Africa is often spoken of as a land of opportunity that is shaking off its unhappy history and moving forward with renewed energy. But multinationals moving onto the continent are learning that doing business in Africa poses some significant challenges. One of these is finding, attracting and retaining executive skills. Odgers Berndtson conducted interviews with executives from 13 successful companies in Africa to see what lessons can be shared with the many companies still considering their entry into these fast-growing markets.
- Good relationships with local leaders remain important. A common mistake when considering the kind of executive required to be successful in Africa is to assume that they must be politically connected. This may have been true 10 or 20 years ago, but things have changed. It is, however, important that executives in Africa interact positively with African politicians, treating them with humility and respect. Even more important is good relationships with the technocrats in government, who can make life either easy or hard for business leaders.
- Employing expats is an increasingly unattractive option. Nearly all the companies we spoke to have been actively reducing the number of expatriate executives that they deploy across Africa. The cost of living in many African cities is extremely high for expats. African executives often make better expats in other African countries, because they are more accustomed to the hardships that Westerners struggle with.
- The power of the employer brand is important. In markets where experienced corporate executives are in short supply and know how valuable they are, the power of a company’s brand plays a big role in attracting them. Leading the local business of a well-recognised international company carries a lot of prestige. Companies without the benefit of a well-known brand will have to find ways to make themselves attractive, such as highlighting their international training programmes.
- Having strong local networks is a definite advantage. Some markets in Africa can be very challenging in terms of finding top quality people locally and convincing people to move there. In most African countries, executive search is quite undeveloped, so companies that choose to use head-hunters will often use international firms that may not be based on the ground but have a good understanding of the African markets and an existing local network. Some of the top-tier executive search firms with offices in South Africa, like Odgers Berndtson, regularly conduct assignments for roles across the continent.
- The experience gap is greater than the education gap. There is a perception that African educational qualifications cannot be trusted. However, among our interviewees, the feeling is that the perception is worse than the reality. It is nonetheless important to check up on the standing of the institutions that candidates have attended, put in place robust assessment processes and take references.
A bigger challenge is an experiential gap, and bridging it requires significant investment in training – which many African governments will happily support through mechanisms like tax breaks because they see the value of training locals.
- Retention requires attention in a competitive skills market. With more multinationals entering African markets, senior individuals with experience in established global firms are being approached regularly to consider new positions, and they are increasingly aware of their own value. The risk of top people being poached is higher for smaller international companies with less recognised brands locally.
- Doing business in Africa is expensive. Costs can vary dramatically across the continent, so it is problematic to standardise salary packages for all African executives. We found that local executives are not paid much less than expats of an equivalent level, because of their limited availability and their cost of living. Bringing the African diaspora back home can be as expensive as employing expats, with many only willing to come back on an expat package.
- International headquarters still do not entirely understand Africa. The degree to which the global headquarters of international companies have actively integrated the continent’s growth story into their own long-term ambitions depends on how long they have had operations there and whether the global leadership has bothered to spend time on the ground. Companies wanting to expand across Africa should ensure that their global leadership spends some quality time in several African countries, developing a good understanding of both the challenges and opportunities.
In conclusion, we believe that tackling the African skills challenge will become both easier and harder. Companies will continue to learn how to most effectively find, attract, grow and retain senior executives each time they enter a new country. They will also learn to plan ahead better in Africa. The process of developing world-class executives is a long-term process, however. The earlier you get in on the game, the earlier you will learn the lessons and get ahead of your competition.
The rise of fierce local competition for multinationals in Asia is progressing at breakneck speed...
Tim Sleep, Managing Director of Odgers Berndtson Australia has been interviewed on Sky’s primetim...