gesture to help, they told me, in Switzerland many industries had reached an agreement with the Unions not to strike. I have since researched this, using Google, and it is true. The number of strikes in Switzerland is one of the lowest in the world. 

Achieving industrial peace in Switzerland has been a contributory factor to the country having one of the strongest economies in the world. What about South Africa modelling its industrial relationships on Switzerland? Africa has an ancient humanitarian philosophy called Ubuntu. it means humanness, captured by the slogan “Umuntu Ngumuntu Ngabantu” meaning, “I am a person through other human beings,” closely related to “I am because you are.” Business has developed a management philosophy around Ubuntu, UMP (Ubuntu Management Philosophy). The Ubuntu philosophy urgently needs to assist developing industrial peace in South Africa.

Switzerland politically is divided into a number of cantons; it is a Federal system of government with a high degree of devolution of power to the Canton states. Switzerland is famous for holding referendums, there could be two or three a year on subjects affecting the well-being of their society. Two examples recently, were, a vote for the ending of radio and TV licenses. This was defeated 28.4%:71.6%. The other, new financial regulations for 2021, the regulations were approved by 84.1%:15.9%.  These results show responsible concern, this is what happens when you seek people to be included.

Returning to the CEO who wanted to step up adversarial relationships, he said. “If users were not tougher on suppliers, their higher charges, would have to be passed on to their customers”. In the highly competitive retail trade, he was determined to keep prices down. Cosy relations with suppliers were not good for keeping prices down….and so his call for a more adversarial relationship.

The retailer had outsourced his transport, I was one of the pioneers in taking over the transport of other companies. The CEO had a point. He was fighting for his customers, keeping prices low.

“We need not be in conflict.” My answer, we needed first to monitor the add-on cost of transport on a regular basis, weekly for all the stores. The retailer used a standard size tray for deliveries. This standard size tray was also used by all food suppliers. Products packed in cartons would have a tray equivalent, based on the size or weight of the carton.    

On a weekly basis we could monitor the cost per tray to do all the deliveries. A simple calculation, the total weekly charge divided by the total number of trays; this gives a cost per tray. A reduction in the cost per tray, meant lowering the cost of transport for the client. Working together, scheduling the vehicles effectively and ensuring full loads, benefitted the client. The working together is called becoming an alliance partner.

Full utilisation of the fleet was another factor in lowering the unit cost. We used the fleet for collection from food suppliers and passed on 90% of the operating income to reduce the tray rate. The programme was basically collecting from suppliers during the day and delivering at night.

There is more detail to this, every industry is different, every non-core activity that is outsourced must have a monitoring system in place, assuring effectiveness and efficiencies are achieved, the root to productivity. Outsourcing must be about a better way; it must enhance the competitiveness of the user.

Minimising the cost of transport without compromising on service or compromising our ability, the Carriers’ to reinvest in up to date equipment and systems, is an imperative  

In my first book “Carrier Value.” I wrote about outsourcing, this included, “the Value Chain theory”, developed by Michael Porter. This framework can be used for to develop a successful outsourced service.

On improved relationships with staff, the value chain plays its part. The principle of staff contributing and having their contribution valued is part of the philosophy of the “Value Chain”. Trust and respect are needed, including being up front with staff on costs and the understanding of the workings of the Value Chain.   

One final remark my Swiss friends made.  The remark was made by the wife of the Swiss national, she was born in Germany.  Her comment, the Swiss somehow, can appreciate the other persons point of view. They were not fixed on being one dimensional, rather seeking the right solution without the need for an adversarial relationship. It may be part of the Swiss culture, friendly and productive relationships.

Her remarks brought back to me our need to dust off the cobwebs from our ancient African Philosophy of Ubuntu. We must pick ourselves off the bottom of WEF rankings. Then on outsourcing, it is a two-way relationship, if focused on contributing   true value for the user, you have an alliance partner and not an adversarial sparring partner.    

By Neil Wright of Wright Publishing

Time to Focus on the Economy

Our President’s talk on Sunday evening 24 May, heralding Level 3 of the Lockdown, raised expectations that businesses could start their engines and so begin the journey back to normality. The President took the opportunity to state that the economy would undergo a radical change. To quote:

We are resolved, not merely to return our economy to where it was before the Coronavirus but forge a new economy. Our economic strategy will require a new social compact among all role players – businesses, labour, communities and government – to restart the economy.

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Expropriation of land without compensation is a populist call, this is the easy part of righting the wrongs of the past. The more difficult part is to make land restitution work in the future. With compensation, the section 25 of the constitution does slow down the process, time for preparations, living off the land is no longer a hunter gatherers existence. Subsistence farming is a poverty trap…inevitably, social grants are needed, and some members of the family must send home money from employment or businesses in the city. People can’t live anymore without modern technology, cell phones, TV’s, modern medicine, including other conveniences.

A good mix of farmers making up this “Rainbow nation “is a good bridge to assist developing farmers. Let transformation of the land be a source of pride for the nation and not risk creating a scorched earth. There should always be a place for productive farmers and wildlife reserves with their ecotourism. Creating more productive farms by developing farmers must be our goal.

Promotion of Chapter Two

This chapter presents a broad view of our political, socio-political and ideological landscapes.  Political groupings are discussed, together with ideological beliefs.  Difficult subjects are confronted, including the ANC’s National Democratic Revolution.  Also included are white minority capital, nationalisation, communism and mini narratives versus the grand narrative.

This book is a must read for all those wanting to understand “Where we are as a country?”

There must be a focus on new enterprises, the total GDP (Gross Domestic Product), must grow four times. New enterprises are needed, farms should be business enterprises. Existing enterprises must grow, a two-pronged strategy is needed. New enterprising owners of land are more likely to succeed if they build up new farms themselves with the necessary support. The successes and failures of farms need case studies for us all to learn.

Much of the real progress of new black farms has been assisted by support from existing farmers, emphasised by the IRR Report. The existing farmers together with support by large corporations, supplier industries – whether of tractors, implements, fertilisers and large purchases of agricultural products, SAB (now ABInBev) and the retail industry. The government does not feature prominently in follow up support….it needs a commission of enquiry.

This summary below is my contribution to the land question, from a believer in One Race, The Human Race. The following is my list of understandings, I am sure there will be more.

  • There should be acknowledgement  by  whites for the injustices of the past, including hurt and humiliation that  black Africans suffered, from laws that deprived them of land, restricted movement, prevented them from developing to their full potential through the racial laws of apartheid.
  • The founders of our democracy arising from  the negotiations at CODESA have provided  the peace,  for us all  to have  freedom of opportunity in this country…this in a nation state of nine provinces with  eleven official languages. The new country, that is our destiny, all of us black and white to now live here together, quidded  by a remarkable document, our Constitution.
  • Freedom of opportunity now needs individuals and communities to be able to take up the opportunities to reach self-fulfilment. Land is part of the fulfilment. It would be a mistake to think that in the modern age, unlike when the land was dispossessed that it is only land that leads to fulfilment. Economic independence should be a goal of fulfilment.It does require, basics in education, knowledge, understanding of the workings of a modern economy, skills and capital support. Ambition is a requirement and the taking up of a career in a chosen field, in a profession, in business, in farming, in a craft or a trade, it requires coaches and mentors.
  • A top priority is protection of land, regardless of who owns it. This means protection of grasses by not over grazing, protection of indigenous trees, bushes and shrubs and protection of indigenous animals.
  • What is the intent of the Government and those supporting the call for expropriation without compensation?  It needs an honest debate.  It was an exercise our founding fathers undertook in crafting our Constitution.
  • The fact that 70% of our citizens, the majority, will be living in cities means this should not be neglected by the state. City development and investment must be a priority. The development of city clusters in an African context is an exciting subject on its own. The dual living of on the land and in the city needs a separate  discussion…those giving up living in the rural areas and moving to the cities should be assisted by a free grant of land in a service township and financial assistance to build a house of acceptable standards. While the community land they lived on becomes part of a commercial agricultural enterprise.
  • The idea that all land becomes state owned and leased back has huge pitfalls. The state in developing countries are not good landlords, the abuse and corruption of a young inexperienced political party in power is a major factor, fairness to all would be impossible.  We also live in a time, worldwide, where land is integral with the economy, including FDI (Foreign Direct Investment). Capital loans are based on the value of property that includes the land. Take it away, what follows? It is also a huge sense of pride and incentive for the people to own their own properties with title deeds. Paid up land in the hands of owners is a major stabilising factor. Citizens unable to pay the rent to the state will create untold hardships. Paid up properties or the reduction of outstanding loans is a survival strategy for property owners. Lease hold property does have its place, in limited undertakings but not nationalising property. There are lessons in Mozambique, their economy has battled since land became state owned and their national budget is subsidised by foreign aid .
  • Ownership, if it is collective, should use modern structures, the use of a company propriety limited, with shareholders. Giving farming enterprises to communities under a chiefdom has weaknesses.  Boards of directors should be appointed, then a competent CEO (Chief Executive Officer). It is a structure that works and provides freedom for individuals to buy and sell shares. Big corporate structures in agricultural production must be part of the mix with shareholding schemes for staff.
  • Land and capital, these go together like a marriage, many farms do not produce sufficient cash flows to pay their way, it is a modern phenomenon. Farms of all descriptions, game farms, wine farms, mountain reserve farms as well farms producing agricultural products are owned by persons or companies that provide the necessary capital to make the investment in all the equipment building etc. These owners may support these farms financially for many years by providing the necessary cash flow.
  • Thriving commercial farms are hugely beneficial to the economy, from employment of staff, suppliers in many small businesses, machines shops, vehicle and tractor dealers. Not to mention mutual dependence farms have for schools, clinics , agricultural colleges, Universities, veterinarians. A thriving farming community is the life blood of many small towns.

The non-derogable Rights at the end of Chapter 2 of the Constitution might provide the answer to compensation being necessary in the expropriation of land. Without compensation you are invariably punishing innocent people and harming others employed directly or indirectly in the linked businesses. In the rhetoric we are losing sight of land being part of a business with all the value chains this implies.

“One Race, the Human Race, Now” is almost as radical a call as “expropriation of land without compensation”, any amendment to the Constitution on the land ownership must by necessity refer to Race. It might be one of the last hurdles before we can put race behind us….and start living the dream of being part of one race, the Human Race.

Since 1994 half of all farming properties have changed hands. (a research finding from the University of the Western Cape). Reports have also shown that the government could have bought half the farms in the country if they were really serious about land restitution.

Three Groups

If a poll was undertaken of the views on the land question, three groupings could be identified.

Group One

The hard-liners, just take the land away regardless. It is retribution for the white ancestors coming to South Africa and occupying the land. It is a Zimbabwe style land grab with no consideration for outcomes to the economy or the future. Those not supporting the legalising of land grabs are regarded as sell-outs. It is purely a territorial stance, not about commercial farming or that 70% of the population live in cities. Almost assuming there has been no change since the first Europeans came to Africa. It is a silver bullet approach…just take the land and poverty for blacks will end….and even if poverty does not end it does not matter.

Group Two

Due process is followed, the review of clause 25 of chapter two of the Constitution is supported and any amendments will be accepted, including that no change to the Constitution is necessary for expropriation without compensation under laid down conditions. There is a genuine desire for a just settlement for present-day white landowners. This attitude is supportive of reconciliation. This group is fully committed to the growth of the economy, including the growth of agricultural productivity. There is a modern approach to Globalisation and the African Continental Free Trade Area (ACFTA), something like the EU, is regarded as an essential for all progressive countries in Africa.…..needing the talent and ability of all South Africans.

Group Three

These are the ones making the most noise but cannot decide whether they fall into Group One or Group Two. They battle to move away from outrageous racist taunts and like a militant union want to drum up mass mobilisation. There is no commitment to the outcome or understanding of what is right for the economy.  Pragmatism and common sense are not included in their discourse.  The question, will they join the national debate and collaborate, or will they continue their aggressive confrontation?

There were shortcomings in the way the ANC Government handled land claims – mostly the title deeds were not placed in the new owners’ hands, so they did not own the land – meaning obtaining development funding, using land as collateral was not possible.

Many other factors contributed to generally poor outcomes of the land expropriated – damage of the land in some cases.  This quote from Tito Mboweni says it all; “The poor relationship between land restitution and agricultural performance would haunt the ANC for a long time. The relevant minister’s key performance indicator was how much land was taken away from commercial farmers without thinking of its likely impact on food production”.

Skype: nrbwright
neil@wrightpublishing.co.za

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    NUMBERS IN OUR LIVES

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