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Time to take IT Project Management seriously

By Mervin Bateman

“Project Manager: This position requires a professional who has a passion for project management. Utilise people and communication skills by managing a team of business and IT experts. Develop and manage strong customer relationships. Must have business experience, common sense and the ability to ask the right questions. Be assertive, organised and output driven. IT qualifications a plus.”

Project Management is a professional skill that should hold a lot of clout in the IT industry. Until now, IT Project Managers have been unskilled, untrained and inexperienced and have not been held accountable for projects which have failed to meet project objectives, deadlines and budgets. Today the role of a Project Manager is to manage business processes and logistics and to ensure correct and efficient implementations of IT solutions.

Project Management encompasses the running of an IT project from end-to-end, i.e. from the inception of an idea to its implementation and roll-out. A Project Manager needs to understand a project on a contractual basis and must be held accountable for the deliverables, whether these are implemented in-house or outsourced.

Delivery is key. Project Management is about delivering the right IT solution for a customer’s business needs on time.

The shortage of qualified Project Managers in South Africa is because project management was used as a stepping stone to entering the IT industry. Emphasis was on “promoted technicians” for technology solutions. Project management now focuses more on the importance of business acumen and how technology is used to meet business objectives.

Project Management is not only an IT discipline; it is about common sense and an understanding of business. This change was brought about by decreased IT spend and because customers are looking to establish trusting relationships with their IT service providers to leverage and maximise the benefits of their IT investment. Customers are looking for more value for their buck.

So what ensures successful project management and implementation?

Project management and the role of the Project Manager must be taken seriously. If this function is to be outsourced, then the right IT partner needs to be chosen. An IT service provider must have a proven track record and reputation. They must understand the key business drivers, provide the right skills set and enable the facilitation of skills transfer. There must be a good “fit” between the customer and service provider, based on culture and trust, so that expectations can be more easily understood and accurately aligned. Project roles and responsibilities and the participation of third party suppliers must be clearly defined

The most important deciding factor when selecting a service provider is people. The decision is not based on technology as most IT solutions come packaged, nor is it determined by cost as this can be easily benchmarked against information that is readily available on local and international IT projects.

On the customer side, regardless of whether the project is implemented in-house or outsourced, a dedicated Project Manager who is qualified to fulfil the position must be appointed in a full-time capacity. Their role should be to manage the project from the client-side and to assist with risk management.

They must have a senior level sponsorship role within their organisation and be able to chair the steering committee meetings and stop the project if there is potential trouble.

Project implementations at a client should be a two-way street; managed top-down for practical business evaluation, and bottom-up for ideas for implementation.

Project Managers, both on the client and service provider side, must ensure that their expectations in terms of the project deliverables are aligned 100 percent. The client’s Project Manager is accountable for the business disciplines and the service provider’s Project Manager is accountable for the IT solution and involvement of third party suppliers. The combined project team must be tightly managed and virtual teams are the way to go.

Project Managers must bring in the right people or specialists as and when they are needed.

To ensure successful project implementation, first identify the key business drivers and then design the IT building blocks. Projects must be broken down into shorter milestones and payments should be made on deliverables. Companies should engage in a risk and reward approach where service providers and individuals are incentivised for project development and implementation that occurs ahead of schedule together with the agreed quality specifications.

The return on investment of an IT project should be measured against the objectives that needed to be satisfied. It should be based on project management and skills transfer, as well as on the quality, standard and lifespan of the IT solutions implemented.

All these factors account for successful IT project delivery and in effect, reduce IT spend in the long run.

Mervin Bateman is CEO of IOCORE, a global IT organisation whose key solutions include enterprise resource planning, systems administration, application development, business intelligence, knowledge management and outsourcing. He can be contacted on +27 (11) 790 2000 or at

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Posted in the category: Insight, News

Investment insight: Resist temptation to quit equities

By Craig Pheiffer

Though the stock market remains bearish, the recent 12% recovery in the Dow in less than a week shows the dangers of being outside the market during such rallies.

We have resisted the temptation to cut the equity exposure further given the inherent value that our local market offers and the undoubted speed at which the market will turn once the bears have had their fill.

Asset allocations remain unchanged from July 2002, when SFPS down-weighted equities from 65% to 60% and up-weighted listed property from 10% to 15%.

The recommended weightings in the October Quarterly Review are equities 60%, bonds 10%, cash 15% and listed property 15%.

SFPS’s recommendation in June to increase listed property weightings proved prescient, as both property loans stocks (PLSs) and property unit trusts (PUTs) held up well in the face of market weakness and the 4% increase in interest rates so far this year.

The PLS index has lost 5,6% in 2002 but the PUT index has lost just 1% since the beginning of the year.

While higher interest rates will put some pressure on the property sector over the coming months, the higher yields offered by the listed property counters should ensure that the property asset class outperforms cash and bonds on a one-year view.

Hyprop was one of the property loan stocks highlighted in SFPS’s July Review of Investment Strategy. Hyprop appreciated 6% this year, with an historic yield of 14,1%. Thus, despite the rising pattern of interest rates and declining equity markets, Hyprop has managed to provide a positive return to unit holders so far this year.

PUTs have also shown stability in recent months. Grayprop, another counter highlighted in July, is up 4% so far this year on a historic yield of 13,6%. The examples of Hyprop and Grayprop serve to illustrate the point that listed property counters deserve an allocation in any investment portfolio.

The relatively high cash allocation of 15% is an ammunition store, ready to be used when opportunities present themselves. A lower cash weighting should only be considered when R153 bond yields trade above 12,00% (currently 11,9%) or should global equity markets return to more realistic valuations.

While bond yields are likely to remain under pressure given the possibility of another rise in interest rates before yearend, the longer term outlook for yields is healthier. Until there is greater clarity on the inflation outlook, SFPS is sticking to its 10% bond weighting. Within the bond component of the portfolio, it recommends reducing exposure from 40% to 30% in the R150 government bond, which has just a few years to maturity, in favour of a stronger weighting (from 30% to 40%) in the longer duration R153.

SFPS identifies a number of investment themes likely to dominate the equities market in the coming months. Those South African companies that are truly international should constitute a large part of the portfolio and should provide a significant hedge against the depreciation of the rand over time.

Given geopolitical uncertainties and strong demand for platinum counters, SFPS recommends a 10% equity weighting in gold and platinum stocks, with additional exposure to these sectors through mining financials. Their diverse mining interests and dual listed status leave them well positioned to benefit from global economic recovery. SFPS recommends an overweight position in diversified large cap industrial stocks, which should also benefit from a global recovery.

Sasol is another favoured stock delivering deliver record earnings, thanks to a weaker rand and higher oil prices. The current war premium in the oil price will dissipate should a war on Iraq prove to be brief and the currency may show some periods of strength but Sasol remains cheaply priced. An oil exposure is recommended for its long-term rand hedge qualities.

The outlook for the Construction & Building Materials sector remains positive with filled order books and the promise of earnings growth above the 20% level into 2003. An overweight position is recommended in this sector.

The overriding theme remains the longer-term requirement of the inclusion of quality rand-hedge counters and those stocks should be included in the portfolio wherever possible. While always important in the investment decision, dividend and interest returns should take on a greater significance during these turbulent times for global equity markets.

Craig Pheiffer is Chief Investment Strategist at Sasfin Frankel Pollak Securities. He can be contacted on Tel +27 (11) 883 2337 or by e-mail at

This article was adapted from the company’s fourth quarter Quarterly Review of Investment Strategy.

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Posted in the category: Insight, News

Tech Insight: Wireless LAN Market to Grow 30% Annually

By Eion Gibson
META Group has today announced its newest METAspectrum evaluation, covering the enterprise wireless local-area network (WLAN) market. Based on its findings, META Group expects the wireless LAN market to grow at a compound rate of 30% annually. This METAspectrum evaluates vendors that focus on providing comprehensive wireless solutions based on the IEEE 802.11 standard to enterprise customers.

We expect a clear distinction among products that will emerge in the next 12-18 months to meet the specific needs of the enterprise, consumer, and public market segments. Vendors seeking success in all markets must strike an effective balance between the richness of features required by enterprises and the low cost needed for consumer and public deployments.

Wireless LAN products targeting the enterprise market must include advanced features for robust security, management, and reliability. To be players in this market, wireless LAN vendors must not only demonstrate a clear commitment to advanced features (beyond Wi-Fi), but also control the manufacturing of at least one part of the entire solution, such as access points or client adapters.

The Enterprise Wireless LANs METAspectrum evaluates the top five vendors in this market. Numerous wireless LAN vendors did not meet the criteria of this study — typically lacking either the advanced features required for enterprise deployments or a focus on enabling mobile applications. The analysis found:

* Vendor success depends on a mixture of performance and market presence.
* The market has transitioned from emerging status to full growth, with core wireless LAN technology quickly becoming commoditized.
* Advance features and services required by enterprise customers remain largely proprietary and can vary greatly among manufacturers.
* Selecting a strategic partner for wireless LAN initiatives is critical, due to proprietary features such as security which can make customers wary of jumping from one vendor to another.
* Best-practice organizations are proactively developing wireless LAN policies, in response to grassroots demand for adoption of the technology and to mitigate risk of rogue wireless networks.
* By 2004, we expect market presence to increase in importance relative to performance, as the technology matures and users place greater value on market penetration and vendor viability.

Eion Gibson, a Strategic Advisor with META Group Consulting Africa, specialises in African carriers/PTTs and consortia; host connectivity, wide area and campus network design and middleware infrastructure. META Group South Africa can be contacted on (011) 880-5644

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Posted in the category: Insight, News

The changing face behind the mouse

By Arthur Goldstuck

If you own a large online media property in South Africa, chances are you are catering for more women than men.

A new research project commissioned by MSN in South Africa, and conducted by AC Nielsen, shows that, for the first time, more women than men are accessing media sites, by a ratio of 54.4% to 45.6% men. One possible reason is the fact that women have become more economically active in South Africa over the past decade. However, regional differences showed a massive swing in the urban areas of the Western Cape (58.3% women) and Kawzulu natal (59.9%).

These were the most interesting of a range of statistics drawn from an online survey of around 3200 Internet users. Since the respondents weren’t randomly sampled, but rather represented a self-selected sample of those web users willing to take part in an online survey, the results can’t be viewed as scientific, but nevertheless represents a clear picture of the trends shaping online usage patterns in South Africa.

For example, 60% of Internet users go to movies at least once a month, suggasting that the Internet user population is an ideal target market for driving increased cinema visits – or not, if you regard their habits as cast in stone. After all, 59% watch more than six hours TV a week, which is about as healthy a pattern away from couch potatohood as one could wish.

More than half of the respondents read the Sunday Times (51%), 37% read newspapers daily, and almost a quarter listen to 94.7 Highveld Stereo.

Almost a fifth work in large corporates with more than 1000 employees, while a large proportion (42.2%) work for small and medium businesses with up to 100 employees. More than half (51.7%) have purchased online, with the 25-34 age group being most willing to click and pay (57.8% of the online buyers), followed by the 35-44 age group (55.6%) and the old fogeys in the 45-54 age group (48%), indicating that the Internet is no longer only the playground of the young and experimental.

The bad news hidden in these bright starts, however, is that 39% of users make a purchase less than once a month, and 9.6% on average once a month, leaving a mere 3.7% of frequent (every week or two) online shoppers. What was that about women being shopping addicts?

The top reasons given for shopping online are fairly obvious:

* Convenience – 41.8%;
* Ability to research online – 37.2%;
* Competitive pricing – 18.5%.

More interesting is the response to the question of what will make people purchase more often:

* Free delivery – 29.9%;
* Better security – 14.3%;
* Relevant products – 12.6%.

Online purchases are predominantly made with credit cards (35.3%), with electronic funds transfer adding 4.1%, debit cards 4%, Icanonline another 3.5%. eBucks 2.4% and 1.6%. No surprise there: plastic remains the most effective online currency in the world today.

Arthur Goldstuck is editor of The Big Change and managing director of World Wide Worx, the leading independent technology and telecommunications research house. He can be contacted on

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Posted in the category: Insight, News, Trends

Tech Insight: The Grid engine under the hood

By Tertius Bezuidenhout

Picture this. You drive past an office building on a workday. Outside, there’s a parking lot full of vehicles, most just sitting there, idle and unused for up to eight hours. And inside? There’s a great many computers also sitting idly on desks, running screen savers and flying toasters.

Isn’t this a huge waste of engineering, design and manufacturing effort? Wouldn’t it make more sense to make better use of the motor vehicles’ idle time, to share them among several users in some way, so they’re not just taking up space?

The same applies to computing resources. And when workstations, desktops, web and e-mail servers are idle – and they are for at least part of any 24-hour period – they’re also producing exactly zero percent ROI (return on investment).

However, unlike motor vehicles, there’s a solution for sharing your company’s compute resources. It’s called Grid Computing – and it allows you to put your idle resources to work.

Conceptually, a grid is quite simple: it’s a collection of computing resources that performs tasks. By pooling federated assets, a grid provides a single point of access to powerful distributed resources.

Underneath the hood, a grid consists of a layered architecture. Resource management loads the grid. Infrastructure software links the grid. System management monitors the grid. And portals enable access to the grid.

The grid is the key to getting work done faster and with higher capacity and quality. It gives organisations access to untapped resources.

Indeed, the power of the grid lies in its ability to provide a resource-rich environment, which maximises the available power of the local network to boost personal and corporate productivity while reducing time to market and increasing ROI.

Sun Microsystems estimates that Grid Computing will grow 300% by next year.

How hard is it to build a grid? Sony Devices Europe created a grid in just two days. How big can grids get? Ford Motor Company employs 1000 CPUs for MCAE (Mechanical Computer Aided Engineering) tasks.

So, while the Net provides connectivity and access to information, Grid Computing goes further: it enables universal computing in a way that will transform communication and collaboration.

Tertius Bezuidenhout is national SE manager at Sun Microsystems South Africa, the provider of industrial-strength hardware, software and services for the Internet infrastructure.

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Posted in the category: Insight, News

Is It Time to Get Rid of EBITDA?

Wharton School of the University of Pennsylvania reports;

After facing a daily barrage of news stories about alleged abuse by corporations, officers, and the accountants who are supposed to certify the validity of their statements, a weary public could be forgiven for wondering if the well of accounting and financial controversies has finally run dry.

An abridged version of a report by Knowledge@Wharton

According to Wharton faculty and other experts, not yet. The latest target, however, may not be a company or even an individual. Instead it is a concept, EBITDA, that may have been indirectly responsible for at least some of the corporate carcasses now littering the landscape.

EBITDA, or Earnings Before Interest, Taxes, Depreciation and Amortization, has been used by analysts and investors as a tool to measure the fiscal health of the many high tech, media and other asset-heavy firms that do not generate earnings, but instead incur plenty of depreciation, amortization, and other charges.

In the 1980s through the 1990s, many analysts and others believed that peeling away these expenses, which generally were not directly incurred in operations, would enable them to more accurately analyze and compare the core operations of companies. In fact, many treated EBITDA as a modified cash flow statement, sometimes mistakenly referring to it as free cash flow.

It should be noted, though, that while a cash flow statement reconciles a company’s net income or loss for a period to the company’s cash position as of the end of that period, EBITDA does not. EBITDA is also different from a free cash flow statement, which is basically EBITDA reduced by capital expenditures (purchases of generally long-lived assets like machinery, equipment or other items that show up on the balance sheet instead of the income statement). And of course, because EBITDA excludes so many expenses, it does not measure net income. In light of this, some people have questioned its usefulness.

John Percival, an adjunct finance professor at Wharton, is one who never quite accepted EBITDA as a valid tool. “In some of my classes, I call it EBIT Duh, “he says. “It is the lazy analyst’s cash flow and it is dangerous.”

Other accountants are also raising issues about EBITDA. Ben Neuhausen, the national director of accounting at BDO Seidman, notes that EBITDA continues to be valuable. But it needs to be used with care. As a measure of performance it is not a substitute for net income. “Just as EBITDA ignores cash outlays for capital expenditures that can be significant, it also ignores interest and other specified expenses that can account for a large part of a company’s cash outflow.”

EBITDA, Percival says, was originally used to assess the ability of a company to service its debt in the short run, about a year or two. Comparing EBITDA to interest expense would theoretically give a user an idea about whether there was sufficient operating income to meet interest payments. But because it ignored many sources of cash outflow (such as capital expenditures), a company could turn in stellar EBITDA, yet not have enough cash on hand to fund its interest and other payments. The problem was actually exacerbated in the 1980s when leveraged buyouts (LBOs), which typically incurred high levels of debt, began to sweep across the nation.

“In the 1980s people started to use EBITDA to find good candidates for LBOs,” (EBITDA was thought to be a good indicator of a company’s ability to meet debt payments), says Percival. They would project growing EBITDA in the future and say that the company could handle much more debt.”

Using an EBITDA-based analysis, says Percival, LBOs would then put “huge amounts of debt in companies and then later find that there was not sufficient cash to service the debt.”

But he notes that EBITDA makes some shaky assumptions, such as a presumption that all revenues are collected. It is  ludicrous, he adds, to use EBITDA to value companies. The problem, according to Percival, is that company value is really an equity concept,  and equity value comes from future free cash flow. Because it doesn’t consider capital-intensive and other cash expenditures,  EBITDA is a poor approximation to free cash flow. Overall, except for very specific, limited applications, EBITDA is a dangerous number.

Article courtesy of the Wharton School of the University of Pennsylvania. The complete article can be read at:

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Posted in the category: Insight, News

Two Hirsches, a listing and a challenge

By Arthur Goldstuck

The business world tends to be obsessed with training its people in job skills, but never goes the obvious step further: training in financial skills. This may well change in the future, as the new “life skills” emphasis of South Africa’s outcomes based education extends beyond the school system.

For now, however, there is no organised approach to the teaching of financial literacy. Except, that is, by financial institutions themselves. But the benefits are likely to be reaped only by those who have already embarked on the quest of upgrading their skills in this area.

There is a simple reason for this: once you get into the loop of researching financial options, you are likely to place yourself or find yourself on the mailing lists of those financial institutions who realise it is in their interests to educate both customers and potential customers.

This was underlined by two events presented last week by two separate organisations, namely Sasfin Financial Advisory Services (SFAS), and, which each offered a seminar-like lecture on financial strategy.

SFAS managing director Bryan Hirsch offered a “money sense” presentation on Blending Asset Management, while Tradek hosted Standard Bank’s Richard Hirsch, who gave a presentation on investing in Warrants – a simple matter, if you understand the techniques involved.

The audiences for these two events were highly revealing. Hirsch B found himself addressing mainly little old ladies on understanding overall asset allocation, and how to blend and rebalance existing investments. Hirsch R faced a packed room of bright young men, eager to play with their newly emerging wealth, and explained how Warrants leverage the price movements of expensive shares without the individual having the risk of investing in the shares themselves.

Among both audiences, the presentations represented not only an opportunity to get better financially qualified, but also a trend towards the financial education of investors in general.

Fact is, there is a drastic shortage of individuals willing to diversify from savings-type investments. The recent announcement of the delisting of Tradek came with just that as a pretext: not enough customers.

That relates directly to the potential success of the Telkom initial public offering next year. If you want the public to invest in Telkom, you are going to have to explain many things, not least how and why share prices go up and down (the Telkom guide to buying shares, now being handed out at post offices nationwide, only explains about prices going up).

And you’re going to have to explain all those acronyms, like the difference between DY and D-I-Y (that is, putting money under the mattress). Although Old Mutual and Sanlam introduced the masses to owning shares for the first time, they did not have to sell them ion buying shares. For Telkom, that is the heart of the matter. For them, financial education will be a business basic. They will have to drag their potential investors – wallets screaming in protest – into the world of equity investment.

As the Hirsch seminars show, there is plenty appetite for financial education among little old ladies and bright young men alike – market segments that are already in the risk game. The challenge now is to work up that same hunger among those who have never had an appetite for risk.

Arthur Goldstuck is editor of The Big Change and managing director of World Wide Worx, the leading independent technology and telecommunications research house. He can be contacted on

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Posted in the category: Insight, News

By Bruce Jones

Most so-called intelligent organisations extract data from production, feed it into business intelligence (BI) systems, analyse the findings and then – based on this analysis – modify the way they do things…

The way forward, however, is for companies to follow a more integrated intelligence route. In the future, intelligence processes will be far more automated with organisational behaviour responding immediately to new intelligence findings.

This automated response will be made possible by what’s become known as “closed loop intelligence” – a term coined by the Butler Group, one of Europe’s leading IT analyst companies.

Martin Butler, president of Butler Group, maintains that “closed loop intelligence” will soon become as much a part of IT-speak as concepts like Business Intelligence (BI) and systems integration.

“There needs to be a feedback loop between the organisation and its intelligence – something that does not exist in most companies today,” says Butler.

“Indeed, there is little in the way of anything like an automatic feedback into the actions the systems take from the intelligence it gathers. In fact we have two worlds in IT – the operational systems and BI.”

In a closed loop environment, there is two-way feed between the operational environment and BI.

As Butler describes the process, “data is derived from production systems and intelligence is fed back to it in a closed loop. This involves the dynamic modification of business rules based on intelligence – possibly without human intervention for simpler operational tasks.”

Organisations are increasingly becoming aware of the need for an architecture which will make it possible to adapt to the speed at which businesses – and their systems – have to change to accommodate changes in the environments in which they operate.

Eventually, change is going to occur too quickly for humans to deal with – some could say that is already occurring. This means that the systems themselves will have to be equipped to automatically adapt their own business rules to accommodate change.

Another factor driving intelligent automation, and the closed loop systems which enable this, is the fact that closed loop systems will exhibit greater intelligence for many mundane tasks than people will ever want to.

Intelligent automation won’t happen overnight.

Nevertheless, the trend towards closed loop systems will accelerate over the next few years as the technology matures sufficiently to make intelligent automation a reality.

Indeed, there is already real competitive advantage to be had from implementing entry-level closed loop architectures.

Bruce Jones is manager of sales support at SAS Institute, a market leader in business intelligence software. He can be contacted on Tel. +27 11 713-3400

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Intelligence – Only Asset To Maintain Value

By Retha Keyser

In today’s tough economic times, organisational differentiation is very difficult. As in declining markets information does not lose value, companies should delve deeper into their information assets to increase profit.

Intelligence is the only asset that maintains its value, regardless of the current economic situation. Differentiation based on intelligence is extremely difficult for a competitor to replicate.

As business has changed, with traditional growth opportunities becoming more difficult, companies can no longer simply develop new products and expect to stay ahead of the pack. Markets today are extremely volatile, and many – like the Scandinavian telecommunications market – have reached saturation point.

Companies today have to become focused on customer relationship management (CRM). Their business cases and philosophies must be built around customers.

CRM projects, however, have a notoriously high failure rate. Cap Gemini says 70% of CRM initiatives fail, while the Boston Consulting Group puts the figure at 66%. Gartner states that 75% of CRM initiatives fail to substantially impact customer experiences, while Meta Group says that 90% of enterprises cannot show a positive return on CRM (see references *).

The key requirement for successful CRM implementations is an appropriate customer-focused strategy ,which must be aligned with the organisational, product and competitive strategies, as well as with market conditions.

Market conditions are vital, as these will determine whether the company chooses an acquisitions-based strategy, one to grow the customer base; or a cost containment strategy. Many companies worldwide are currently adopting the latter.

Once the strategy has been decided – and this may vary for different customer segments – the organisation must choose the appropriate leadership style, organisational culture, HR strategy, IT solutions and performance metrics.

To be successful, CRM projects must be practical and evolutionary, implemented sequentially in a series of manageable steps.

While focus should be on the entire process, clear objective and goals should be put in place so that targets can be met. If the biggest pot of gold is on top of Mount Everest, that is not the one to aim for first off.

It is also vital to understand customer value and economics.

Even if companies have unsophisticated measures of customer value, this at least represents a beginning. Companies need to understand customer economics by working out what customers are costing them. Activity-based costing has become simpler and easier, making it essential for ascertaining customer value.

CRM is about getting customer loyalty by satisfying expectations and needs, but not to the detriment of profit.

The technology chosen to support any CRM strategy is vital, with companies needing both operational and analytical CRM systems.

The former is the interactive layer, such as the call centre or web site, through which companies interact with customers. On their own, they do not provide competitive advantage, but without them, companies are at a disadvantage.

Companies also need customer-centric analytical systems that allow them to profile, segment, and understand customers, as well as measure the success of CRM campaigns.

The two types of system must work closely together, so need to be open and inter-operable.

Companies should choose vendors that are accessible, provide a full service and are reliable. Local as well as global presence is a big advantage.

Retha Keyser is CRM business specialist at SAS Institute, a market leader in providing business intelligence software and services for enterprise intelligence. They can be contacted at (011) 713-3400, or visit their web site at


Cap Gemini – Gartner G2 “Use the Balanced Scorecard to Execute CRM Strategy,” July 2002

Boston Consulting Group – “The Antidote to mismanaged CRM Initiatives”,, 2002

Gartner – “Want to maximise your CRM performance? Measure it!,” James Brewton,, 2002

Meta Group – “Human Capital – empowering employees for CRM,” Jackie Roberts, 2002

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Posted in the category: Insight, News

Labour insight: Desertion in the face of the holidays

By Jan Truter

With the end of the year around the corner, some employers face the prospect of employees going on leave and not returning on the due date or not returning at all. What is the correct way of dealing with such a situation?

There is an incorrect assumption that if an employee has been absent from work without permission and has not communicated with the employer for a certain period, that such an employee has deserted (also referred to as absconded)..Employers generally view such a situation as one where the employee “dismisses him/herself”.

In reality an employee only deserts when he/she leaves the work place with the intention of not returning. The fact that the employee ceased to tender his/her services, amounts to a breach or repudiation of the contract. The employer may “accept” such repudiation. The problem is often that the employer is unable to establish whether the employee has in fact deserted. There may be several reasons for the employee’s absence.

If it is not clear whether or not the employee has deserted, the employer must make an attempt to contact the employee. If successful, the employee must be notified of a hearing to establish the reason(s) for his/her absence from work. The employee’s services may for all practical purposes be terminated if all reasonable attempts to contact the employee have failed. In this regard the Labour Court found that stopping an employee’s pay could amount to dismissal.

If the employee returns to work at some future date, the employee must be afforded the opportunity to state his/her case. Notwithstanding the fact that the employee was dismissed as far as the employer is concerned, the safest approach would be for the investigation to take the form of any other investigation into misconduct. After the investigation, the employer must
communicate to the employee the decision as to whether the employee is re-employed or reinstated or not, and preferably furnish the employee with written notification of that decision.

* Jan Truter is a founder of Labourwise, an on-line labour relations service aimed at SMEs. Email them on

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The Big Change is a business strategy blog and newsletter published by Arthur Goldstuck, managing director of World Wide Worx, a leading technology research organisation based in Johannesburg, South Africa.

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