Doing Business in South Africa

Assure you have a another third-party contact on the ground that can check the credentials of your potential partner first.

Previously white senior managers were in charge of making decision, however a new generation of middle managers are being empowered to make decisions. Due to the country’s politics history there is a great shift in power and therefore different management styles can be seen.

As mainly a hierarchical culture decisions are top-down and negotiations can thus take much longer than anticipated by foreign business counterparts. If there are strong connections at the top of the pyramid, business dealings can be accelerated. However some systems can be very bureaucratic and corruption is common. In some instances foreign counterparts could be asked to pay bribes.

It is imperative to establish trust before business negotiations can begin. Negotiations are usually based on win-win outcomes. Include deadlines in contracts, however these dates can be rather fluid. Decision-making are usually top-down. Business negotiations can be slow. Never interrupt your South African counterpart while they are speaking and comment on the idea and never criticise the person. Respect is paramount. Business relationships and mutual understanding are more important as opposed to social or personal relationships.

Discussions about politics especially Apartheid, this could offend your South African counterpart. Understand which culture or tribe you are dealing with as most tribes will be insulted if you label them incorrectly for example if you call a Zulu a Xhosa etc. There are numerous differences among different types of South African groups and they are usually open to help educate foreign business parties. Be open and ask questions about their culture and heritage. South Africans are very proud of their country.

 

 

A quality manager (QM) in the Logistics Division of German Auto Manufacturer, Inc (GAM) had recently resumed business in South Africa after having left in response to the international boycotts against firms doing business in a country that practised apartheid. Its plants in the country assembled luxury cars for the domestic market and neighboring countries in southern Africa. The QM reported morale and motivation problems among their associates. The Logistic Division was responsible for supply of parts, subassemblies and other items to the production line. The Division employed 425 people including a management staff of eight. The management staff was culturally diverse and consisted of four German nationals one of whom was the QM’s boss, the Division Head, a British expatriate whom had been living in South Africa for two years, a black South African and two white South Africans. In the GAM Human Resource Management system, all shop floor employees were referred to as associates, and this is a practice they followed in their South African operations. The shop floor staff consisted primarily of black South Africans with different ethnicities, but were largely Sotho-speaking as they came from the surrounding townships located about 20 to 25 miles from the Division. Many of them relied on the taxis that operated daily from townships to business areas for transport to and from the plant as a few, if any of them, owned cars. Management staff, however, were provided with company cars as part of their compensation package.

When the Logistics Division started operations six months ago the Division Head, an engineer by training had been appointed. He had never worked in South Africa before but had been successful in previous company assignments throughout Europe. GAM’s human resource approach to expatriate assignments was to rotate managers every three years at different international sites to install uniform standards and values across the globe. GAM believed that this approach was the best way for their managers to develop the skills and knowledge to be effective in the international assignments. In line with this philosophy, managers assigned to an international site were expected to draw upon their previous experiences to perform well. No country training was done prior to the assignment other than a review of management’s strategy for operations in the country. The Division Head confessed to his fellow managers that he know little about South Africa prior to arriving, but had believed that the company’s well-defined strategy and performance culture would ensure success during his assignment. When he arrived at the Logistics Division, he promptly put a strategic plan in place that was aligned to the company’s goal to make sure all world-wide operations were “world class” no matter in which country they did business. Within the company, this goal was referred to as “Keeping the Rhythm.” In line with the plan, performance metrics were set within a performance management system that covered all employees from management to associates.

The QM described the culture as both task-oriented and performance-driven. People were rewarded on how they performed in respect to the set targets. Each month, the Division Head held a communications session with employees to inform them about progress toward performance goals. The sessions were held in a large auditorium with the management team sitting behind a table at the front of the room and employees seated theatre-style in the spacious auditorium. Typically the Division Head would make a 15-min PowerPoint presentation with graphs and brief everyone on operations and progress toward goals. Generally, none of the other managers or team leaders made presentations. Once the Division Head finished his presentation, he would ask if there were any questions. In the five months that he had been conducting these communications sessions, no one had asked a single question. The Division Head had told the QM on more than one occasion that he really believed that all staff, including the associates, really understood what needed to be achieved at the Division.

Yet, all was not going well. There was a high absenteeism among the shop floor employees as well as a problem with lateness in some of the departments. The team leaders who had been appointed by the management team complained of uncooperative workers and discipline problems. Additionally in the recent months they had experienced incidents of theft from the stores. All of these problems began to be reflected in the Division’s performance on key metrics, and recently there had been an increase in complaints from the Production Division about delays in receiving parts. The Division Head was quite concerned because he had aspirations for one day becoming part of the top management team at GAM. He had two very successful international assignments under his belt and wanted this one to be just as successful.

The Division Head called a meeting with his management team to discuss what was transpiring at the Division. During the meeting, the South African managers were mostly quiet. Typical of his leadership style he seemed to have the problem all figured out. He believed the problem was a lack of motivation among the workers. In his previous assignment in Belgium and the UK, workers had always responded well to tasks and set goals. He thought a ‘motivational talk’ from a local expert might help motivate the staff. He had then asked the QM for his assistance in finding a good speaker on motivation. An experienced human resources consultant, convinced the Division Head and the rest of the management team that she needed to do a survey of staff to really find out more about “the motivational problems.” The Division Head agreed as long as the consultant ensured that she would get to the “bottom of the problem.” She decided to do a survey a random sample of 50 percent of the staff as well as conduct 30-min interviews with management. The original idea of surveying the shop floor associates was not feasible because of the insufficient literacy of most of them. The consultant held focus group discussions about the climate and culture of the Division. The result of the interviews and focus group discussions revealed a huge gap between the perceptions and feelings of associates and management. The majority of associates said they do not understand the behavior of the Germans.
One associate expressed a view that most had agreed with during the focus group sessions: “They act strangely, including the Division Head. They have no manners.” They come into the shop floor in the morning but they do not greet us. They just wave at us with their hands. What is this kind of behavior? We work for them every day.” Another associate stated, “I do not think they really care about us. They rush everything, including the monthly meetings held in the big auditorium. We have been working here for almost seven months, and they do not know our names. But we know their names.” Another issue raised by the associates was about how the team leaders had been appointed. A spokesman for the associates in his focus session said, “Team leaders were appointed by the Germans without consulting us. They are not our natural leaders, and we do not really trust them.” When the consultant asked the associates what they expected from management, they readily offered a number of suggestions. The interviews with the management team presented a very different view of the problems. There was also a difference in the views of the local South African managers and German nationals. The Division Head and the other German managers expressed the view that the workers were lazy and not willing to work hard. They felt the monthly forums were an excellent form of communication and did not understand why the associates never asked questions. The Division Head had stated that he felt that he has done everything by the book, bringing staff up to speed. He also believed in keeping an eye on the shop floor and made regular walks through the departments each morning.

In this case the Division Head is using his previous knowledge instead of understanding the current situation and the culture he is dealing with. The staff on the shop floor is a hierarchical, collectivist culture and requires a more paternalistic management style with the Division Head acting like a father caring for his staff and in return receiving their loyalty. He needs to earn their trust and ‘caring’ could even extend beyond the workplace if workers need guidance in resolving issues at home. Building trust and rapport with each employee is important and can be done by learning their names and by taking the time to get to know them. Rapport can also be built through spending more time and not rushing meetings. It is important for the Division Head to give information and instructions during meetings as the workers most likely will respond to a top-down approach, however the big auditorium probably created an even bigger gap between management and the shop floor staff. The purpose of a meeting in a collectivist, hierarchical culture is not used to have discussions or ask questions but for management to give instructions, thus a more informal setting and meeting breaks could be used to get feedback from employees. Lastly the shop floor staff would probably like to select their own team leaders based on their own ranking system and by selecting team leaders without consulting them showed a lack of trust from management and most likely demotivated staff even further.