Questions 1.1 is based on the following case study:
Zonke Engineering Systems
Zonke Engineering Systems designs, builds, and operates standardised, coal-fired utility plants in
Sasolburg in the Free State. These small generating plans (35 megawatts and 55 megawatts) are
built adjacent to an industrial plant that utilises steam in its operations. Zonke sells the steam to the
industrial plant and electricity to the local utility, Eskom. Under South African regulations, Eskom is
required to purchase this independently produced power if it is cost-competitive.
Garret Levinson founded the company four years ago, and firmly believes that the future of
electric generation in South Africa would depend upon coal as the primary fuel and standardisation
as a method of cost control and efficiency. This new technology, known as “cogeneration”, is rapidly
coming of age as many companies turn to these systems to cut energy costs. Zonke’s very efficient
plans have allowed it to pursue a low-cost leadership business strategy.
Thandi Mabula, the human resource management director, developed benefit packages for both
corporate and plant personnel, an employee handbook, job descriptions, a salary programme, a
supervisor’s manual, and other basic personnel policies. In less than three years, the company built
five plants. Over a few years, the size of the workforce grew from 5 to 39 people at corporate
headquarters, and from 0 to 183 employees in the plants. These employees are from various race
groups, with the employee demographics ranging from employees of different ages, with different
needs pertaining to employee benefits.
Most of Zonke’s employees belong to The National Union of Metal Workers of South Africa
(NUMSA). Zonke and NUMSA have a collective bargaining agreement in terms of the pay levels,
and NUMSA ensured that the aspects of performance evaluation, grievance procedures and
administrative processes are specifically addressed in the collective bargaining agreement with
Zonke. NUMSA is still in the process of negotiating transport allowances for all the employees.
Zonke faced a dilemma regarding determining benefits and salaries for its employees. Although
the salaries are competitive, they are not as high as to attract workers from Zonke’s “customers” –
its industrial hosts and the local utility, Eskom. The pay and grade structures of Zonke do not
compare with the market rates of competitors yet. The grades and pay levels were determined by
the different values of each job, at each level. They are not discriminatory in terms of age, race,
gender or religion. Exhibit 1.1 reflects the pay and grade structure at Zonke.
Exhibit 1.1: Pay and grade structure
Paterson Grade Minimum Midpoint Maximum
(R’000) (R’000) (R’000)
A 34 905 53 695 68 543
B 77 722 82 016 163 387
C 152 039 209 826 293 818
, D 292 366 415 379 900 159
E 881 028 1 103 345 1 452 702
F 1 452 858 3 521 191 5 650 799
QUESTION 1
1.1 Based on the remuneration information of Zonke Engineering Systems (Exhibit 1.1),
do the following calculations:
(a) The range spread for positions in the C grade [5 marks]. Based on the calculation,
identify the type of position this could be classified as [1 mark] and your
observation regarding positions in the C grade [2 marks]. (8)
𝑴𝒂𝒙𝒊𝒎𝒖𝒎 𝑺𝒂𝒍𝒂𝒓𝒚 − 𝑴𝒊𝒏𝒊𝒎𝒖𝒎 𝑺𝒂𝒍𝒂𝒓𝒚
𝑹𝒂𝒏𝒈𝒆 𝑺𝒑𝒓𝒆𝒂𝒅 =
𝑴𝒊𝒏𝒊𝒎𝒖𝒎 𝑺𝒂𝒍𝒂𝒓𝒚
𝟐𝟗𝟑 𝟖𝟏𝟖 − 𝟏𝟓𝟐 𝟎𝟑𝟗
=
𝟏𝟓𝟐 𝟎𝟑𝟗
𝟐𝟏𝟒𝟏 𝟕𝟕𝟗
= = 𝟎. 𝟗𝟑 𝒙 𝟏𝟎𝟎 = 𝟗𝟑%
𝟏𝟓𝟐 𝟎𝟑𝟗
The range spread is the difference between the maximum and minimum salary in the
salary range. It is calculated as a percentage. The type of position that C grade could
be classified as is the Higher level managerial, executive and expert technical. This is
because typical range spreads in South Africa that range 60% and over are in that
category.
(b) The compa-ratio for the CEO position [3 marks]. Discuss your observations
regarding the calculated compa-ratio [2 marks]. (5)
𝑬𝒎𝒑𝒍𝒐𝒚𝒆𝒆 𝑺𝒂𝒍𝒂𝒓𝒚
𝑪𝒐𝒎𝒑𝒂 𝑹𝒂𝒕𝒊𝒐 = 𝒙 𝟏𝟎𝟎
𝑴𝒊𝒅𝒑𝒐𝒊𝒏𝒕 (𝒎𝒂𝒓𝒌𝒆𝒕 𝒓𝒆𝒇𝒆𝒓𝒆𝒏𝒄𝒆 𝒔𝒂𝒍𝒂𝒓𝒚
𝟑 𝟐𝟓𝟎 𝟎𝟎𝟎
= 𝒙 𝟏𝟎𝟎 = 𝟗𝟐%
𝟑 𝟓𝟐𝟏 𝟏𝟗𝟏
Zonke Engineering Systems
Zonke Engineering Systems designs, builds, and operates standardised, coal-fired utility plants in
Sasolburg in the Free State. These small generating plans (35 megawatts and 55 megawatts) are
built adjacent to an industrial plant that utilises steam in its operations. Zonke sells the steam to the
industrial plant and electricity to the local utility, Eskom. Under South African regulations, Eskom is
required to purchase this independently produced power if it is cost-competitive.
Garret Levinson founded the company four years ago, and firmly believes that the future of
electric generation in South Africa would depend upon coal as the primary fuel and standardisation
as a method of cost control and efficiency. This new technology, known as “cogeneration”, is rapidly
coming of age as many companies turn to these systems to cut energy costs. Zonke’s very efficient
plans have allowed it to pursue a low-cost leadership business strategy.
Thandi Mabula, the human resource management director, developed benefit packages for both
corporate and plant personnel, an employee handbook, job descriptions, a salary programme, a
supervisor’s manual, and other basic personnel policies. In less than three years, the company built
five plants. Over a few years, the size of the workforce grew from 5 to 39 people at corporate
headquarters, and from 0 to 183 employees in the plants. These employees are from various race
groups, with the employee demographics ranging from employees of different ages, with different
needs pertaining to employee benefits.
Most of Zonke’s employees belong to The National Union of Metal Workers of South Africa
(NUMSA). Zonke and NUMSA have a collective bargaining agreement in terms of the pay levels,
and NUMSA ensured that the aspects of performance evaluation, grievance procedures and
administrative processes are specifically addressed in the collective bargaining agreement with
Zonke. NUMSA is still in the process of negotiating transport allowances for all the employees.
Zonke faced a dilemma regarding determining benefits and salaries for its employees. Although
the salaries are competitive, they are not as high as to attract workers from Zonke’s “customers” –
its industrial hosts and the local utility, Eskom. The pay and grade structures of Zonke do not
compare with the market rates of competitors yet. The grades and pay levels were determined by
the different values of each job, at each level. They are not discriminatory in terms of age, race,
gender or religion. Exhibit 1.1 reflects the pay and grade structure at Zonke.
Exhibit 1.1: Pay and grade structure
Paterson Grade Minimum Midpoint Maximum
(R’000) (R’000) (R’000)
A 34 905 53 695 68 543
B 77 722 82 016 163 387
C 152 039 209 826 293 818
, D 292 366 415 379 900 159
E 881 028 1 103 345 1 452 702
F 1 452 858 3 521 191 5 650 799
QUESTION 1
1.1 Based on the remuneration information of Zonke Engineering Systems (Exhibit 1.1),
do the following calculations:
(a) The range spread for positions in the C grade [5 marks]. Based on the calculation,
identify the type of position this could be classified as [1 mark] and your
observation regarding positions in the C grade [2 marks]. (8)
𝑴𝒂𝒙𝒊𝒎𝒖𝒎 𝑺𝒂𝒍𝒂𝒓𝒚 − 𝑴𝒊𝒏𝒊𝒎𝒖𝒎 𝑺𝒂𝒍𝒂𝒓𝒚
𝑹𝒂𝒏𝒈𝒆 𝑺𝒑𝒓𝒆𝒂𝒅 =
𝑴𝒊𝒏𝒊𝒎𝒖𝒎 𝑺𝒂𝒍𝒂𝒓𝒚
𝟐𝟗𝟑 𝟖𝟏𝟖 − 𝟏𝟓𝟐 𝟎𝟑𝟗
=
𝟏𝟓𝟐 𝟎𝟑𝟗
𝟐𝟏𝟒𝟏 𝟕𝟕𝟗
= = 𝟎. 𝟗𝟑 𝒙 𝟏𝟎𝟎 = 𝟗𝟑%
𝟏𝟓𝟐 𝟎𝟑𝟗
The range spread is the difference between the maximum and minimum salary in the
salary range. It is calculated as a percentage. The type of position that C grade could
be classified as is the Higher level managerial, executive and expert technical. This is
because typical range spreads in South Africa that range 60% and over are in that
category.
(b) The compa-ratio for the CEO position [3 marks]. Discuss your observations
regarding the calculated compa-ratio [2 marks]. (5)
𝑬𝒎𝒑𝒍𝒐𝒚𝒆𝒆 𝑺𝒂𝒍𝒂𝒓𝒚
𝑪𝒐𝒎𝒑𝒂 𝑹𝒂𝒕𝒊𝒐 = 𝒙 𝟏𝟎𝟎
𝑴𝒊𝒅𝒑𝒐𝒊𝒏𝒕 (𝒎𝒂𝒓𝒌𝒆𝒕 𝒓𝒆𝒇𝒆𝒓𝒆𝒏𝒄𝒆 𝒔𝒂𝒍𝒂𝒓𝒚
𝟑 𝟐𝟓𝟎 𝟎𝟎𝟎
= 𝒙 𝟏𝟎𝟎 = 𝟗𝟐%
𝟑 𝟓𝟐𝟏 𝟏𝟗𝟏
