AFRICA’S WAR FOR TALENT - JSE MAGAZINE

AFRICA’S WAR FOR TALENT

The struggle to find the right skills and talent is one of Africa’s biggest challenges to realising its growth potential. EY’s David Storey and Rob Urquhart survey the calm before the storm

The median age of the continent is 20, putting projections of its potential labour force at 1.1 billion people by 2040. Poor educational infrastructure and enrolment rates, however, and the continued importance of agriculture as an employer, means the pool of potential talent to take up management and skills-intensive professional and technical roles is low. Matching this small supply with a growing demand should yield an intense competition for local African skills in particular. But as the results of EY’s recent Sub-Saharan Africa Talent, Trends and Practices Survey suggest, the war for talent in Africa is not one dimensional.

Where is the war for talent exactly?
Short-term expectations of both multinationals and local African companies that EY surveyed are of a demand for – and a turnover of – labour that is not startlingly different from that which is currently experienced. But there are warning signs that the landscape is set to change. Recruitment needs for technical and professional skills are expected to rise, while the demand for expatriates is expected to decrease in the next year.

The expatriate factor
Whether this expected decrease in the reliance on expatriates is realistic remains to be seen. Results showed that transferring skills from expatriates to local employees is imperative for companies using expatriates. But building local capacity and transferring skills requires companies to have the capability – and know-how – to do so, an approach that recognises systemic gaps that could hamper the success of such initiatives, and the willingness of expatriates to fully participate.

Notwithstanding the challenges an expatriate workforce can bring (cultural conflict, differing norms and behaviours etc.), employers pay a premium for expatriate skills commensurate with seniority – almost 50% of executives in the survey attract a premium that is at least twice that of a local employee in the same category. Nevertheless companies that use expatriates should exercise caution when considering the substitution of expatriate with local labour.

Although expatriates are in some instances used as a blunt instrument to fill a capacity gap, for many others they form part of a co-ordinated talent deployment and development programme – and companies should not lose sight of this.

Similarly companies should avoid adopting too narrow a definition of the skills and talent challenge associated with Africa. Returning expatriates are often undervalued and not properly integrated on their return; resignations shortly after returning are common, and the investment made in their skill and experience lost.

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The management and leadership dilemma
Given that expatriates often occupy management and leadership positions, the ability to move away from a reliance on them requires a competent and available pool of management skills.

Currently, however, leadership development infrastructure in sub-Saharan Africa is not geared to the task of training managers. There is a shortage of business schools (fewer than 10 meet international standards) and the majority of other training providers are generally of a low quality.

Quite critically a recent WEF report highlights managerial skills as one of four key levers for improving the continent’s competitiveness. Internally organisations appear no better positioned right now to address these challenges. Management and leadership development is a high priority, but capacity to undertake such types of interventions (including associated talent management activities) is assessed as low.

The absence of leadership capacity carries additional implications. Performance management systems will not work effectively without suitable leadership capacity and on-the-job role models.

Performance management is about setting goals, giving feedback and coaching. With a shortage of suitable leadership capacity, however, the implementation of these systems will not reach their desired aims nor lead to the development of a performance culture sufficient to drive business performance.

The ‘hidden’ talent pool
According to the survey, an often over-looked alternative to expatriates is the returning diaspora – men and women from African states who are returning to their countries of origin after having lived and worked abroad. Their appeal (aside from their skills, experience and potentially cheaper cost) lies in their knowledge of their country of origin and the ease of their cultural acclimatisation, which result in greater effectiveness in transferring skills.

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Taking action
A decreased reliance on expatriates through skills transfer, or the hiring of the returning diaspora alone will not be sufficient to address the anticipated increased skills requirements (particularly for professional and technical skills). So what can companies do to ensure that they are well placed in the war for skills and talent in Africa? Adopting an aggressive buying strategy is one solution, albeit short-sighted. Continually paying premiums in a constant buying war can lead to an over-inflation of the value of local skill, potentially to the point where expatriate skills usage becomes a cost attractive alternative.

Rather, where companies do recruit locally, their efforts should be focused on recruiting for potential first, which should then be supported by investment in programmes to develop skills. Given the levels of secondary and tertiary enrolment rates in Africa, such investment may need to be more substantive and of a longer duration than would have been undertaken in mature economies, and may require the establishment of public-private partnerships for delivery.

Secondly it would be naïve to assume in an environment of increased competition for skills that staff turnover and the need for recruitment will not occur. Understanding what one’s scarce and mission critical skills are is important, as is the need for proper workforce planning and forecasting (78% of respondents in the survey currently have a reactive, short-term approach and view of their resourcing needs). Focus on mission critical skills first, and set bold goals for the employment of local labour.

Thirdly, recruitment efforts should also take care not to over-emphasise compensation and benefits as key selling points. Undoubtedly in countries where formal wage economies are small these are critically important factors. But as the results of the survey indicate, factors such as career growth opportunities and greater levels of independence are also seen as important retention factors: increasingly Africans are not simply looking for jobs – they want to build their careers.

In thinking about what these selling points to retain staff are, it is nevertheless important to recognise that what works in developed markets can’t be simply ‘rubber stamped’ onto Africa.

Figuring out which aspects of the total reward offering can be standardised and executed across Africa at scale and which must be sharply tuned into local needs will need significant effort and ‘on the ground’ understanding.

Fourthly, while skills transfer from expatriates to local employees is important, expatriates won’t and can’t do it on their own. Critically, EY’s survey finds among respondents the absence of key managerial capabilities, including the transfer of technical skills, managing performance, engaging employees and managing diversity.

Companies need structured skills transfer processes and programmes, and to build the capabilities of their expatriate staff to deliver these. They should also consider whether the length of expatriate contracts is of adequate duration to effectively transfer skills (particularly skills of an operational or technical nature), and what mechanisms or incentives can be used.

Finally, companies need to recognise the diaspora as a unique talent pool that is neither expatriate nor local, and requires management as such. Targeting the diaspora necessitates properly understanding their motivations and needs, and segmenting and structuring an attractive employment proposition accordingly.

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