PRESENTATION TO THE SELECT COMMITTEE ON LABOUR AND PUBLIC ENTERPRISES ON THE COMPENSATION FUND

TURN-AROUND STRATEGY

INTRODUCTION

• CF’s performance for a number of years has not been at a level where we can confidently pronounce that we are achieving constitutional mandate, in so far as services to our clients and stakeholders are concerned.

• CF continued to experience serious challenges around human resource capacity and systems compatibility with the kind of services it delivers.

• For example, the Auditor-General has already found that some employees do not possess the necessary skills in critical areas such as finance to the extent that service providers with accounting expertise had to be contracted to provide additional capacity.

• This state of affairs has resulted in instances where it has taken a long time for medical service providers to be paid for services rendered to employees who were injured on duty or contracted diseases.

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•The DG appointed a Task Team consisting of Mr S Govender as a Project Leader to develop the terms of reference for the turn-around strategy.

•The DG is the sponsor of the project.

•The Task Team started its work in December 2012 to co-ordinate the development of the specifications for the Compensation Fund turn-around strategy.

Specific objectives - summary

Investigate and audit all allegations as reported by the Public Protector, SCOPA and Portfolio Committee for Labour.  Investigate and audit findings by the Auditor General  Perform audit tests, audit trails on data and all systems for accuracy, completeness and the implications thereof on the CF. Test procedures for detective and prevention of risk and fraud

controls against policy and procedures of the CF. Determine the application of the funds received by the CF, to identify irregular and unauthorised expenditure that does not serve the objectives of the CF.

Scope of Work

Specific objectives - summary

To implement a remedial plan to address

governance, controls and administration

relating to:-

1. AG queries (126 queries raised)

2. Public Protector Report

3. SCOPA’s Concerns

4. Portfolio Committee of Labour

Terms of reference

3.1 Components of turnaround strategy

3.1.1Managing the turnaround

The enabling components to manage the turnaround are turnaround leadership, stakeholder management, and turnaround project management.

3.1.2Stabilising the business and the financial management

The CF needs to be stabilized to ensure the short-term future of the business, introducing predictability and ensuring legal and fiduciary compliance (PFMA).

3.1.3 Fixing the distressed Compensation Fund

The underperforming or distressed public entity needs to be fixed in strategic, organisational and operational terms.

 3.1.4 Devise and Implement a Remedial Plan to remedy the interim crisis :-(Business unusual plan of action)

Identify the root cause or contributory factors to the issues and weaknesses identified in the business process

Perform Root Cause Analysis on finance, fraud and risk administration and management

Perform an diagnostic review of people and systems to identify weaknesses to establish controls

Develop mitigating action plan aimed to resolving, eliminating, or minimising the incidence of the identified issues, weakness and lack of controls

Develop, design and implement the turnaround plan for the CF (Future model for the CF):-

Diagnostic of the alignment of the strategic objectives of the CF against its shareholders mandate and objectives

Perform a legal review with the aim enhance service delivery. The legal review must be included in the turnaround plan.

Develop and implement a change management program addressing all elements of the program

Map and design Business Process for the Fund which includes both business processes for core and support functions of the CF

Provide best practice benchmark study to the CF Develop, Review and Update Governance Policy and

Procedures as may be required Facilitate the turnaround leadership Develop, design and implement the turnaround

approach and plan for the CF Implement the turnaround plan for the CF

People

• Review Employment Contracts, Score Cards and Performance management, and redefine these as may be necessary

• Develop appropriate organisational structure • Develop job descriptions covering posts in the revised

organisational structure• Perform a complete skills audit across all levels of staff and

evaluate current skills against the skills required to perform the job requirements

• Evaluate suitability of current staff and perform a best fit placement of staff into positions where they are best trained and able to perform in accordance with the organisation’s goals.

• Manage the implementation of the new Human resource organisational structure in accordance with best HR practice

Business Processes and Systems

•Review, Map, Optimise and Define all Business Processes across the entire value chain•Review, Map, Optimise and Define all Systems Processes to close the gaps in governance and controls across the entire value chain •Develop mitigation strategies for work segmentation, Risks and Controls• Develop segmented workflows to optimise employee load balancing and turnaround times on tasks and service delivery elements•Business systems and architecture review and make recommendations for optimisation •Review, design and implement business intelligent information reports and advise a business specification to implement BI•Develop Dashboards and Radars to facilitate good and timeous management information to feed into effective management processes

Project Office

Establishment of a Project Office to manage projects relating to the scope of work and delivery of the turnaround plan and to co-ordinate activities of the remedial and turnaround implementation plan at a location determined by the Director General of Labour.

Resource the project office with resources to manage both the remedial and modernisation of the CF.

Actuarial and Audit Professional Services (remedial plan)

An analysis of the Compensation Fund conducted provides for the estimation of ± 600 000 claims that has remained unpaid for a number of years.

The objective of the assignment is to conduct an actuarial valuation to determine the value of these claims as well as the impact thereof on the financial reserves of the Fund.

A comprehensive valuation report highlighting the work carried out, the methodology used and the findings and recommendations arising from the valuation should be produced.

The audit is an essential component of the diagnostic study which aims to assess the finance capacity of the C F.

DG met with Board, Audit committee and executive management on the 8th February 2013.

DG met with Unions representatives on the 9th February 2013.

DG had a general  CF staff meeting on the 11th February 2013.

PROGRESS: CONSULTATION

Finalised the scope of work specifications and prepare for tender on the 15th February 2013.

Terms of Reference presented to the Bid Specification Committee on the 19th February 2013.

Presentation to the BAC on the 20th February 2013.

Tenders issued on the 2nd March 2013.

Briefing session with Bidders held on the 12th March 2013.

Evaluation of tenders was finalised.

PROGRESS: PROCUREMENT PROCESS

WAYFORWARD

• Bid Adjudication Committee to adjudicate on the two tenders.

• Contract to be finalised with the successful bidders.

OTHER INITIATIVES UNDERTAKEN BY THE FUND TO IMPROVE ITS

PERFORMANCE

Pilot Project of the Rand Mutual Association Processing System• The Fund intends to achieve its through a system which is will enable

it to deliver on its mandate. In the RMA system which is based on the mandate of COIDA has tried and tested and was found to be 90% compatible with the business of the Fund.

• The business operating model and business processes that are also compatible to the Fund’s business objectives.

• However, before the RMA system could be adopted, the Minister approved that a pilot project be conducted.

• It must also be noted that RMA is operating under the licence of COIDA

Pilot Project of the Rand Mutual Association Processing System (Cont)Benefits of RMA System 

•Improve the turnaround time of processing payments and debt collection through flexible channels.•Reduce the paper through electronic submission.•Eliminate manual reconciliations.•Facilitate accurate and compliant monthly reporting.•Provide integrated assessment and claims management.•Improve process management and controls.•Enable Outcome oriented Management rather than People management.

Implementation of the New Organisational Structure• Following the approval of the new organisational structure, a

Placement Panel comprising representatives of organised labour and the employer was established to oversee the migration of employees.

• The new organisational structure was also successfully implemented on the PERSAL system.

• In addition, all the newly created posts (such as the Chief of Operations, posts in the Finance and Supply Chain Management and Medical Specialist Occupations for all the provinces) have been advertised.

• This approach would ensure that these critical posts are filled before the end of the year as they would play an important role in the newly reconfigured Compensation Fund.

Decentralisation of COIDA Functions

• In line with endeavours to provide improved services to our clients and stakeholders, the CF has undertaken a decentralisation of its functions to provinces and centres.

• This decentralisation initiative has resulted in a situation where a new organisational structure which specific focuses on the provision of services at lower level being designed.

• In terms of the new organisational structure, the majority of posts and functions would be devolved to service delivery points.

• In addition, task teams have been established, among others, to outline the modalities of the decentralisation of functions, assess office accommodation needs in provinces and labour centres and preparations for the redeployment of employees and equipment.

Backlog Project• In February 2013, the Fund implemented a project to address backlogs

relating to claims registration, adjudication, quality control, legal reviews and PTSD. Thus far the backlog project has yielded the following results:

 

• In February 2013 there were 240 000 unregistered new claims.  All these claims were registered and on 30 April there were only 1 609 new claims which remained unregistered.  Since May all new claims received were registered on the same day.  The benefits of this process is that clients are able to view claim numbers on the website and thus submit all supporting documents, quoting the correct claim number;

• The Fund is now in a better position to determine liability (adjudicate) on all these new claims and communicate the outcome to clients; and

• On the Legal reviews and PTSD backlog, the results were that claims could be processed and placed on the court roll (until November 2013) and responses finalised on the long outstanding PTSD claims. 

Call Centre Upgrade• Fund is upgrading and deploying new technology to enable

Customer Care Staff to Deliver quality service and provide first call resolution.

 

Benefit

 • Walk-in Centre Customer/Queuing Management System.• Improved working environment - tools of work (headsets, call

logging, customer info updates, customer verification, call recording.

• Accurate Call Recording (voice and screen capture).• Customer Satisfaction Survey capabilities.

Legislative Amendments

• In order to improve service delivery, the Fund is currently amending the current legislation.

• It is envisaged that the draft bill will be available for public comments by the second quarter of 2012/13 financial year.

RoE website

• The Fund implemented the RoE website in 2012 to allow employers to register on-line.

• For the period until the end of March 2013 94,302 online submissions were received with total revenue of R3,3 billion.

• In the last two months when the 2012 submissions were opened for submission we have received 82,870 submissions with total revenue of R3,4 billion.

• R8.10 billion was invoiced by the end of 2012/13 financial year

against a target of R5.6bn

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THANK YOU