Africa is home to countless multinational companies (MNCs) operating alongside an ever expanding number of local entrepreneurs. All this has led to heightened competition, with survival depending on innovativeness in order to maintain competitive edge and high productivity technological systems, market expansion and, ultimately, increased profits. In this dog-eat-dog environment, a machiavellistic corporate behaviour is now rampant where most companies have decided to take a harder line on non-core business issues and make the most of measurable outcomes – technology, markets and profits. In terms of technological innovation, organisations are competing to stay ahead of the game, particularly so because technology means less labour costs, more efficiency, better quality products and ultimately more profits. There is much financial investment towards researching the market and innovating new marketing strategies, new technologies, and more so towards recruiting top talent in finance, information technology (IT), operations and marketing. Big companies compete for conspicuous market-related corporate citizenship initiatives such as sports sponsorship with quite large amounts of money thrown every year at such programmes. In all these developments, human resources (HR) management, already struggling to come out of a repugnant perennial reputational crisis as a corporate function, has been further relegated to the margins of core business. In most organisations, HR is assuming routine in-discipline functional roles of recruitment, selection and organising training among other non-strategic roles.

This paper seeks to give an exposé of the vast potential contributions HR can make to corporate strategy especially within the peculiarly volatile African business environment and growing economy. More precisely, it seeks to respond to the question: What strategic contributions is HR making or potentially make, that have quantifiable and measurable value-addition to the financial bottom-line? What is the meaning of HR’s strategic role in Africa or what are the critical areas that are likely to be strengthened by the involvement of HR? It further seeks to give an account of the challenges the profession is facing as it seeks to transform itself from its classical HR functional role to a more strategic business partner/human capital consultancy role. African, and especially South African, case scenarios will be modelled against American, Asian and European benchmarks where HR has made some significant inroads towards professional redemption, earned itself some trust (and respect), and has consequently gained a more meaningful role within the board.

HR as seen ‘…or as it has allowed itself’ to be seen by the board

Throughout corporate history, and not only in Africa, HR management as a corporate function has atrociously and persistently failed to earn respect, trust and consequent recognition from among its supposedly functional equivalence of finance, marketing, operations and IT. Even as it seems to have gained some loose reputational pieces and redeemed itself over the last decade, its relative worth to the line is still being seriously doubted by most line protagonists, with functions such as finance still enjoying corporate hegemony by some distance. In most organisations, HR actually assumes a support rather than a line role.

Perhaps the biggest problem is that HR has to find its much needed relevance amidst a world of line quantitativists whose everyday numbers language of exponential growth and decline, regression, computer analysis, trends, absolutes, Eigen values, covariance, means, and linear models is not everyday language for HR.⁽²⁾ The perception of line management is that, in this highly measured world of quantitativists, HR still presents itself in largely qualitative terms which are not recognised and do not fit in with the quantitative rigour of modern business.⁽³⁾ This leads to the assumption that HR is a bit woolly, more art than science and, therefore, a likely non-contributor to the rigorous thrust of modern management which likes to see itself as more science than art.⁽⁴⁾ Some line managers still believe that HR is ineffective, costly and incompetent. In summary, they feel it is value sapping.⁽⁵⁾

Admittedly, nothing is further from the truth for the majority of HR professionals in Africa. Even the South African Board for People Practices (SABPP), the custodian of the HR profession in the African benchmark economy of South Africa, did admit that sadly, very few HR practitioners have developed the necessary strategic, business and administrative skills required to function at board level.⁽⁶⁾ It is a pertinent realisation by the SABPP which warrants an immediate question: What are those critical skills that HR needs to master particularly within the peculiar African social, political, economic, legal and cultural operating environment? A further and related question is: Do the HR leaders themselves, especially at senior management level, know the skills and knowledge that they need to acquire in order to begin to have real and meaningful influence on line business? And, likewise, do the non-HR functions know what kind of HR partner they would be happy to meet in the board? Our ability to provide answers to these questions will surely determine the success or failure of the HR business partnership role that HR professionals must assume in the new business era.

New HR mandate now and into the future: Push and pull factors

Despite some serious doubts, questions and debates on the value of HR to strategic business, it has become increasingly clear that the changing global business environment has increased the need for drawing HR closer to the board/line as a strategic business partner than ever before.⁽⁷⁾ The finance-driven constructs of doing business have of late come under serious doubt, where evidence has persistently shown that the so-called ‘soft’ issues, such as cultural incompatibility, have led to major business failures during strategic changes such as mergers, acquisitions and international joint ventures, even more so than ‘hard’ factors such as cash flow and debt structure.⁽⁸⁾ However, the presence of debates and doubts is itself an indication of the worthiness of sharing some insights on the extent to which HR executives or senior management play, or can play, a role in the key corporate strategic facets. These critical facets might include, but are not limited to, corporate social responsibility, boards and directors strategic planning, audit committee, compliance with laws, rules, business codes and standards, IT, risk, internal audit, governance of stakeholder relationships, and lastly integrated reporting and disclosure among other issues.⁽⁹⁾

Generally, the business environment has changed across the world and changes have meant more opportunities and challenges for HR as it bids to become relevant in terms of adding value to line business. Notable changes are more evidently coming from five critical imperatives of globalisation, technological advancement, competition for intellectual capital, organisational changes, and need for market expansion for increased profitability.⁽¹⁰⁾

Globalisation both in operational and marketing terms, including intra-continental expansion, is causing serious challenges to African countries; for most as recipients of MNCs and for a few like South Africa, as headquarters of globalising firms. These global movements have serious ramifications for the nature, functioning and direction of human capital leadership, especially in terms of inputting to the line. For a country like South Africa with an evident hegemony in terms of the number of globalising firms such as MTN, Vodacom, SABMiller, and Standard Bank to name but a few, HR is becoming increasingly important in helping with the deployment and redeployment of talent.

HR practices and policies for deploying expatriate staff are increasingly becoming pertinent strategic issues.⁽¹¹⁾ In an expansionist situation, HR must develop criteria for recruitment and selection of professional and managerial expatriate employees. Family situation, the partner’s career, schooling stage of children and a whole host of other family issues all have to be properly managed as their mismanagement can determine the success or failure of operational expansions.⁽¹²⁾ Different countries have different remuneration policies as dictated by different tax, legal and labour issues, all of which determine the appropriateness of using expatriate as opposed to local labour.⁽¹³⁾

The expatriate versus local labour puzzle is made even more complex by the differences in affirmative action programmes which normally reflect a country’s cultural, racial and regional conflict histories. The South African Broad-Based Black Economic Empowerment (BBBEE) initiative represents the kind of history redemption policies and legislations one would typically find in most African countries whose consequences go beyond employees to include the respective labour-sending communities and local suppliers. BBBEE is a strategic initiative turned Act (2003) of the South African post-apartheid Government, fundamentally aimed at promoting economic transformation through ensuring meaningful participation in the economy of historically disadvantaged groups, particularly Indians, Blacks and Coloureds ⁽¹⁴⁾ Still, in the case of South Africa, the position of the huge expatriate labour from other African countries makes the whole BBBEE policy implementation even more complex, political and turbulent. The questions of reverse discrimination, what constitutes unfair discrimination, handling of industrial actions, interpretation of labour legislation, and labour mobility of local talent into senior management issues are all challenges that require strategic input of human capital experts.

The August 2012 industrial action incident in the South African North West District of Marikana ⁽¹⁵⁾ which unfortunately resulted in the deaths of 45 people including 34 employees, represents a typical case of how disgruntlement on the part of employees and labour catchment communities, justified or otherwise, can be very costly to the company if not pro-actively handled through proper procedural policies and mechanisms. It is a challenge that falls well within the jurisdiction of senior HR management, something which should alert them to how similar incidences can be avoided in the future.

Perhaps the biggest strategic HR challenge, especially for those within South African companies expanding into the African jungle, is that some ventures had operated, and continue to operate, in countries with legacies of conflict with evident aftermaths of serious poverty, a breakdown of systems and institutions, political control of the economy, endemic corruption and an unpredictable operating environment among other issues.⁽¹⁶⁾ After 1994, South African companies moved primarily into Member States of the Southern African Development Community (SADC) that were not in conflict, because of their geographical proximity, political stability, historical trading and political ties, and existing opportunities.⁽¹⁷⁾ The strategic HR implications of such proximal expansion, although significant, cannot in any way be compared to the more recent West, Central, East and later on North African expansions of recent years.⁽¹⁸⁾ For example, despite the language and cultural differences, Mozambique quickly became a top trade and investment destination for South Africans where proximity and opportunity, and the massive Mozal aluminium smelter, represented irresistible pull factors.⁽¹⁹⁾ Of late, South African businesses have expanded into Angola, the other lusophone SADC country, a destination initially avoided because of the difficulty and cost of entry, given the unique structure of the post-war economy, logistical concerns, and differences in language and culture.⁽²⁰⁾ More recently, Nigeria, Africa’s biggest market, has been the big drawcard. Although, also initially avoided by South Africans because of its military rule and reputation as a tough place for business, the 1999 democratisation allowed the economy to open up and re-engage with global business.⁽²¹⁾ East African expansions intensified around 2002 with business invasions into Uganda, Kenya and Tanzania, all amidst a hostile reception as local business was wary of the South African threat to its own well-developed private sector and stiff competition especially in sectors such as brewing, retail and tourism.⁽²²⁾ By 2009, Angola, Nigeria, Ghana, Zambia and the Democratic Republic of Congo (DRC) were top investment destinations, with Zimbabwe, back on the investment radar following the relative normalisation of the economy, also coming into the fray.⁽²³⁾

What is particularly noteworthy in these developments, and what has serious management implications, is that, despite all the challenges South African companies faced and continue to face in their African expansionist jungle expedition, they are still prepared to weather the storm. Decisions to expand are based not least on notions of conflict and post-conflict States but rather on an assessment of opportunity versus risk and the requirements for mitigating such risk.⁽²⁴⁾

There is one fundamental resource that gives the companies all the confidence and motivation to undertake these high risk hunting expeditions – human capital. The fact of the matter is that as long as the processes are championed by good talent, especially at the apex, then surely all things will fall through. And it is inconceivably wrong, and indeed mistakes have been made, in thinking that once the financial, operational and marketing risks have been calculated and weighed up then any expansionary project should succeed. Human capital risks are equally influential if not even more influential than the other risks. In fact, human capital risks are at the nexus of all the other risks and have the potential to bloat the other risks and increase the propensity for failure in the whole expansionist strategy. The potential for risk conflation is high if ‘soft’ human capital risks are not properly accounted for before and during expansion. As already mentioned, a lot of issues require HR input, especially in areas of sustainable human capital movement, understanding of cultural terrain, proper gauging of labour standards, affirmative action issues, understanding what is contextually acceptable as social responsibility, remuneration (issues especially of senior management), and corporate governance and ethical frameworks among others. 

Competency antecedents for a successful business partnership HR role

It is a shared reality amongst African organisations that HR consultants, especially those from big human capital consultancy firms, receive much more respect than in-house HR functions. It is the norm in most organisations that when it comes to strategic changes such as mergers, acquisitions and restructuring, services are sought from private human capital consultants such as Deloitte, a service that normally comes at very high bill. High level psychometric assessments for the employment, deployment, promotion and training of senior management especially are also services commonly tendered to external human capital consultancy. The board is also likely to seek external technical advice on the remuneration of directors from external consultants rather than use the in-house HR professionals. Companies like Deloitte Human Capital Consulting, a member of Deloitte and Touché Group, boast of high-level human capital services in critical areas such as talent strategies, assessment, rewards, strategic change, leadership impact and development, organisational design and technology adoption among others.⁽²⁵⁾ The company also has strong Data Services and Analytics which include Human Capital Diagnostics, Quantitative Analytics and Reward Benchmarking.⁽²⁶⁾

A decision to use external consultancy services implies that the internal HR leadership is, very often, just left to implement consultancy recommendations. This lack of trust on the part of the line and board of in-house HR services and a preference for external consultants is by no means accidental, neither is it a decision that the board normally regrets, except for its high price. Independent human capital consultants represent exactly what organisational HR leaders should be in terms of a number of characteristics. HR in organisations needs urgently to move from its mere HR management function to becoming human capital consultants or business partners to reflect the strategic role it has to play in the new business environment. The fact of the matter is that HR cannot just wake up assuming a strategic role. The profession has suffered a reputational attack for so long that regaining trust, respect and recognition from the board, not to mention getting a meaningful seat in the board, requires a complete repositioning. Trust has to be earned and trust has to be accorded by line board functions. It is not the argument of this discussion paper that HR should devise company strategy; rather the paper acknowledges that strategy is the responsibility of the company’s executive board and HR is, or should be, part of that,⁽²⁷⁾ and meaningfully so. There are a number of ways this can be achieved.

Firstly, to fully function as strategic business partners and be ultimately treated as such, HR senior management should initiate and guide serious discussions on how the company should be organised to carry out its strategy.⁽²⁸⁾ There is a need for HR management to focus on the impact on organisational objectives of what they do. Throughout history, HR leaders have tended to be more concerned with procedural and maintenance issues and not with aligning HR strategy with organisational strategy.⁽²⁹⁾ It is the duty of HR to attract, motivate and retain human capital – especially intellectual capital in the area of the core competence of its business,⁽³⁰⁾ human capital that will be able to adapt in line with the globalisation trends. In other words, HR should think and act strategically.

Apart from thinking strategically, HR leadership should also seriously master the science of creating an entrepreneurial business culture.⁽³¹⁾ This represents a particularly huge labour market challenge, especially in the notoriously volatile African business environment. With high unemployment and large organisations shedding jobs, creating sustainable employment is vital. Owing sometimes to drops in commodity prices, political instability and related economic downturns, low skills level, and usurping labour costs among various other challenges, so many organisations in Africa have downsized and continue to do so.

Becoming administrative experts is another strategic change required of HR in Africa. An improvement on the administrative front for HR does not imply subrogating the crucial role of making sure that all routine work of the organisation is done well, but just means shedding the repugnant image of being policy police.⁽³²⁾ This can be achieved through improving efficiency, not only of their own function, but also that of the whole organisation. Arguably, there are numerous processes that can be done better, faster, and more importantly, cheaper through HR innovativeness.⁽³³⁾ They should find strategic ways of creating, for instance, automated and flexible benefits programmes that employees can manage without the need for paperwork and create technology-driven resume screening systems that reduce cycle time for hiring new candidates, among other issues. At organisational level, HR managers can also prove their worth as administrative experts by continuously rethinking how work is done throughout the entire organisation. One notable area in this regard is that of designing and implementing systems that allow departments to use shared administrative services.⁽³⁴⁾ South African organisations have already made quite good progress in this regard with most big companies such as Anglo American, Eskom and Sasol already having well established HR shared services structures.

Corporate governance is another crucial issue of possible HR influence. Although the custodianship of good corporate governance rests with the board and senior management,⁽³⁵⁾ the strategic furtherance of corporate governance in most organisations seems to be largely in the domain of ‘hard’ management positions of chief executive officers (CEOs), finance managers, managing directors, and general managers, with HR considered too woolly to be relevant. Recent highly publicised corporate calamities of major European financial institutions ⁽³⁶⁾ have exposed the frailties of greedy, finance-driven corporate governance systems and intensified the need for holistic systems, encompassing all functional roles. Board-level corporate governance issues currently divorced from the HR department but for which HR professional expertise is needed, include management of human capital and operational risks, corporate social responsibility (CSR), remuneration of senior management/directors, corporate ethics and succession planning issues among others.⁽³⁷⁾ CSR, especially in Africa, prioritises employee-related issues such as diversity, employment equity, job security, remuneration, occupational health and safety, employment relations, and work-life balance.⁽³⁸⁾ A recent study of sustainability within the South African mining sector revealed significantly higher detailed sustainability reporting on social issues compared to economic and environmental dimensions.⁽³⁹⁾ This can be easily understood within the historical socio-economic and political context of the South African mining industry where community groups around mines present a major source of influence on companies’ social disclosure and practices.⁽⁴⁰⁾ When CSR takes a big social orientation as in the case of many African countries, naturally HR has to take a central role in the planning and implementation of any CSR/sustainability strategies as there is no other function that can understand and consequently advise on the social dynamics of business better than HR.

Higher education institution: New HR role - new knowledge

When more is expected of HR in line with the new demands on the profession, a higher quality of the professionals is required. HR cannot, however, expand its role in an organisation if it does not have the requisite expertise. Becoming a strategic business partner requires a degree of knowledge about strategy, markets and economy, whilst assuming an administrative expert role requires some knowledge of re-engineering as well as the intricacies of what the line actually does.⁽⁴¹⁾ Earning the desperately needed respect requires a high level and confident demonstration of relevant skills to the line on the part of HR professionals. Higher education institutions are definitely an important part of the puzzle. Without their support the whole new strategic HR role will fail. University programmes should closely reflect the new expectations of the new African organisation in terms of HR expertise. The odds are not at all bad, especially in South Africa with most top universities already having programmes that are striking a good balance between behavioural and core business courses.⁽⁴²⁾ Most universities and Technikons in South Africa have such industrial psychology and HR management course structures; a development that represents a move in the right direction in terms of narrowing the costly gap between HR and the line.

Concluding Remarks

The success of HR in achieving the role of HR business partnership requires support from non-HR functions as much as it requires the HR professionals to upgrade themselves. The new HR internal consultancy or business partnership role requires new HR competencies in terms of knowledge, skills, values, thinking and behaviour. But HR leaders cannot come out of the historical professional dungeons alone without due assistance from the line functions and the board. Senior line executives have to change what they expect from HR and, more importantly, how they behave towards HR staff.⁽⁴³⁾

Professor Dave Ulrich, a prominent strategic HR guru attached to the University of Michigan School of Business, gives insight into how senior operating executives can support what he terms the ‘new HR mandate’. Firstly, for HR to be taken seriously, senior line executives have to demonstrate that they believe typical HR issues, soft as they might seem, are critical to business success.⁽⁴⁴⁾ Other ways notwithstanding, there is one critical way senior managers can demonstrate their belief in the skills of HR. This is through the inclusion of HR professionals in strategy discussions and stating explicitly that without the collaboration of HR, strategies are more hopes than realities, promises than acts, and concepts than results.⁽⁴⁵) Secondly, senior line managers must explicitly define deliverables for HR, and hold HR accountable for results. Thirdly, there is also a need to invest in new innovative HR practices in the same manner huge amounts of investment are thrown towards operational, marketing and financial management innovations.⁽⁴⁶⁾ Lastly, and possibly the most important thing line executives have to do is invest in the development of HR professionals themselves. It is the norm, especially in Africa, that much of skills development and training investment goes towards improving the skills of line management such as finance, marketing and operations. Even most corporate citizenship initiatives prioritise finance, IT and operations in terms of bursary sponsorship priorities.

It is high time corporate managers begin to accept the fundamental reality that, as much as HR managers might not be a scarce skill in most African countries, strategic scientific business partners are definitely scarce, perhaps at the same scarcity level as finance, IT and operations skills. This position is also acknowledged by the SABPP, which points out that some people land in the HR profession by default without any formal training whilst some are ‘dumbed’ into HR having failed in some other functional disciplines.⁽⁴⁷⁾ But becoming a strategic HR partner cannot happen by mistake as in the case of a general HR practitioner, as it requires a certain level and manner of training. The Health Professions Council of South Africa (HPCSA) has set a very high professional bar for its members by stipulating certain high minimum requirements for one to register and practice as an industrial psychologist. The robustness of training for South African industrial psychologists which has, as the minimum, a Masters degree in Industrial Psychology will go a long way in redeeming the battered reputation of the HR profession. With good further training in other aspects of business such as finance, marketing, economy and information technology, industrial psychologists represent the future of strategic HR business partnership in South Africa, and sets a an excellent benchmark for the continent.

Written by Tendai Mariri ⁽¹⁾

NOTES:

(1) Contact Tendai Mariri through Consultancy Africa Intelligence's Industry and Business Unit ( industry.business@consultancyafrica.com).
(2) Pambos, M., ‘Human resources – a pillar of corporate strategy’, 20 September 2002, http://www.xeta.co.uk.
(3) Ibid.
(4) Ibid.
(5) Ulrich, D., ‘A new mandate for human resources’, Harvard Business Review, January 1998, http://hbr.org.
(6) ‘Comments on the King III Report and Code of Governance: HR - the way forward’, Opinion Paper, South African Board for People Practices Publication, January 2009.
(7) Ulrich, D., ‘A new mandate for human resources’, Harvard Business Review, January 1998, http://hbr.org.
(8) ‘Comments on the King III Report and Code of Governance: HR - the way forward’, Opinion Paper, South African Board for People Practices Publication, January 2009.
(9) Ibid.
(10) Ulrich, D., ‘A new mandate for human resources’, Harvard Business Review, January 1998, http://hbr.org.
(11) Horwitz, F., ‘Key issues facing human resources management’, Leader.co.za, 15 January 2008, http://www.leader.co.za.     
(12) Ibid.
(13) Ibid.
(14) ‘Broad Based Black Economic Empowerment’, Republic of South Africa Department of Trade and Industry, September 2012, http://www.dti.gov.za.
(15) ‘South Africa's Lonmin Marikana mine clashes killed 34’, BBC News Africa, 17 August 2012, http://www.bbc.co.uk.
(16) ‘Doing business in post-conflict and fragile states: Challenges and risks’, African Development Bank (ADB), Development Planning Division, Working Paper Series No. 23, 2011, http://www.dbsa.org.
(17) Ibid.
(18) Ibid.
(19) Ibid.
(20) Ibid.
(21) Ibid.
(22) Ibid.
(23) Ibid.
(24) Ibid.
(25) ‘Human: The human capital value proposition’, Deloitte Consulting, 24 September 2012, http://www.deloitte.com.
(26) Ibid.
(27) Ulrich, D., ‘A new mandate for human resources’, Harvard Business Review, January 1998, http://hbr.org.
(28) Ibid.
(29) Horwitz, F., ‘Key issues facing human resources management’, Leader.co.za, 15 January 2008,  http://www.leader.co.za.     
(30) Ibid.
(31) Ibid.
(32) Ulrich, D., ‘A new mandate for human resources’, Harvard Business Review, January 1998, http://hbr.org.
(33) Ibid.
(34) Ibid.
(35) Davis, G.F. and Useem, M., 2002. “Top management, company Directors, and corporate control”, in Pettigrew, A., Thomas, H. and Wellington, R. (eds.). Handbook of Strategy and Management. Sage: London.
(36) ‘Timeline: Credit crunch to downturn’, BBC News, 7 August 2009, http://news.bbc.co.uk.
(37) ‘Comments on the King III Report and Code of Governance: HR - the way forward’, Opinion Paper, South African Board for People Practices Publication, January 2009.
(38) Ibid.
(39) Mariri, T. and Chipunza, C., 2011. Corporate governance, corporate social responsibility and sustainability: Comparing corporate priorities within the South African Mining Industry. Journal of Human Ecology, 35(2), pp. 95-111.
(40) Ibid.
(41) Ulrich, D., ‘A new mandate for human resources’, Harvard Business Review, January 1998, http://hbr.org.
(42) An example of this is found in the programme objectives of the Bachelor of Commerce (Bcomm) Industrial Psychology degree of the University of Stellenbosch. See http://academic.sun.ac.za.
(43) Ulrich, D., ‘A new mandate for human resources’, Harvard Business Review, January 1998, http://hbr.org.
(44) Ibid.
(45) Ibid.
(46) Ibid.
(47) ‘Comments on the King III Report and Code of Governance: HR - the way forward’, Opinion Paper, South African Board for People Practices Publication, January 2009.