Emerging Markets: Africa’s Human Capital Challenges
While Africa—like all emerging markets—attempts to meet the world’s expectations of gaining traction towards becoming a stable marketplace for growth and investments, organisations are still faced with some debilitating challenges that could be a roadblock to future success. And human capital is at the top of the list.
While within Africa, each country exists at different points on the spectrum of political and infrastructure development, a common thread is the need to find qualified local talent. Attrition rates are high and are affecting the bottom line.
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Building a talent pipeline
A robust marketplace has a good supply of jobs and organically becomes a training ground for all workers. However, when jobs are scarce, it’s hard for workers to obtain the right kinds of exposure to gain leadership experience. Many regional HR leaders in Africa are finding it a challenge to meet their internal “localisation” targets. The general consensus is that although young Africans are very keen to work, only about 50% of them feel able to find an appropriate job. Furthermore, only a small few of those working are satisfied with their roles.
Many MNCs are addressing this key learning and development issue by creating grassroots internship programmes for the younger population, which represents a strategic effort to build the future pipeline of senior leaders. An internship is a relatively new concept for parts of Africa, but Unilever is one company reporting great success. These programmes tend to offer rotational apprenticeships across the organisation (and across Africa), exposing the individuals to many aspects of business, with an inherent aim to build the confidence levels of the younger population. Typically, the programmes are around 3-years and attrition rates are extremely low among interns.
Some businesses are targeting young Africans as early as late school/university years by offering them roles as a Brand Ambassador. These brand ambassadors use social media (like WhatsApp, FB, Instagram) to inform the young and upcoming African workforce about brand news, products and services, and community outreach efforts. By collating a group of like-minded and bright students through social media, brand ambassadors can feed across timely and tailored news or updates to further ignite interest in the brand as a whole. Group members can be carefully chosen so that topical and tailored flashes of information can be sent through to feed curiosity and raise brand awareness. And when this younger African workforce is ready for employment, they will already have a baseline knowledge of the brand’s products and services, thus reducing the onboarding and training time.
While brand is still an important factor for talent, reward is the hottest area of contention when we look in-depth at competition between local companies and multinational organisations. Many local companies are improving their compensation packages, which is having a knock-on effect of talent moving away from competitor MNCs. This affects profitability levels, in terms of lost training hours and mid-term projects not being properly implemented.
How are local entities able to compete based on salary? Pay mix. The total cost to the organisations doesn’t differ that much between local and MNC, but employee total compensation packages at local companies are now including LTIP, allowances and sign-on bonuses to increase attraction and retention.
Volatile currency fluctuations have created some challenges around compensation levels in certain markets, but creating a pay mix that encompasses both short-term and long-term elements can help ease some of this disruption.
Retention is key in Africa. Lose talent and you lose market share and risk stalling growth. When HR leaders talk about improving HR sophistication, HR technology and talent, there is a consistent theme that all initiatives must also aid in reducing retention.
Some organisations are deliberately trying to globalise African talent by promoting an internal international secondment strategy. This has a huge impact on attracting talent, but not surprisingly has been seen to have a negative impact on attrition. There is no shortage of interest when talking to African HR leaders about overseas experience; however, getting them to return at the end of the assignment is critical. As it stands, top talent is moving overseas and not returning, which is creating a brain drain in Africa. Many HR leaders are lamenting that their investment made in future leaders is being lost to competitor emerging markets (and more developed) as Africans on secondment often earn more overseas and their high salary expectations upon return do not match market norms.
Africa’s challenges in this area are unique as tribal favouritism and contrasting political agendas creates corruption that can have debilitating effects on a company’s growth. Countering this takes time, but role model organisations are proving it can be done with strict governance and a zero-tolerance approach. As a whole, there is a need for fair employment practices and workplace justice as corruption and distrust negatively impact retention levels.
Strong succession planning and talent management strategies is crucial to the continued development of Africa. While some organisations currently lack the talent pool today for proper succession planning, a concerted effort around ongoing talent sourcing and the continued focus on long-term strategy will remain key.