Codes of practice: the implications for job advancement

The various codes of practice proposed and applied as guide lines regarding employee rights in South Africa are discussed. There are three groups of codes: codes developed by com panies, 'internal codes' developed by other South African organizations such as SACCOLA and TUCSA, and 'external codes' imposed on South African employers from abroad, like the Sullivan principles. While all codes aim at removing discrimination in the work place, local codes focus mainly on economic and some social aspects, and external codes have a stronger political intent. Many problems still exist with the measuring and monitoring of the implementation of these employment codes, sometimes done in-company, sometimes by independent external organizations. Generally trade unions support the codes, some seeing codes as a tool to increase union recognition and power. The codes, however, also have some dysfunctional aspects, because they can shift the focus and priority away from education and training, the all important factor in Black advancement.

The various codes of practice proposed and applied as guidelines regarding employee rights in South Africa are discussed. There are three groups of codes: codes developed by companies, 'internal codes' developed by other South African organizations such as SACCOLA and TUCSA, and 'external codes' imposed on South African employers from abroad, like the Sullivan principles. While all codes aim at removing discrimination in the work place, local codes focus mainly on economic and some social aspects, and external codes have a stronger political intent. Many problems still exist with the measuring and monitoring of the implementation of these employment codes, sometimes done in-company, sometimes by independent external organizations. Generally trade unions support the codes, some seeing codes as a tool to increase union recognition and power. The codes, however, also have some dysfunctional aspects, because they can shift the focus and priority away from education and training, the allimportant factor in Black advancement.

Introduction
The term 'code of practice' is a misnomer -in many cases they are guidelines or principles. However, in all cases they deal with employee rights. Not one code I have read mentions employer rights. I wonder if a more suitable title may not be 'A Code of Employee Rights'. There are to my knowledge approximately 16 codes of practice around in South Africa -there may be more. In the mid-seventies, it seemed a new profession had arisen -professional code writer. It is interesting to note all the overseas codes are aimed at one small area on the global map, namely South Africa. One could deduce from this that everywhere else in the world is rosy -only South Africa has labour problems that require a code. It is true to say that many of the countries from which these codes originate would not stand in a very good light if the focus were turned inwards to measure their own progress. One shudder~ to consider the results of monitoring the codes in many third world countries. This is not an introduction to a premise that everything in the garden is rosy in South Africa -far from it. There is widespread discriminatory practice in the work place, and it is not all based on race. Any realistic survey would also give evidence of general discrimination against women. It can be argued that is is an inditement on South African managers in commerce and industry that codes had to be written at all. The track records of many companies show very little to be proud of. Frequently we have heard the statement 'Ah yes, but the government will not allow us to do that' -a nice excuse for wanting to do nothing.

Codes In general
We must not run away with the idea that all the codes are the same -they are not. They can be broken down into basically three groups, namely external, internal and company codes.
Company codes: One is tempted to think that codes of practice originated with the principles of the Rev. Leon Sullivan. This probably arises through his association with civil rights issues over the last two decades. In fact the endorsement of the Sullivan principles by US firms with affiliates in the Republic of South Africa was as recent as March 1977. Long before this, and certainly by the early 70s, a number of leading South African com-panies had instituted 'codes'. They were not called that -thus they missed the accolade of originator. Look back at the chairmen's statements in the annual reports of a number of large South African companies, and you will see statements regarding their employment practices figuring prominently -SA Breweries, Anglo Vaal, Barlow Rand, Anglo American, to name only the larger ones. Similar statements can also be found in a number of overseas affiliated companies.
Internal codes: In December 1976, the President of the Cape Chamber of Commerce invited all members to join in a programme of total and genuine non-discrimination against their employees. Although taking the form of a manifesto, it was the earliest non-company South African code. In December 1977, the Urban Foundation/ SACCOLA code was published. Two other major South African codes are the TUCSA Code of Conduct and the South African Council of Churches code.
S.-Afr. Tydskr. Bedryfsl. 1981, 12(4) this statement: 2 'It is important that there be a clear understanding that my main objective which, briefly, is · ,the end to apartheid in South Africa. My reason for involvement in the South African situation is a moral one, and one that l have the responsibility to address as a clergyman. The inhumane effect of that system on Blacks, I believe, cannot and should not be tolerated and must be attacked by persons and organizations from all walks of life and from all parts of the globe'. Later in his statement, he indicates how he first announced his intention: 'Therefore, fully conscious of the odds against succeeding, I made the announcement one Sunday morning to members of my congregation in Philadelphia of the attempt I was about to initiate and asked for their support and their prayers. I have urged them (the signatories) to take a stand against all forms of racial discrimination and to lobby for an end to the apartheid system itself. I still have hopes that the Principles, and their vigorous implementation, can serve as a major External codes: As previously indicated, the Sullivan step in a growing world effort to bring an end to racial principles were launched in March 1977. This appeared to discrimination and the apartheid system.' unleash a virtual barrage of codes -the British Com-It would appear from these statements that the major pany Guidelines, the European Economic Community intent is political with economic and social aspects as Code of Conduct, the Canadian Government Code of secondary. Conduct. Suddenly everyone was 'in on the code act'.
The other North American code 'Code of Conduct In general, the internal and external codes covered concerning the Employment Practices of Canadian Comeight major areas, namely desegregation, employment panies Operating in South Africa', studiously avoids in practices, remuneration, training, development, social its preamble any reference to systems other than the responsibility, trade unions and migratory labour. for Trade, to a question asked in the House by Mr be a good or bad thing, depending on your point of view, George Rodgers, Mr Smith referred essentially to but generally things which are not quantified or quan-economic issues in the reports submitted. 5 However, he tifiable are not measurable. This has led to a number of did refer in a number of places to the inability of comwriters indicating the codes are little other than a pious panies to meet certain requirements under present South hope or philanthropic ideal.
African legislation.

What Is the Intent of the codes?
The time is opportune to ask ourselves what the intent of the writers of the codes was. Here I am treading on dangerous ground, trying to visualize the intent without having the inner sight from the sanctum where they were drawn up. --"> I think it fair to say that the business codes relate to removing all discriminatory practices in the work place. _;;, To select, promote and reward on merit and ability. The Cape Chamber of Commerce, the Urban Foundation and TUCSA codes seem to my mind to follow a similar intent that is primarily economic with some social aspects. It is when we get to the external codes that things get a little 'hairy'. It is difficult to distinguish between the political, social and economic intent. Very little has been written, with the exception of Rev. Leon Sullivan, on how the codes were formulated. In the case of the Sullivan principles we have the Rev. Leon Sullivan's statement of purpose to give us some insight. Taking a few quotes from It is probably fair to say the hidden hand of Commerce and Industry has played a part in many overseas codes, in keeping these codes primarily orientated to economic factors. According to Schmidt,6 even the Sullivan Principles, which from Sullivan's statement, appear to have strong political connotations, were turned down in the final draft. Schmidt states the initial draft read: 'Where the implementation requires a modification of existing South African laws and customs, we will seek modification through appropriate channels'. The final draft deleted 'changing laws and customs' and spoke only of modifying 'working conditions'.
This realism of attention to economic factors was further substantiated by the South African Ambassador to the United States, Donald Sole, when he told Princeton University's Forerunner magazine: 'I do not think they (American Corporations) will play any role in what you refer to as "elimination of apartheid", ... they cannot play any role whatsoever in the institution of Black majority rule, ... ' Thus it would appear the intent of the majority of codes is for improvement in practices in the economic sector with some attention to social aspects.
porations employ only one percent of the total black labour force -approximately 70 000 workers out of a black population of 18,6 million. The 12 largest companies, accounting for three-quarters of American capital in South Africa, are highly capital intensive, they maintain a ratio of capital to employees that is five times the overall average of companies in South Africa.
It may appear in this discussion, I have given undue weight to the Sullivan Principles. If this is so now or during the remainder of this paper, it is because far more has been published on this 'code'. To put it in its true perspective, however, we must remember American cor- Comparison of eight major codes in terms of eight considerations Recognition and active encouragement of trade unions.
No migrant labour unless married accommodation provided.
Accelerate the creation of employment opportunities at wage ra1es to maintain visible living standards.
Recognition of basic rights of workers: freedom of association, col-lec1ive negotiation, lawful strikes and protection agains1 victimization.
Pro,,ide job oppor-To promo1e sound 1unitie,;; 10 facili1a1e relatiom be1ween mm,ement of Blacks employees or all in10 semi-,;;killed and races on 1he one skilled po5ilions. In-hand, and managelroduce Blacks 10 su-meni on the mher. per\·isory positions in the interests of on an accelera1ed ba-building a sound sis rather than re-economy. cruiting expatriate personnel.
Encourage co·mpanies to as'iist in providing medical and health fadlities for workers and families, transportation 10 and from work. adequate housing, education for children. legal assistance, unemployment insurance.
Companies to ensure employees free 10 organize collecti,·e bargaining units. Extend customary bask rights to such bargaining units.
Actively to press employers and Government to recognize the right of the African to the same trade union and collec1ive bargaining righ1s as are presently enjoyed by 01her workers, and to insist that 1he en· terprise committee system can never be a substi1u1e for genuine trade unionism. To en· courage and assist African workers in 1heir own indus1ries to organize 1hen1· selves into a trade union, pending 1he time when African workers will be permitted to become members of registered unions.

Measuring and monitoring the codes
We have indicated that a number of the internal and external codes are more guidelines or principles than codes. It is in the monitoring of these guidelines or principles that they become quantified codes. None of the codes currently carry legal penalties for non-compliance. The pressure is brought to bear where grading systems are used or some form of categorization appears. Being graded as making poor progress or categorized as paying wages well below the MLL has a social stigma attached to it and provides ammunition for voiciferous interest groups. The chairman of an overseas company with a rating of other than the very best is sure of a lively shareholders' meeting with minority shareholders demanding disinvestment in South Africa.
The business codes are extensively monitored incompany, with the chief executive usually receiving an annual report on the progress of companies within the group on agreed objectives. Frequently the group personnel function operates as a monitoring agency.
The internal codes are not currently monitored. The Urban Foundation/SACCOLA code has made an initial attempt to design a monitoring format and questionnaire. This was tried out in a pilot study and, it is understood, modified in the light of the feedback obtained. Professor Blackie Swart, Institute of Labour Relations, UNISA, stated at an NDMF seminar in March ,_/1979, that the Institute had been approached to act as the monitoring agency for SACCO LA. 7 They had designed a model for this purpose which had led to two aspects being considered in the monitoring: the intention of management present employment practices.
Thus the SACCOLA monitoring system will have both quantitative and qualitative aspects. One can imagine the difficulties that are entailed in designing a questionnaire that will be acceptable to the majority of South African companies. One thing is certain, when the SACCOLA system becomes operative it will not only supply us with information on the progress of the code which covers the vast majority of South African employees, but will also supply information to counter-act the overseas detractors to the genuine progress currently being made in job advancement and other areas of the code. TUCSA has indicated it intends to monitor its code, but no formal monitoring system has become apparent at this stage. Reports by the 52 registered trade unions and seven unregistered trade unions covering 252 734 individual members is one possible monitoring system which may arise. signatories are required to complete semi-annual compliance reports. The comprehensive questionnaires, dealing with each of the six principles, are formally assessed by Arthur D. Little. Arthur D. Little, a prestigious management consulting firm, acts as an independent monitoring agency and submits a comprehensive report to Rev. Leon Sullivan. The report grades companies into categories of achievement or progress. A number of other agencies and interests groups based in the United States have attempted to get in on the monitoring scene. While they have created a degree of harassment to parent companies and affiliate management, they appear to have made little progress as effective monitoring agencies to date.
Some affiliates of overseas companies have gone a stage further than the basic monitoring processes. Shell was among the first of these by employing a South African university to carry out a Social Audit of its programmes. A more recent audit was carried out by the Institute of Race Relations on Ford's compliance with the Sullivan principles.
This form of auditing can increase the credibility of the companies' programmes both externally and internally. It can also indicate to the company areas where it is not making the impact or progress it believes it is making. It can also produce results which reflect on the credibility and competence of the auditing agency. We may see an increase in this form of independent auditing as companies look for increased credibility in implementing codes. However, there are very few independent organizations in South Africa with the necessary in-depth knowledge of business to produce really meaningful reports for management action.
The 'pros and cons' of monitoring can lead to endless debate. In some cases the monitoring can become so complex that the utilization of scarce management resources becomes counter-productive. It becomes something like the tax payers' dilemma: 'How do I beat the systemgain most, pay least?' One senior manager heavily involved in the monitoring process said to me: 'At least the codes have taught us how to measure the effectiveness of our job advancement programmes'.

The unions and the codes
In general the trade unions support the codes, particularly those that specifically require recognition of trade unions, rights of employees to join them and collective bargaining. As we have already noted the German trade unions play an important role in the monitoring process.
With their system of worker-elected directors on the boards of large companies, they have a significant say in policy, which includes the operation of affiliates in relationship to the EEC code .
TUCSA has not only provided its own code but in its 1979/80 directory, stated its support. 7 'As such TU CSA welcomes these codes of practice. They embody much of that for which we have been consistently campaigning for many years.' Some unions appear to consider that the prime reasons to being of the codes, is to promote trade unions. The Federation of South African Trade Unions (FOSA TU) states: 8 'All codes must be measured against the yardstick of whether they have promoted union recognition'. In the same article FOSA TU claims that employers have painted a distorted picture of the progress they have made in relation to the codes.
The AFL-CIO has stated its support of the Sullivan Principles. The ILO has also agreed that the overseas codes are a step in the right direction, although they appear to see them as an implement for political as well as economic and social changes. They have been fairly critical of the major South African code, the Urban Foundation/SACCOLA code, indicating that they consider it a watered down version of the overseas codes with very little teeth.
Dysfunctional aspects of the codes Thus far we have looked at the codes of practice and related aspects in some detail. It is necessary to state my perception of these matters, before I can give you my views on their implication for Black advancement. I must stress that what follows is my personal view, based on approximately six years of experience in the specific field of job advancement with a major emphasis on the black worker. · , My major premise is that the codes are dysfunctional in a number of areas -one of which is Black advancement. My argument is that where a company is measured by either an external or an internal code, (I specifically exclude company codes) the company will define some aspects of its strategy in relation to the monitoring system. Public opinion, activities of pressure groups, etc. will ensure this. Companies will strive for a favourable rating, assessment or other mark of progress. I have tried to show in Table 2 a comparison of priorities between the codes of practice, black worker needs and the needs of the South African economy. I am sure there are people who will disagree with my ranking. However, I am even more sure that, if each of you were to draw up a comparison based on your personal view, you would not end up with three tables in the same rank -order. The point is that different interest groups have different priorities, and expect different outcomes from the implementation of codes of practice.
I argue that a company's major priority in relation to a code will be a favourable rating, or put in another way, it will strive to avoid an unfavourable rating. If you do not agree, I can assure you, when the latest ratings were released in the USA by Arthur D. Little on the Sullivan Principles, there was a long queue of companies who had not made category I, hammering on the door to query their ratings.
To achieve a favourable rating, companies will in general look for high visibility programmes. These will achieve favourable media coverage, for example YZ Company spends R2 million on racially integrated facilities. This has an impact on public opinion, pressure groups, shareholders, etc. Thus I have ranked the priorities in the light of this. Pay and Training and Development are not at the top of the ranking. Pay is a high visibility item where it is low. Training and development is frequently a long-term concept, and its visibility is thus muted. Returning to pay, this can be extremely dysfunctional. Let us take a very simple example. Assume a company can afford a RI 000 a week wage bill and it has ten employees, on average each employee will earn RIOO. Now assume further that RlOO is the Minimum Living Level and you are locked into a code that requires you pay 500'/o above the MLL. Unless you can increase your wage bill, and this has been very difficult if not impossible during the recent recession, a simple division shows that you reduce your work force by 400'/o. I realize it is not quite as simple as this example, but all increases in wages have to be paid for somewhere, unless there is a corresponding increase in productivity. In general there has been no marked increase in productivityif anything it is falling, in relation to wage increases over the past three years. There can be little doubt that over the past three years companies have looked very carefully before employing or replacing workers and it is my argument that where they are locked into pay/code percentages, they will tend to reduce or not replace head counts. A further strong possibility is a move from labour intensive operations, with escalating wage bills, to capital intensive operations. Not exactly desirable if you consider unemployment figures among black workers.
One of South Africa's dilemmas is a significant shortage in many work categories, and yet at the same time extensive unemployment in the black potential work force. Now is not the time to argue why this situation has arisen, but it is a fact. In general, the black workers are ill-equipped to meet our manpower shortages. They have neither the knowledge nor the skill to fill the thousands of vacancies existing today. In the mining industry, with a booming gold price, gold output is restricted by man-  power shortages. While there are a number of variables in the solution to this problem, certainly one of the major ones is a massive investment in training and developing all race groups, with specific emphasis on the black worker. Yet most codes are fairly vague on objectives in this critical area and a monitoring system based on annual progress is hardly conducive to the long-term effort required in training much of our work force. For example, any investment in training a skilled person will not show any output before 22 months at the minimum, and generally in 4-5 years. I am not saying that companies who are signatories to codes are not investing in training -they are -in some cases 100 OOO's ofrands. But, I am saying they are also investing scarce financial and other resources in a variety of other areas, dictated by the codes. I believe if more of these funds were channelled into training and development to increase our labour productivity which would increase our growth, in turn creating more job opportunities, then this cycle would generate the funds to deal with the other areas of the codes which, however important, are peripheral to the core problem of a growing economy. I therefore submit that the codes are dysfunctional to job advancement, particularly with respect to the black worker, considering what is currently being achieved and what could be achieved.
In conclusion I think there is no better picture than the figures produced by Prof. Sadie. 9 (See Table 3.) In the figures, he shows that the ratio of socio-economic groups is 42: 1. In the United States it is 6: 1; most advanced countries are somewhere between 10 -15: I. I do not know what ratio is ideal for South Africa. I do know it is not 42: 1. We have to get that ratio down and that means advancing workers through the various levels. The ratio will not be improved by desegregation, recognizing a black union or the like, and if we do not get the ratio right and fairly quickly, codes of practice and monitoring them will be the least of our problems.