Telkom admits retainers to keep staff
Jacques Schindehutte, Telkom chief financial officer, admits that retention packages have been paid to staff, encompassing senior management, to prevent them from leaving during a period of difficulty for the group.
On Friday (8 June), Telkom announced reported a marginal decline in operating revenue to R33.1 billion, for the year ended March 2012.
Headline profit for the year fell 32.8% to R1.658 billion, while profit after tax for the year declined 93% to R179 million.
Earnings before interest, taxes, depreciation, and amortization (EBITDA) of R8.5 billion, declined 8.8% and group EBITDA margin decreased to 25.8% from 28.1%.
“We’ve had to move to secure, not necessarily only top management, because the reality is that you are working in a business that is under pressure,” Schindehutte told BusinessTech.
He said that the more successful the business, the more generous the hand was in regards to bonuses, etc.
“So people are reluctant to come to a company with immense challenges, and therefore I think paying retentions obviously helps as part of your strategy to get people to come in and stay for a minimum period. Thereafter, once they settle themselves and prove themselves, then it’s obviously much easier to deal with the issue of incentivisation.
“But to just sometimes attract people, or deter them from leaving for a fantastic opportunity, is not bad strategy, and we have done that,” Schindehutte said.
CEO Nombulelo “Pinky” Moholi told media and investors at a presentation in Rosebank, that the group would try to avoid culling its staff in an effort to curb escalating costs. Moholi said that staff retention annually ranged between 2-3% for a workforce in excess of 22,000. Employee expenses amounted to R8.6 billion for the year ended March 2012.
The CEO said that Telkom would first look to work “smarter and more efficiently,” while Schindehutte added: “Management and labour needs to lift its game.”
Telkom decided against a dividend declaration in respect of the financial year ended 31 March 2012.
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