To employ or not to employ?
That is the decision employers must make and ARMS is here to assist…
The South African economy is not dead – in fact, it has fared better than expected in the wake of the corona virus pandemic. Admittedly, some industries have suffered greatly, but it is encouraging to note that other industries such as the agriculture and mining industry have boomed.
In this discussion we review why employers can be encouraged by positive trends in the economy, and why it behooves employers to invest in comprehensive recruitment processes. Even if recruitment is not yet an option, employers are reminded that background checks on their employees could, and should, be part of their standard operating procedures to prevent avoidable loss.
Positive Economic Factors
Wasserman reported that there are five encouraging signs that the South African economy is not without hope. The first is that recent tax income has remained strong due to the increase in mining and corporate tax. Diesel prices have also returned to normal and Wasserman reports that this is due to the unexpectedly positive contribution made by the “underestimated” agricultural sector. Stephan Engelbrecht, fund manager at Anchor Capital, stated that: “The local consumer appears to have navigated the crisis far better than many had anticipated”. Therefore, resilient consumer spending and a record export year were also credited with the surprising performance of the South African economy.
Recruitment
Wasserman reported that educated individuals, especially young people, with at least matric, drove the employment recovery and agriculture, manufacturing, and trade all bounced back to beyond pre-pandemic levels. This means that many companies appointed professionals during this time. These employees were probably appointed in positions of trust.
Risk
There is, however, always risks associated with appointing employees in positions of trust. Employees may gain access to confidential information, trade secrets or even finances which they may use to the business’ detriment.
Employees could also act contrary to your corporate culture and, if they have a bad attitude in the workplace you may need to take difficult steps to manage their behaviour.
Thirdly, appointing foreign employees without having proof of their valid visas would also create liability for the Employer as they need to exercise due diligence in their appointment of foreign nationals. A failure to do so may result in hefty fines or even imprisonment.
The cost of the damage to a business’ reputation after an employee has brought its name into disrepute with unacceptable behaviour (i.e. discriminatory, xenophobic remarks etc.) can also be astronomical and should also be avoided where possible.
Lastly, unknowingly appointing employees who have a record of theft without conducting a background check on them could be a very costly mistake.
In Ownership and Control, Cant and Nell evaluate the cost of employee theft in South Africa. They found that theft typically comes to the fore as a result of the economic crises prevailing and that it is a known fact that as economic hardships increase the occurrence and likelihood of theft in the workplace because people look at other ways and means to supplement their declining income.
Cant and Nell stated that shrinkage as a result of theft by employees is a serious problem that results in a loss of profit as well as additional costs such as legal expenses, loss of productivity, expensive security measures, product replacements, increased insurance, loss of trained staff and the expense of retraining new staff in the case of conviction of dishonest employees. The cost of employee theft is enormous and it has a definite and detrimental impact on business activities.
Remedy
Luckily, ARMS is launching our new service of facilitating background checks on potential candidates or employees behalf of our members. These background checks can detect adverse financial histories of employees (who may be appointed in management positions), criminal background checks, employment history checks, fraud listing, identity checks (i.e. for foreign nationals), qualifications checks etcetera. We can even facilitate checks on social media accounts to ensure that employees who pose a risk to the reputation of the employer are vetted carefully.
Please contact us
If you are interested in this new service, please do not hesitate to contact us at 021 591 5400 or send us an email at admin@arms.capetown.
References: Cant, M. C., & Nell, E. C. (2012). Employee theft in the South African retail industry: Killing the goose that lays the golden egg? Corporate Ownership & Control, 10(1-4), 444-54. https://doi.org/10.22495/cocv10i1c4art5
Wasserman H (2021) 5 signs that SA economy isn’t dead yet – in fact it’s doing better than expected. Business Insider: South Africa https://www.businessinsider.co.za/signs-of-life-in-south-african-economy-2021-2
