Why some companies in South Africa have a talent retention problem

Chief executives in South Africa are being challenged to offer better employment opportunities than their competitors, says Salesforce South Africa VP, Zuko Mdwaba.

“With remote work on the rise, they are competing with organisations in every market, to provide the best flexible working conditions and developmental opportunities,” said Mdwaba. “Today’s workforce expects business leaders to lead in a way that is ethical and responsible.”

He said that flexible working arrangements can meet the needs to retain employees. Options can include flexible fully remote work or an entirely office-based approach.

Professional services firm PwC said that the retention of talent is likely to remain a significant risk factor for businesses in 2022. It said that recent events globally have prompted many to reflect more on the ‘why’ of their jobs.

“However, in South Africa where unemployment is higher than ever, this is nuanced. Certainly, there are notable challenges being experienced with finding skilled and executive talent in light of increased emigration and other pressures. Creative retention arrangements, which are more sophisticated than cash alone are becoming an increasing weapon in the talent war.”

Capitec chief executive, Gerrie Fourie recently described the local hiring market as a ‘war of talent’ with businesses struggling to hire from a limited talent pool.

He added that in the context of IT workers or data scientists, which are highly technical professionals, it is easy to work for a London company but live in South Africa.

According to PwC some of the push factors that are leading more people to quit include: complaints about the ‘office grind’, long commutes in traffic, and a full-time return to the office.

“In some instances a failure to create employee buy-in and alignment to a company’s strategy and/or purpose and underlying values, and a reduction or absence of incentives vesting, particularly at a C-suite level, has made the barriers to leaving a company much lower.

“This coupled with the introspection mentioned above has led to an acceleration in resignations.”

Will the ‘great resignation’ stimulate small businesses?

A global upsurge in voluntary resignations amid the Covid-19 pandemic – otherwise known as the ‘great resignation’ – witnessed almost 50 million Americans quit their jobs in 2021 alone.

Another trend, however, has been developing in tandem with these mass resignations – a boom in the number of people starting new small businesses, with new business being formed increasing by 53% in 2021, when compared to the same period in 2019.

These emerging trends have led some experts to conclude that the flipside of the ‘great resignation’ is a small business boom, said Jeremy Lang, executive director at Business Partners Limited.

Whether South Africa will follow suit is dependent on a number of factors that are unique to the country’s socioeconomic climate, said Lang, adding that to understand how South Africa differs as a case study, we need to take a closer look at the reasons behind the mass resignation.

He said that numerous workplace studies have indicated that South Africans were compelled to work longer hours during lockdown, resulting in burnout becoming an unfortunate reality for many. Furthermore, remote working has opened the world’s borders to South Africans, who now have more options to work remotely for offshore companies.

“In South Africa, where the socioeconomic climate is characterised by record-high unemployment, the status quo is very different from other regions such as the United States. The ‘great resignation’ in America is arguably a white-collar phenomenon.

“In South Africa however, where the majority of the unemployed are blue-collar workers, South Africans simply do not have the luxury of quitting their jobs and relying on the state,” said Lang.

These realities therefore beg the question: will South Africa experience a small business boom as an after-effect of the pandemic? The answer is both yes and no, said Lang.

“It is yes, in the sense that remote working culture has given rise to a new generation of digital nomads – individuals who choose to spend their time working remotely, from different geographical locations.”

This trend is most apparent among Gen Zs and Millennials, who frown upon office-bound working environments and are doing much to resist the nine-to-five mentality, which may not be the most practical solution to obtaining a work/life balance.

These digital nomads may work as freelancers, consultants and workers in the emerging gig economy. As such, they may very well be the new generation of small business owners.

“The answer is also, no,” added Lang, “in the sense that much work needs to be done in the way of refining the process that aspiring entrepreneurs must abide by in order to start their own businesses. On a positive note, the president’s establishment of a red tape committee to decrease the bureaucracy that exists within the SME space, hope is on the horizon.”

However, as the latest findings from Business Partners Limited’s Q4 2021 SME Index indicate, cashflow problems and limited access to funding remain two of the biggest challenges that face small and medium-sized enterprise (SME) owners. Unless these challenges improve, there will be little to no impetus for the rise in small business opportunities.

“Whichever way we choose to look at these difficult questions, it is clear that the workplace of the future, for large and small businesses alike, has changed beyond recognition. In the post-Covid-19 context, much will depend on aspiring entrepreneurs’ view on the SME environment and its potential for profitability,” Lang said.

“As the Q4 2021 SME Index reveals, confidence levels are returning to their pre-Covid levels, which is indeed a good sign and may very well be a welcomed precursor to an upsurge in new and innovative small businesses.”

Reputation integrity

The Reptrak Company, a cloud-based reputation intelligence company, said that changes in the way of work over the past two years have altered what is important to employees and what they want from the company they work for. Global trends of remote work opportunities, reevaluations of work-life balance, and the search for more purposeful work have led to many quitting their jobs.

The recent 2022 Global Reptrak 100 report showed that the biggest driver of a decline in a company’s reputation was whether it cared for employees’ health and well-being and its ability to offer fair rewards and equal opportunities in the workplace.

“Companies around the world are under tremendous pressure to find great talent. The pandemic has changed the workplace and the public’s mindset about employers, perhaps forever,” said The RepTrak Company CEO, Kylie Wright-Ford.

Read: Brain drain warning for South Africa as medical specialist shortage flagged

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