Many multinationals and retailers and banks in South Africa are looking to invest in Africa; this is not surprising since Africa has some of the world’s fastest growing economies. Africa is a very attractive market. The pool of consumers in Africa is expanding rapidly, and by 2025, 303 million African households will have access to discretionary income. However, doing business in Africa is not easy and requires insight into how things work in Africa.
“Most surveys conducted with CEOs in multinational corporations indicate that the biggest challenge doing business in Africa, is finding the right people at senior levels,” says Guy Lundy, Senior Client Partner at Korn Ferry.
People did not get the benefits of the kinds of education and experience that leaders in many other parts of the world would have had: “There is not that history of education and mentors. The younger generation was not able to learn at the knee of the previous generation of business leaders. Furthermore, people are not coming from a place where they have had long-term experience in global best practice,” Lundy explains.
Some countries in Africa insist on the appointment of local executives; this has not always been the case. “There was the recognition that local executives are fairly hard to come by, but increasingly, governments and communities have started to put pressure on companies to hire more local people. The days of having expats coming in and taking the most senior roles and being replaced by another expat when they leave are over. Governments, communities and companies do not want this. Expats are also very expensive. They can be four times more expensive than a local. The world has experienced tough times economically for the past eight years. One of the ways in which companies are reducing their overheads is by cutting back on expats.”
Many executives, particularly in West Africa are well educated and often boast an MBA from INSEAD, Wharton or Harvard. “The challenge is that the pool of executives is very small. There is also a lot of circulation within this pool. When we work in Nigeria or Ghana everyone knows everyone else because there is not a mass of executives to draw from. However, when we work in South Africa, you always come across someone you have not come across before, because there are many more thousands of skilled, trained and experienced executives,” Lundy recounts.
People who have left Africa and have studied abroad are often employed abroad: “They often have a foreign spouse and their children have grown up elsewhere. It is quite difficult to get them to come back to Africa. They are used to life in New York or London. It is a very different prospect living in Lagos or Accra.”
Even where it is possible to recruit a local executive from abroad, it is often difficult to assimilate them into the work environment: “It can be quite hard for the people in the company. There is a sense that you left and while you spent all these years abroad, we built up the company. Resentment builds up. For the person coming back it is often quite a culture shock. Things do not work as seamlessly as they do elsewhere.”
Multinationals are doing a fair amount to grow talent in Africa: “Many companies that take a longer-term view are taking potential executives out of some of the markets and placing them into their operations elsewhere in the world – this provides them with exposure to the organisation and global best practices. They learn how the organisation expects things to be done. Some multinationals are partnering with institutions such as the London Business School. They send their employees on short courses abroad and support this with coaching and ongoing support and development. If there is an expat, some companies will not allow them to leave until there is a local who can take their place; this ensures that the expat transfers his or her knowledge.”
None of these approaches are without challenges. Some people who accept international placements have no intention of returning to Africa. Some companies now insist that their employees work for the company for a specified number of years before they will be considered for an international placement.
Given the small pool of executives in Africa, and the intense competition for these skills, Lundy says the solution is to develop an attractive employee value proposition: “You need to offer more than money. Companies that have been doing it for longer have started to look at what the company can offer over and above salary. It is about training, international opportunities, being part of a global pool of executives, and part of a respected brand. Brands in Africa are highly regarded.”
There is no such thing as “making a quick buck” in Africa; Africa is a long game. “You have to show that you are committed to that long game. Companies that leave because things did not work out will find it much harder to return ten years down the line. If you show your employees that you are committed, that you are here to stay and are here for the long-term you get a lot more support from employees and potential employees,” Lundy reveals.
There has been a tendency for companies from abroad to think of Africans as unsophisticated; this is not the case. “Africans have a solid understanding of their local environment. Companies need to show their long-term commitment and that they understand that Africans understand more about Africa than they do. The approach should be one where we learn from you, at the same time as teaching you global best practice, and giving you opportunities. Making it a partnership with employer and employee is key to success in Africa.”
Lundy cautions that South Africans are not necessarily well-liked in the rest of the continent. “The more humility that South African companies can display the better, if they want to get buy-in. By showing Africans that they take them seriously, that they really respect the value that they can bring to the table, will give them more room to succeed,” Lundy concludes.
Guy Lundy is a Senior Client Partner at the world’s largest executive search and leadership advisory firm, Korn Ferry. He is responsible for the Retail & Consumer sector across Africa.
He is an experienced strategy consultant and sought-after professional keynote speaker, focusing on the future of South Africa and Africa. He is also an experienced Board Member, having sat on the Boards of several South African organisations.
Guy was previously a Partner at international executive search firm Odgers Berndtson, and before that the CEO of Accelerate Cape Town, a business think tank that brings together the leaders of large corporates and other stakeholders to promote and drive the long-term development of the Cape Town city region. He has also worked for a number of large organisations on four different continents, including Dimension Data, Ernst & Young Management Consulting, Oracle, and the London Stock Exchange.
He is the author of two books about South Africa and its future: “South Africa: Reasons to Believe” and “South Africa 2014: The Story of our Future”. In 2009, Guy was listed by Business Day as one of the “Top 100 thinkers in South Africa”.