1

Vodacom Group Limited Integrated report for the year ended 31 March ’13

Human capital report

Year ended 31 March

Number of employees 2013 2012 2011 % change

South Africa 5 153 5 238 5 302 (1.6)

International 2 115 2 076 1 997 1.9

Corporate head office 174 189 214 (7.9)

Total number of employees 7 442 7 503 7 513 (0.8)

Employee turnover (%) 7 9 11

Differentiating our brand, driving growth and becoming more efficient depends largely on having the best people with the right skills and right attitude in the positions most suited to them. We ensure our people feel motivated and engaged to such an extent that they stretch themselves beyond their daily functions, which requires that we empower them to change what’s not working, and trust them to be accountable for achieving their set goals.

Talent management and succession planning

Our ongoing efforts to improve talent management for our more senior employees have resulted in more focused development interventions, ensuring we have the right capabilities in place to meet future needs. To further strengthen talent management, we are working to deepen our succession pool by targeting employees identified as having the potential to move up into more senior positions.

We also offer the following programmes as part of leadership development:

•   Inspire – a global leadership development programme for emerging senior talent;

1 Raise the bar on talent2 Build key capabilities3 Build a lean and effective organisation3 Create a safe and healthy place to work5 Embed desired culture6 Drive a high performance culture

•   Vodacom advanced executive programme (‘VAEP’) – our executive development programme; and

•  ASCEND – a leadership development programme for our heads of functions.

Employment Equity

We understand the business imperative of transformation, and recognise diversity as a strategic advantage. Having an employee base that reflects the diversity of our customers gives us a deep understanding of their needs, which helps us retain our leading position in our markets. Our transformation programmes are aligned to our skills development priorities to help us address the scarcity of skills, such as developing skilled women through our bursary programmes in technology.

We are making good progress in achieving our employment equity targets at management levels, and marginally missed our internal targets for semi-skilled people and people with disabilities. During the year, black people accounted for 82% of new hires and 69% of promotions in South Africa. Our diversity and inclusion programmes have been extended to our International operations and will be further embedded over the next year.

Raise the bar on talent1

2

Our most notable learning and development initiatives are:

•   The Vodacom bursary programme, which gives permanent employees in the Group the opportunity to advance their careers and develop specific information and communication technology (‘ICT’) skills. In total, 634 bursaries were either awarded or renewed during the year, at a cost of R11.4 million.

•   A virtual learning centre is available to all employees.

•   Hosting interns and learners in partnership with the Information Systems, Electronics and Telecommunication Technologies (‘ISETT’) Sector Education and Training Authority (‘SETA’), with 27 interns and 84 learners hosted during the year.

•   The Columbus Programme, a two-year assignment that gives talented graduates international exposure. In South Africa we are hosting candidates from Vodafone Spain and Vodafone Ghana, while Vodafone are hosting some of our graduates in Spain, Ghana, the United Kingdom and India.

•   The Young Achievers Programme, which offers training on business and leadership to young people starting their careers. Of the people who participated during the year, 85% were black and 52% women.

Our South African training days for the year totalled 12 332, which breaks down as follows:

Days Female Male Total

African 3 194 3 540 6 734

Coloured 701 1 163 1 864

Indian 590 869 1 459

White 535 1 740 2 275

Total 5 020 7 312 12 332

Human capital report continued

Year ended 31 March

2013 2012 2011

Women representation at senior management level (%) 29 26 23

Ratio of average basic salary of men to women (times) 1.4 1.5 1.4

Black representation at senior management level (%) 49 45 42

Vacancies filled by black employees (%) 82 78 76

Total representation of people with disabilities (%) 0.67 0.80 1.08

Women’s network

We are in the initial stages of setting up a women’s network in South Africa, which will help us address gender-based issues raised by employees and form a platform for investigating the issues that impact career progress for women at Vodacom. We are considering launching a similar programme in our International operations. During the year we participated in the Vodafone International women’s forum and women in technology forum. 

We are launching an initiative to provide identified women employees with international exposure to help them broaden their understanding and knowledge of our business and of the Vodafone Group, and to improve their functional and cross-functional abilities.

Disability

We understand that disability is still stigmatised in some workplaces. At Vodacom, we work to create a trusting environment in which employees are comfortable disclosing their disability status, and a number of our initiatives focus on disability as part of our diversity and inclusion agenda. We have also made various modifications to our head office buildings to ensure they are accessible to disabled people.

We currently have 65 employees with disabilities at Vodacom, down 12 from the prior  year’s 77.

During the year we invested R56 million in training and development initiatives across the Group, including online learning programmes, local training events, global development programmes, bursaries and internships.

Year ended 31 March

2013 2012 2011 % change

Total training spend (Rm) 56 68 71

Average training spend per employee per year (R) 15 018 9 794 9 359

Build key capabilities2

3

Vodacom Group Limited Integrated report for the year ended 31 March ’13

We continue to work towards aligning the overall structure of our business to best practice, with the ultimate aim of creating a more streamlined business structure with fewer layers of complexity, thus improving overall efficiency. To this end, we are implementing Vodafone’s global business transformation programme, Project EVO, which went live in South Africa on 2 April 2013.

Project EVO aims to standardise and simplify internal processes for finance, procurement and human resources under the principles of speed, simplicity and trust. Through Project EVO we are realising more direct accountability of our people by taking out unnecessary layers of authority. We have also introduced new self-service options for employees and more streamlined approval processes.

Health and safety

This year we added a seventh rule to our six absolute rules that help ensure the safety of our people, all of which must be adhered to at all times:

Absolute Rule #1Never work under the influence of substances (drugs or alcohol).

Absolute Rule #2

Always wear a seat belt when travelling in or operating vehicles.

Absolute Rule #3

Never use a handheld phone or any other device while driving. Only make calls using a hands-free device or by pulling over when it’s safe to do so.

Absolute Rule #4

Never carry out work on electrical equipment, circuits or gears if you are not qualified or adequately prepared.

Absolute Rule #5

Never exceed speed limits or drive at a speed which is dangerous for the type of road, vehicle or conditions.

Absolute Rule #6

Always use suitable personal protective equipment.

Absolute Rule #7

Never carry passengers in the load area of pick-up vehicles (bakkies or trucks).

To reduce the frequency of safety incidents, we have identified our top risks and developed programmes that proactively mitigate these risks. Our top five identified risks are:

Risk Mitigating action

Road risk

• Defensive driver training• Use of Bluetooth hands-free devices• Monitoring driver behaviour•  Implementing journey management plans

Contractor control

• Contractor reviews and audits on high risk suppliers• Contractor induction sessions and forums• Safety passport system launched

Working at heights

• Specific inspections by a health, safety and environment (‘HSE’) specialist ensuring that:

– Fall protection plans are drafted by qualified persons and conform to minimum standards

– Medical fitness and training certificates are evaluated to assess worker competency

Legacy infrastructure

• Inspection programme for all legacy infrastructure

Electricalwork

• Electrical standard launched• Incorporated in absolute rules

Our absolute rules address a number of these risks and we minimise their potential occurrence through enhanced training programmes and processes. Our overall lost time frequency injury rate (‘LTFIR’) decreased 59% to 0.24, well below our target of less than 1.

Employee wellness

We have a dedicated employee Wellness Centre on our Midrand campus that is equipped with a wide range of facilities and services to help our employees with their wellness needs. The centre communicates frequently with employees about various wellness issues. We also have a telephonic counselling service for employees who require counselling on difficulties they may be encountering at work or at home.

Sickness Absenteeism Rate

Absenteeism remains a major concern for all organisations, and can be a good indicator of both productivity and engagement levels. In South Africa, the cost of absenteeism to Vodacom was R201 million in the year, down from R203 million in 2012. The average absenteeism rate in South Africa for the year was 1.4% (2012: 1.4%), below an industry average of between 2.6% and 3.0%.

Chronic Lifestyle Disease (‘CLD’)

For the year, we found that the Sickness Absenteeism Rate (‘SAR’) was higher than average for employees that score highly on CLD risk factors. However we also found that, although the percentage of employees with CLD risk factors has increased across most disease categories, the SAR for five out of six risk factors was in fact lower than the company average. This suggests that employees who score highly for risk of CLD are managing their health risks more effectively, thus taking less sick leave and being more productive.

Build a lean and effective organisation3

Create a safe and healthy place to work4

4

Human capital report continued

The CLD health risk factor profile for South Africa is higher than that for HIV (based on tested employees). Approximately 4 000 of 5 000 employees have more than one CLD health risk factor. Considering that the average age of the Vodacom South Africa workforce is 32,  this health risk will require concerted effort to mitigate.

HIV/AIDS

Most countries in which we operate are considered high risk for HIV/AIDS.

The Vodacom Group HIV/AIDS Policy is available to all employees on the intranet, and ensures that:

•   employees are educated on HIV/AIDS and tuberculosis (‘TB’), including on the transmission of the disease and healthy lifestyle choices;

•   the company’s policy on fairness and non-discrimination is communicated; and

•   affected and infected employees have access to support.

The HIV prevalence rate among our employees increased from 0.7% in the prior year to 1.6% in November 2012, which is attributable to 32 more employees testing positive. Of known cases, 134 HIV-positive employees are confirmed to be registered on treatment programmes through their individual medical aids or non-governmental organisations (‘NGOs’).

2013 2012 2011

Number of people tested (SA and Group standalone) 1 966 1 345 1 535

Prevalence rate 1.6% 0.7% 1.0%

As at December 2012, 53.8% (2 678 employees) were aware of their HIV status when combining the results of onsite testing and those registered on the HIV Disease Management Programme. 

Our International operations recorded the following results from their testing initiatives during the year:

International operationNumber of

people tested % of

staff tested Prevalence rate,of those tested

DRC 36 6% * all negative

Lesotho 33 28% 3.0%

Mozambique 108 44% 1.0%

Tanzania 267 60% 1.5%

We provide an opportunity for all employees to be tested at least once a year, together with the necessary counselling.

The Vodacom World Aids Day event was held on 5 December 2012, attended by over 460 employees in the Vodacom Dome on the Midrand campus, to listen to Justice Edwin Cameron sharing his story of living with HIV/AIDS.

IAMLIFESTRUCK

Vodacom Wellbeing in association with IAMLIFESTRUCK launched an initiative during the year that is assisting over 100 employees in Midrand and their chosen buddies in making physical and lifestyle changes over the next 12 months. The initiative is aimed at encouraging exercise and healthy eating. The programme has been well received and its Facebook site has over 600 active members. Participants are reporting increased energy levels and higher productivity.

Executive wellness

A total of 166 Vodacom executives participated in the Vodacom Executive Health Programme during the year. As a result seven executives are being monitored by our occupational health doctor, with one deemed high risk, three moderate risk and three low risk.

5

Vodacom Group Limited Integrated report for the year ended 31 March ’13

Employee engagement

The annual People Survey was conducted during the year, with 6 054 respondents across the Group; a participation rate of 89%. The main aspects the survey measures are employee engagement, our Manager Index, our values of speed, simplicity and trust, and the extent to which our culture is diverse and inclusive.

This year’s results showed improvements in all indices and scores except for the Simplicity Score. We had a large number of changes and reorganisations in the business during the year, including senior management changes in the Group Executive Committee and reorganisations in South Africa, Tanzania and Lesotho. We are pleased that we were able to increase our employee Engagement Index across the Group during this period of change.

Feedback from the survey indicates that our employees are proud to work for Vodacom and that they would recommend Vodacom as a place to work. People are also clear on Vodacom’s goals and priorities and work in teams is well-organised. Our people are of the opinion that Vodacom will outperform competitors and the majority feel that Vodacom does a great deal to accommodate the needs of employees with disabilities.

On the other hand, our employees believe that more should be done to ensure the most talented people progress in the business, as well as identify and address barriers that impede effective job performance. Cross-team collaboration also needs attention as many people feel that they are not adequately supported by other teams within the organisation. More attention also needs to be paid to embedding The Vodacom Way within the organisation as speed, simplicity and trust remain highlighted as areas for improvement by our people.

Year ended 31 March

% 2013 2012 2011

Engagement Index 75† 73 73

Manager Index 69 68 69

Diversity and Inclusion Index 71 69 69

† This item was included as part of our assurance process in the current year.

This year Tanzania and Lesotho performed particularly well, with notable increases across all indices measured in the survey. The Manager Index improved across all five markets, while the Engagement Index improved in all markets with the exception of South Africa which remained unchanged from the prior year.

Unionisation

The Employment Law division, reporting to the Chief Officer: Legal and Regulatory is responsible for maintaining relationships with the unions and meetings are held on a regular basis to ensure unions have a platform to raise issues with management and for management to understand concerns from employees.

Union representation in South Africa:

Year ended 31 March

Number of employees 2013 2012 2011

Communication Workers Union (‘CWU’) 741 812 846

Media Workers’ Association of South Africa (‘MWASA’) 18 20 26

% employee representation 15.5% 16.6% 17.1%

The union membership in South Africa has decreased 1.1ppts over the period under review.

Mozambique has a small union that has recently been established. Tanzania and Lesotho are not unionised.

The DRC is unionised with 50% of employees belonging to the union. There is no signed collective agreement with the union due to the parties not being able to reach agreement to date. It is currently under negotiation.

We have not experienced any strikes over the past year in any of our operations.

Disciplinary procedures

We have numerous active policies relating to discipline which are published on our intranet and are available to all employees. In addition to this, the Employment Law division publishes monthly newsletters highlighting the most pertinent misconduct-related issues. In this way, employees become more familiar with what is acceptable behaviour and what is not. There is also a grievance policy and procedure in terms of which employees may submit a grievance to management, which is addressed within five working days.

For the year under review, approximately 60 cases of employee misconduct resulted in disciplinary enquiries in South Africa. Of these matters, 15 resulted in dismissals. There were no incapacity-related dismissals for the year under review.

The most common form of misconduct was work-related gross negligence/negligence, which accounted for approximately 29% of hearings. This type of transgression has declined in prevalence from the previous financial year when it accounted for 52% of serious misconduct. The nature of negligence varied but included network-related negligence and negligence in providing poor customer services. Dishonesty-related transgressions

Embed desired culture5

6

accounted for approximately 16% of the misconduct cases, as opposed to 29% in the previous year. Forms of dishonesty included theft and unauthorised accessing of customer information. In the latter part of the financial year there was a trend identified within Vodacom of dishonesty relating to a failure to declare “kickbacks’ from suppliers, and employees were dismissed.

The majority of the remaining matters dealt with can be broadly classified as time-related misconduct such as abscondment and uncommunicated/unauthorised absence from work, accessing confidential information, sexual harassment and harassment-related cases, misuse of company vehicles and the breach of the Absolute Rules. Action taken to mitigate the risk of reoccurrence of these types of misconduct include monthly newsletters and making employees aware of examples of serious misconduct during training about prevalent forms of misconduct.

The National Consultative Committee (‘NCC’) is an employee representative committee in South Africa that aims to involve employees in aspects of decision making that affect their work environment and enhance cooperation between management and employees. The major issues discussed during the year were concerns about the reorganisation in the business and requests from employees to increase some of the company benefits.

We are committed to developing sound employee relations and acknowledge the rights of all our employees. During this year, 12 cases were referred to the Commission for Conciliation, Mediation and Arbitration (‘CCMA’); six CCMA arbitrations decided in favour of the Company, five CCMA matters were abandoned after conciliation and one was settled. There were 59 disciplinary transgressions during the year, 15 of which resulted in dismissals. We regularly distribute an employee relations newsletter to help limit the occurrence of disciplinary transgressions.

The Vodacom Way

The Vodacom Way programme reinforces our five strategic priorities and aims to align our people to a central way of doing things that will help us provide an unmatched customer experience. Three values underpin the Vodacom Way: 

Over 3 000 employees have attended the Vodacom Way programme to date in South Africa. An enhanced programme will be run in all our other markets over the next year. The Vodafone Hub was launched in Vodacom in March 2013, which will provide information related to the Vodacom Way, values and behaviours regularly. The Vodacom Way employee peer review has been incorporated into Performance Dialogue reviews.

Human capital report continued

We have a number of programmes that aim to create a culture within Vodacom of recognising performance, as well as motivating and coaching employees to perform above and beyond expectations. We look to encourage not only individual performance, but to maximise effective teamwork.

We recognise that reward has a direct impact on employee behaviour and performance, company culture and ultimately the sustainability of the Group.

On-the-Spot Awards

Any employee, supervisor or manager can nominate individuals or teams that deliver extraordinary operational performance, quality of work and/or customer care. Awards can be either cash or non-monetary, to be presented to individuals or team members as a form of immediate recognition.

Vodacom Excellence

Any person in a supervisory or management position can nominate an individual for Vodacom Excellence. The Chief Human Resources Officer reviews all the nominations on a monthly basis and selects a monthly winner which is congratulated at a quarterly breakfast with Group Executive Committee, and also attends the annual incentive trip that incorporates a learning programme.

Vodacom annual CEO Awards

Individuals and teams who show extraordinary and true customer obsession as well as an innovative spirit qualify to be nominated for the Vodacom Annual CEO Award. Monthly Vodacom Excellence 

1Firstly, we need to trust that each of us is accountable and responsible for delivering on our vision.

2We then have to

simplify our business by questioning our

policies and processes and getting rid of those

that aren’t working.

3 Once that’s done, speed will follow.

Drive a high performance culture6

7

Vodacom Group Limited Integrated report for the year ended 31 March ’13

winners together with new and additional nominations are considered for the Vodacom Annual CEO Award. Individuals or teams can nominate themselves; can be nominated by other employees or by line managers and the individuals selected will be recognised by the CEO at an award event.

Performance Dialogue

We encourage all our managers to have regular performance discussions with their people. Annual performance discussions, which are compulsory, help employees define their goals, track their performance and assess their behaviour against the Vodacom Way. The improvement in performance discussions has had a positive impact on the business by aligning employee goals not only to short-term financial targets, but also to our five strategic priorities and the Vodacom Way. Whereas managers assess employee performance, a calibration process across different business units makes sure that the rating process is fair and truly recognises individual performance aligned to business performance.

Staff retention is imperative to sustain consistency and business continuity. In the year we celebrated a substantial segment of our workforce that reached five years (645), 10 years (219) and 15 years (73) service milestone with the Company.

Reward and benefits

A pay analysis was conducted for the year ending 31 March 2012, which analysed average annual salaries per level, race and gender. The results revealed that our reward pay ranges cohere with current national benchmarking surveys and our policies and practices are fair and equitable in terms of racial or gender classifications. Our minimum pay has also been increased to R130 000 per annum, which is significantly higher than other companies in our sector.

The Group Reward division regularly analyses remuneration across business units, per race and gender groups. Any perceived individual pay discrepancies are escalated to Human Resources and line management to be addressed where appropriate. This year’s results were positive, with Vodacom being aligned to the requirements.

Benefits

Every April, employees are given the option to review their death benefits and increase their cover up to seven times their annual pensionable salary, based on the individual’s financial needs and circumstances. The core death benefits payable from both the pension fund and the Group life scheme is three times an employee’s pensionable earnings.

The rules of the Vodacom Funeral Scheme allow for employees to join the scheme within the first three months of employment with Vodacom.