HUMAN RESOURCE CHALLENGES FROM

DOING BUSINESS IN AFRICA:

Lessons from twenty South African companies

27 March 2008

Marius Meyer

082 859 3593

mmeyer@unisa.ac.za
 SA GLOBAL PERFORMANCE
• Largest producer of gold and diamonds
• Largest producer of platinum
• Largest exporter of silver and vanadium
• One of the largest sugar producers
• Largest paper producer
• Largest quantity of mangenese
• Largest producer of chrome
• Cheapest producer of electricity
• Largest producer of uranium
• Largest brewery (SAB Miller)
• One of the best wine producers
• Most profitable game park
• SAA is one of the safest airlines in the world
• UNISA is 4th largest university in the world
Different business environment
AFRICAN BUSINESS LANDSCAPE
• Growth through cross-border expansion is a
business imperative for survival
• International buyer-supplier partnerships
• Establishing new operations in different
African countries
• Local companies will be forced to compete
in their once protected backyard with global
players
• Firms are forming partnerships with
international partners
 CHALLENGES
• Globalisation
• Corporate governance
• Profitability through cost & growth
• Leadership & capability focus
• Change, change, change
• Technology
• Attracting, developing, retaining staff
• HR accountability & reporting
GROWING SA BUSINESS IN AFRICA

• Are we creating wealth in Africa?

• Are we exploiting the rest of Africa?
• Do we use fair labour practices?
• Are we currently colonising Africa
again?
• Do we dominate the rest of Africa?
• Are we exporting our problems?
20 SOUTH AFRICAN COMPANIES

11 CASES 9 INTERVIEWS
• 3 insurance • 2 banks
• 2 retailers • 2 mines
• 2 manufacturing • retailer
• bank • wholesaler
• cell phone • chemical
• mine • cell phone
• food • furniture
COST OF GLOBAL HR FAILURES

• 20 – 50% of expatriates fail

• Cost varies: $ 200 000 - $ 1 200 000
• 50% of international joint ventures fail
• More diverse companies outperform
less diverse companies by 8%
 GLOBAL HR OBJECTIVES
• To prepare HR to maintain a balanced focus
between global and local HR
• To develop new paradigms for helping people
to manage change and complexity
• To analyse global HR risks & training needs
• To design skills training programs around global
business practices
• To instill awareness for global diversity
• To align HR strategies, roles and practices to
global & African business strategies
ROLE OF HR IN GLOBALISATION

“The single most important issue

nominated by experienced executives to
explain their failures abroad points to the
“soft side” of business. Cultural misfits
are at the roots of several problems.
Parties fail to recognise each other’s
agendas beyond the strict business
transaction.”
Cesar Souza
CHALLENGES IN AFRICAN HR:
BUSINESS ENVIRONMENT
• Adaptation problems
• HQ vs country operations
• Lack of HR decision-making autonomy
• Communication
• Lack of global leadership and staff
• Organisation culture
• Legislation & politics BUSINESS
ENVIRONMENT
CHALLENGES IN AFRICAN HR:
HR POLICIES & PRACTICES
• Transferability of HR policies & practices
• Expatriate & repatriate management
• Skills and talent management challenges
• Employee retention (repatriates)
HR POLICIES
• Performance management PRACTICES
• Training & development issues PROCEDURES
• Incompatible remuneration systems
• Labour legislation
• Structural issues & role ambiguity
 STAKEHOLDERS
• Corporate social
• Shareholders
responsibility
• Government • Information technology
• Board • Internal audit
• Management • Suppliers
• Employees • Agencies, partners and
• Unions joint ventures
• Society • Customers
• Regulatory and • Business and pro-
standards bodies fessional networks
• Other?
African HR is not a quick fix
 AFRICAN HR PITFALLS
• Assuming that all African countries are the same
– a practice will work everywhere
• HR-business link is not clear
• A lack of cultural alignment - diversity
• Inadequate preparation & planning
• A lack of consultation with stakeholders
• Not growing your people with the company – if the
company is globalising, people must also
globalise
• Absence of HR risk management (both corporate
governance & HR governance)
• Not enough communication & feedback
• A lack of measurement & reporting
 Global HR risk management is about ensuring that the right
people do the right things in the right way in the right country.
 LESSONS FROM 20 CASES
• Communication, feedback, communication, feedback …
• Planning and doing your homework is critical
• Balance between transfer & adaptation
• Build on successes (what worked, culture, values, brand,
competencies, approaches)
• Identify & develop local talent
• Balance consistency & flexibility
• HR function plays a critical role - culture
• Global HR governance framework & risks
• Clear HR policies, procedures, practices
• Use of technology to optimise HRIS
• International HR standards
• Global leadership development – “global mindset”
• Educate HQ – share knowledge & learning
• HR measurement systems
 Triple bottom-line: 3 P’s

+ +
PROFITS
PEOPLE PLANET
(Financial
(Social) (Environment)
performance)

SUSTAINABILITY
WHAT IS HR GOVERNANCE?
HR governance is the act of leading the HR
function and managing related investments
to:

• Optimise performance of the organisation’s

human capital assets;
• Fulfill financial & other responsibilities;
• Mitigate enterprise HR risk;
• Align the function’s priorities with those of the
business; and
• Enable HR executive decision-making
Mercer
Consulting
 HR GOVERNANCE
The process, structure and actions
needed to lead, direct and control HR
practices to achieve the goals of the
company.
LEAD DIRECT CONTROL

How will we get there? How will we ensure that

Where do we want to go?
(policies, systems, we get there?
(vision, strategy)
practices) (measurement)
We need better International HR
Administration
 HR IMPLICATIONS OF
CORPORATE GOVERNANCE
• Selection • Employment
• Induction relations
• Training • Organisation
• Performance development
management • Diversity and
• Remuneration employment equity
• Health and safety
• Succession
planning • Ethical organisation
culture
GET YOUR STRUCTURE RIGHT
 GLOBAL PERFORMANCE FRAMEWORK

Product/
Drivers Criteria Focus
Service
Delivery
1
1 2
2 3
ENABLERS Customer
3 4 Satisfaction
4
5
+ 5
6
7
+ =
6 8 Stake-
7 9 RESULTS
holder
8 10 value
11
 AFRICAN HR ISSUES
• Expatriate and staff management
• Knowledge transfer to expatriates/locals
• Retraining and development for
repatriates
• Career management for locals,
expatriates & repatriates
• Mentoring programs to connect locals,
expatriates and repatriates
• Talent management strategy
Rules must make sense – or staff will
resist it!
TYPICAL AFRICAN HR RISKS
• Expatriate costs vs benefits
• Expatriate failure - culture
• Legislation
• Political instability
• Ethics
• Skills levels
• Employee retention
• Staff morale
We need HR risk management
 ROLE OF HR

• Intercultural effectiveness surveys

• Pre-departure planning for international
assignments
• Global advisory HR committees
• HR globalisation = risk management
• Evaluating the success of global HR
Be a watchdog for ethics!
 PRINCIPLES FOR EFFECTIVE HR
GLOBALISATION
• Balance global integration with local
needs
• High involvement among local site staff
• Integrate HR with business unit & local
HR strategies
• Expect problems and work through them
(use a risk management
approach)
GUIDELINES FOR HR RISK MANAGEMENT
• Do a proper analysis of HR risks
• Do a complete HR due diligence
• Liaise with all relevant stakeholders
• Develop HR solutions to mitigate
risks
• Do regular HR audits, including risks
• Measure progress and
improvements
• Liaise with risk manager
 GLOBAL HR RISK AND GOVERNANCE MODEL
CORPORATE GOVERNANCE FOCUS: PERFORMANCE & COMPLIANCE

CORPORATE GOVERNANCE PRINCIPLES

R
broader business context

Corporate Governance Global Business Strategic

Operating Ccntext
I
External stakeholder

Global Business
S Model: Design, Processes, Intent: Leadership
engagement in

K Roles and Operating Model

M
A
N HR Corporate Governance Global HR
A Model:
G Strategic Intent
E Design, Processes, Roles
M
E
N HR Leadership
T

Operating Context
Internal stakeholder
business value chain

Global HR
engagement in

HR
HR Policies HR
Value Chain HR
and Operating
Delivery Systems
Standards Model

HR GOVERNANCE MEASUREMENT & REPORTING

CORPORATE GOVERNANCE OUTCOME: TRIPLE BOTTOM-LINE

Balance flexibility with order
 CRITICAL QUESTIONS
• Do you have a global HR governance
framework in place?
• Do you comply with legislation in all African
countries where you operate?
• Have you identified global HR risks &
solutions?
• Do your HR practices add value to
corporate governance & the global
business strategy?
• Have you done a stakeholder analysis?
• Do you implement ethical business
practices throughout your organisation?
• Have you audited the HR function for
global alignment?
To be world class, you have
to treat your people as an
asset on the balance sheet
rather than a cost on your
profit and loss account.
Thus, the human resource
function has come to occupy
centre stage.

Clem Sunter
 CONCLUSION

A more inclusive and devolved international role of

subsidiary HR functions is needed in African countries.
Without HR risk management, global business will fail.
Let us take on this challenge to help our companies
and its people, and ultimately all our African nations to
reap the benefits of globalisation.
 THANK YOU!

I hope you are successful in doing

great business and HR work in Africa.

Any questions?