Talent wars rage as firms raid competition for staff

Kenyan companies are raiding rivals for skilled employees rather than developing their own staff, sparking a vicious cycle of talent wars that have significantly increased their costs, a new study has shown.

Consulting firm Ernst & Young (EY) says the mismatch between college training and workplace requirements has resulted in a shortage of rightly skilled workers in the corporate world, fuelling costly talent wars.

“The war for talent has resulted in poaching rather than talent development as an easier form of getting workers with the right skills,” said David Storey, a partner at EY in charge of people and organisational change for Europe, Middle East, India and Africa.

Mr Storey said Kenya’s perennial talent wars have pushed labour costs way above the African average because poaching from rival companies requires pricey inducements such as higher pay, allowances and promotions, all of which have serious cost implications.

“Poaching of staff pushes up labour costs and the vicious cycle results in companies not investing in training,” he said.

The talents market survey report says Kenyan companies could slow down the rapid wage inflation by investing in graduate trainee programmes, internship schemes and staff mentoring as plans that nurture in-house talent through on-the-job training.

READ: Local graduates lack key skills for job market

In Kenya, the report names professional services, banking, insurance, media and emerging technical fields such as mining, oil and gas as sectors where talent wars are most intense.

Kenya accounted for four per cent of the total sample of 224 companies across 23 countries in sub-Saharan Africa with 392,000 employees.

EY also faulted Kenyan firms for focusing on regional expansion, the top line and bottom-line growth at the expense of nurturing talent.

Executives surveyed in the study put more emphasis on mergers and acquisitions to grow market share as well as entering new markets rather than building organisational capacity through staff training.

“Technical and professional skills will be most in demand, while executive skills are the least. Without competent managers and leaders, the performance and development of talent required to drive growth will never be realised,” reads the report.

Celestine Munda, EY head of advisory services in East Africa, reckoned that collaboration between universities and industries in curriculum development and industrial attachment could help close the skills gap among fresh graduates.

“There should be internship programmes for college students during the long holidays to equip them with the experience and skills to help address the needs of the labour market,” said Ms Munda.

READ: FKE seeks to bridge skills gap with internships for students

The EY report comes as publicly-listed and private firms flex their muscles in the labour market with brazen raids that have nearly crippled rivals’ operations in the past two years.

The list of prominent talent raids includes Sasini Tea’s January hiring of Moses Changwony from DL Group, a tea estate firm, to serve as its chief executive following the exit of Caesar Mwangi.

Mr Changwony was previously the managing director at the firm, which owns DL Koisagat tea estate and factory in the Rift Valley.

National Bank last September tapped Chris Kisire, who was head of finance at Mumias Sugar Company, to be the lender’s chief finance officer while listed real estate firm Home Afrika tapped Housing Finance Bank Uganda’s head of strategy and investor services Njoroge Nganga as its chief executive.

Equity Bank in 2012 headhunted Julius Kipng’etich from Kenya Wildlife Service (KWS) to serve as its chief operating officer.

The bank’s CEO, James Mwangi, said Equity was attracted to Mr Kipng’etich’s stellar performance at KWS where he transformed the loss-making parastatal into a serious business outfit.

Chandaria Industries in November last year poached PepsiCo Kenya chief Butch Moldenhauer to be the chief operating officer at the tissue and hygiene products manufacturer.

Mr Moldenhauer helped PepsiCo establish a Sh2.4 billion local production plant in Ruaraka and launch Pepsi products in Kenya, setting off price wars that cut the dominance of rival Coca-Cola in the local market.

The EY report further says that lack of highly sophisticated staff locally has resulted in companies hiring expatriates as well as turning to Kenyan professionals in the diaspora.

However, the study concludes that hiring expatriates does not result in skilled transfer given their short tenure, high turnover and cultural differences.

“Expats are less capable of spotting and grooming talent given that they do not understand the local culture. Most of them have a two-year average period contract hence a continuous in and out cycle,” said Mr Storey.

EY says sourcing skilled personnel from the African diaspora presents a better option given that they have a mix of international experience and understand the local culture and market.

“One-third of respondents in eastern sub-Saharan Africa expect future recruitment to come from the returning African diaspora.”