HR Tech in Africa: Is Kenya ready to embrace the power of digital HR?
In the west, digital HR has become a booming business. Companies are constantly seeking ways to improve operational efficiency.
Most importantly, western businesses have recognised:
- The strategic value HR can provide, when empowered to act as a partner of the business
- The importance of investment in the number one asset of any organisation; its people.
Things have progressed immensely in the last decade. In such a highly competitive marketplace today, technology plays a pivotal role in helping organisations to deliver the strategic HR agenda.
Over the last few years, Asia has followed a similar trend and has also been building a strong industry within the HR technology space.
So, what about Africa?
Well, Africa is a large, diverse continent with 54 markets and a population exceeding 1 billion people.
In recent years, there have been various reports discussing how Africa is rising and becoming a hot spot for investment, business and technology. So what where do they stand on technology to support people management? People are the key asset of any organisation.
The Deloitte 2017 Global Human Capital Trends highlights digital HR to be a growing trend in South Africa. But, how about the 53 other countries which make up the African continent?
It would be wrong to view Africa as one entity. Each country has its own identity, readiness for technology, business drivers and of course, challenges. In general, South Africa tends to be more developed and further ahead than other Africa.
As such, this article will focus exclusively on Kenya. In future articles, other African countries may be explored.
Kenya is a key player in the East Africa region. The port of Mombasa and borders with Ethiopia, South Sudan, Uganda, Tanzania, and Somalia make Kenya the primary gateway to East Africa.
The World Bank predicts that “Kenya’s Medium-term GDP growth should rebound to 5.8% in 2018 and 6.1% in 2019 respectively. This level of growth is notably one of the highest in Africa but will depend upon several factors:
- Completion of on-going infrastructure projects
- Resolution of slow credit growth
- Strengthening of the global economy and tourism.
The World Bank report also acknowledges that Kenya has a potential to be one of Africa’s great success stories. The following factors create opportunities for further business growth and investment:
- Kenya’s youthful and growing population
- Dynamic private sector
- Highly skilled workforce
- Improved infrastructure
- A new constitution
- The country’s pivotal role in East Africa.
In 2016, I spent some time in Kenya, talking to business and HR leaders about the potential of technology for HR. It was very apparent that there was some interest but little action was being taken. Much of this was attributed to lack of knowledge, perception of HR and cost concerns.
So, before exploring the specifics of digital HR, let’s consider how Kenya views technology in broader terms.
Technology in Kenya
Kenya is positioned as one of Africa’s most innovative technology hubs.
This report by TechCrunch reveals that innovation hubs have become integral to Africa’s emerging technology ecosystem. For example, more than 150 start-ups have launched out of Kenya’s iHub.
Furthermore, Disrupt Africa’s report noted that African tech start-ups raised funding in excess of US$195 million in 2017. This was up 51 percent on 2016. The top three destinations for investment were South Africa, Nigeria and Kenya.
These factors paint a general picture of technology in the country and show that there is clear potential to consider using technology to enhance various situations, including the workplace.
However, to consider Kenya’s readiness for digital HR, one must look much deeper below the surface. To answer the question fully, let’s look at a few other factors pertaining to HR and the wider business.
In preparing the following answers, I reached out to two well-respected and trusted in-country advisors:
Stewart Samkange is SAP SuccessFactors’ East Africa Director. He has previous experience working with IBM, Microsoft and Oracle. Stewart works with senior business and HR leaders, so is able to provide a good overview of the current market. He shared with me his experiences working with clients in the Kenyan market.
Emily Kamunde-Osoro is a Leadership Coach & Director at Rise and Learn, an HR & leadership advisory practice. Prior to setting up Rise and Learn, Emily was HR Director at Jubilee Insurance, a well-known and respected business within East Africa. During her time with Jubilee, Emily commissioned a digital HR transformation. Emily shared with me her insights, industry knowledge and experience of working with business leaders at all levels.
To what extent are organisations using technology for HR?
Stewart and Emily echo a similar view to what I concluded when I visited Nairobi in 2016. Stewart conveys it well by expressing that there is “a luke-warm reception when it comes to digital HR – there is some interest but very little action”.
Traditionally, companies have implemented solutions that predominantly support core HR process and payroll. There has been little investment in supporting the softer side of HR, such as recruitment, performance, talent, learning & development.
A growing interest in HR technology
Many multinational and large organisations have some form of HR technology in place but there is now a growing interest from SME businesses too. This movement is starting to gain momentum, primarily driven by the following influences:
- Millennials are different and beginning to challenge the status quo when it comes to development, growth and opportunities.
- Attracting and retaining top talent is becoming increasingly crucial, as the marketplace becomes more competitive.
- The financial and telecommunication sectors are facing growing pressures in retaining their talent. FinTech start-ups are disrupting these sectors. Better benefits are being offered by cross-sector competitors. Leaders in these sectors are now realising the importance of talent management and building proper succession plans.
- Concerns around sensitive data leaks and security breaches have put HR data on the radar of CEOs and CIOs, who are demanding more rigor around data privacy.
- Companies are under increasing pressure to show diversity statistics. This is required to demonstrate to the people that they are representing the full ‘face of Kenya’ (i.e. equality between tribes and ethnic backgrounds).
- Disruptive thinking and challenge. For example, do people always need to be in the office? How can HR support the business to achieve its objectives? How can big data & the power of analytics be used to encourage data-driven decisions? Is the business upskilling the HR community to make more of a difference?
What solutions are offered?
In Kenya, Oracle and SAP are both established in the market and offer top-tier solutions. Their cloud-based technology solutions are becoming more affordable than traditional on-premise versions. As such, these solutions are also becoming attractive to SME businesses, as well as the larger enterprises.
However, cost is a major factor that comes into play when considering any technology investment. Many businesses opt for a cheaper local solution, such as PERPAY. Solutions from India and Sri Lanka also have a growing presence, due to their affordability.
In the past, technology has tended to only be implemented by the larger or multinational organisations. Kenya has seen a recent shift towards more SME businesses becoming more open to the idea of technology. They have an increasing appetite to start doing things differently and thinking outside the box.
Due to their size and agility, these SME businesses (typically around 200-300 people) are challenging the norm. They are able to make much faster decisions than the larger businesses.
As an alternative model, Rise and Learn offers outsourced core HR solutions for smaller companies, where implementing and managing their own technology may be too expensive.
Outsourced services are growing in popularity among the smaller businesses. This is mainly because it enables them to start embracing the benefits of automation, without high capital investment.
Rise and Learn also provides eLearning solutions to SMEs through various partnerships.
With all this said, there are still many companies that are using manual systems. They are yet to realise the benefits of a more digital and automated organisation.
What are the key barriers preventing organisations fully embracing HR tech?
Whilst mindsets are slowly shifting, there are common barriers preventing businesses from taking the leap into the digital HR world. Such factors include:
- There is an automatic perception that technology is expensive. Business leaders often dismiss the idea of digital solutions based on cost, without considering the cost-benefit analysis and return on investment over time.
- Leaders are failing to see the benefits of HR systems. Stewart explains that “from a CEO’s perspective, HR technology is not always seen as essential and in many cases is not of strategic importance.”
- Old school thinking is common, with focus given to things such as performance improvement plans, disputes and conflict resolutions. Clearly, none of these factors are about building or developing people.
- Many leaders have a reactive approach to HR and implementing technology is often done on a need to basis, as opposed to it being part of a strategic plan.
- Leaders failing to see how HR technology can develop a more effective and conducive working environment. Technology aside, strategies to attract top talent, developing people and enhancing the workplace experience are crucial to continued success.
- Emily explains that “in a country where unemployment is high and there is no government support for those without work, the prospect of losing a job is a fear for many. This then translates into slow implementation or resistance to change, with many projects eventually failing.”
- While CIOs often see benefits of technology, it can be hard to convince them on cloud-based solutions. The usual fears circle around data security and possibly also a loss of control.
- As HR technology is immature in Kenya, knowing where to get information on which system is best or how to effectively implement solutions can be challenging. Experienced consultants and project resources are also not easy to come by.
HR as a strategic business partner
I often use the analogy of building a house to describe how HR technology should be adopted. The plan or blueprint always comes first, followed by strong foundations. Both of these are critical to the success of the final outcome. The same concept applied for HR technology.
The first step in defining how technology can support HR and the business is to start with a clear strategy. This should address the question of how HR are intending to add value to the business and support its growth. Once defined, HR technology can be deployed as an enabler (rather than the driver).
Without strategic direction and a solid foundation, HR technology will not demonstrate its true power. Much like building a house without solid concrete foundations, it will most likely start sinking.
In Kenya, Business Partnering in HR is in place. However, there is often a disconnect in expectations between Senior Business Leadership and HR teams. From a leadership standpoint, the expectation is clearly for HR to support the business strategically. Leaders expect HR to provide greater value and offer data insights to support their decision making. This expectation presents an opportunity for HR to step up to the mark and elevate their profile.
Getting Emily and Stewart’s thoughts
Emily explained to me “organisations that value HR have been able to make milestones; that’s how we were able to succeed in a lot of things at Jubilee Insurance. A business that moves hand in hand with HR will find they will make more milestones than those who don’t.”
Emily also added that “the other challenge is HR themselves stepping up to the mark; we have come a long way and made some progress from 4 – 5 years back. Rise and Learn have been organising a lot of conferences around strategic HR and how technology can change HR”
Stewart also echoes the same view and mentioned that “businesses that are awake are noticing that roles such as HR Business Partner are beginning to work. The demand from organisations is much more than simply processing leave forms and those types of things.”
Stewart adds that “Business Partners are starting to realise their role is not just transactional HR. They need to understand the dynamics and be able to help run the business. That wake-up call is definitely hitting now and leaders are putting pressure on HR to make them accountable.”
The hot topics at a global level are AI, machine learning and block chain – is any of this influencing Kenya’s decisions?
Stewart explains that “there are certainly people talking about the next level digital agenda but perhaps more as a personal interest, rather than these concepts attracting any business airtime.”
I refer to my point earlier about getting the foundations in place. This is the starting point that is crucial to the long term success of digital HR. However, does this mean these concepts need to be in the distant future? Is there an opportunity to skip a generation and build HR technology capabilities that rival or exceed even the most forward-looking organisations in the West?
During my time on the ground in 2016, I concluded that Kenya had a genuine need for technology to support and drive HR forward. The market had not yet woken up to this need. From speaking with Emily and Stewart, it seems there has indeed been some increased interest and awareness in the last two years. However, there is huge potential that has not been fully acknowledged or embraced.
My view is that businesses will continue to face growing pressures. The need to develop and retain top talent, provide more strategic HR support and meet expectations of an increasingly younger workforce will prompt action. Leaders have to respond and start to think differently to remain relevant in the market.
Technology is increasingly having a major impact on all areas of people’s daily lives in Kenya. Naturally, there is some curiosity emerging about how technology can bring real benefit and value to the workplace. With this in mind, there will be an increased interest in exploring and investing in digital HR solutions.
Seeing the opportunity
There are a host of opportunities for those willing to challenge the status quo. It requires being able to break through the barriers and take a giant leap forward. Those who do this by creating effective HR strategy and investing in technology will reap the reward. Technology can be immensely powerful in enhancing operations, engaging the workforce, identifying top talent and delivering powerful, real-time insights to business leaders. These benefits can also be realised while reducing overall operating costs and enhancing productivity over a reasonable time period.
Emily explains that “technology has pushed businesses to really do things differently. Effectively that means those who are leading Human Capital should align themselves. They need to understand how to help the business reach their objectives. By using technology to report on time, manage talent and manage a diverse workforce in different locations, they are able to create an impact. Technology is not something that organisations can run away from”
Emily also explained that “there is a lot more education that needs to be done to fully achieve this.”
Will Kenya be the leader?
There is a clear opportunity for Kenya to lead the way in East Africa, if not the wider continent. The country is already a regional power house. They have made significant investment in groundbreaking technology and fast connectivity. There is no shortage of technology innovation emerging from the various tech hubs.
So, Kenya is better positioned that most African countries to take big leaps in this area.
The big question is, will Kenya take up the opportunity to become a leader within this space or let another nation take the spotlight?
Are you a HR professional in Kenya?
I would love to hear your thoughts, comments or questions. I invite you to add your comments below.
If you would like more information on how you can prepare for the future and leverage HR technology for your business, please reach out to me here.