Experienced leadership is the key for economic development in Africa – and its lack could spell the downfall of global organisations operating on the continent.
This is the word from Giles Robinson, MD of Hay Group, who adds that African regions have displayed steady economic growth since the beginning of the 21st century, and the positive trend looks set to continue.
As a developing continent, Africa presents myriad investment opportunities, but global organisations may not be suitably positioned to take advantage of its offerings, or know what Africa needs in order to prosper.
"Think glo-cal" seems to be the mindset required. "Multinationals can bolster their growth potential by investing in local African talent and relevant reward programmes," says Robinson. "Failure to do so could produce the opposite effect, however."
Israel Berman, Hay Group's MD of Asia Pacific & Africa, adds: "The combination between local leadership and some global expertise is the key to success. Organisations need to invest in local leadership and remain cognisant of the inherent culture and how business is done."
Robinson says there is a definite future in Africa. "Emerging markets such as India prove the possibility for positive change: since moving towards a market-based system in the 1990s and dispite a population of 1-billion, India has demonstrated 6% annual growth and has reduced poverty by up to 50% to become among the fastest-growing economies."
But an analysis of Hay Group’s recent research "Africa: release the potential" – a survey of more than 100 multinational organisations across the African continent – shows 80% of global organisations are glo-cally challenged when implementing an effective local strategy in African operations. This means only 20% are successfully planning and executing a clear localised business strategy.
"The research exposes an inherent inability to apply effective localised reward, talent, and development programmes," says Robinson.
For the majority of companies with African operations there exists a definite disconnect between global headquarters, often based in more developed economies, and local African offices. For example, on an annual basis, 30 percent of global HR teams do not visit local African operations.
Robinson warns that this disengagement threatens to disrupt organisations’ capability to capitalise on the economic growth opportunities inherent in Africa. Without engagement with their local operations multinationals are unable to grasp local cultural and socio-economic issues including the legacy of colonialism and its impact, ineffective infrastructure, often unregulated practices, the influence of tribalism, and distinct cultural practices.
Africa offers a large pool of potential talent, but limited development opportunities and the lack of effective communication with international colleagues create difficulties in attracting, identifying, training and retaining the talent required to maximise growth. As the demand for highly skilled individuals exceeds the supply, this challenge is complicated further.
In addition to inconsistent levels of education and a shortage of technical and managerial skills, many organisations also have to manage the migration of skilled employees to other economies, often due to the attraction of US-dollar based, tax-free pay opportunities attracting the best.
In response to the skills shortage, increasingly organisations across Africa are relying on expatriate managers. However, this short-term solution may introduce additional challenges: local employees may perceive their own career paths to be limited or blocked. It may also propagate the attempt to enforce rigid global policies in situations where flexibility to meet local cultural conditions would achieve a more sustainable result.
Among all these challenges, the prevalence of inexperienced leadership is the greatest. "In Africa leadership has emerged through the context of the struggle," explains Robinson. "To unleash Africa’s economic potential, multinationals need to harness processes that can identify leadership, and recognise and nurture the climate conducive to good leadership."
As Berman explains, there are three elements to success: cultural sensitivity; local leadership and a long-term commitment.
"In the search for and development of leaders, culture, climate and context all play significant roles. There is no short cut to fostering experienced leadership," says Robinson. "But if India is anything to go by, the investment will produce great returns."