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Can Corporate Social Responsibility Aid Reform in the Maghreb?

The Rise of Corporate Social Responsibility – A Tool for Sustainable Development in the Middle East argues that companies can contribute to sustainable economic development in the MENA region through corporate social responsibility (CSR). The report was issued by Booz & Company’s Ideation Center, its “think tank in the Middle East [providing] thought leadership through insightful research, analysis, and dialogue that is true to the Middle East’s dynamics.”

The report raises several questions; some are existential, while others focus on distinguishing between short-term – “give him a fish” – approaches and long-term “teach him to fish” options. I have never been a great fan of CSR, simply because it is not, in my analysis, a substitute for investments in sustainable economic development that directly create jobs. This report takes a different tack, saying that “Companies, as good corporate citizens, must become involved in sustainable development and contribute to the broader improvement of their societies … [by aligning] themselves with these national goals [job creation, poverty alleviation, and the environment] that are built around sustainable development, using the powerful tool of CSR initiatives to help achieve them.” CSR, in their assessment, is both a social force for reducing economic inequality and a means of improving environmental conditions. Their case studies in the region are helpful yet do not address the core issue: can CSR have a long-term impact beyond philanthropy that supports greater opportunities for more equitable economic growth?

What is CSR?

Perhaps the first issue is definitional, as the United Nations Development Project (UNDP) defines sustainable development as “distributing the benefits of economic growth equitably, regenerating the environment rather than destroying it, and empowering people rather than marginalizing them.” Is this consistent with what the region is thinking? According to the Booz report, “Companies and government officials interviewed in our study most frequently cited the need for robust job creation to nurture economic growth and spread benefits among the population as the most salient issue.” This is the dilemma, as few of the examples provided in the report are about job creation. More are about philanthropy, which, while laudable, does not necessarily lead to enhancing job growth over the medium to long term.

I am not saying that CSR is not important. In fact it is a key component of a mature approach to economic growth; but it lacks a defined connection to job creation. As the report highlights, “half of the region’s population is under the age of 25…among those 14-24 years of age, approximately 25 percent lack a job…” So building homes for the poor, insisting on higher environmental standards for manufacturing facilities, and encouraging literacy are laudable, yet my assessment is that these programs must be part of a larger coherent CSR strategy that is wedded to generating meaningful employment if it is to go beyond alleviating short-term social and environmental issues.

And the challenges for recruiting partners into CSR programs can be quite daunting, as there are few if any incentives for employees to participate. Less than 14 percent of firms surveyed have formal CSR-related key performance indicators, “and just 11 percent include CSR performance in their bonus schemes.” So to make CSR effective over time, the report points to a process to close the gap between a company’s individual CSR programs and a country’s national development priorities.

Another challenge is that countries diverge in their CSR priorities, making it critical to define local needs rather than using an imported template. In the MENA, the focus is on issues ranging from alleviating poverty and supporting charities and community projects to education and employability. There is not a broad consciousness of the need to address environmental issues, which is a priority elsewhere. “Executives [in the MENA] are struggling to relate environmental issues to profitability and long-term business objectives.” In many cases, environmental concerns are still seen as external to the company rather than incorporated into its internal operations.

Building effective partners

The report also talks about the importance of proactive government and civil society participation and encouragement of CSR. On this theme, a very interesting CSR project is run by SEDCO Holding, a Saudi Sharia-compliant wealth management company. After a national survey indicated that young Saudis have few skills in managing their personal finances, SEDCO initiated a financial literacy program for university students. It is a private-public partnership that involves an international NGO, resulting in a great example of how CSR can make an economic impact beyond charity. Smarter consumers make smarter decisions and can transfer this knowledge into their own business practices. This is a forward-thinking project that benefits all of the stakeholders and provides best practices that can be emulated elsewhere.

A positive recent development noted in the report is the notion of corporate governance – responsible and accountable company leadership. “It was only within the last 10 years that an Arabic word for corporate governance, hawkamah, was coined.” In the transition from family-owned private firms to corporate-managed public entities, a company’s identity shifts beyond the personality of the founders to values expressed in their corporate mission. It is this redefinition of company identities that holds the most promise for the inclusion of CSR in a firm’s objectives.

Just as long as you don’t forget that the bottom line is profitability and job growth!

Worker incentives: Are MENA employee stereotypes shifting?

 In reviewing comprehensive strategies for closing the gap between education and employment—an unresolved agenda of the Arab uprisings—one area where there is no ready agreement is non-monetary compensation. Everyone acknowledges that money is the chief incentive for attracting employees, but there is a dilemma when taking a longer view of the “employee value chain,” that is, from graduation to employment to career, what matters for recruiting and retaining good workers? In looking for possible answers, there are clear differences between countries that have plenty of people and plenty of funding, such as Saudi Arabia, and countries that have plenty of people and limited funding, such as Morocco. In both countries, young people assert that they want to and are ready to work. Yet in both countries there are wide gaps in expectations between those with secondary and university educations, which preclude a “one size fits all” approach.

The case of Saudi Arabia

In Saudi Arabia, where hundreds of thousands of new jobs are needed annually over the next 5-10 years to fill employment needs of locals under 25, the clear preference is for white collar jobs, even though industrial workers are in high demand throughout the country. While there has been extensive research on the categories of jobs available to Saudis, the most difficult step—motivating young people to fill the potentially available slots, has yet to be taken.

The kingdom has a three-pronged approach: 1) pushing the private sector to hire more Saudis and provide incentives for companies to have in-house training programs; 2) upgrade government coordinated training programs to enable young Saudi men and women to acquire skills linked to the rising demand centers for employment; and 3) educate and motivate Saudis to take seriously employment as a career.

The majority of the general population as well as university graduates are female, who, while seeing a gradually growing number of workplace opportunities, are also facing a dwindling pool of eligible husbands. This fact impacts the career aspirations of both men and women and cannot be overlooked as a normative peg is promoting employment.  

 

The case of Morocco

Morocco has different challenges since its young people are attracted by both blue and white collar jobs but the labor supply exceeds demand, especially if potential employees are reluctant to relocate. University graduates who prefer government-related jobs are disappointed in that few are being chosen under the accelerated hiring program of the current government. Since it has limited funding, the government is incentivizing the private sector through subsidies and grants to train in specific sectors. This is especially important since government training facilities are limited in number and unable to carry the full burden of training across a range of jobs. While there is an increasing emphasis on entrepreneurship and start-ups, the overall environment for promoting new businesses is still difficult to navigate. There is a large pool of entrants into blue collar work if they can access effective training programs.

Non-monetary incentives

Given the challenges in both countries, another motivational tool is identifying non-monetary incentives that could be part of an effective recruit and retain policy. Offering some ideas are two articles. McKinsey & Company just republished a seminal article on the topic “Motivating people: Getting beyond money.” And IESE Insight published “Remuneration Tips for a More Motivated Workforce,” which covers a study conducted by this Spanish economic institute. Both are based on surveys done with a variety of companies, ranging from mid-size to large corporations.

The McKinsey article found that:

“…praise from immediate managers, leadership attention…, and a chance to lead projects or task forces—[are] no less or even more effective motivators than the three highest-rated financial incentives: cash bonuses, increased base pay, and stock or stock options. The survey’s top three nonfinancial motivators play critical roles in making employees feel that their companies value them, take their well-being seriously, and strive to create opportunities for career growth.” 

The IESE Insight article found that:

“variable remuneration schemes, although increasingly widespread, do not always achieve their main objective: to motivate people.” In these schemes linking benefits to company profits (however measured), the author found that the relationship between variable remuneration and motivation is too complex as “numerous factors that cannot always be controlled influence the equation.”

In the MENA countries, using Saudi Arabia and Morocco as examples, both the financial and non-financial motivators cited in the two articles are not common practice. Yet the McKinsey article noted that “…in developing markets…[respondents] cited employee motivation as a key reason for modifying incentives.”

The Way Forward

So where to begin? Promoting one’s initial job as an entry into a career will be a major culture change in how Moroccans and Saudis perceive employment. Too often, either the job in industrial settings has defined limitations, or traditional job security has meant that there was little turnover to allow movement upwards for young, talented employees. Senior management must become committed to integrating their traditional role as benefactor/bureaucrat with a balanced style that demonstrates appreciation for talent, initiative, and loyalty.

Both articles warn that nonfinancial compensation schemes must be fair, objective, and realistic to discourage employees from “gaming” the system by working for the reward and not the overall benefit of the company. Discussions about how to motivate through nonmonetary rewards are a very useful device for engaging employees, if the option for these benefits is available. In addition, until middle management and supervisors also adapt their behaviors to support a corporate culture that recognizes and rewards teamwork and respect for diverse skills, talents, and personalities, any incentive-based motivational program will be eroded by a “do as I say, not as I do” credibility gap.

Crossing the divide: young Moroccans reaching for the future

If Moroccans were any kinder, I would be buying an apartment in this North African nation tomorrow – the only challenge being where! Their multilingual skills were prominently displayed for the past 10 days as I struggled in French, Arabic, and English to get to know Moroccans under 40, many under 30, who are part of the new wave of university graduates and Moroccans returning from abroad committed to building the future Morocco. It was more than invigorating to be talking with young people the age of my children, having conversations that were incisive, insightful, and clear-eyed about the opportunities in their country. They were open and willing to discuss a range of issues related to their aspirations and motivation. As my sentences tumbled out in broken bits of languages, they were immediately in tune with both the intent and the context of my remarks and questions, displaying a sense of humor and desire to understand and to be understood.

These are trying times in Morocco. Against a backdrop of the drama of rifts in the governing political coalition, a large number of regional and international conferences in Morocco are focusing on its place in the global market. There is a growing appreciation that business as usual, whether that means speaking French and selling into the EU or maintaining rigid labor and business hierarchies, is not sufficient. Foreign direct investment continues to grow incrementally, moving beyond real estate and tourism into manufacturing sectors that rely on the improving infrastructure and competitive salaries that Morocco provides. The renewable energy sector, including wind and solar power, is broadening its scope of activities from north to south, requiring even more investment in transportation, power, and broadband/IT services. Most importantly, all of these projects provide opportunities to engage Moroccans who have the talent and energy to acquire or develop skills needed in the global market.

As I spoke with the young people about what skills or attitudes would help Moroccans meet future challenges, the words I heard most often were innovation, creativity, breaking barriers, adaptation, caring, and courage. There is a tension, mirroring young people globally, when they talk about the older elites and networks that they believe limit their prospects for growth. Their impatience and sense of entitlement echoes US graduates whose expectations are undergoing shock therapy in today’s jobs marketplace. As these rising Moroccan stars re-examine their professional aspirations, I detect in many of them a more holistic style in approaching job opportunities. Of course salaries are the first priority but there was a very strong emphasis on the processes and environments they value.

It was surprising that courage came up so often, and for them it has at least two elements. The first is having the confidence to take initiatives, make suggestions, and address issues that in the past had been the purview of only those higher up the workplace food chain. They felt that the support of their peers and managers is the key to building this confidence. The second, closely aligned dimension is risk-taking – feeling secure enough that trial and error is an option because it promotes learning, innovation, and team building. Most felt that risk-taking is valued more inside international companies than Moroccan firms, which often are reluctant to suggest out-of-the-box alternative solutions to their customers. I found this perception was especially strong among those who had worked/studied abroad and experienced the benefits of a more collaborative and creative work milieu. One of the pleasant surprises I encountered in the more than two dozen interviews I conducted is the pride that older (over 40) Moroccan managers have in young people. While counseling that they should be patient and acquire more experience, these managers appreciate the dynamic and intense work styles of their younger teammates. This was quite interesting as at least half of the group is Moroccan women under 35.

I spent a solid ten days in Casablanca building new ties to Morocco and renewing past friendships. While the confidence of the Moroccans with whom I spoke is tempered by the barriers they encounter, there is an essential conviction running through all of them that Morocco can make the needed changes to compete globally. And they are very excited and motivated about being part of that change.

Repairing the neglect of workforce development in the MENA

The World Bank has issued its fourth volume in the series Jobs for Shared Prosperity – Time for Action in the Middle East and North Africa. Well over 300 pages, the study provides its five main messages separately for those who need a super condensed summary. Reading through the messages, I noticed how clear it is that very few results can be achieved without strategies that integrate the resources and talents of the public and private sectors. Drawing on my experiences across the MENA region, there is much to be gained from cross-border sharing of best practices regardless of the differences in the economic profiles of the countries. Let’s look at the region in terms of the key messages of the study.

Message #1: Labor markets in the MENA make poor use of the available human talent and resources, thus inhibiting the economic potential of countries and people in the region. Current political dislocations aside, Arab countries, like much of the developing world, made post-independence choices that centralized economic growth around government institutions. Despite dramatic changes in society since then in population, education, middle class composition, ethnic/minority/gender issues, global market standards, etc., governments were slow to accommodate to the realities of today’s economies. Concurrently, vested interests working with their government counterparts too often dominated the private sector. This cronyism added to the obstacles inhibiting progressive economic policies. Human capital was collateral damage in this scenario since labor had little impact on employment standards in a system of regulated government-social services and little flexibility in labor markets.

Message #2: Change the rules to create a dynamic private sector that capitalizes on the full range of the region’s human capital. Government business regulations have been slow to shed their opacity; end interference in the business of business, and equitably protect the rights of owners and employees. A major incentive towards transparency is that all MENA countries require FDI, which requires attention to rule of law, accountability by government officials, and awareness of environmental impact. The WTO, bilateral trade agreements, and a host of multilateral treaties have helped shine a light on changes that must be made for an economy to be competitive.

Message #3: Let skills flow into productive private sector jobs by realigning employment conditions in both the private and the public sector and rethinking labor regulation. Lower the barriers holding back women who want to work. MENA governments can no longer be the employers of first or last resort. Coddling public sector employees in non-productive jobs limits economic efficiencies and distorts opportunities. Efforts to enhance the employment of youth and women will be advanced through adopting unemployment policies that enable transitions to the labor force and access to services that respect the needs of working families.

Message #4: Make young people employable by closing information gaps, improving quality and relevance of skills, and partnering with the private sector in training. These steps have become the mantra of US, international and local government programs to advance employment among young people. An interesting corollary to this focus on training programs is providing recognition to those who have acquired skills informally, through on-the-job experience. Morocco is piloting a program called Validation des Acquis de l’Experience Professionelle (VAEP) to provide accreditation to workers who can demonstrate proficiencies that qualify them for advanced positions. Piloted through a cooperative agreement with the French government, VAEP originally started with the building trades in 2008, was expanded to textiles and clothing in 2011, and is poised to move into hospitality and meat processing. The bottom line is that professional skills validation through transparent proficiency examinations will “make it possible for employees to obtain diplomas or certificates outside of their initial schooling,” according to the article in Le Soir.

Message #5: Use short-term interventions to respond to immediate needs while building credibility and consensus for medium-term, game changing reforms. Demands for jobs, training, market-focused education, and transparency will not be satiated by government promises. Public-private partnerships can be a critical vehicle for identifying quick start-up projects and programs that support jobs for those marginalized and underutilized in current labor markets. Government subsidies for employment can be used more efficiently when tied to needs identified by current and future employers. The success of longer-term reforms of labor regulations, jobs training and education, gender-related policies, and workplace health and safety rules can be facilitated by piloting initial efforts at these reforms in short-term programs that deliver jobs and generate data that supports new policies.

The World Bank’s Jobs for Shared Prosperity, like the Arab Human Development Reports of a decade ago, offers a serious and methodical critique of how to take an under-performing region and enhance its prospects by freeing its most abundant resource – its people – from antiquated and ineffective labor constraints. Empowering employees is at the heart of building local stability and prosperity in the MENA, and it is an agenda that can no longer be postponed.

Breaking the cycle of “educating for unemployment” in MENA

The Audit Court (Cours des Comptes) in Morocco recently issued a critical report on the country’s vocational training system. At the same time, the World Economic Forum was focusing on youth under/unemployment at its annual conference in Davos. This is no coincidence, as the demographic realities in emerging markets create a demand for very high levels of job growth in the next decade to absorb high school and university graduates.

In fact, key demands emanating from the Arab uprisings are for jobs, greater transparency in employment practices, and sufficient resources for market-oriented training and education.

Jamie McAuliffe, president of Education for Employment summarized the challenge quite accurately: “But it is much easier to describe the problem than to advance concrete solutions. Both within the Middle East and North Africa (MENA) and beyond, there are still few examples of large companies and national governments putting the necessary muscle and resources behind solving the problem.”

Effective program management, qualified human resources, and sufficient budgets will provide a baseline for developing and delivering solutions to reverse the complacency and ineffectiveness that characterize training programs in the region. Looking at the Audit Court’s report helps provides a starting point to discuss the challenges to technical/vocational training in the MENA region.

The Moroccan Office of Vocational Training and Employment Promotion (OFPPT) is charged with orientation, education, and placement of students, as well as providing opportunities for continuing education for adults who wish to change career paths. Ideally, OFPPT maintains relationships with potential employers since it has the critical responsibility to be familiar with the needs of the workforce and adapt curricula and training to meet those needs.

OFPPT has its equivalents throughout the MENA region, some of which focus specifically on vocational and technical skills training for recent middle school and high school graduates, while others are similar to community colleges that provide “white-collar” education and training programs for the services industries. Whatever the agency’s mission, the goal is the same—to graduate employable young people for the workforce.

After decades of acquiring academic degrees that held out little prospect of jobs and careers, young people recognized that their educational systems did not make them employable, and governments are scrambling to respond.

It is too soon to tell how the new programs will turn out, but observations of actions over the past two years raise several critical issues. Let me say, from the outset, that this is a lifelong issue for me. I have been working on training programs in the Middle East since the late 70s, starting in Iran, moving then to the Arab Gulf countries, and continue today providing services to both US employees assigned to the MENA as well as to Arab trainees at all skills levels across a broad range of sectors. So while youth employment has become a regional priority due to the Arab uprisings, there are experienced professionals and best practices available that can help guide the determination of flexible yet accountable solution options.

One of the key concerns that I have is the quick fix notion of turning Arabs into entrepreneurs. Yes, Western mercantilism and international trade definitely had its roots in the Mediterranean, as Phoenicians (from Lebanon, of course) were the pioneers in sea-borne trade throughout the region. But that does not mean that one’s DNA equates with modern day commercial success; in fact there are many obstacles to ensuring an enabling environment for entrepreneurs.

A country’s legal, financial, regulatory, and cultural norms, among others, must be coordinated in order for enterprises to succeed. As this “eco-system” advances, concurrent efforts are needed to enable companies at all levels to expand their capacities to compete in the contemporary marketplace. And of course, the point of this enterprise is to develop the human resources to lead, manage, and staff the companies of today and tomorrow.

In my assessment, there are six “demand” factors that should shape the “supply” of labor generated by vocational/technical training programs.

  1. The skill/labor needs of the market today and projected for a decade.
  2. The interests/aspirations of youth and how this matches #1, and how to close the gaps that exist.
  3. Flexible and targeted curricula that provide core technical, language, and soft skills, as well as specific skill sets linked to jobs, with a strong emphasis on practical training based on partnerships with potential employers. Courses should reflect local demand and opportunities.
  4. The careful allocation of funding so that training programs are sustainable rather than becoming unsustainable subsidies.
  5. Government policies that take a holistic approach to job growth, involving a broad range of stakeholders and supporting outcomes based on results.
  6. Ensuring that entrepreneurship programs are balanced with efforts to enlarge the competitive capabilities of medium and large-sized firms.

With these “demands” in mind, a concerted, coordinated, strategic campaign involving various groups of stakeholders will go a long way in meeting the challenges not met by previous vocational/technical training regimes.

Breaking the cycle of “education for unemployment” in the MENA

The Audit Court (Cours des Comptes) in Morocco recently issued a critical report on the country’s vocational training system. At the same time, the World Economic Forum was focusing on youth under/unemployment at its annual conference in Davos. This is no coincidence, as the demographic realities in emerging markets create a demand for very high levels of job growth in the next decade to absorb high school and university graduates.

In fact, key demands emanating from the Arab uprisings are for jobs, greater transparency in employment practices, and sufficient resources for market-oriented training and education.

Jamie McAuliffe, president of Education for Employment summarized the challenge quite accurately: “But it is much easier to describe the problem than to advance concrete solutions. Both within the Middle East and North Africa (MENA) and beyond, there are still few examples of large companies and national governments putting the necessary muscle and resources behind solving the problem.”

Effective program management, qualified human resources, and sufficient budgets will provide a baseline for developing and delivering solutions to reverse the complacency and ineffectiveness that characterize training programs in the region. Looking at the Audit Court’s report helps provides a starting point to discuss the challenges to technical/vocational training in the MENA region.

The Moroccan Office of Vocational Training and Employment Promotion (OFPPT) is charged with orientation, education, and placement of students, as well as providing opportunities for continuing education for adults who wish to change career paths. Ideally, OFPPT maintains relationships with potential employers since it has the critical responsibility to be familiar with the needs of the workforce and adapt curricula and training to meet those needs.

OFPPT has its equivalents throughout the MENA region, some of which focus specifically on vocational and technical skills training for recent middle school and high school graduates, while others are similar to community colleges that provide “white-collar” education and training programs for the services industries. Whatever the agency’s mission, the goal is the same—to graduate employable young people for the workforce.

After decades of acquiring academic degrees that held out little prospect of jobs and careers, young people recognized that their educational systems did not make them employable, and governments are scrambling to respond.

It is too soon to tell how the new programs will turn out, but observations of actions over the past two years raise several critical issues. Let me say, from the outset, that this is a lifelong issue for me. I have been working on training programs in the Middle East since the late 70s, starting in Iran, moving then to the Arab Gulf countries, and continue today providing services to both US employees assigned to the MENA as well as to Arab trainees at all skills levels across a broad range of sectors. So while youth employment has become a regional priority due to the Arab uprisings, there are experienced professionals and best practices available that can help guide the determination of flexible yet accountable solution options.

One of the key concerns that I have is the quick fix notion of turning Arabs into entrepreneurs. Yes, Western mercantilism and international trade definitely had its roots in the Mediterranean, as Phoenicians (from Lebanon, of course) were the pioneers in sea-borne trade throughout the region. But that does not mean that one’s DNA equates with modern day commercial success; in fact there are many obstacles to ensuring an enabling environment for entrepreneurs.

A country’s legal, financial, regulatory, and cultural norms, among others, must be coordinated in order for enterprises to succeed. As this “eco-system” advances, concurrent efforts are needed to enable companies at all levels to expand their capacities to compete in the contemporary marketplace. And of course, the point of this enterprise is to develop the human resources to lead, manage, and staff the companies of today and tomorrow.

In my assessment, there are six “demand” factors that should shape the “supply” of labor generated by vocational/technical training programs.

  1. The skill/labor needs of the market today and projected for a decade.
  2. The interests/aspirations of youth and how this matches #1, and how to close the gaps that exist.
  3. Flexible and targeted curricula that provide core technical, language, and soft skills, as well as specific skill sets linked to jobs, with a strong emphasis on practical training based on partnerships with potential employers. Courses should reflect local demand and opportunities.
  4. The careful allocation of funding so that training programs are sustainable rather than becoming unsustainable subsidies.
  5. Government policies that take a holistic approach to job growth, involving a broad range of stakeholders and supporting outcomes based on results.
  6. Ensuring that entrepreneurship programs are balanced with efforts to enlarge the competitive capabilities of medium and large-sized firms.

With these “demands” in mind, a concerted, coordinated, strategic campaign involving various groups of stakeholders will go a long way in meeting the challenges not met by previous vocational/technical training regimes.