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Brain Gain: Structure pay packages to attract top talent

South Africa is desperate for skilled professionals to urgently bolster economic growth.

Fragile markets, stringent visa laws and a surge globally of violence against foreigners have done little to curb businesses sending staff on assignments abroad. South Africa is coming out as a top location for international professionals finding employment, along with its developing BRIC counterparts.

“South Africa could do well to embrace in-bound mobility and create total reward packages that speak to the individual needs of these professionals,” says Martin Westcott, the executive chairman of P E Corporate Services. “The fact that skills shortages in South Africa are both substantial and entrenched is a key factor constraining economic growth.”

Westcott, speaking on expatriation trends during a workshop of the South African Reward Association (SARA), identified how the economic slow-down and fewer job opportunities in developed economies are seeing a steady reversal of the country’s net ‘brain drain’. This is combined with a severe slippage of exchange rate and the country’s comparatively high standard of living.

“Our most recent international pay comparison studies indicate that South Africa is ranked second only to the United States in terms of purchasing power of the net disposable income enjoyed by executives and professionals,” explained Westcott.

Balancing mobility and remuneration
“Individuals who are well established in their jobs in the home country will take an off-shore assignment provided that it is financially beneficial for the entire family,” says Nevan Naidoo, the head of Reward across Africa for the Standard Bank Group. “Employees focusing on career advancement, with ambitions of taking on more senior roles in a global organisation, will see assignments off-shore as a platform for advancement. In these instances planned succession will be a key driver instead of money.”

“The appointment of foreign nationals must be contextualised and well understood by local employers to prevent any frustration,” says Naidoo.
“While security challenges are one of the main areas that influence expatriation considerably, businesses are creating the necessary awareness regarding operating in Africa specifically,” adds Kohl Van Rensburg, head of Reward: Africa, Retail Banking and Wealth for the Standard Bank Group. “Companies are being pro-active in making sure they remain safe: that good evacuation processes are in place, excellent global medical cover is provided, and so on.”

The division between home country and host country approaches to expatriate remuneration have been near on par for many years. Most expatriates who relocate for short to medium term assignments retain domestic financial commitments which create practical difficulties in switching to a host country pay model.

Van Rensburg recommends that businesses adopt the split payroll methodology; where “a percentage of salary is paid in the home country with a smaller percentage paid in the host country, dependant on cost of living indices in the host country.”

While there must be correct processes and systems in place to ensure a company’s expatriation policy is well executed, measuring the success of assignments is difficult and dependent on specifics of the assignment, says Westcott: “There has, however, been very strong growth in the use of key performance indicators (KPI) for performance evaluation and bonus determination in recent years and, in particular, the alignment of KPIs with corporate and business unit strategies.”