S4E09 Grit & Growth | From Downsizing to Thriving: Strategic HR in a Global Context

Introduction

• The traditional way of recruiting was flawed as it did not integrate social norms, and this was a problem when trying to recruit leaders from diverse backgrounds (2s).
• The podcast "Grit and Growth" from Stanford Graduate School of Business explores the trials and triumphs of entrepreneurs from Africa and Asia, with insights from Stanford faculty and global experts (38s).
• The host, Darius Teeter, mentions that the podcast often discusses human resources and the importance of having a human capital strategy, which is often lacking but crucial for businesses (1m2s).
• The guest, Ro, is the CEO and founder of Roan Partners, a human capital consulting firm based in Sagal, and has decades of experience navigating human capital in private and multilateral organizations (1m26s).

Ro's Approach to Strategic HR

• Ro's approach emphasizes cultural sensitivity and a break from a postcolonial mindset, and she understands how to build sustainable teams and navigate the difficult process of downsizing (2m17s).
• Ro's career has been defined by her focus on strategic HR, guiding organizations in shaping their long-term goals and aligning their people strategy to meet future challenges (3m28s).
• Strategic HR is about supporting the organization's future by creating a change management framework, adapting to the changing ecosystem environment, and projecting the organization into the future (3m44s).
• Ro's approach to strategic HR involves putting in place HR models that align with the business model, ensuring sustainability, and considering factors such as nonprofit or profitability (4m15s).
• Rowan Partners was founded with the mission to unlock the potential of Africa through its people, focusing on supporting organizations to understand the importance of investing in people to get a return on investment and be more sustainable or profitable (4m50s).
• The company has a diverse portfolio of clients, including large private sector companies, SMEs, multilateral organizations, and national public sector clients, and works in the region and outside Africa (5m26s).

Rowan Partners' Marketing and Value Proposition

• Rowan Partners' marketing strategy involves using big data to measure the impact of investment in people on revenue or profitability, and communicating that investing in people is not just about paying salaries (6m14s).
• The company's value proposition is its "gloal" perspective, which combines global experience with local context, cultural understanding, and regional experience (6m56s).
• This approach helps international clients with branch offices in Africa to navigate local labor laws, cultural differences, and social norms (6m42s).
• Rowan Partners differentiates itself by breaking the pattern of replicating Western practices and instead contextualizing universal practices in people management to suit the local context (7m42s).

Contextualizing for the Local Context

• Contextualizing for the local context means understanding the nuances of the local market, such as cultural differences, social norms, and economic conditions, and adapting people management practices accordingly (8m24s).
• For example, a manager in London or Paris with a team or office in Côte d'Ivoire or Sénégal needs to understand the local context, including labor laws, cultural differences, and social norms, to effectively manage their team (8m35s).
• Rowan Partners' approach is based on the founder's experience as an HR Manager for a company with offices in the region, where she realized the importance of adapting to the local context to remain competitive (8m51s).

Case Study: Construction Company's HR Transformation

• A construction company had high HR expenses in a region due to the cost of sending expatriates, prompting a review of their HR strategy to better align with regional realities (9m8s).
• The company's approach was to develop local leaders, which helped them thrive by adapting their HR practices to the region (9m38s).
• The goal was to build a framework that would attract and retain local leaders who could run the company's offices in the region (9m58s).

Addressing Challenges in Attracting and Retaining Talent

• The company had previously struggled to implement an effective HR framework due to a lack of understanding of the expectations of local employees (10m24s).
• Local employees had the same expectations as expatriates, but with lower costs, as they would be retained and stay in the region (11m11s).
• A new compensation package was designed to attract Africans who wanted to return to work in the region (11m37s).
• The company's previous recruitment approach was flawed, as it did not integrate social norms and was based on Western standards (11m58s).
• For example, expecting candidates to maintain eye contact during interviews was seen as disrespectful in African cultures (12m17s).
• Many global companies in the region struggle to attract and retain diaspora talent due to a lack of understanding of local contexts and expectations (12m37s).
• This can result in companies investing heavily in bringing diaspora talent back to the region, only to have them leave again due to a lack of local context and understanding (12m42s).

The Evolving Global Market and Compensation

• The global market has evolved, especially with the rise of remote work, and companies have had to face the reality that a one-size-fits-all approach to compensation no longer works (13m39s).
• Some companies have realized that they cannot have a differentiated compensation and benefits package that does not reflect the employment markets in terms of where they recruit from (14m11s).
• The COVID-19 pandemic led to the realization that there is one global employment market, and companies started recruiting from regions where local compensation is cheaper (14m27s).
• Smart companies have revamped their compensation policies to respond to the global market, moving away from international versus local packages and focusing on job-based compensation (14m58s).
• The traditional gap between expatriate and local compensation is no longer relevant, and companies are adjusting to a more job-based compensation scheme (15m43s).
• The assumption that only expatriates can do certain jobs is no longer true, and companies are recognizing that local talent can often fill these roles (16m2s).
• Unconscious bias has played a role in the past, with the assumption that local capabilities were not available, leading to the need for expatriates (16m21s).
• Companies are working to understand and address these biases, recognizing that local talent can often meet their needs (16m32s).

Navigating Labor Laws and Regulations

• Differences in labor laws and regulations, such as official holidays and leave policies, can create challenges for companies operating globally (16m48s).
• Companies need to adapt to local ecosystems and negotiate with officials to create frameworks that work for both the company and local employees (17m32s).
• In some countries, labor laws are based on those of their former colonizers, and understanding these laws is crucial for creating effective and inclusive teams, especially when downsizing (18m2s).

Downsizing and Restructuring

• Downsizing is a challenging aspect of running a business, and the process can vary significantly across cultures and labor laws (18m20s).
• When downsizing, it's essential to have a clear plan, considering the potential ripple effects on the organization and its employees (18m49s).
• A master plan should include a strong communication strategy to minimize the negative impact on both departing and remaining employees (19m1s).
• Transparency and a well-structured communication plan are vital for retaining key talent during downsizing (19m36s).

HR Framework and Staffing Plan

• An HR framework should include a plan for the future, focusing on talent management and the right HR strategy for the organization (19m58s).
• Recruiting for capabilities rather than just positions is crucial, and this can be achieved through a strategic HR plan that maps required capabilities against a timeline (20m18s).
• A staffing plan helps identify which positions are temporary, long-term, or need to be outsourced, and this information can inform hiring decisions with the right contractual structure (20m24s).
• Considering the business needs and labor laws, companies can negotiate agreements with labor inspections or unions to gain flexibility in their hiring and staffing decisions (21m20s).
• In some countries, labor inspections can validate agreements between companies and unions, allowing for more flexibility in HR decisions (21m40s).

Labor Inspections and Union Agreements

• The National Labor Relations Board is responsible for protecting workers' rights, including the right to unionize, except in Africa where labor inspections are more hands-on for businesses operating in different regions (21m55s).
• Labor inspections can offer advice, not just audits, but this requires having a plan to present to the labor inspection, which can provide a rationale for specific agreements that support business flexibility in talent management (22m6s).
• Building relationships with labor inspections is crucial, as it's better to establish a connection when there are no issues, so they can see the company's commitment to doing the right thing (22m26s).
• Most companies only interact with labor inspections when there's a problem, such as a lawsuit, but proactive engagement can lead to support when issues arise (22m42s).
• In one experience, having a good relationship with a labor inspector helped navigate complex labor laws and regulations, even with limited experience as an HR manager (23m8s).
• Understanding the labor framework from the inside out is helpful in avoiding mistakes when applying the rules, and seeking guidance from labor inspectors can provide the best interpretation (23m51s).

Communication During Downsizing

• When communicating downsizing or restructuring, having a communication plan aligned with the master plan is essential, including knowing where to start and end (24m35s).
• One common mistake during downsizing is forgetting about the people who will be staying in the company and how the changes will affect them, leading to feelings of guilt and betrayal among remaining employees (24m57s).
• Remaining employees may feel like they're next in line to leave the company and start looking for other jobs, which can lead to turnover before the company realizes it (25m26s).
• When downsizing, it's essential to communicate with the people staying in the organization, explaining why they are staying, as this is a business-driven decision that can impact their engagement and motivation to deliver on business goals (25m38s).
• The organization's employee brand and reputation are also at stake, as the people leaving are ambassadors of the organization, and clients are watching, so it's crucial to manage the brand and communicate with clients about the reason for downsizing (26m11s).
• The ecosystem of the organization is affected by downsizing, and it's not just about communicating inside the company, but also considering the impact on clients and ensuring that each impacted stakeholder receives the right communication (26m31s).
• Clients want to know that the organization still has the capabilities to deliver on agreements and business, and in the context of environment, social, and governance, clients are worried about people's well-being in the companies they work with (27m8s).
• The organization's reputation is at stake if they don't do the right thing about people's well-being, and it's essential to strike a balance between compassion and the pragmatic needs of the business when treating people who are being let go (27m31s).
• Planning the downsizing process carefully can make it easier for the organization to get through it, and it's essential to have a level of empathy, especially at the leadership level, to show people that they care (28m1s).
• Having a scheme around the right severance packages, outplacement services, and showing empathy can have a positive impact on the organization, especially for clients and the people staying in the organization (28m51s).
• Taking a smart approach to downsizing can actually help the business, and it's not just a social approach, but a bright business approach (29m15s).

The Importance of People Management

• Managing people is more than just an operational task; it's about securing the right skills for the company's growth strategy and finding people (29m27s).
• Downsizing requires aligning with company values, considering local cultures and laws, and showing compassion, especially during difficult times (29m35s).
• It is essential to prioritize the well-being of remaining employees, not just those who are leaving, as this approach benefits both the staff and the company's bottom line (29m45s).
• Clients notice the impact of a company's treatment of its staff, as employees are the face of the organization (29m55s).

Podcast Credits and Conclusion

• Ro shared her insights and business growth journey, and additional HR-related episodes can be found in the show notes (30m1s).
• The episode was researched and developed by Erica Amak, AJ, and VN Virgin, with Kendra Gladich as the production coordinator (30m15s).
• The executive producer is Tiffany Steves, with writing and production by Nathan Tower, and sound design and mixing by Ben Cranell at Lower Street Media (30m23s).
• The host of the episode is Darius Terer (30m31s).