Talent scouts–Employment focus

The war on talent is just beginning, according a new survey on employment trends in Africa, which also warns that the use of expatriates is problematic and likely to create greater tensions in the future. EY’s inaugural Sub Saharan Africa Talent Trends and Practices Survey 2013 also revealed an increasing trend towards employing from other African countries and, worryingly for risk managers, that talent management skills are relatively weak across the continent. The survey has four major conclusions: 1. The war for talent in Africa is just beginning. Global studies and long business experience both demonstrate that a company’s success is directly linked to its ability to attract and retain the right skills. African business is no exception—indeed, the continent’s relative shortage of skills more or less guarantees fierce conflict for the right skills. This survey shows that two skills categories will be most in demand: technical/ operational and professional.hide2. The reliance on expatriates is problematic and needs to be rethought. Traditionally, the easiest way for companies to source scarce skills is to rely on global talent pools—not surprisingly, this is particularly true for global companies who are in a position to redeploy staff. However, the high premium that expatriates attract becomes a source of tension within companies. At the same time, political pressure for localisation is growing across the region. For these reasons, EY believes that companies need to build the capability to facilitate skills transfer from expatriates to local employees as this will become a vital competitive differentiator. At present, however, it is clear that companies across the region lack this capability. 3. There is an increased desire to source skills from other African countries or the returning African diaspora. As a consequence of the desire to reduce their dependence on expatriates, some companies are looking to source skills from other African countries or from members of the returning African diaspora. Whilst this could be an innovative and cost-effective way of addressing the expatriate dilemma, EY believes this needs to be managed sensitively and should not disregard the importance for organisations to ‘grow their own timber’ by improving their ability to transfer and build local skills. 4. Organisations in Sub Saharan Africa are currently weak in those talent management skills they deem to be a high priority. As will be clear from the previous three points, the capability of an organisation’s HR function is vital to its success. HR has to be able to identify the skills needed and to source them; it also has to have excellent retention and performance management strategies to ensure maximum benefit from those skills. And, in particular, HR professionals within the organisation must provide the capability to facilitate skills transfer from expatriates, be they from the developed world, other African countries or the African diaspora. David Storey, a partner in Ernst & Young Advisory Services, said the survey ‘represents the confluence of two of our fundamental beliefs: a deep sense of optimism about Africa’s enormous potential and our commitment to building a better working world’. He said it is important to acknowledge the use of human capital as a key enabler of growth. He added: “Africa is emerging as a significant point of growth, making it an attractive expansion target for companies in search of new markets. The EY attractiveness index 2013 for Africa shows that Africa’s growth is real and sustainable, with the economic output of Sub Saharan Africa having grown strongly from US$344.1bn in 2000 to US$1334.2bn in 2012. Sub Saharan economic output is projected to reach US$1844.6 by 2017.” Mr Storey stressed: “Many other statistics can be cited to describe the nature and extent of Africa’s growth—but perhaps the most important measure of its potential is its effectiveness in harnessing its most important resource: its people.” But he warned a shotgun approach to human capital management practices on the continent is short-sighted; organisational and regional differences point to nuances that require differentiated and contextually appropriate responses. “Success in Africa,” he said, “therefore requires a detailed understanding of the HR milieu and an authentic commitment and investment in human capital.” Despite the overall optimism, there are clear areas of concern. The report says that aligning HR, business strategies, management and leadership development stand out as high priorities. Other high-priority items are employee engagement, as well as sourcing scarce and critical skills. The survey revealed that the priorities do not change substantially when data for local, multinational and public sector organisations are compared. All share capacity gaps in people development, it says. Employee engagement is a priority for the private sector but not the public sector, where performance and reward is an important focus area. Expatriate trends Another major finding was that it appears as though organisations in Sub Saharan Africa are set to reduce their dependence on expatriate skills. 53% anticipate hiring fewer expatriates and only 16% anticipate hiring more. This trend is particularly clear in the professional and technical/ operational staffing categories—the skills most in demand. In line with the expected decline in appetite for hiring expatriates, organisations are clearly looking to other labour markets as potential talent pools for sourcing skills. The likelihood of recruiting from other African countries is expected to increase from the current level (10%) to 17%, and from the returning African diaspora (currently 18% and expected to rise to 27%). One in four multinationals expect to increase recruitment from other African countries in contrast to one in nine indigenous companies; possibly because of concerns of the tensions this might invoke with local labour markets. One third of respondents in eastern Sub Saharan Africa expect future recruitment to come from the returning African diaspora. Recruitment from other African countries is expected to double for eastern Africa, with only a marginal increase in the francophone region. Slightly more than 90% of South African respondents were less bullish about future recruitment from the returning African diaspora and other African countries but is nonetheless expecting to increase its hiring from both talent pools. The survey concluded labour legislation may be a contributing factor in those figures. Two in three respondents in the central African region also expected recruitment from other African countries and the returning African diaspora to remain low/very low in the future, however, respondents from the west African region are bullish about recruitment from the returning African diaspora, believing it will almost double. One in 20 respondents currently recruits from other African countries with one in six respondents expected to do so in the future. The top four factors for retaining local talent are fixed and variable pay, employee benefits, greater levels of independence and employer brand. For South African organisations job security is one of the four top retention factors; reflecting possibly on South Africa’s experience of low economic growth. Employer brand is one of the top three retention factors for multinationals, perhaps reflecting on the perceived status of working for an international organisation. Workforce planning, according to the report, is a critical tool for both strategic sourcing and the planning/implementation of internal development. 78% of respondents currently have a short-term focus, while 70% intend or desire to shift to a longer-term forecasting model. EY believes this longer-term focus will become more important as demand—and competition—for skills increases. The research indicates that the African labour relations environment is comparatively calm. In the main, regulations are expected to increase but this will not affect hiring decisions. Overall, most organisations demonstrate high compliance with labour market institutions and report a relatively good experience with them. Trade unions are recognised by the majority and increased trade union activity is expected. Relatively little industrial action has been experienced in the past 12 months (except in South Africa), but much more is expected in the coming year. When it comes to resolving labour disputes, indigenous companies tend to have basic dispute resolution procedures in place, while multinationals are more likely to have more sophisticated processes at their disposal. Although expatriates make up a little more than 5% of the respondent employee base of the survey, they are likely to be in executive and senior management roles. The survey found, as a result, they are typically used to plug strategic skills gaps in labour markets, start up new businesses on greenfield sites and lead organisations. EY stressed: “Given the importance of these roles, understanding the dynamics of this market segment provides deeper insight into the employment situation and challenges of the continent.” While one third of respondents expect the demand for expatriates to remain the same in the next year, slightly more than half expect to experience a lower/much lower demand for such employees with a move away from dependence on expatriate labour. Cost is not the only issue relating to expatriates—or even necessarily the biggest, according to the report. It claims localisation is becoming more important on Sub Saharan Africa’s labour agenda and the consequences of ignoring this issue are escalating. EY warned: “These consequences include an increase in anti-imperialism, cultural divisions and reduced employee engagement. “In pursuing the localisation agenda, the survey found that the two biggest challenges appear to be skills transfer from expatriates to locals, and more employment of locals. One challenge here is that expatriates are not trained to spot and develop local talent. In fact, their presence can help exacerbate cultural dissonance.” CHECKLIST EY provides this checklist of questions companies active in Sub Saharan Africa should consider: What is the role of HR in achieving competitive differentiation? What people practices need to change to support the organisation’s strategy, whether it is to consolidate or to grow? How will organisations in Sub Saharan Africa improve their talent-management practices to ensure the human potential of their staff is fully realised? How will organisations in Sub Saharan Africa achieve greater levels of employee engagement and thus improve their ability to compete? What are the cultural and organisational obstacles to more effective engagement? What aspects of an organisation’s current HR operating model require re- examination—especially when growing across borders? Expatriates are an important constituent of the Sub Saharan talent pool, yet they represent a potentially damaging issue for organisations as localisation pressures build. What is the organisation doing to ensure expatriate skills are properly transferred to locals? How can expatriates be better managed for long-term growth and value? Has the full spectrum of resourcing solutions been considered; what is the real potential of the returning diaspora and what is that value proposition? How is skills transfer from expatriates to local employees practically and sustainably managed? How can the leadership pipeline for executive and management skills be deepened and sustained?

Talent scouts–Employment focus

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