Contenu connexe Similaire à MB Executive Partners - HR Leadership Study (20) MB Executive Partners - HR Leadership Study1. HR Leadership Study
in Family Owned Conglomerates
in the GCC
Prepared by Mustapha Bouterid
Managing Director
MB Executive Partners
Mob+971502259936
Email mb@mbexecutivepartners.com
2. About MB Executive Partners
MB Executive Partners is a premier Executive Search firm with a particular
focus on the GCC and North Africa. MB Executive Partners differentiates itself
through delivering high quality research, systematically studying target
markets – and sharing strategic information with its clients, accessing talent
pools in geographic areas that are not explored by its competitors, and a turn
around time of 4-5 weeks that has become a market example.
This document is strictly for the intent of its recipient. Copy or circulation is not
allowed without prior authorization of MB Executive Partners. © MB Executive
Partners 2012.
For more information on MB Executive Partners, please visit
www.mbexecutivepartners.com
© MB Executive Partners 2
3. Executive Summary
Family Owned Conglomerates are one of the 3 most important employers in the
GCC region along with Government related companies, and the Financial
Services industry. Some of them reach a century back and are seen as great
factors for development by the people they employ as well as communities.
The evolution of the global financial crisis into a global economic meltdown has
deeply affected the priorities on the business owners agenda which has led HR
Leaders to generate new means of addressing key items such as downsizing of
the workforce, top performers retention, compensation, and the alignment of
the mentioned items with the becoming of those groups which only a few have
successfully evolved in the hands of owners from newer generations.
© MB Executive Partners 3
4. Table of Contents
© MB Executive Partners 4
HR Leader – Peculiarities of the role in Family Owned Conglomerates
Evolution of the HR Leader's agenda
Downsizing of the workforce and confidence crisis management
Talent retention
Reputation management
Conclusion
5. Family Businesses are now faced with a significant contraction of capital leading
them to operate drastic changes in their investment portfolio. Whilst some
Banks see their cost of funding rising sharply and have had to drastically revise
their risk management framework, Family Owned Conglomerates have also had
to generate treasures of ingenuity in order to sustain their market position
across the sectors they operate in, but moreover in order to preserve a legacy
that is to be transferred to the third generation of owners.
The role of the HR Leader has dramatically evolved from a generation of owners
to the next, leading to a gap in terms of knowledge base given the abrupt
change in the overall business priorities of those family businesses.
HR Leader – Peculiarities of the role
in Family Owned Conglomerates
© MB Executive Partners 5
6. © MB Executive Partners 6
HR Leader – Peculiarities of the role in Family Owned Conglomerates
Evolution of the HR Leader's agenda
Downsizing of the workforce and confidence crisis management
Talent retention
Reputation management
Conclusion
7. Evolution of the HR Leader's agenda –
Target Tasks – Time Allocation in %
7
Training & Development
Policy Development
Performance Management
System
Employee Relations
Compensation & Benefits
Administration
Recruiting & Staffing
Organizational & Space
Planning
Employee Safety,Wellness,
Awareness, and Health
Company Employee &
Community Communication
Employee Services &
Counseling
Pre-crisis During crisis
10% 10%
8% 11%
10% 7%
14% 19%
15% 5%
15% 19%
6% 10%
7% 3%
4% 5%
11% 11%
© MB Executive Partners
8. © MB Executive Partners 9
As described in the time allocation diagram, the time allocation of each target
task that makes up for the HR Leader's agenda have been greatly impacted by
changes in companies strategy. From a top down approach where the Human
Resources function had little input on companies agenda, the HR function is now
expected to produce quality output that is to have a short term impact on a
number of key company indicators which are:
n Training & Development – pre crisis 10% / during crisis 10%
On the HR Leaders agenda, Training and Development has been particularly
impacted since the beginning of the economic crisis. Despite a solid effort from
HR Leaders to increase the budget base for this critical item, and despite a
structural need for such a service towards the employee pool of Family Groups.
The main reason for not increasing the budget capacity of T&D is due to the
high turnover of the Family Groups employee pool, which stands between 17%
and 28%. As a result of this high turnover, Family Owned Conglomerates have
shied from investing in their people. Another reason mentioned by our
interviewees is the cost as well as the lack of an attractive training offer from
specialized providers.
Evolution of the HR Leader's agenda –
before and during crisis
9. © MB Executive Partners 10
n Policy Development – pre crisis 8% / during crisis 11%
A slight increase in activity has been noticed in policy development.This is due
to the increased requirement in structuring internal policies in a greater
manner – this has been a result of the consulting exercises that a number of
Family Groups have undergone. According to our interviewees, an increased
effort in developing policies has instigated a greater sense of belonging from
the employee pool, which perceive this exercise as a way of structuring family
businesses to the tune of international companies with a culture of best
practices.
n Performance Management Systems - pre crisis 10% / during crisis 7%
The benefits of having a PMS has long been proven as a powerful tool to record
and track the performance of an employee pool. Although this tool is at the
center of a number of international HR Leaders performance management
strategies – it is still relatively unknown to most of our interviewees. Despite the
fact that the majority of them have recognized the benefits of developing and
running such a tool, most have admitted that the investment inherent to it has
discouraged their management from developing it, which in consequence, has
kept HR leaders from acquiring first hand design and implementation
experience with regards to such systems.
Evolution of the HR Leader's agenda –
before and during crisis
10. © MB Executive Partners 11
n Employee Relations – pre crisis 14% / during crisis 19%
A notable increase in this target task has been brought to our attention. This
target task has historically represented a significant portion of HR Leaders time
allocation. The observed high turnover rates as well as the lack of performance
management systems have led HR Leaders to increase their presence at the
forefront of managing employee grievances.
n Compensation & Benefits Administration – pre crisis 15% / during crisis
5%
Fueled by unprecedented growth between 2000 and 2007, a number of HR
Leaders evolved in Family Owned Groups have admitted that attracting talents
was closely linked to having a competitive compensation framework – thus, a
significant portion of their time has been invested in building a compensation
framework with the help of specialized advisory firms such as Hay. Since 2007,
this trend has been completely reversed and has led HR Leaders to decrease
attention allocated to compensation topics.
Evolution of the HR Leader's agenda –
before and during crisis
11. © MB Executive Partners 12
n Recruiting & Staffing – pre crisis 15% / during crisis 19%
This key item has probably come as a major surprise during our study. Affected
by lay-offs between 12% to 22% within 18 months of the start of the economic
crisis. Most of our HR Leaders had to counter lay-offs with hiring talents with a
high degree of specialization, particularly in sectors such as retail, and real
estate asset management.
n Organizational Space & Planning – pre crisis 6% / during crisis 10%
The management of the workplace has not been a critical task for our
interviewees – only accounting averagely for 6% pre crisis and 10% during
crisis. This 4% increase is due to the centralization effort initiated by HR
Leaders. Regrouping employees whom were on multiple locations into a fewer
number of offices to reduce rental/ownership cost.
n Employee Safety, Wellness, Awareness, and Health – pre crisis 7% / during
crisis 3%
A Marginal occupation compared to other items on the HR Leaders job
description.
Evolution of the HR Leader's agenda –
before and during crisis
12. © MB Executive Partners 13
n Company Employee & Community Communication – pre crisis 4% /
during crisis 5%
When asked whether measures such as lay-offs did or did not have an impact
on the way HR Leaders communicate towards employees or the general public,
it was answered by the negative. Most of the communication projects led by HR
Leaders are mostly to do with making public senior appointments and
communicating on empowerment programs (Emiratization, Saudization etc.)
n Employee Services & Counseling – pre crisis 11% / during crisis 11%
Through long standing regional experience and a high degree of cultural
awareness, interviewed HR Leaders recognize that cultivating relationships and
managing employees from a diverse cultural background is key – especially in
countries where non nationals account for up to 85% of the population.
Interviewed HR Leaders have shared that most of the efforts deployed within
Employee Services & Counseling were to maintain a certain degree of clarity
between management's expectations and employees career aspirations.
Methods and allocated time for this key task have not evolved despite an
uncertain business climate.
Evolution of the HR Leader's agenda –
before and during crisis
13. HR Leader – Peculiarities of the role in Family Owned Conglomerates
Evolution of the HR Leader's agenda
Downsizing of the workforce and confidence crisis management
Talent retention
Reputation management
Conclusion
14© MB Executive Partners
14. © MB Executive Partners 15
Most of the HR Leaders we have interviewed during the course of our research
have admitted that their business has downsized between 17% and 28%. One of
the most important effects induced by those large scale lay-offs, is the negative
impact on the group's reputation. As mentioned earlier, following significant
lay-offs, most of the HR Leaders we have interviewed had to hire highly skilled
managers and senior managers.
Downsizing of the workforce and
confidence crisis management
Duration of the
search
2-4 month
Employee
On-boarding
½ month to
1 month
Total
turnaround
time
3-5 month
Duration of the
search
3-5 month
Employee
On-boarding
1 month +
Total
turnaround
time
5-7 month
Hiring Decision
Hiring Decision
15. © MB Executive Partners 16
Based on our market knowledge as well as the discussions we have had with
our pool of HR Leaders, here are some of the key items, which have had a
negative impact on company's hiring's:
n Information asymmetry – some of the HR Leaders we have been talking to
have expressed a certain frustration with regards to not being able to deploy an
internal communication strategy aiming to educate and inform the employee
pool of the changes incurring within their organization. Rather than developing
clear communications guidelines designed to explain the changes that their
groups were facing, a top down executive order was cascaded onto them, not to
share information such as the scale of the lay-offs, motivations of downsizing
decisions etc. This has led to creating a distance between the workforce at
every level, and the executive team, making it difficult for HR Leaders to
maintain a normal level of confidence from the workforce as well as potential
hires.
n Lack of external communication from restructuring groups have led a
number of “opinion leaders” formerly employed with downsizing Family
Owned Conglomerates to diffuse less than positive publicity about their former
employers.
Downsizing of the workforce and
confidence crisis management
16. © MB Executive Partners 17
n Recruitment companies – contingent as well as executive search firms, due
to their lack of cultural empathy have not succeeded in sourcing and identifying
the most relevant talents through rigorous market research.The lack of advisory
as well as failure to act as a stream for market intelligence to their clients, has
also kept a number of HR Leaders from receiving quality market information,
usable to restore confidence both towards employees as well as potential hires.
Downsizing of the workforce and
confidence crisis management
“Executive search firms,
due to their lack of cultural
e m p a t h y , h a v e n o t
succeeded in sourcing and
i d e n t i f y i n g t h e m o s t
relevant talents”
17. HR Leader – Peculiarities of the role in Family Owned Conglomerates
Evolution of the HR Leader's agenda
Downsizing of the workforce and confidence crisis management
Talent retention
Reputation management
Conclusion
18© MB Executive Partners
18. According to our pool of HR Leaders, Talent retention
has become a priority for Family Owned
Conglomerates, only in the last 2-3 years.
Fueled by unprecedented growth during the pre-
crisis period, Family Groups have rather focused on
bringing on board individuals who would be able to
address a set of particular issues, develop specific
areas of business, or leverage on their relationships to
allow them to enter markets/countries they could not
have access to.
The latter is particularly important for Family Groups
with interest in franchising international brands.
“Talent retention has
become a priority
for Family Owned
Conglomerates”
Talent retention
19© MB Executive Partners
19. Talent retention
20© MB Executive Partners
0
10
20
30
40
50
60
Active feedback
system
Percentage of
internal
promotion versus
external hiring
Promotion of a
corporate culture
Availability of a
training and
development offer
55%
33%
25%
20%
20. HR Leader – Peculiarities of the role in Family Owned Conglomerates
Evolution of the HR Leader's agenda
Downsizing of the workforce and confidence crisis management
Talent retention
Reputation management
Conclusion
21© MB Executive Partners
21. Lay-offs have been seen as the most challenging part of our HR Leaders scope
of work, throughout the discussion we have had with HR Leaders. The subject of
managing an effective communication process towards both internal and
external stakeholders has allowed us to gather a variety of data with regards to
how Family Group included in our sample have managed this process.We have
taken some best practice communication items from Fortune 500 companies in
order to establish a set of four key items we have then submitted to our pool of
HR Leaders.
Reputation management
22© MB Executive Partners
0
10
20
30
40
50
60
70
80
90
100
Provide extra
benefits
Rollout of a
proactive internal
communication
plan
Communicate to
external
stakeholders
Provide
outplacement
services
89%
57%
50%
15%
22. n Roll out of a proactive internal communication plan: 57% of our
interviewees have shared that rolling out an effective communication plan had
helped the company in implementing their restructuring plan more easily.
Communicating to the workforce at early stage also allows for Family Owned
Conglomerates to control the spread of information towards external
stakeholders.
n Provide outplacement services: outplacement services are commonly
provided by companies in the context of lay-offs. In some regions such as
Europe, governments jointly participate to such initiatives. In the context of
GCC based Family Groups, some HR Leaders have taken on the initiative of
allocating resources to assist employees.This translates mainly in leveraging on
their relationships with recruitment firms. Despite that, only a small fraction of
those HR Leaders found the right support from the recruitment industry. This
translates into 17% of our HR Leaders having been able to roll out this service.
Reputation management
23© MB Executive Partners
23. n Communicate to external stakeholders: 53% of our interviewees have
shared that they have been tasked to communicate on lay- off plans to external
stakeholders – mainly the media. This has been a fruitful initiative, which has
allowed Family Groups to preserve their reputation more effectively. Not
communicating to external stakeholders has greatly affected Family Groups in
being able to attract talents.
n Provide extra benefits: Family Groups have been adamant on making sure
employees were provided with 3-12 month visa sponsorship, 3-6 month housing
allowances, school fees coverage till year end, return tickets to home country
for self and family, as well as a 1-3 months severance package. This has allowed
many employees to legally remain in the region after their employment has
been terminated, in order to seek employment in decent conditions.
Reputation management
24© MB Executive Partners
24. HR Leader – Peculiarities of the role in Family Owned Conglomerates
Evolution of the HR Leader's agenda
Downsizing of the workforce and confidence crisis management
Talent retention
Reputation management
Conclusion
25© MB Executive Partners
25. HR Leaders have deployed an incredible amount of energy during the
economic crisis. A challenging economic climate, the reshuffling of Family
Groups' business agenda, to name hardships but a few – have brought HR
Leaders closer to the center of decisions making, within the Family Groups
organizational charts. Initiatives taken to “humanize” difficult restructurings
have led a number of Family Groups to be able to bear the fruits of those
positive initiatives.
For that, some of our interviewees now enjoy the privilege of hiring smarter and
faster. HR Leaders are now more than ever, confronted to a need of partnering
with Executive Search Consultants capable of cultural empathy as much as
being able to read the Family Groups' agenda and adapt to it.
Conclusion
26© MB Executive Partners
26. Mustapha Bouterid
Managing Director
MB Executive Partners
Sheikh Zayed Road
P.O. Box 121206
Dubai
United Arab Emirates
t +97144424955
f +97144424955
m +971502259936
e mb@mbexecutivepartners.com
w www.mbexecutivepartners.com