Endeavor Lebanon, an affiliate of Endeavor Global, the non-profit organization leading the entrepreneurship movement by supporting High-Impact Entrepreneurs around the world, held its fifth high-impact media roundtable on January 22nd 2014, to discuss human capital management in small and medium enterprises (SME’s).
The roundtable meeting brought together Dr. Lina Daouk-Öyry, Assistant Professor in Organizational Behavior at the American University of Beirut, Mrs. Nahla Khaddaj Boudiab, Chief Operating Officer at Al Mawarid Bank, High-Impact Endeavor Entrepreneurs Mr. Rabih Nassar, Founder of Element N, Mr. Omar Onsi, Founder of Nymgo, Mr. Tarek Sadi, Managing Director of Endeavor Lebanon, Ms. Farah Bachacha, Associate Director at Weber Shandwick Lebanon, and key business media.
Lebanon’s Human Capital Competitiveness
Human capital management involves three key capacities: the capacity to draw in talent, the capacity to deploy talent and the capacity to develop talent. Collectively, these capacities form the backbone of an organization’s human capital competitiveness. On the global human capital competitiveness scale, Lebanon ranked 103rd globally according to the latest World Economic Forum’s 2013-2014 reports. Compared to neighboring Jordan at 68th, Qatar and UAE at 13th and 19th places consecutively, Lebanon is clearly underperforming the region’s competitiveness levels.
“Even with some of the best educational institutions and world-class business schools, Lebanon lags behind on too many other basic competitiveness requirements, from infrastructure and technology readiness, through to labor market efficiencies, market size and business innovation,” said Ms. Bachacha, moderator of the Endeavor roundtable. Recent research by Endeavor Insight, the research arm of Endeavor, confirms the mismatch between the quality of talent coming out of Lebanon’s universities and that in the labor market.
“There is a clear brain drain in the country and we are not seeing any concerted efforts to reverse that; Lebanese talent is being hired abroad while companies in Lebanon often realize the need to hire the right employees too late down the road,” said Mr. Sadi from Endeavor Lebanon.
Recruitment as a Strategy
According to Mrs. Khaddaj Boudiab, recruitment is a fundamental element of the business strategy which may necessitate analysis and understanding of what the company can offer to employees, in return for what they offer. “You must give thought as to who you want to recruit for each job, she explained. Human Resources (HR) in our region is often seen as a support department. Ideally, the head of HR must be present in senior leadership meetings and aware of the company’s long-term mission, in order to recruit and develop human capital in support of the company’s business goals. “A good interview must assess the specific skill set, knowledge and characteristics needed in an employee for a designated job, therefore questions must be designed to address those areas concerned and not the general knowledge or character of a person,” stressed Dr. Daouk-Öyry of AUB.
Attracting the Right Talent
A large talent pool exists in local universities, as fresh graduates typically represent the best hires for entry level positions. Entry-level and junior hires can be recruited in job fairs, through professional networks such as LinkedIn, and sometimes via referrals.
“When we want to recruit for junior positions, we mainly assess the candidates’ abilities to learn. Any technical skills can be taught whereas the capacity to learn cannot be taught beyond a certain stage,” said Mrs. Khaddaj Boudiab. For more senior positions, referrals, headhunting and advanced searches within other organizations, sometimes overseas, appear to be the best routes to find the sought-after talent.
The conveners agreed that different organizations have to use different incentives to attract talent, with an attractive organizational culture being the common denominator of all. Higher pay is often used by small and medium companies to lure in talent, whereas bigger corporations tend to boast their learning environment, professional culture and training opportunities.
“From a psychological standpoint, employees need to feel they are being compensated fairly. There is evidence that supports the fact that for mechanical tasks, monetary compensation works well as a motivator; whereas with more cognitive tasks, factors like employee autonomy and space for creativity come to the forefront,” added Dr. Daouk-Öyry from AUB. Mr. Onsi, who employs around 30 employees in Lebanon, underlined the difficulties linked to bringing in skilled foreign employees to work in Lebanon, due to the country’s high security risk and ambiguous labor laws. Nymgo and Element N offer an Employee Stock Option Plan (ESOP) as additional incentive but it is still not well valued by Lebanese employees who prefer cash to the promise of a much greater upside that stock options represent.
According to the entrepreneurs in the meeting, Rabih Nassar and Omar Onsi, a company’s years in the market, number of expatriates hired, prestigious headquarters and pleasant offices affect the perception and level of interest of fresh graduates being targeted for recruitment. “When the company is small and young, attracting talent is especially difficult,” noted Mr. Nassar.
“In Silicon Valley, students run to startups for primary work experience, whereas in our part of the world they race to big corporations. Local universities may have to work on changing how students think of their career paths and their perceptions of where a valuable work experience can be acquired,” added Mr. Onsi.
Growing a Culture of Human Capital Development
The speakers concurred that a culture of human capital development is key to talent retention. Leaders of an organization naturally define the behavior of their employees through what they say and do. The talks underlined the importance of creating a systematic way to scientifically measure the employee’s performance and reward it objectively, vis-à-vis their most important goals and required skills.
“Human beings have biases and an assessment scorecard can be a strategic tool where company leaders embed the elements they wish to see in their employees and the overall organizational behavior,” stated Mrs. Khaddaj Boudiab.
An assessment scorecard must include and evaluate, beside job-specific performance objectives, soft skills such as knowledge sharing, team building, communication skills and leadership abilities. Nymgo adopts an evaluation system named OKR (Objectives and Key Results), to key down the most important objectives for each employee in every quarter.
“It works wonders to the progress of our team as it helps to keep everyone focused on improving themselves and supporting the company in achieving its goals,” said Mr. Onsi of Nymgo. Element N places capital importance on career path planning, internal mentorship and trainings providing its employees with a unique opportunity to grow their technical and leadership skills. In fact the current top tier of its engineering team have all been recruited as junior fresh graduates and rose through the ranks.
To Endeavor, which screens dozens of companies each year to identify growth businesses and help them scale up, company culture is an assessment factor. “A company’s culture reflects its leadership, and it is important for leaders to be able to build in their organizational culture the flexibility to restructure and manage change as the company grows, which would help to accelerate growth,” clarified Mr. Sadi. Mrs. Khaddaj Boudiab also stressed the importance of creating a development culture through an environment of constant learning
Conclusions and Recommendations
The discussions finished by summing up a number of initiatives and actions that help promote and accelerate human capital development in the country. Universities can play a major role by shifting to educational programs that expose students of any degree to a wider array of disciplines, encouraging students to innovate and conduct industry-grounded projects, as well as incorporating more real-life case studies in curricula.
“Engineering and computer science programs in Lebanese universities are still not adapted to the current needs of the technology sector. Over the past ten years, we have found that fresh graduates we recruit require typically 18-24 months of additional training before they become fully productive,” remarked Mr. Rabih Nassar of Element N.
Mr. Nassar also showed strong willingness to help universities close the gap between the classroom and the workplace, which he started to do with the Saint Joseph University in 2013.
Mrs Khaddaj Boudiab emphasized the need for a three-step career guidance program that aids students to develop human capital. Firstly students must be taken through a process to discover competitive areas in early university years. Then, it is essential that they are made aware of the jobs needed in the market, positions available, and limitations of the country when it comes to certain fields. Thirdly, more industry interaction must be fostered within university programs, through focused internship programs that gear and prepare students for the corporate world’s requirements.
Organizations were also urged to embed human capital development within their cultures, invest in their employees and empower HR managers to select, hire and evaluate employees in more systematic ways. The conveners also recognized the government’s fundamental role in raising the country’s human capital competitiveness levels, through continuously fostering the entrepreneurship culture and building up the country’s technology infrastructure.
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