Experience is greatest talent test CEOs in Africa’s finance sector face

Across Africa, financial services companies are growing. They’re offering more services to more people in more places, through innovative business models and mobile technologies.

So it’s no surprise that 96 per cent of CEOs in the sector expect their companies to grow this year, according to PwC’s annual Africa CEO Survey, 2012. The question is whether they will have the people they need to meet these growth expectations.

Talent is very much on the boardroom agenda for Africa’s financial services CEOs.

We surveyed 201 CEOs across Africa — in Ghana, Nigeria, Angola, South Africa, Zambia, Mauritius, Tanzania, Kenya, Uganda and Rwanda — a third of them in the financial services sector. Almost all of them told us talent constraints are impacting growth and profitability and in general, it’s becoming more difficult to recruit and retain the right people.

Talent is a strategic advantage in markets that are competitive and growing fast, and 86 per cent of CEOs in financial services wish that they had more time to spend on it, according to our survey.

Instead, many of them say that regulatory issues and managing risk take up more and more of their time.

Ninety-six per cent of CEOs in Africa’s financial services sector are investing in workforce development, that is training, this year to help cultivate a future supply of potential employees.

Almost half of CEOs in financial services say that it’s become harder to hire workers, particularly those with deep skills in assessing market risk, foreign exchange risk and interest rate risk or derivatives. Actuarial skills are also on high demand.

The diaspora remains a key source of talent, particularly if the incentives are right. Foreigners have helped to fill a need but CEOs on the continent’s financial services sector would prefer to find the right people closer to home.

The problem is that experience is hard to come by in Africa’s financial services sector. In emerging economies in Africa, this could be the greatest talent challenge of all. Experience provides the confidence and capacity for talented people to make informed decisions based on creative thinking.

Training is certainly valuable but degrees, certificates and secondments cannot compensate for length of service.

Experienced, high-potential middle managers and senior managers are the most difficult employees to recruit and retain. CEOs in Africa’s financial services sector are leveraging social networks like LinkedIn to build a list of employable contacts or to publicise openings and needed skills sets.

Competitive compensation is another strategy, but it’s not enough to retain the most talented employees.

In every market where we surveyed CEOs, they told us that empowering manager-level employees is one of the most effective ways to win their loyalty.

It’s important not only to give managers more decision-making capability but also to require it of them, building experience and improving retention at the same time.

The need for high-potential managers has placed a premium on their worth. Over half (55 per cent) of financial services CEOs in Africa say that talent-related expenses rose more than expected over the past 12 months.

Many complain anecdotally that poaching results in poorly-trained and inexperienced employees who ratchet up higher and higher salaries as they move from one employer to the next.

The most valuable employees are those that can manage innovation and make it profitable, yet 43 per cent of financial services sector CEOs say their companies were not able to innovate effectively due to talent constraints.

To address this challenge, some universities and private sector companies are working together to create “ecosystems of innovation where they can pool their resources and talent to achieve a common goal: Provide the entrepreneurial skills that make innovation commercially viable.

CEOs in Africa’s financial services sector are focusing more and more on their retention policies to help build experience among their top talent.

Attractive workplace cultures, training opportunities and competitive compensation can help.

But CEOs must also encourage their companies to delegate more and give talented mid-level managers the chance to learn and grow.

That kind of trust is hard to cultivate when smart people are new to an organisation, or within organisations that are inherently risk-averse. But it is an essential strategy to help financial services organisations address the talent challenge in Africa.

Richard is a Partner and Head of Financial Services sector at PwC Kenya