Why Give a Damn:

The intention of this series of posts is to share the story of the beginning and ending of a business. We will zoom in on lessons learned in different areas such as the business setup, funding, the market, consumers and technology. This post focuses on your people, finding the right management (local or expat) and how best to hire, groom and train your team.


The authors of this post, Ties Kroezen and Lonneke Craemers, managed NICE International, a company focused on the energy and IT sector in Africa.


NICE International was a Dutch based flagship social enterprise operating in Africa that had to wind down its activities in September 2013. In 2011 the Managing Director of NICE participated in the Unreasonable Institute. We, the authors, hope that other social enterprises can learn from our experience. In a first column, the history of NICE was outlined. In this column, we share the lessons learned on finding the right management (local or expat) and how best to hire, groom and train your team.

Management: Local or Expat

At NICE we had a policy of working with local management in order to make the company fit in the local context and address the needs of local consumers. The managing director of NICE Gambia was a Gambian who had gone to university and worked in the UK for 10 years. We expected that someone with this background would be able to operate successfully in the local market whilst meeting our European standards on how to run a business.

Local management was not able to meet our expectations on how to operate the business.

Over time we saw that our local management was not able to meet our expectations on how to operate the business. They were, for instance, not fully capable of running a proper accounting system, developing business plans and realistic budgets, planning activities and reporting against plan. We responded to these shortfalls by increasingly getting involved in the local operations through providing training, sending consultants, developing templates, managing action lists, having more frequent progress meetings, etc. In the long run we saw that this resulted in a lower sense of ownership of the local staff as they had the feeling that the people from Europe were running the show.

Our lesson learned is linked to the point we made in our post about Choosing the Right Business Model:

  • If you expect a local company in a developing country to operate in a Western manner, an expatriate should run the business locally.
  • If you choose to work with local management, even when trained in a Western country, the management should be allowed to operate the business in their own way, accepting that it will be different from your expectations. In that case operate as an investor, agree with local management on targets to be accomplished and only make additional funding available when targets are met.

Local Staff: Hire the Best or Groom the Rest

One of the main challenges of NICE has been the quality of local personnel. There is a small group of local people in developing countries able to run a company in a Western style. As we learned in Tanzania, these people are in high demand from international companies and NGOs. As they are a scarce resource, they require compensation at (or even above) Western levels. As a small social venture NICE was not able to afford them, especially since our revenues were not at a Western level.

Another issue faced was that most of the highly qualified local managers preferred a secure job at an established organization over the insecurity of building and running a social venture.

Despite our efforts, most of staff did not reach the required performance level within a reasonable amount of time.

Therefore, we chose to hire less experienced and less expensive local talents with the intention to train them to the required level. As a result, we invested significantly in training, supervision and support of our local staffs. This was one of the main activities of our international headquarters. It did result in very loyal staff and we trained a few very talented people. But headquarter staff based in Europe is expensive. In some cases we learned that the total cost of a young talented local staff – including all the cost of training and support – exceeded that of an experienced and more expensive local staff or even an expatriate. And despite all our efforts, most of the local staffs did not reach the required performance level within a reasonable amount of time.

One of the positive outcome of training your own staff often results in very loyal employees. Our employees really experienced working for NICE as being part of an extended family, the NICE family (that is also how we promoted it). That is wonderful and a strong asset, but it is sometimes also difficult to combine such cultural ideas with business performance. For instance, people were often very obedient and expected us to direct the rules and supply for them (like at home where there is a head of the family who directs and supplies), whereas we expected them to be much more pro-active.

In the end we concluded that for certain key roles (such as accountants) it is probably cheaper to send an expat looking for an adventure and willing to accept a reasonable salary than hire an experienced local staff or train a young talent.

Conclusion

Social entrepreneurs have a tendency to focus on impact and their business model. The NICE case shows that even with a working business model (especially when operating in an international context) things can still go wrong. Our advice is to take these lessons learned and get seasoned advisors.

In the next post we will look at funding, whether to use hard or soft money and upscaling: Big bang or step-by-step.

Even with a working business model-especially when operating in an international context-things can still go wrong.  Tweet This Quote

About the author

Ties Kroezen

After working for 15 years as an international strategy consultant, Ties decided to dedicate his energy, expertise and experience in business to a better world. He moved to Ghana with his family to build Savanna Farmers Marketing Company, a company with the mission to improve the incomes of small-scale farmers by linking them to the market. This company is now marketing the produce of 15,000 farmers in Northern Ghana. He subsequently co-founded FairMatchSupport, a social enterprise building value chains for sustainable food products from developing countries to the European market. Since 2008 Ties managed NICE International, a company building a franchise chain of solar-powered Internet centres in Africa. He is now looking for a new role to create massive impact. Ties is on the supervisory board of Social Enterprise NL, the industry organization for social enterprises in The Netherlands and the advisory board of the education course International Sustainable Development of the University of Applied Sciences in Leiden, The Netherlands.

  • Shih Chi Tseng

    It is true that even working with a business model things still can get wrong. I think sometimes it relates to the culture. Every country has its own working culture. It is hard to let them accept different thing within short time, or even totally accept it. So i think we can try to combine two cultures together and take out the weaknesses we have in both cultures, try to make a new working culture.

  • cordierm

    Sometimes the most impactful lessons are learned the hard way. The experience that NICE had is a great example of how unexpected things can derail a company and demonstrates some really key things to pay attention to when working with any enterprise

  • greatelk

    Thank you so much for sharing NICE’s experiences with us! Working with/in different cultures is always a challenge and it’s great to read about some firsthand experiences.

  • Sammaritano

    This is more of speculative question, but like you said, it seems like it would have been a great idea to bring in a trained workforce into the pivotal positions of NICE’s company. Yet, would you not think the social dynamics within the workplace would be affected if you had Dutch/European workers managing only crucial aspects of the business? Would the rest of the Gambian workforce within the company view the situation as your headquarters trying to maintain all power and control? Possibly even the local workforce seeing the situation to be where headquarters couldn’t trust their workforce in Gambia to carry out a competent job? Although, it does seem that is what happened in the end.

  • Cassie135

    I like the conclusion about hiring more experienced personnel from the start. People can definitely make or break a business. It is important to hire people that know what they are doing and are also passionate about what they are doing.

  • awatwa

    That was a very valuable lesson. In today’s rapid changing environment, we shouldn’t expect a plan is 100% safe just because it has followed what has been done in the past. At the end of the day, changes often leave plans behind, and only the fittest will survive

  • Claudya Febriani

    A thorough analysis of the problems Nice was facing. It’s indeed a big dilemma for a company that operates internationally, especially in the developing countries. Costs would eventually be the real issue here since they would not survive if they can’t manage lower costs in the long run.

  • Ties Kroezen

    Thanks for your most valuable comments. II think that the best team for a Western-initiated venture in a developing country is a mix of Western and local people, all having the willingness to work together and learn from each other. In the past I built a business in Ghana with this model and it worked fine.

  • anp042

    Awesome. I’m saving this article. Although I have no experience operating a business in a foreign country, I do intend to in the future. I’ve assumed it’s a whole different ballgame overseas, but somethings, like passion for the work, can probably be spread throughout. I assume there’s a closing gap on the differences in growing a company around the world as the world is getting smaller and smaller. But culture and roots are deeper in some places than others.

  • erickmcu

    Very interesting points! Your mixed model is a strong one. But the one key element not discussed is the planned timeline, mapped with the organizations vision, mission and goals. Are you there for the short or long term? Most organizations are in for the long haul (would suggest teaching the locals to fish rather than providing the fish) but others are there for a short time, for example an entrepreneurship bootcamp for the locals. Depending on the timeline, you’d want to shift your focus from expats to locals to lead the organization/effort.

  • Rebecca Kahler

    Doing business abroad is never black and white, and this article is a good reminder of that. Thoroughly and thoughtfully determining who you hire for a business abroad is essential to its success. This highlights how intricate a role hiring practices play in business.

  • kabbasuf

    NICE has to be applauded for their intentions. However, the research does not appear to have been sufficient before launching the endeavor. The insights are helpful, but I wonder if conducting adequate research would have saved them from meeting their fate. Cultural differences are huge when it comes to doing business in a developing country (or should I say barely developed country).

  • Liemd

    As a less experienced student myself, it gives me hope to know that employers might prefer the less experienced to be trained under them. It is very true that we can be very loyal to our employers as we are thankful to be given chances to improve ourselves.

  • omholtj

    Many of my friends did not have much experience going into their fields after college. Most of them said their managers wanted a ‘blank slate’ to be able to train them to their liking. Many employers and managers prefer someone who is not set in someone else’s ways. It also struck very true to me that you have to be open to compromise and trying someone else’s idea when working with a different culture.

  • tayler_schroeder

    I found that this article shows the importance of planning and giving yourself some wiggle room. I like that the company was willing to hire less experience people and train them, but maybe it could have been done earlier or differently help the success of the company. Things can always go wrong though and the advice to learn from your mistakes can never be mentioned enough!

  • Tim Rutkowski

    This article can, and will give insight to any persons that are looking to start up a new business; and are developing their business model. What my biggest question is what is an NGO in this context? Is this just another way to say a foreign investor or owner?

  • thangha

    It is so hard to start a business in a foreign country. The most important process in a business is to hire the right employees so that the business will grow. In this case, the company should hire someone with experience to do the hiring process.

  • Sara Sanchez

    It is a good idea to bring in expats for the first couple of years until the business is established in the area. Then start recruiting those highly experienced local managers. Another idea is to bring in young talent as an intern to learn the company. It is also less expensive than hiring them full-time.

  • SamanthaSesnon

    Interesting observation on local versus expat workers. It seems to be a little bit of a generalization to me, but an interesting description of how things seemed to work in this organization including some ideas that might shine in other organizations.

  • Alex Szlamas

    Strikes me as being slightly anecdotal, but it does outline a way to assess the cost of effective staffing in a social entrepreneurship environment; especially ones that crosses international borders.

  • Hairong Zheng

    It is never late to learn from operating, especially for small businesses. I like the idea about training own employees of a company; however, there are always trade offs. Cost of training a manager maybe even more expensive than hire a new manager because a training system is necessary. Moreover, well-trained employees may find another job after training. All these factors have to been considered as a business owner. Finding the most efficient and lowest cost is an unavoidable way for a business to survive.

  • Dinglin Wu

    Again, Small businesses are hard succeed. For most small businesses the owner is the manager and it is really hard to overcome this line of differentiation between large firms and start-ups. However it’s still interesting to see you say that small businesses shall hire inexperienced workers.

  • Keiichi

    Hiring is very important part of process to establish a new business in foreign country. employees that have a lot of experience help to make better result for their new business and human resource is necessary factor to succeed for small business.

  • duongh1

    It’s most likely that there is no business perfect model. There’s always some variables which are not taken into consideration may have serious impact on the business.

  • Anthony Putra

    I agree that in pursuit of perfection, there are still chances for failure. Even in hiring employees, there are advantages or disadvantages in expat or local workers. As good as a business plan gets, always take into account variable X / the unknown variable that may interfere with your predicted results

  • Lonneke Craemers

    Hi Dinglin Wu, we are not saying small businesses should hire inexperienced workers. In most cases we decided it was the only affordable option for us. We have also concluded, however, that training these people can be very expensive and that for the crucial positions in your business it may be less expensive to hire more experienced people or expats in the long run.

  • Lonneke Craemers

    that is what we tried to do and to some extend this was very successful. for instance, we did some trainings on culture differences. very interesting for both sides! @tsengs:disqus

  • Lonneke Craemers

    @Sammaritano:disqus you are completely right. what i have learned is that in our case the ‘my way or the highway’ attitude can really work. this means that the manager who applies this approach has to be present all the time.

  • Lonneke Craemers

    @erickmcu:disqus see our post on the history of NICE, here our mission and strategy is explained. we were there for the long run and did a lot of (business) trainings for our local staffs. our idea was to start up the business, train locals were needed, leave local staff to run the business and move on to start somewhere else with the same idea. Unfortunately we have not succeeded in scaling up, part of the reason is the quality of the people as mentioned in the blog. however, there were also other reasons, that we will focus on in other blogs.

  • Lonneke Craemers

    @anp042:disqus great! do not hesitate to contact us if you need advice when you decide to start!

  • Lonneke Craemers

    @omholtj:disqus thank you for this reply. i think you are very right, it is really important that employees can work with the needed freedom to get the best results. however, there also has to be some framework in order to keep everything together. our challenge was to find and train people to work with this pro-active attitude. in some cases we found and trained talents that stayed very loyal and helped the business grow. in some cases, especially the crucial positions, it was difficult to find capable staff.

  • Lonneke Craemers

    @timrutkowski:disqus an NGO is an organisation that does not have the objective to make a profit, whereas a business does!

  • hanj5

    This article is definitely a good reminder that no matter how perfect your business plan is, you will face many challenges you’ve never thought of. Best is to anticipate and react as soon as you can.

  • Drew Cox

    I agree on this article that you always have to be prepared for the challenges ahead. Being a step ahead of the game can always help lighten the stresses of certain challenges that may be a major burden in the future. Bringing in interns to learn the ins and outs of the company. This makes the struggles a little less on the head boss or CEO if the company! When you have an intern you can also spread yours views onto them, this makes it easy to have things ran your way. Why do you think such management wasn’t able to meet standards in the time given to them? Thanks again for the article!!!!

  • jrmsmlbg

    Very important topic indeed. Having the right people from management to the team itself, is very important especially when working in a developing country. Figuring out what makes sense for management was a great point. Whether to hire an inexpensive local and train them, expensive local that is ready trained, or an expat are key to figuring out what is the most cost effective solution when important goals have strict deadlines. I feel that with NICE, more time was spent on training managers and teams than they wanted to. But with the ability to train the teams as they did, they had more people that were loyal and experience NICE as more of a family.

  • Tom Ashmus

    I really like the idea of this article. It seems like most of the articles are about great ideas and how successful random companies are. But this article isolates a startup that did not work and focuses on what they did wrong so people can learn from it. In many ways it didn’t fail at all, I’m sure this article went on to help many other startups becoming successful.

  • Tom Ashmus

    I totally agree. There are so many different variables that are impossible to predict until it is a real live situation. These variables can have extreme effects on startups like we see here, but this article explains what they did wrong so people can learn from it and not repeat their mistakes.