SME Advisor Issue 124

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ISSUE 124

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MANAGEMENT Dominic De Sousa Chairman Nadeem Hood Group CEO Georgina O’Hara Publishing Director Paul Godfrey Head of Content – SME paul.godfrey@cpimediagroup.com Editor Rushika Bhatia rushika.bhatia@cpimediagroup.com ADVERTISING Account Executive Freshia Mistry freshia.mistry@cpimediagroup.com Account Manager Mrudula Vempuluru mrudula.vempuluru@cpimediagroup.com Creative Director Sam Birouty Senior Designer Solomon Arthur Printed by Print Well LLC

Gazing into the future of workplaces Disruptive global forces such as the emergence of social networks, technological innovations and generational shifts have created a huge impact on the way people collaborate, communicate and work.

The question is – how is this going to impact the talent needs of your business in the future? In this issue, we turn to experts such as SPRING Singapore, Cisco, Deloitte, Gartner and BCG, who highlight the following three major themes – 1. Reshaping workplaces Workplaces today are evolving to become spaces where creativity, technology and talent integrate to promote productivity. As the lines between work and social become increasingly blurred, offices have undergone serious transformation. Meanwhile, employers have also realised that offering the right working environment is no longer sufficient to retain top talent, they have to focus on health benefits, additional amenities and the overall wellbeing of their employees. Moreover, with the millennial generation accounting for a large proportion of the global workplace, employers have to make a conscious shift to adapt to this fresh, new style of working; any employer that fails to meet the needs of this generation will no longer to be able survive.

2. Working with robots Technology has been another major driver in revolutionising the concept of a traditional workplace. Concepts such as artificial intelligence aren’t as far away into the future as you might think.

In fact, countries such as China are already taking the lead with the modification of over 500 factories to include robots taking over work that would normally be accounted for by 300,000 employees! Our cover story for the month focuses on the all-important topic of man-machine collaboration on page 76 3. The SME advantage As an SME, it is very natural to neglect the development of your workplace in order to address higher priorities such as cashflow, sales, marketing and so on. But, the reality is that employees are the most valuable asset for an SME. Experts emphasise the importance of building strong HR capabilities; this is one area which can enable you to compete against larger more established companies.

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CONTENTS

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09 EDITOR’S NOTE Gazing into the future of workplaces. How are today’s disruptive market forces going to change the way we work?

10 SME CONTENT CURATORS Presenting this month’s portfolio of industry specialists and thought-leaders, who played a critical role in the content of the magazine.

The Economist’s View 12 The Big Ask: How will the introduction of tax impact salaries in the UAE? Martin McGuigan of Aon Hewitt Middle East assesses the impending policy change…

16 A fresh perspective on human capital. Joanna Abou Jaoude, a top HR strategist from Deloitte Middle East, analyses the evolving landscape and highlights top trends.

22 Merging realities: blending physical and virtual in an era of new workplaces. Are work habits being transformed as a result of the digital workplace?

Editor’s Roundtable 28 An exclusive interview with Dubai SME. HE Abdul Baset Al Janahi gives an insightful overview of the thriving sector…

SME ADVISOR ISSUE 122

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44

Data & Analysis 50 Reshaping your workplace: a new approach to organisation design.

Experts at the Boston Consulting Group unveil a new methodology to manage talent…

Organisation & Structure 58 Getting past failure – creating a culture of innovation and learning.

A comprehensive guide to help SMEs in their quest for international business growth.

80 Business Banking 34 Principles of quality customer service.

Top tips to help your business build a solid customer base and boost revenue.

Digitally Disruptive 38 Let me take you on a journey…

Etisalat’s Connect.ae is a powerful navigation tool that delivers pin-point accuracy and a host of impressive features.

Infographic of the month 42 Our infographic section showcasing key trends shaping the SME marketplace.

Movers & Shakers 44 Rohei: pioneering imaginative workplaces that nurture creativity. Our very exclusive meeting with the team that was ranked as one of the best places to work in Asia.

64 The makings of a good leader.

Global business celebrity and TV personality Betty Liu reveals that leaders can function most effectively when they put the needs of their followers first.

68 End of Service Gratuity in the UAE. Senior advisers from Clyde & Co. present the latest updates.

SME Unplugged 72 A template for HR growth.

How can SMEs facing manpower constraints cultivate their talent pipeline and grow their business?

Technology for business 76 Looking to the future: the age of man-machine collaboration. Don’t miss our cover story!

80 Robot Revolution. We take a sneak peek into Cisco’s futuristic HQ, where sleek modern design meets network capabilities and walking robots.

Content Curators

“It is a tangential leap to say the introduction of corporation tax might have an adverse impact but it is likely to have some negative impact on the dirhams in your pocket in the longer term.”

Martin McGuigan, Partner, Head of Rewards Consulting, Aon Hewitt Middle East

CONTENT CURATORS Presenting this month’s portfolio of industry specialists and thought leaders, who played a critical role in producing the feature content of our magazine and ensuring that we were more topical than ever.

“HR needs to be more preemptive with regard to digital transformation as it plays an important role in shaping the organisation’s digital identity.”

Joanna Abou Jaoude HR Strategist, Deloitte Middle East

“Engaged employees are more willing to collaborate, take on challenging roles, and provide local leadership as required by changing business conditions.”

Biswajeet Mahapatra Research Director, Gartner

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Content Curators

“As key players in the tech space – and with the ability to drive innovation, SMEs are well-positioned to be strategic partners in the development and growth of Dubai Wholesale City.”

“If you ask any leader of a team, organisation or company, he or she will tell you that being a great leader requires a mix of nature and nurture.”

HE Abdul Baset Al Janahi

Betty Liu

CEO, Dubai SME

TV Personality and leading Business Guru

“As the Middle East’s industrial sectors continue to grow, competitive pressure is also rising. With this in mind, to edge out the competition, SMEs in the region need to ensure that they are achieving maximum performance.”

Dr. Christopher Daniel Partner and Managing Director, Boston Consulting Group Middle East

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“SMEs need to view human capital as a strategic tool to help drive business growth and be more forwardlooking in their HR practices.”

Christophane Foo Executive Director, Human Resources & Organisation Development, SPRING Singapore

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The Economist’s View

The Big Ask:

How will the introduction of tax impact salaries in the UAE?

Ahead of the proposed launch of VAT and corporate tax in the UAE, global expert Martin McGuigan, Partner, Head of Rewards Consulting at Aon Hewitt Middle East, assesses the impending policy change and examines its potential impact on salaries…

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It is happening – tax is here and we have a date for the introduction of sales tax in the UAE. Currently the focus is on Value Added Tax (essentially a sales tax) and Corporation tax, but the dreaded spectre of income tax is not on the table (well, for now).

Corporation tax would be more complex to introduce and probably more of a long term play, but in essence the shareholders would see their returns decreased as the government takes a slice of the wealth they create.

Typically when shareholders see their margins decreased they want to find a way to improve them again, therefore we may see a double impact as employees and consumers, if this is implemented. Salaries are a large part of the operating expense of most organisations therefore annual increases in salaries may be scaled back, additionally we may see costs of goods and services increased to boost the top line in order to see the bottom line hold steady. Therefore,

whilst it is a tangential leap to say the introduction of corporation tax might have an adverse impact but it is likely to have some negative impact on the dirhams in your pocket in the longer term.

A sales tax would have a direct impact on all of us as it would be levied at the point of sale. In essence the price of everything from your iPhone to your insurance premium could essentially increase overnight. The retailers and suppliers will simply pass on the charge to you (as a consumer) in order to maintain their margins.

So the question we will all inevitably ask is “Can we all anticipate a pay rise to compensate for the increased cost of living that a sales tax would cause?”

Whilst the answer depends on a number of variables I think it is probably a plain and simple “NO!” Why is this probably the case?

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The Economist’s View

Salaries are a large part of the operating expense of most organisations therefore annual increases in salaries may be scaled back. www.smeadvisor.com

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The Economist’s View

It is a tangential leap to say the introduction of corporation tax might have an adverse impact but it is likely to have some negative impact on the dirhams in your pocket in the longer term.

Well as previously stated the answer depends on how the tax is introduced, specifically what the rate of tax actually is and what goods and services the tax applies to.

If the introduction rate was less than five per cent then the case for a compensation increase is weak, if however we moved straight to a UK like 20 per cent we would inevitably all feel the pinch a bit and look for an inflation busting pay rise.

Unfortunately, there is no guarantee that increases will follow if taxes are introduced. If we look at other economies where death and taxes are the only certainties there are tax changes all the time. When the government introduces a new tax (for instance, airline taxes or insurance tax in the UK) there is no corresponding increase in the way we get paid.

Similarly if there is an increase in the underlying tax rate for an existing tax (For example, the top rate of income 14

tax in France moving to 75 per cent) we don’t see employers equalising pay the next day to compensate for the decrease in Euros value to the employees impacted. Conversely when taxes fall (which happens occasionally) we don’t see employees rushing to give money back to their employers as they are now slightly better off.

The likely impact is a long term adjustment on compensation levels, essentially we all have choices to make around where we work and how we are paid for our contribution. Typically when we move roles we tend to get paid more, and if companies see a pattern emerging that they are losing key contributors because they are behind the market they will adjust pay in order to catch up with their competition, i.e. salaries will rise.

However, these trends are typically a lagging indicator and the budgeting process will take several cycles to catch up.

We have already surveyed our client base on their likely intentions on the topic and none of them plan to implement a pay rise – all have stated they will adopt a wait and see approach to ensure they understand the actual impact of the tax on spending power.

Overall, the introduction of taxes would probably have a negative impact on discretionary spending and our ability to save money, however if taxes are introduced it would impact everyone equally and we’d find every employer grappling with the same challenges from staff.

No one could dodge the bullet and therefore we’d quickly accept it and move on.

If we felt strongly enough about it we may choose to return to our home countries, but rest assured the government take will be considerably more of your hard earned cash there, but it comes without the sunshine and lifestyle benefits we all embrace!

Martin joined Aon Hewitt Middle East as the Head of Reward Consulting in 2012.

Prior to joining Aon Hewitt, he spent four years as Head of Executive Compensation and Reward at Towers Watson Middle East, having previously spent a decade with the firm in London.

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The Economist’s View

A FRESH PERSPECTIVE ON HUMAN CAPITAL 16

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The Economist’s View

Top HR strategist Joanna Abou Jaoude of Deloitte Middle East takes a hardened look at the evolving human capital landscape and shares critical advice on the way moving forward…

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The Economist’s View

The reality is that in order to successfully navigate the Middle East’s talent environment, public and private sector organisations will be required to implement integrated interventions aimed at attracting, developing, engaging and retaining employees. A large part of this renewed strategy involves mapping global and regional drivers shaping talent management. The team at Deloitte recently launched a research publication, the Global Human Capital Trends Report.

The study, one of the largest longitudinal studies concerning talent management in the world and being issued since 2013, reached out to more than 7,000 HR and non-HR leaders around the world. Here are some of the key themes emerging out of the study – Global shifts • The digital transformation The digital age is moving at such a fast pace that it is fundamentally transforming the way organisations operate, be it in the private or the public sector, and is requiring them to develop new ways of thinking about service delivery that influence the way operating models are designed.

Hence, the profound effects on the functions of HR in these organisations and their role in identifying new approaches to managing people. HR needs to be more pre-emptive with regard to digital transformation as it plays an important role in shaping the organisation’s digital identity. It is a challenge and a real complexity to plan future capabilities of a workforce in the digital economy; as is the ability to integrate the right people into a dynamic organisational context and help existing employees and leaders gain new digital competencies to be able to drive transformation.

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• Women in the workplace An old Chinese proverb says that “women hold up half the sky” and that is certainly true in 2016. Women need to be more seen as being key to economic development. Ignoring the talent of half of the population is surely not the optimal way to achieve organisational effectiveness.

Traditional approaches to diversity are fostering retention and development, but not advancing sufficient women to leadership quickly enough. Despite decades of increased focus on quotas, development, women’s rights, and workplace flexibility, the limited progress around the world suggests that something is clearly

missing from strategies to empower and advance women to top-level positions and to boardrooms in the private and public sectors.

What is often forgotten when we discuss women’s empowerment is the role of men. Men hold most leadership positions and unless they accept the business case for the recruitment, retention, development, and advancement of women to executive positions, little is likely to change.

Regional drivers • GCC’s workforce distribution Both a surplus in the supply of young national professionals and a deficit in the supply of experienced

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The Economist’s View

• Nationalisation programmes In addition to the workforce distribution, GCC governments have launched nationalisation programmes that highly impact talent management. In fact, GCC governments have enforced nationalisation requirements on public and private sector organisations in the GCC. These requirements aim to up-skill nationals, address high national unemployment rates, particularly among millennials who constitute more than 50 per cent of the GCC’s workforce, and reduce reliance on expatriates in certain sectors. Not complying with nationalisation requirements may hinder the organisation’s ability to participate in the labour market. For instance, the Nitakat programme in the Kingdom of Saudi Arabia classifies private sector organisations based on their nationalisation performance; the better the organisation classification is, the easier it becomes for that organisation to participate in the labour market.

and qualified talent present talent management challenges that organisations in the GCC should address to cope with skill shortages.

The International Monetary Fund estimates that up to 1.6 million nationals could enter the GCC labour market by 2019, with new private sector jobs covering a maximum of half the expected labour market entrants. As a result, both private and public sector organisations in the GCC could be pressured to absorb the surplus of young national professionals in order to avoid an increase in national unemployment rates and to comply with nationalisation requirements.

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HR needs to be more preemptive with regard to digital transformation as it plays an important role in shaping the organisation’s digital identity.

50%

of the GCC’s workforce is made up of millennials

1.6

million nationals could enter the GCC labour market by 2019 as per the IMF’s estimates

Embracing change and mastering growth To embrace these regional and global drivers, private and public sector organisations in the Middle East should revisit their perspective on talent management and be prepared to question enduring practices. In order to do so, Deloitte proposes a few among many talent management trending interventions.

• Talent planning Currently, the majority of talent management activities such as planning for recruitment and implementing trainings are reactive, driven by incidental requests received from concerned line managers. To be viewed as

Joanna Abou Jaoude, HR strategist at Deloitte Middle East

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The Economist’s View

All in all, talent management is prime in the Middle East and it is triggered by the rise of regional and global drivers.

a strategic partner rather than a transactional support function, HR should develop a strategy that is in line with that of the organisation and broader government priorities (e.g. nationalisation) This strategy should also include a talent component that both focuses on enabling the organisation to achieve its objectives from a talent point of view and guides proactive talent management activities such as recruitment and learning.

• Talent analytics At the moment, talent management activities are not consistently monitored and, as a result, lessons learned and trends are not extracted. To support the decisionmaking process, HR could use talent analytics tools to provide talent-related insights and trends.

HR could use talent analytics as a descriptive and monitoring tool to measure employee metrics such as

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productivity and turnover, and to determine trends and corrective actions. Talent analytics could also be used as a forecasting tool to support the workforce planning process. Talent analytics typically aim at informing decision making and enabling efficiency at both the levels of HR and the business.

However, there are two main challenges that organisations face in the Middle East: - Data governance: organisations in the Middle East struggle with the quality of data (e.g. accuracy, consistency). In fact, only seven per cent of interview and survey respondents believe that the quality of their data is very good. Data governance is critical to the success of talent analytics that allow for proper general management and talent management in particular; - Understanding talent analytics: few organisations in the Middle East understand what talent analytics are and how they can benefit both the organisation and HR. 34 per cent of respondents do have a good to very good understanding only. Yet, there is very little investment done in the area across HR often limited to recruitment and payroll.

Talent analytics bring together HR and business data from different sources and it is now addressing a wide range of challenges spanning analysing flight risk, selecting high potentials, predicting compliance to risks, analysing engagement ratios, etc. Analytics technology is now available off the shelf, embedded in most Human Resource Information Systems (HRIS) and talent management systems. In the very near future, it will become almost impossible to make any HR decision without analytics.

• Diversity in the workplace Organisations in the Middle East are increasingly aware of the importance of inclusion and diversity in the workplace.

Organisations are willing to invest in leaders from different segments of employee groups touching particularly upon millennials and women and nationals. Those are crucial in further up-skilling young nationals who are asked to take on large and critical responsibilities in organisations.

Organisations need to raise the bar by encouraging and empowering millennials, women and nationals.

The UAE government for instance, has announced the formation of a UAE Youth National Council which comprises of young men and women tasked to advise the Government on youth issues. The Council is led by a female Minister of State for Youth who is no older than 22. This must incentivise other organisations in the semigovernmental and private sector to invest more in developing women, millennials and nationals since at the moment, most of the substantial leadership development investment goes to the Senior Management and C-suite executives and is mostly driven by the CEO (50 per cent of respondents in the UAE).

All in all, talent management is prime in the Middle East and it is triggered by the rise of regional and global drivers. This point of view consists of an invitation for private and public sector organisations in the Middle East to re-invent their talent management functions in line with Deloitte’s latest findings and to re-imagine the talent experience of employees and candidates. http://dupress.com/periodical/ trends/human-capital-trends/

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The Economist’s View

Merging realities:

blending physical and virtual in an era of new workplaces

The advancement of technology is revolutionising the way organisations interact with their employees. In the following feature, Biswajeet Mahapatra, Research Director, Gartner, tracks how work habits are being transformed in a new era of the digital workplace‌ 22

Digital workplace is a business strategy for promoting employee agility and engagement through a more consumer-like computing environment. It ensures that technology investments boost employee engagement through a focus on employee autonomy, continuous learning and effective collaboration. By promoting employee engagement, a digital

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The Economist’s View

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The Economist’s View

Engaged employees are more willing to collaborate, take on challenging roles, and provide local leadership as required by changing business conditions.

workplace stimulates discretionary contributions that, in turn, can boost business effectiveness.

Engaged employees are more willing to collaborate, take on challenging roles, and provide local leadership as required by changing business conditions.

So essentially, a digital workplace program is a complex balancing act involving the orchestration of diverse technology-based capabilities that empower, engage and equip employees to work effectively both as individuals and collectively. It diffuses these capabilities across an organisation in ways that may require changes not only to systems and processes but also to the organisation’s culture, including how its people work and are managed.

The most influential factor in the digital workplace is consumerisation. Many employees in their consumer lives exhibit 24

great facility with mobile devices, self-support, social networks, diverse real-time communications and information discovery.

This digital literacy is having a substantial impact in the workplace, where these employees bring their own knowledge, devices and applications. The technology landscape is filled with innovative ideas in various stages of development, including virtual personal assistants, 3D printing, emotion recognition systems, robotics, predictive analytics and many more. The availability of new technology aids the ability to develop and deploy even newer forms of technology, ensuring that the pace of technological evolution will accelerate.

The benefits of a digital workplace Digital workplace programs aim to enable new and more effective ways of working. Direct benefits of digital

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The Economist’s View

workplace include: delivering a more social, mobile, accessible and datadriven work environment, which is better able to exploit changing business conditions, making employees more agile and engaged, have a better understanding of customer needs and requirements and in many times pre-empting the needs and providing excellent services through well informed employees, fulfilling employee needs to working from anywhere, using any device and tools which they feel will augment their work, enabling a collaborative environment of working wherein virtual teams across the globe can seamlessly work for delivering higher value of goods and services. Digital workplace helps promote employee engagement which creates a workforce that makes discretionary contributions to business effectiveness. Digital workplaces have an explicit goal of creating a consumer like computing experience that enables teams to be more effective. Digital workplace strategies exploit emerging smart technologies and people-centric design to support dynamic, nonroutine work.

Wearables, virtual assistants and robots – are we there yet?

We have a Digital Workplace Hype Cycle which talks about all the technologies which would become enablers for digital workplace. But most of them are in the innovation trigger level. Some of them which would make a good impact include: Emotion Detection/Recognition, virtual personal assistants which can perform some of the work of a human assistant, people-literate technologies exploit naturallanguage processing to reduce the cognitive burden on people, letting them concentrate on their objectives instead of technical details, digital dexterity which is the cognitive ability and social practice

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needed to leverage and employ various types of media, information and technology for advantage, in unique and highly innovative ways that optimises personal and business value. Digital dexterity will revolutionise the way work is done by virtue of the shift to agile working practices, the offloading of processes and repetitive tasks to smart machines, flatter management hierarchies and highly collaborative work styles. Or maybe using Smart advisors which are a class of smart machines that advise users about the state of operations, make recommendations on best decisions to take, or give the best answers to their questions.

Transforming traditional workplaces The technology driving the digital workplace is complex with both enterprise vendors and consumer-oriented providers vying for control. The types of digital workplace technology being used by employees are growing dramatically, fragmenting into smaller pieces, and are increasingly being propelled by consumerisation. Gartner predicts that by 2020, the greatest source of competitive advantage for 30 per cent of organisations will come from the workforce’s ability to creatively exploit digital technologies. Customer intimacy is being driven by contextual delivery of information, deep insights across the customer life cycle, establishment of customer communities and co-creation opportunities, mobile-first strategies, as well as extension of the fabric of the IoT into homes and workplaces. Enterprise feedback management services will boost intimacy, and speech and emotion analysis tools will give new insight into customer mind-sets. Intent-driven customer systems and customer best-next-

30%

of organisations will get their competitive edge from the workforce’s ability to creatively exploit digital technologies by 2020

1 in 3

jobs will be replaced by smart machines by 2025

Biswajeet Mahapatra, Research Director at Gartner

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The Economist’s View

Digital workplace helps promote employee engagement which creates a workforce that makes discretionary contributions to business effectiveness.

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action systems will drive better seller/customer relationships.

Which basically means all the new technologies which we spoke earlier about would see a huge uptake to keep pace with changes in culture, work environment, customer expectations, and just to be competitive.

Gartner predicts that one in three jobs will be replaced by smart machines by 2025. The question then arises – from the point of view of a business owner, what makes hiring smart machines appealing?

Smart machines does not mean just

robots. It can be smart advisors, or VPA (virtual personal assistants) or it may mean your existing tools will become much more intelligent that they would be able to do a lot of the jobs especially the ones which are repetitive, ones which can be categorised, flagged and pre-empted. All these would help in huge reduction of cost of operations, higher satisfaction level of customers, better understanding of customer behaviours, well informed employees which can take faster decisions and overall lead to compete effectively in the market.

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Editor’s Roundtable

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Editor’s Roundtable

HE Abdul Baset Al Janahi: “Our focus is to improve SME competitiveness through enhancement of productivity, quality and innovation.”

With strategic initiatives such as the ‘SME Hub Passport’ and ‘Dubai SME100’ under its belt, Dubai SME continues to provide unparalleled support to the thriving sector. In an exclusive interview, SME Advisor speaks to the man at the forefront of the prestigious agency – His Excellency Abdul Baset Al Janahi, CEO, Dubai SME.

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Editor’s Roundtable

Dubai SME has always advocated that bank financing mainly targets established companies and cannot be expected to flow into startups or their early stage development.

What are some strategic initiatives that Dubai SME is leading in 2016 to support the SME sector?

Dubai SME was established in 2002

by His Highness Sheikh Mohammed Bin Rashid Al Maktoum Vice President and Prime minister of UAE, Ruler of Dubai’s goals and visions: • To promote entrepreneurship and risk taking culture among young Emiratis • To provide start-up support to Emirati entrepreneurs and encourage new concepts and innovations.

• To diversify the economy towards more private sector participation of Emiratis in business • To position Dubai as the Global Entrepreneurship Hub Since its inception in 2002, Dubai SME focused on creating comprehensive support systems that motivate entrepreneurs and help start-ups to step out and pursue growth. We have come past major milestones in our mission, identifying barriers and integrating enablers in Dubai’s entrepreneurial ecosystem.

Moving forward, Dubai SME aims to formulate appropriate strategies and initiatives to improve the SME sector as a whole and hopefully, increase their value-add to Dubai’s economic diversification and development goals.

Our SME2021 plan focuses on three main areas: • Increase entrepreneurial activity in the economy • Enhance the competitiveness of Dubai’s SMEs (through innovation, productivity, quality) • Integrate SMEs with high-growth economic opportunities in Dubai Since several of our research studies confirm that our SMEs are low on productivity, we’ve set certain benchmarks to increase their competitiveness and encourage them to adopt certain best practices that will help them achieve higher

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productivity. Of course, productivity ultimately leads to an increase in capacity, expansion across new markets and higher revenues. We’ve grouped our strategic initiatives under four main dimensions that covers: Entrepreneurship Promotion, Ecosystem Development (policy & regulation), Business Development Programmes, and Research & Statistics.

Dubai SME will continue to roll out initiatives and programmes required to fill gaps in the entrepreneurial support system in Dubai and position SMEs to benefit from the diversification and global aspirations of Dubai’s economic development strategy.

Specifically, what are some key objectives for Dubai SME in 2016 in terms of providing/assisting with financial accessibility to SMEs? The question of SME financing needs to be looked at from various angles.

Primarily, we should consider two things: Type of finance, i.e. debt or equity, and maturity level of the SME. In the case of a mature (established with more than two years’ records) SME, the market expects that they have their books in order, which will make getting debt from banks quite straight-forward. However, getting equity investment for amounts less than US$ five million is quite challenging here, since most of the existing private equity players target bigger deals.

Often, the case with our SMEs is that they have tremendous growth potential but not articulated well enough to attract necessary funding or attention. We launched a programme to address this issue – the Dubai SME100 initiative, which ranks the top 100 SMEs in Dubai every two years. The ranked SMEs receive a variety of benefits that vary from workshops, seminars and advisory support from different partners. One of the advisory support the ranked

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Editor’s Roundtable

companies receive is a vital valuation advisory support and guidance on getting enhanced access to financing from our partner, Shuaa Capital.

Dubai SME100 is now in its third cycle and 37 SMEs have already received support by way of business valuation and growth advisory services by Shuaa, and will have the opportunity to participate in capability development seminars and workshops as in the past two cycles.

Many of these businesses are well positioned to move to the next phase of their development, attract funding partners and possibly become listed entities in the future.

For start-ups however, debt financing is not an option, since banks need to look at their audited financials for the last two years. Dubai SME has always advocated that bank financing mainly targets established companies and cannot be expected to flow into start-ups or their early stage development. Therefore, equity financing, through angel investors and venture capitalists, is what we need and hence, Dubai SME as a government agency is planning to address this market failure through couple of initiatives to support equity investment. The new initiatives aim to establish more viable and sustainable sources of funding through linking entrepreneurs and successful investors.

The Mohammed Bin Rashid Fund (MBRF) we launched in 2015 is also a major step towards supporting early stage development of SMEs. Emirati nationals between 21 and 65 years of age can avail of the Fund’s financial support in two categories: the Seed Capital Loan, offered directly to start-ups requiring funding of more than AED 50,000 but not exceeding AED 500,000, and the Credit Scheme Loan, offered through banking partners and guaranteed by the Fund, to both start-ups and existing businesses requiring a funding of more than AED 500,000 but not

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exceeding AED five million.

In terms of the current support being provided to SMEs, what do you think is lacking? And, how is Dubai SME filling the gaps?

Dubai SME always take a holistic approach in developing our plans and accordingly, we have already identified areas for improvement in the entrepreneurship ecosystem and included them in our 2021 plan.

The main areas we are working on, along with the government bodies concerned, are: Intellectual Property Rights, Research & Development support, Equity Financing, Local Supplier Integration, and SME Rating.

Expo 2020 provides SMEs with a platform to display and deploy their capabilities on a global stage, not only during the event but also in the run-up to the event.

Do you think that having strong Corporate Governance protocols is helpful in terms of getting finance?

Corporate Governance is integral not only for SME access to finance but also for the sustainable growth and development of an enterprise.

A key element of good corporate governance principles is transparency.

Transparency allows all key stakeholders to measure the strength, viability and potential of an SME. In other words an SME that embraces corporate governance makes itself a bankable and investable enterprise.

Dubai SME has been encouraging SMEs to open their doors to corporate governance principles and we teamed up with Hawkamah – the Institute for Corporate Governance – to develop the first-ever Corporate Governance Code for SMEs. We have several case studies of emerging businesses which have implemented our nine pillars of good corporate governance and can articulate the benefits in terms of growth, transparency and sustainability. The nine pillars include creating policies and procedures for management, developing transparency in shareholder relations, defining the role of advisory or executive boards, establishing

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Editor’s Roundtable

As key players in the tech space and with their ability to drive innovation, SMEs are wellpositioned to be strategic partners in the development and growth of Dubai Wholesale City.

accounting practices, and regulating communications with stakeholders and family shareholders.

Dubai SME100 is also working with IFC (The International Finance Corporation) to provide free workshops to the ranked SMEs. The purpose of the workshop it to equip SMEs with tools and training to implement sound Corporate Governance processes and structures.

How many members does Dubai SME currently have and what are your growth expectations moving towards Expo 2020?

Since 2002, Dubai SME has supported more than 18,000 entrepreneurs and the number of active members who launched their businesses now stands at 2,800.

With our 20 per cent average annual growth, we expect this number to double by 2020.

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Expo 2020 provides SMEs with a platform to display and deploy their capabilities on a global stage, not only during the event but also in the run-up to the event. A multitude of initiatives and projects are under way and more are expected as Dubai prepares for the biggest event the city has ever hosted. An estimated AED 30 billion worth of developmental works is underway on the EXPO 2020 site alone. With 25 million visitors expected during the Expo and the infrastructure and services required to meet their expectations, local companies will be in great demand as suppliers and partners.

SMEs are known for their flexibility and leadership in driving innovations and hence, Expo 2020 means a tremendous opportunity for SMEs. How do you foresee the launch of the new Wholesale City creating opportunities for SMEs? The Dubai Wholesale City is conceived as the largest wholesale hub in the world, specifically aimed to increase the UAE’s share of the global wholesale trade, currently valued at US$4.3 trillion and expected to grow to US$4.9 trillion in the next five years. The concept is founded on Dubai’s tradition as a trading hub and its economic strategy of further diversifying the national economy, away from dependence on oil.

The various industry clusters and free zones Dubai has successively rolled out - for example, Dubai Internet City, Dubai Media City, Dubai South etc. - do not exist in isolation. They evolve and flourish as a network of enterprises, logistics and support systems, each of which has a strong SME component. A key element of Dubai Wholesale City is the utilisation of integrated smart services, and the City aims to activate the world’s largest e-commerce platform. As key players in the tech space and with their ability to drive innovation, SMEs are well-

positioned to be strategic partners in the development and growth of Dubai Wholesale City.

Globalisation is the key to unparalleled success. How is Dubai SME helping home-grown brands turn global and build a strong brand identity for UAE? Entrepreneurship has played a stellar role in enabling Dubai to evolve into a regional and international business hub. Many of the brands the world identifies with Dubai today started as small scale enterprises.

Dubai SME aims to mould this entrepreneurial culture of Dubai and its role in creating Brand Dubai into the chief engine of the emirate’s economic development and sustainable growth. The ultimate outcome is for Dubai to have more growth-oriented, innovative, capable, and sustainable enterprises that can fly the UAE flag high.

In 2011, we launched the Dubai SME100 ranking specifically to identify high potential SMEs based in Dubai – to groom them to become bigger, better and sustainable enterprises. The Dubai SME100 ranking identifies and ranks companies based on a set of financial and non-financial performance parameters and then helps the ranked companies to acquire new capabilities and develop the business.

The ‘SME Hub Passport’ we launched in 2015 is another innovative partnership initiative to enable our SMEs grow beyond our borders. All SME Passport holders will have priority access to a growing network of global Impact Hubs where the SMEs can avail of an array of privileges, including free mentorship and valuable networking opportunities. The SME Hub Passport opens them to global markets, gives them an understanding of the growth strategies and potential in the startup world, and empowers them with a competitive advantage in going global.

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Networking

Trade Fairs

Market Information

Events

Membership

Market Entry

Business Support

Come Aboard www.ahkuae.com ABU DHABI Abu Dhabi Mall, West Tower, 1st Floor, Office 107 Tel. +971 2 645 5200 info@ahkabudhabi.ae

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Business Banking

Principles of quality customer service Most companies are making an instinctive effort to provide great service – primarily because they understand that ‘outstanding service’ can be a key differentiating factor in today’s fiercely competitive markets.

For early and growth-stage businesses, customer service can be an important stepping stone in building a solid customer base and boosting revenue. We offer top tips…

Superior service culture – do you have what it takes?

For years, service experts such as Ron Kaufman have been strong advocates of the fact that “a service culture is a working context where a group of people are committed to creating value for the customer, but also creating value for and supporting each other.” But, what are the core service values that will help your business increase market share, shareholder value and community goodwill? Up! Your Service, in association with Harvard Business Review, have put together “The Four Rules for a Service Revolution”. They are: Rule #1: Don’t start with customerfacing employees. Instead, involve everyone, with a special focus on internal service providers.

Rule #2: Don’t start by training people

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Business Banking

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Business Banking

on specific service skills, scripts and procedures. Instead, educate them first to a better understanding of what service excellence really means.

Rule #3: Don’t pilot the change.

Instead, go big and go fast to build momentum for the new culture.

Rule #4: Don’t focus on traditional KPIs during the service revolution (such as satisfaction, NPS, operational measures, and sales). Instead, focus on leading “revolution indicators” (i.e., number of ideas generated and ideas implemented) to generate valueadding ideas and new service actions.

Ten steps to achieving customer service excellence Bearing in mind the above-mentioned four golden rules of service, what are practical steps that a business can take to move forward in the right direction?

Developing effective customer service leadership that encourages great behaviours and performance from your employees can seem like a daunting task, but it doesn’t have to be!

1. Create a culture of service leadership: Many organisations spend a lifetime focusing on training their frontline team to

deliver better service. The reality is that in order to achieve service excellence, every organisation should look to start at the top. This means including the senior-level management in the process and ensuring that they understand the overall objectives of your service mission. Remember that service is an inclusive process – this means that everyone within the company is equally responsible for your service outcomes.

2. Ensure employee satisfaction.

Building an inward facing service model is as important as providing external service. Although this may seem like an obvious step, more often than not companies overlook employee satisfaction.

Employees perform and work better in a superior service culture environment; they understand that everyone is helping each other to succeed. Achieving service excellence is a combination of empowering both internal and external stakeholders of an organisation. If employees aren’t satisfied on the job, there is a

higher likelihood that they will not be motivated to deliver a high-level of customer care. In a business that promotes an internal service culture, every individual is driven to make something good happen, and feels good to be of service to someone. Put simply, customer service is – and should be – an intrinsically rewarding process.

3. Show them that you care.

Customer service organisations spend much time and money on reactive customer service but far less on personalised proactive support. Reaching out to customers quickly on matters of interest creates a feeling among customers that enterprises really do care.

There is a wealth of information available on customer activities and purchases, both from internal and external sources. Intelligent search and indexing of this content provides information on the customer’s tastes and preferences.

However, it is important that the suggestions are relevant and helpful and not intrusive or disturbing. Many companies can improve customer experience by supporting customer interests and notifying them of special savings with a personalised proactive outreach. Some customers exhibit certain purchase patterns and behaviours. It would be beneficial to keep track of such customers and approach them with offers they can’t refuse.

4. Never complain to a customer about your organisation. Negative vibes from an employee may keep a potential customer away for life.

5. Analyse – and understand – your customer. Businesses need to have a better understanding of their customer segments. As the service provider, you have to analyse if the customer you are serving is

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Business Banking

a new customer, an already loyal customer or somebody who is just casually shopping. It is significant that you engage with different types of customers differently. Service providers need to become value creators; you have to ascertain what the customer is looking for and deliver that.

6. Listen to the customer. Effective communication isn’t just about the positive messages you are sending out to your customer, it’s about listening to your customer too. You are unlikely to be able to help your customers effectively if you don’t fully understand their needs. Moreover, by not listening you can become very frustrating to the customer and may lose a sale or repeat visit. Opening the door to a two-way dialogue between your company and the end customer will enable you to deliver the best solutions.

7. Know your business. Whatever your product may be, have an in-depth knowledge of its features and specifications. Also read the product guide thoroughly to understand what may have gone wrong. This will enable quick and expedited service which will in turn lead to higher customer satisfaction. If you are unsure of the problem, never lie or make up some answer. Don’t hesitate to ask the customer questions that will give you a better understanding of their needs.

8. Make reasonable promises: Do not offer your customers a service which you may not be able to provide. Stick to deadlines and if situations change, inform the customer promptly.

9. Be memorable and leave a lasting impression: Research suggests that people tend to remember a single

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negative experience over several positive ones. Try to make the customer’s experience positive in any way you can. For instance, in the case of a dissatisfied customer, try to induce an element of humour into the situation, when appropriate. It may cheer the disgruntled customer up.

10. Use technology to build a competitive advantage. With the continual advancement of technology, it is imperative for your business to make a conscious shift to adapt more technically sound strategies to stay ahead of the curve. Use technology to build quick and efficient response mechanisms. For instance, if you receive a customer complaint on a social media network, provide an instanteous response assuring them that their concerns have been acknowledged and swift action will be taken. A Customer Relationship Management (CRM) solution is another great example; it allows your business to manage and analyse critical customer information such as purchase history, buying preferences and transaction frequency.

NBAD’s SME Academy – featuring service guru Ron Kaufman To share the above principles of customer service and emphasise the power of the service message, National Bank of Abu Dhabi (NBAD) invited world-renowned service guru Ron Kaufman at its recent SME Academy initiative held on April 26th at the H Hotel. With the theme of Achieving leadership in customer service, the skills-building workshop gave 234 SME owners the unique opportunity to enjoy a highly interactive session on establishing service culture within their organisations. Speaking at the event, Ron said: “I truly believe that service is the ultimate competitive and sustainable advantage – and armed with the lessons shared at today’s event SMEs can achieve new levels of business growth.”

“Service is taking action to build value for someone else.” – Ron Kaufman 37

Digitally Disruptive

Let me take you on a journey…

Etisalat’s new Connect.ae is a powerful navigation tool that delivers pin-point accuracy and a host of super-cool compatibilities and features. Plus, when you add Etisalat’s unique strategic partnerships with the top online brands, Connect.ae puts all your day to day needs - bookings, meals, shopping - quite literally at your fingertips. There’s even a special adaptation for Apple Watch…

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Digitally Disruptive

Combining crystal-clear Navigation with high-end online Search Picture this: a Navigation tool that locks down the hyper local search capabilities of your business and unleashes the power of effective lead generation and conversion - creating a brand new shop window for your products, special offers and listings.

Connect.ae aggregates, organises, filters and distributes local data for all digital services, regardless of the style or format of device. So SMBs have got a smart shortcut to what they need, no matter where they’re located in the UAE. What’s more, the platform is available in Desktop, Mobile, Tablets and Apple Watch - and to ensure near-universal application, it’s rolled out across iOS and Android.

As a Navigation tool, Connect.ae is among the very best available. It doesn’t require an Internet connection for navigation, because all maps are stored on the device’s memory.

There’s an advanced Text-to-Speech function, allowing full voice routing guidance for street names - the socalled ‘TTS’ function at its very best.

Plus, you’ll enjoy the following key benefits – • Detailed 3D Maps There’s powerful 3D map rendering at ‘blasting’ speed!

• Quick Search Simply use the search bar on the map screen to find everything you need, easily - restaurants, a particular street, a mall or local business • Speed limit alerts You’ll get an alert every time you exceed the speed limit.

• Full interaction You can call or mail every place of interest from the data on the detail screen.

• Safety cameras You can access a complete optional database of safety cameras.

• World maps The local view is just the beginning: comprehensive worldwide maps are

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available for all your international travels.

A world of 300,000 options…

Connect.ae is a state-of-the-art aggregator of business services; SMBs can simply and straightforwardly utilise Etisalat’s powerful alliances with the likes of Booking.com, Roundmenu.com and Zomato. com - all of which means a galaxy of choices in the daily shopping itinerary. Access as many as 300,000 businesses, not to mention malls, healthcare providers, schools, colleges and amusements parks - a list that is, quite literally, almost endless!

Powerful, flexible and SMBrelevant, Connect.ae was recently created by Etisalat Information Services and it’s designed specifically to be the first hyper local search engine for end-users and customers in the region.

As Rashid Khusaif Al Naqbi, General Manager, Etisalat Information Services (EIS) comments: “We searched for the best partner to develop a unique hyper Local Search Engine for all sorts of businesses and services as a complement to our telecoms business. EIS’ strength in digital products and data solutions coupled with the Etisalat SMB strong channel partner network makes it a compelling value proposition. By offering turnkey solutions, Etisalat SMB can enable all their customer base to have visibility and presentation in the new digital platform.”

And the best news of all…

Connect.ae features a special adaptation for Apple Watch. This is the ultimate in convenience because it means you can search via preselected categories that are constantly available on your wrist.

Categories include all the everyday items you’re likely to want - from pizzas to salons, and hospitals to groceries. The things you’re going to 39

Digitally Disruptive

Connect Navigation most relevant features list Offline Premium Maps No internet connection required for navigation.

All maps are stored on the phone’s memory.

Routing Alternatives Possibility to choose from various routing alternatives before starting navigation TTS Full voice routing guidance with street names (Text-to-Speech) Detailed 3D maps Powerful 3D map rendering at blasting speed Quick Search Use the search bar on the map screen to easily find everything, a specific street, restaurants, local businesses, etc.

Speed limit alerts Get an alert every time the car speed is over the allowed limit Full interaction Directly call, mail or visit every point of interest, right from the detail screen.

Safety Cameras Complete optional database of safety cameras.

World Maps Worldwide maps available for international travels.

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need, here and now, where you are.

With the core competence of fast local search results, it’s quite natural to move that function to your wrist - twinning a great local app with the watch that takes the course of wearable technology to a whole new level.

When you launch the app, you get an overview of 10 preselected categories, and with just a click, you bring up search results that can be sorted by proximity, reviews or relevance. The 10 categories are – • Restaurants • Pharmacy • Pizza • Salons • Cinemas • Coffee shops • Hospitals • Hotel • Dentist • Grocery Convenient, smart, innovative, Connect.ae empowers SMBs with leading-edge technology.

With its customised map and

navigation solution, Connect.ae is created specifically to deliver the very best local search experience. It’s an unmissable competitive and practical tool for SMBs. For Further information visit: www.connect.ae

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Give your business an easy start. Call us now!

800 5800 etisalat.ae/hellobusiness

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Infographic of the month

THE EVOLUTION

OF HUMAN CAPITAL The global perspective 26% of the world’s adult population has a good job 77% are currently in the process of restructuring their organisation or have recently completed the process 18% report that their employers don’t measure employee engagement at all As little as 7% measure employee engagement on a monthly basis 24% believe that leadership programmes don’t provide sufficient value 24% high-performing HR companies use design thinking as a tool

Outlook for the UAE

Macro-level trends:

What do employees look for in their organisations?

Do monetary incentives play a major role?

Increase in the use of technology to enhance HR management

Career progression

Good benefits package

37%

42%

What do candidates look for in potential employers?

37%

Employers using social media for hiring

32%

Shortage in the number of talented fresh graduates

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47%

Office work environment

32% Training programmes

54%

49% Competitive wages and financial incentives

86%

84%

Allowances and benefits

Good working environment

83%

76%

Increment in salary

Alignment of skills and qualifications with the organisation’s goals

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Infographic of the month

What are HR Departments focusing on?

Employee retention and engagement: 54%

Recruitment of the right skills: 43%

Develop effective performance management practices: 42%

Organisation culture development: 38%

Effective learning and development opportunities for the workforce: 38%

Leadership development across all levels: 37%

The role of technology

42%

72%

anticipate a significant amount of growth in the development of robotics and cognitive technologies

agree that Digital HR is critical

Sources: YouGov, Deloitte University Press, Gallup

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Movers & Shakers

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Movers & Shakers

EXCLUSIVE INTERVIEW

Rohei: pioneering imaginative workplaces that nurture creativity This month’s issue focuses on human capital, talent management and the future of workplaces, so it is only fitting that we speak to a company that is a true leader in this space. SME Advisor got talking to Singapore-based Rohei, an organisation that was recently ranked amongst one of the best places to work in Asia.

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Movers & Shakers

ROHEI is an intriguing concept. What does the brand set out to do?

ROHEI is a learning and development consultancy. We provide core skills training to organisations and individuals; this includes Corporate Training, Personal Development courses, Online Learning courses, Executive Coaching, and OD Consulting. We enjoy being brothers, sisters, and friends to our learners and the workforce at large.

ROHEI started after our founder Rachel Ong left her role as Vice President of a training company, after 11 years of consulting and decided to focus serving the youth. But her friends constantly nudged her to start something so that they could work together. Work at ROHEI officially 46

started on the 1st of April 2007 and the group of friends gathered to explore what they could meaningfully put together in terms of real value as a business.

Over the next four years, the team explored an eclectic mix of work from starting a plumbing school for a leading SME in Singapore, residential leadership programmes for tertiary level students to business process reengineering and strategic planning for MNCs and government agencies.

But out of their strengths, experiences, and goals emerged a common heart as training practitioners: being shepherds to the workforce. The team has expanded steadily and ROHEI’s focus is now

very clear: our biggest contribution to any organisation is our ability to craft learning experiences that leave a lasting impact. We aim to equip and upskill, to challenge limiting mindsets, to restore hope and build courage and, God - willing, change lives.

On your website, there is a fascinating phrase: “We create inspired learning experiences”. Tell us more!

We believe that some things are better caught than taught. When a person goes through the experience, rather than just hearing the words and principles being taught, it changes them. Our training focuses both on the individual’s mind and heart, and we hope to bring lasting change in their lives, something they can apply both at work and at home.

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Movers & Shakers

One of our main training processes are what we call Learning Stations, in which we create experiences such as obstacles, challenges, or stories for our participants to go through, and learn important lessons. Each learning station is a work of art, inspired by our love for people and our desire to bring new life to the workforce. It is designed with much research and crafting by our Program Design team. Creating a learning station involves much observation, study, creativity, and a lot of testing and refining. And it’s brought to life by our experience designers and trainers.

What does ROHEI aim to achieve?

What is your mission?

Our mission is to inspire hope, joy, courage, and purpose in the global workforce. In general, corporate culture can be oppressive and performance-driven. We want to show how workplace culture can be different. We want to inspire organisational leaders to change the culture of their workforce from performance-driven to peopleoriented. Because when the focus is on people and their growth and development, performance naturally follows, and the work they do comes from the heart.

What are some of the critical challenges you currently face and how do you plan to overcome them?

One critical challenge is knowing the wisdom to navigate the balance between placing emphasis on both People and Results. To overcome this, we need to be intentional in building leaders across levels and departments, for each to flourish in their lanes so that personal and business goals can be aligned as well.

What is your long-term vision for the company? How do you see it shaping up in the years to come? www.smeadvisor.com

Our vision is to see transformation in the global workforce, to see a change of culture, a shift from oppressive, performance-oriented approaches, to people-centric approaches. Our dream is to see a workforce that is skilled and committed to lifelong learning and development; mentally resilient and courageous in uncertainty; committed to wholeness in the spheres of work, home, and community, walks in moral excellence, believing that the community and family are worth fighting for; walks in dignity and compassion; looks forward to work, recognising that work is a privilege; completes each day energised and fulfilled; and endeavours to celebrate success with others.

You’ve recently been ranked as one of the best places to work in Asia.

This is a magnificent achievement.

What do you regard as some of the

When the focus is on people and their growth and development, performance naturally follows, and the work they do comes from the heart.

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Movers & Shakers

building opportunities • Purpose; being able to see the fruits of our labour, and how lives are changed by what we do

People within your team should be treated as the heartbeat of your organisation.

Poh Yu Khing, Chief Marketing Officer, Rohei www.rohei.com

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critical factors that helped you receive this recognition?

• People-oriented culture • Transparent leadership that creates trust • Strong friendships and relationships at work What do you consider as the key elements of a great workplace? How does your company make working an enjoyable and rewarding experience for its employees?

• People-centric culture; people know they are cared for; they’re in a safe place where they can be honest, and know that others will speak the truth to them as well • Culture of openness and trust; constantly giving and receiving feedback • Balances relationship-building and performance/excellence • Embraces and celebrates diversity • Strong values • Care and excellence in managing the physical space • The element of fun—both in finding joy in everyday situations and in creating team

In the UAE, there has been a recent unveiling of the Ministry of Happiness, which overlooks the wellbeing and happiness of citizens. From a business point of view, how important is it for you to integrate employee happiness and wellbeing within your strategic objectives?

Our employees’ well-being and sense of joy and fulfilment is one of our primary concerns. We do not see people as resources to be used, rather they are the heartbeat of the organisation. Therefore we make sure we see them, hear them, understand them, care about them, appreciate them, and then challenge, support, and encourage them. (These are the 8 Real8ability Factors© that we adhere to and teach as part of our programmes.)

We prioritise our weekly time with our staff, as well as monthly gatherings that help us keep our focus on our vision and mission, and build our relationships and corporate culture.

How would you describe the leadership style within your organisation?

We believe in servant leadership, in leading with humility. We also use the Real8ability© factors as a guide in managing relationships and performance.

Are there specific soft-skills that you look for in a candidate when hiring?

We look for people who share our values such as moral excellence, humility, the will to succeed, creativity, serving others and compassion!

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Data & Analysis

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Data & Analysis

Reshaping your workplace: a new approach to organisation design Experts at the Boston Consulting Group (BCG) - led by Partner and Managing Director Roghe Fabrice - unveil a fresh methodology to manage talent with a clear, stable approach to strategy and culture.

Here, we examine these organisation design principles, which can help businesses rethink HR, maximise value and reduce staff turnover.

In a time of economic turbulence, disruptive technology, globalisation, and unprecedentedly fierce competition, the priority concern for many business leaders is to adapt to the changing conditions in order to boost their company’s performance. For that purpose, they frequently turn to organisation design for help. By driving a thorough organisational review and redesign, company leaders can change the trajectory of their business.

Corporate reorganisation is certainly in vogue. In a survey conducted by BCG, almost 80 per cent of respondent companies reported under-going a recent reorganisation exercise – in about half of those cases, a large-scale, enterprisewide reorganisation initiative. If only it were that easy. The results have been disappointing: survey respondents rated fewer than half of the reorganisation

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efforts as successful. The underlying reason for such a low success rate: all too often, the companies’ leaders relied on organisational frameworks that have become outmoded and ineffective in today’s business environment.

Adapting to today’s evolving landscape The business world of the early 21st century is radically different from that of the early 20th century, in two key respects.

First, organisations now have to operate in a vastly more complex environment – one of globalisation, hyper competition, revolutionary technologies, and elaborate regulation. Such complexity implies an increased number of performance requirements for companies (for instance, to satisfy customer needs, address competitive pressures, or comply with the ever-increasing labyrinth of regulation).

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Data & Analysis

Successful reorganisation is often the most promising route for companies to regain their former sparkle, consolidate their strengths, or gain a competitive advantage.

the front line, in order to make the most reliable and creative judgments possible, must master and monitor local conditions. So, in this respect, they are now the experts: they know more about this aspect of the trade-offs than their superiors do and, accordingly, need greater autonomy and empowerment.

If reorganisation efforts continue to overlook these two major changes in the world of work, they will continue to fail. A new approach is needed, one that is better suited to the realities of the world in which companies now operate.

BCG has developed such an approach, called “Smart Design for Performance, or just Smart Design” – drawing on the principles of Smart Simplicity. The approach has been battle tested and has shown great success in raising company performance, mastering complexity, and enhancing employee engagement.

If you then assign to each requirement its own structural solution, you end up with an extremely complicated and unwieldy organisation.

Second, in most companies the nature of work has changed: from algorithmic work—that is, clerical or manual labour – to knowledge or heuristic work. Knowledge workers differ from clerical or manual workers in that their role is not merely to follow rules and perform specific tasks but also to use their own initiative to further the organisation’s mission. They have to interpret the rules, adjust to the changing realities, and make trade-offs among conflicting requirements in order to arrive at the optimal solution.

All of that requires judgment.

Judgment in turn involves creativity and full engagement on the part of the workforce. For algorithmic work, variation is discouraged and minimised—people need to follow the rules. Knowledge work and creative engagement, however, actually embrace variation and flourish in proportion.

What’s more, heuristic workers on

Understanding “Smart Design, Smart Simplicity” Smart Design is based on BCG’s Smart Simplicity model of how to design organisations for performance.

EXHIBIT 1: Smart design establishes the cultural behavioral link between organisational levers and results Organisational levers Structures - Processes - Metrics - Incentives - Information systems - Training Communication...

COMMON APPROACHES

SMART SIMPLICITY

People

Results Performance of the organisation Underlying assumption: Organisational levers directly determine results Error: Without an understanding of how levers influence people’s behaviour, what actually happens remains a black box, and unintended consequences ensue

Organisational levers Structures - Processes - Metrics - Incentives - Information systems - Training Communication...

Why people behave the way they do

Behaviours

Results Performance of the organisation Underlying assumption: Behaviours determine performance leversinfluence performance indirectly by acting on the contexts of the people involved Lesson learned: To effectively manage change, you need to understand behaviours and why they are rational

Source: Yves Morleux and Peter Tollman, Six Simple Rules: How to Manage Complexity without Getting Complicated, Harvard Business Review Press, 2014

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Data & Analysis

Two of the framework’s key tenets are as follows: 1. A company’s performance is a direct consequence of its people’s behaviour, which in turn is a response to the contexts in which these people find themselves. The performance of any organisation is driven by the behaviours of the individuals in that organisation: the decisions they make, the activities they undertake, and their interactions. These behaviours are rational – a rational reaction to a particular situation; they are not “hyper rational,” as the behaviours of a computer algorithm might be. Rather, they represent the individuals’ perceived best strategy in the situation. To change these behaviours, and hence raise the organisation’s performance level, you have to make a new set of behaviours rational; to do that, you have to change the situation, or context.

2. The new context must encourage cooperation. Company performance improves strongly when organisations raise the level of cooperation among the individual actors and align individual goals more closely with company goals.

Cooperation, in this sense, occurs when one individual takes action to improve the performance of another; it brings synergy, such that everyone’s efforts combine in the most effective way and benefit the whole group. Cooperation is therefore the essence of teamwork; the whole is greater than the sum of the parts.

Implementing the new approach within your business A holistic view of organisation design would encompass numerous components: structural elements, roles and responsibilities, individual talent, and enabling mechanisms such as core enterprise decision-making processes, performance management, and talent management. These are the key levers

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EXHIBIT 2: Smart design involves aligning four design elements to enhance organisational capabilities and drive target behaviours

PURPOSE: WHY?

DESIGN ELEMENTS: WHY?

Strategic priorities

1

Content

MAKING IT HAPPEN: HOW?

Designing and staffing through a cascade: “layer by layer”

Organisational structure • Management reporting structure • Spans and layers and resources

4

Competitive advantage

Organisational enablers • Enterprise decision processes • Performace Management • Talent management

Applying programmatic rigor with minimum overhead

2

Behaviours

3

Roles and responsibilities • Accountabilities, decision, rights and KPIs for key positions

Using multiple layers of communication

Individual talent

Organisational pain points

• Talent matched with role requirements • Skill building

Enabling leaders and top talent

Source: BCG analysis

for organisational change, and they are obviously crucial—but their relevance is indirect. To change a company’s performance is to change what happens in the company. And what happens in a company is not directly a matter of organisational levers (such as structures, processes, and systems) but one of behaviour – that is, what people do: how they act, interact, and make decisions. Workforce behaviour is what determines company performance. All of the various organisational levers act together to affect behaviour, and that in turn affects company performance.

But the traditional approaches assume, incorrectly and damagingly, that the organisational levers act directly and proportionately on company performance.

The new approach to redesigning an organisation, far more appropriate

for the new business environment, has behaviour at its core. It involves identifying and explaining the current behaviours of the workforce, defining the desired behaviours – those that would improve company performance—and generating the new behaviours by creating contexts that are conducive to them.

BCG’s Smart Design approach involves three main steps – the why, what, and how: 1. Define the purpose of the reorganisation By redesigning the organisation, your company can resolve many stubborn issues of strategy and execution. But before embarking on the redesign, make sure to identify clearly the company’s current performance shortfall (that is, the gap between the 53

Data & Analysis

company’s current performance and its target performance) and hence the precise aims of the reorganisation effort—with regard to competitive advantage, strategic priorities, or organisational pain points.

2. Determine the target behaviours and design the organisation Accordingly In this second step, you define the behaviours required to achieve the purpose. That will, in turn, lead to a set of design principles to be used for guidance as you shape the four key design elements, which are the building blocks for producing the desired behaviours. These elements are organisational structure, roles and responsibilities, individual talent, and organisational enablers. Note that they affect one another in many ways, and they act in combination to alter the context for individuals and encourage behaviours that drive high performance. So, instead of dealing with each of the four elements independently, you need to consider them jointly and align them.

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a) Organisational Structure.

Organisational structure refers to the hierarchy of management reporting—who reports to whom with regard to executing the strategy.

These reporting lines establish the organisation’s geometry: the spans of control and the number of layers.

Organisational structure can affect behaviour profoundly. That is because the reporting relationship is an important basis of power: a line manager has power over his or her subordinates by virtue of being able to influence things that matter to them—notably, their assignments, remuneration, and career paths.

The overall architecture of a company tends to reflect the company’s priorities. If the priority is functional excellence, for instance, then the company will usually be organised functionally; if the priority is customer intimacy, then the company will likely be structured according to customer type.

The problem is that almost all companies need to address multiple, often conflicting, priorities in order to be competitive in today’s environment. For example, in a functional organisation, the emphasis might still be on serving customers or on organising optimally to develop new products. Structure alone is not the answer. If a company neglects other ways of influencing behaviour, and concentrates on making multidimensional or overly sophisticated structural changes (or just continues to add new structures) in order to cater to its conflicting priorities, the result is complicatedness and extra bureaucracy. Which is where Smart Design comes to the rescue.

Another way that organisational structure affects behaviour is through geometry: the more layers the structure accommodates, the longer the chain of command becomes, and that can have counterproductive consequences— slower decision making, managers hampered by an overly narrow span of

control, a tendency for units to work in silos, and uncooperative or disruptive behaviours by frustrated workers. The trend in recent decades has been for organisations to reduce the number of layers within their hierarchies. Yet over layering persists, for two reasons.

First, the layers are often generated as a reflex response to business complexity: if a growing company opts to create a new regional structure, for instance, it would understandably be tempted to create a new layer in the organisational hierarchy to accommodate the regional heads. The second possible reason is that if the organisation is poor at inspiring its workforce to perform, it might overuse a particular incentive: the prospect of promotion. New layers might then be needed to accommodate the various employees who are being “rewarded” in this way. The new positions seldom add much value, and the roles involve little or no power. The effects of these extraneous layers and narrow spans of control include slower decision making, silo behaviour, and subdued productivity.

In contrast, a smart and effective organisation is lighter and flatter in structure, allowing for flexibility and agility. It specifies fewer and bulkier management roles with broad spans of control and motivates the employees in those roles to use their own initiative and to exercise their creativity in finding solutions.

b) Roles and Responsibilities.

Roles and responsibilities clarify who does what and who is accountable for what. For the staff to adjust their behaviour in a more cooperative direction, they need to understand their own responsibilities and those of their colleagues. They also need to know how these responsibilities are to be discharged, what decision rights and key capabilities are needed, and how to measure success. To foster performance and cooperation, the roles and responsibilities should be sharply www.smeadvisor.com

Data & Analysis

focused on what matters most; they should be defined more in terms of ‘the what’ than ‘the how’; and there should be sufficient overlap to ensure that all the bases are covered but not so much overlap that work would be duplicated or rivalries would emerge.

An effective way to design roles and responsibilities is through the process of “role chartering.” Each role is defined – on a single sheet of paper each time – in six related aspects: • Individual and shared accountabilities: that is, responsibilities for the completion of tasks.

• Decision rights: needed for carrying out the accountabilities.

• KPIs: for measuring the performance of these accountabilities.

• Mission-critical cooperation requirements: what each person can do to make others more effective at accomplishing their accountabilities, and what others can do in return.

• Desired leadership markers for the role—the values, characteristics, and “style” best suited to the role, such as a bias toward action, a sense of urgency, or candour and openness.

• Key capabilities required for fulfilling the purpose of the role.

The charters, if effectively designed, will help to foster cooperative behaviours and add value accordingly.

The challenge is not just to define a person’s independent responsibilities but also to define his or her shared responsibilities with regard to the work of others, in light of interdependencies.

So too for metrics: how is success to be measured? (If you cannot measure it accurately, you cannot reward it appropriately, and if you cannot reward it appropriately, you cannot easily incentivise people to engage in it. The metrics might show that each silo is performing strongly, while the performance of the organisation as a whole might be weak.) Cooperation cannot be measured, at least directly or quantitatively—hence the need

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for managerial supervision of key interactions and for spelling out the mission-critical cooperation requirements. The key is to align the charters of those people who especially need to cooperate with one another.

If your own role charter, thanks to a systematic alignment process, chimes well with those of your supervisors and your peers; that should both clarify individual and shared accountabilities and facilitate productive and cooperative behaviour.

All in all, by devising role charters for key positions in the organisation, a company can accomplish several aims: clarify the individual and shared accountabilities, establish how to align roles and responsibilities horizontally and vertically with the desired behaviours, secure from everyone involved the necessary buy-in for behavioural change, and increase power and alignment in the organisation, in order to enhance autonomy and cooperation and thereby cope better with complexity.

c) Individual Talent.

Individual talent is needed for filling the roles and discharging the responsibilities. To be a good match for a given role, the individual obviously must have (or be able to acquire) the right skill set and the motivation. That way, the role is performed effectively, the individual is engaged rather than disaffected, and the individual’s colleagues are therefore undistracted and likely to behave productively and not disruptively.

To achieve the right match, proceed in a methodical way. Begin by reviewing each key role and specifying the talent it needs; then choose the most promising candidate, regardless of current seniority, salary level, or contract type (external resourcing is one of the options).

If necessary, the company will aim to “upskill” the candidate for a new role, via mentoring, training, or other development opportunities. This

If executed well, performance management can help to enhance workplace behaviour – but it is liable to misuse.

upskilling is particularly important around the time of a reorganisation effort. Consider the example of a senior role holder: during preparations for the reorganisation, he or she might need to learn new ways of designing a team or of managing difficult conversations.

And after the reorganisation has taken place, he or she might need to acquire new managerial skills in such areas as leading a new team, resolving conflicts across units, and managing a broader span of control.

Once equipped with the appropriate talent or skill sets again, the role holder is in a position to fulfil his or her new responsibilities. However, that might still not be enough. The individual also needs the motivation to apply these skills, specifically in a cooperative way. When companies are struggling to execute a strategy, they often lay the blame on skill gaps when the real culprit is rather different: a shortage of cooperation.

The solution is to make adjustments to the context, in such a way that a committed fulfilment of the responsibility becomes a rational and personally beneficial behaviour for the role holder.

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Data & Analysis

Any new organisation design should not only deploy and leverage existing talent to the full but also aim to attract, retain, and develop future talent.

Any new organisation design should not only deploy and leverage existing talent to the full but also aim to attract, retain, and develop future talent. One strategy in this regard is to create and foster roles that offer great learning experiences or enhanced career paths. Once again, make sure to create a conducive context for such roles – one that gives an ambitious and talented individual the right amount of exposure, for example, and provides him or her with the right opportunities to move on after a while.

d) Organisational Enablers.

Finally, organisational enablers provide further help in creating the coherent organisational context that encourages the desirable behaviours.

The main enablers are enterprise-level decision processes and their support systems, performance management, and talent management.

Among the enterprise-level decision processes are strategic 56

planning, product and portfolio planning, budget allocation, and major capital investments. Decision making within organisations often becomes slow and contentious, and when a company tries to improve the situation by imposing formal guidelines and new processes, it often just complicates things and makes matters worse.

Once again, the right approach is to create a conducive context: the major stakeholders can then cooperate with one another to generate effective and timely decisions for the company’s benefit. As an additional resource for sharpening their decision-making abilities, the stakeholders have access to a support system, including IT platforms and data analytics. This system needs to be well designed, however, and the analytics need to be relevant as well as practical.

Failing that, the system could actually prove counterproductive, and weaken rather than strengthen the quality of decisions made within the organisation.

Performance management is conducted through staff evaluations.

The evaluations would ideally involve a combination of KPIs and judgmentbased assessments. The company should ensure that those conducting the performance management are properly equipped to do so. They need to acquire the requisite skills, by means of training, if necessary – how to recognise cooperative and uncooperative behaviours, for instance, or how to provide feedback candidly but constructively.

If executed well, performance management can help to enhance workplace behaviour – but it is liable to misuse. All too often, companies deploy performance assessment criteria to link operational failures to specific roles or individuals. The clearer the link, the more strongly the company believes it has the right assessment system – only to find that

these direct attributions have the effect of making matters even worse and prompting suboptimal or even counterproductive behaviour.

A smart organisation understands that performance requirements can be highly complex and often conflicting and accepts that problems of execution arise for many reasons. It also understands that frequently the best way to solve these problems is to increase cooperation, and that means reducing the payoff for those people or units engaging in uncooperative behaviour, even if the problem does not take place directly in their own domain, and to increase the payoff for everyone when everyone cooperates in a beneficial way.

As for talent management (through appointments, promotions, or a new career path, for example), it too can have a powerful effect on the way that people behave. One technique is to carefully assign people the role – perhaps as a temporary transfer – of someone affected by their behaviour.

By getting them to walk in another’s shoes in this way, you alert them to the “shadow of the future” – that is, you make them aware of the problems that their current behaviour might create for their future selves.

This technique is particularly effective when the outcomes of their behaviour lie very far in the future.

(In biopharma R&D, for example, the time lag between decision and outcome is so great that the decision maker might never be personally affected by the outcome.)

By reminding people that what happens tomorrow is a consequence of what they do today and making

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Data & Analysis

them accountable for it, you give them an incentive to optimise their current behaviour.

Both performance management and talent management need careful designing to create the right context for behaviour. It is all too easy to misalign them with target behaviours and thereby actually encourage the counterproductive behaviours that you are setting out to eradicate.

3. Make It Happen Reorganisation is undertaken not for its own sake but in order to successfully execute strategy and boost performance (in each case, by modifying the behaviour of the workforce). So the implementation phase is crucial. It has two main aspects: establishing the right context throughout and enhancing the capabilities of leaders and top talent. And it can be accomplished most efficiently through a process with three features: cascaded design, rigorous programme management with multi-layered communication, and capability building.

Cascaded design, or “layer-bylayer, team-by-team design,” involves role chartering by each employee successively down the organisation, in consultation with his or her colleagues and line manager. This cascading process helps to refine and publicise each role – clarifying the interdependencies and the way they affect one another – as well as speeding up decision making and reinforcing strategic goals throughout the organisation.

Rigorous programme management involves creating, tracking, and course correcting a portfolio of change

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initiatives. If conducted properly, it maximises the visibility of the change programme and ensures that members of the workforce understand and feel the consequences of their actions. Through feedback loops, it indicates, encourages, and reinforces the desired behaviours.

One of its major components is multilayered communication – at all levels of the hierarchy, senior managers hold one-on-one conversations with their subordinates and conduct pulse checks or surveys to monitor how their subordinates are progressing and how they feel. In that way, they can gain insights into the effects of the new context and make adjustments to it as needed.

Capability building, or enablement, drives performance and hence value.

Organisation design provides a unique opportunity for companies to boost capabilities in this way, provided that the company’s leaders and top talent learn the necessary skills: first, how to execute the organisation redesign smoothly, then how to lead within the new organisational context and help their subordinates to adapt, and then how to drive business objectives and value in their new roles. To ensure sustainable outcomes in each of these requisites, companies often benefit from a tailor-made leadership- and talent-development programme.

The Middle East perspective “As the Middle East’s industrial sectors continue to grow, competitive pressure is also rising. With this in mind, to edge out the competition, SMEs in the region need to ensure that they are achieving maximum performance. In addition, the gradual development of these sectors is also set to trigger a shift towards ‘knowledge work’ – which in turn will require a design approach that differs from the traditional one we often see here in the region. Adopting this approach will help boost performance

by creating specific contexts that encourage collaborative efforts, drive optimal behaviors, and support the SMEs strategy.”

Food for thought…

Successful reorganisation is often the most promising route for companies to regain their former sparkle, consolidate their strengths, or gain a competitive advantage. But taking that route requires steady nerves and bold measures. Many corporate executives are sufficiently bold to authorise a thoroughgoing organisation redesign, but not to break with the conventional approaches to it. The trouble is, the conventional approach has produced uninspiring results in recent years, and in many cases has actually made matters worse. It is simply inadequate in the present-day business environment: the circumstances have changed, and the approach needs to change as well. To drive productive behaviours, you must create broader and more conducive contexts for them and then implant the new contexts, layer by layer, deeply into the organisation.

Smart Design is a comprehensive end-to-end approach that is specifically adapted to the new circumstances and precisionengineered for boosting performance and engagement. It has produced outstanding results with minimal disruption: companies applying Smart Design have seen a revival of employee motivation and engagement and a surge in company performance.

If reorganisation initiatives often offer the best hope for troubled companies, Smart Design offers the best hope for reorganisation initiatives.

Dr. Christopher Daniel, Partner and Managing Director Boston Consulting Group Middle East

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Getting past failure

Creating a culture of innovation and learning

In the fast-paced, quickly evolving technological and business world, organisations need to develop a culture that encourages employees to embrace the possibility of failure and apply their expertise to new areas of study and innovation. Organisations that succeed in doing so will truly liberate employees, leading them to explore and innovate in different intellectual and entrepreneurial spaces.

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“I have not failed. I’ve just found 10,000 ways that won’t work.” ~ Thomas A. Edison Experts often regard failure as the prerequisite to invention. Most successful entrepreneurs, organisations and business geniuses walk a fine line of creativity and innovation that more often results in failure than it does success. For any business to develop an innovative product or solution, it needs to have an approach that encourages risk taking, looks at learning through

mistakes and embraces failure. In fact, the growing acceptance of failure by prominent business leaders is quickly changing the way organisations innovate. Businesses are beginning to realise that constructive mistakes can not only be worthwhile, but also prove to be significant educational tools enhancing an employee’s experience and learning.

Here’s a quick checklist to determine if your company has a culture of learning from failure –

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Organisation & Structure

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Ensure that you are rewarding employees that have demonstrated good behaviours and performed beyond their capabilities – no matter what the result of the overall task is.

a) Do you find that your company is lacking agility and innovation? b) Are your employees hesitant to openly discuss their professional missteps with colleagues? c) Do you find that your team members are often blaming one another for a task gone wrong? d) Do they ultimately solve a problem individually, or wait for someone else to fix it?

If your answer to two or more of the above questions is ‘yes’, it is definitely worth revisiting your overall business approach and considering the following strategies that will help create a learning from failure culture

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1. Replacing failure with a learning process. Successful companies creative a positive mind-set by encouraging the iteration and evolution of business ideas. So, when an employee attempts a new task or takes on a fresh project, it is viewed as a continuous process where he or she is constantly meeting smaller goals, learning along the way. Even though challenges and setbacks are expected, the idea is to keep moving forward. The bottom line is to create a culture where employees are comfortable trying new things, knowing that they aren’t 100 per cent guaranteed to succeed.

2. Analyse what went wrong. Before jumping to a conclusion, make sure that you have thoroughly analysed what went wrong in a task and caused it to fail. Identifying the root cause behind any problem is the first step to acknowledging it, and eventually overcoming it. Moreover, analysing where an employee fell short in successfully completing a task can aid in ascertaining how close he or she was to the overall goal. Once you’ve singled out the cause, help them recalibrate and gain a renewed focus on the goal.

If the same mistake has occurred more than once, it might be worth checking for a disruptive pattern.

Is there an issue in the working system that is throwing everyone off? Or, is there a particular department that is constantly stumbling? In this case, consider providing solid employee training, which can strengthen basic skills.

3. Promote transparency and create effective channels of communication. When something goes wrong, as humans our first instinct is to hide it, not talk about it and forget about it. This is not only an individualistic approach but can be extremely harmful to

the bottom line of a company.

Transparency is vital as it cultivate a culture of trust.

4. Focus on behaviours – not just the overall outcomes. Rather than focusing solely on the end result of a project, dig deeper to analyse each and every employee’s contribution and efforts. Understandably, it can be difficult to reward a team leading a failed project or task, but what happens when the same team uses the learnings to create a profitable outcome in the future? Ensure that you are rewarding employees that have demonstrated good behaviours and performed beyond their capabilities – no matter what the result of the overall task is.

5. Set an example. Most business leaders have a failure story that they talk about – the likes of Bill Gates, Steve Jobs, Richard Branson – they’ve all stumbled and picked themselves up. As the person leading your organisation, you need to set an example. Remember: all the stakeholders within your business – employees, business partners, investors and suppliers – need your reassurance after they fail. Your team needs to understand that it’s okay to try and fail, as long as they’ve learnt something from the experience. Of course, as the owner of the company, it is your responsibility to provide this, acknowledge a sticky situation and offer a plan for speedy recovery.

6. Ensure accountability. It is often the case that failure and blame go hand-in-hand. Every employee at some point needs to understand that accepting failure means taking the blame and taking responsibility for what went wrong. From a company’s perspective, this is the most challenging step of all – management needs to create a culture where it is

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Organisation & Structure

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OK to admit and accept failure, but at the same time maintain highstandards of performance.

7. Encourage intelligent risk taking.

This is something that could be potentially messy for business owners to manage. Yes, risk taking is a good thing. But, how do you differentiate from a genuine mistake and a mistake caused due to lack of initiative, skill or effort? An article on Harvard Business Review explains: “A sophisticated understanding of failure’s causes and contexts will help to avoid the blame game and institute an effective strategy for learning from failure. Although an 62

infinite number of things can go wrong in organisations, mistakes fall into three broad categories: preventable, complexity-related, and intelligent.” Figure One provides a spectrum of reasons for failure – giving employers a sound guide to taking appropriate action in different situations.

8. Remember, collaboration is key.

A large part of the process of creating a culture where failure promotes learning involves sharing stories of failure. By encouraging employees to talk about past failures in a team environment, the stigma surrounding failure reduces and they get insights

from each other’s mistakes. In fact, such a discussion can lead to a brainstorming session where the team together comes up with an innovative solution to move forward. Employees who once felt inhibited suddenly feel free to express their thoughts, frequently contributing to the innovations that drive the company. The critical part is tackling failure as a team i.e. collaboration can help build a culture of innovation where individuals are encouraged to experiment and quickly learn and evolve. It’s a culture where failure is celebrated and considered to be forward progress to further innovation.

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Organisation & Structure

Figure One:

Praiseworthy

Blameworthy

Reasons for failure 1. Deviance: An individual chooses to violate a prescribed process or practice.

2. Inattention: An individual inadvertently deviates from specifications.

3. Lack of ability: An individual doesn’t have the skills, conditions or training to execute a job.

4. Process inadequacy: A competent individual adheres to a prescribed but faulty or incomplete process.

5. Task challenge: An individual faces a task too difficult to be executed reliably every time.

6. Process complexity: A process composed of many elements breaks down when it encounters novel interactions.

7. Uncertainty: A lack of clarity about future events causes people to take seemingly reasonable actions that produce undesired results.

8. Hypothesis testing: An experiment conducted to prove that an idea or a design will succeed fails.

9. Exploratory testing: An experiment conducted to expand knowledge and investigate a possibility leads to an undesired result.

(Source: Harvard Business Review)

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The makings of a good leader Global business celebrity and TV personality Betty Liu reveals that leaders can function most effectively when they put the needs of their followers first.

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Organisation & Structure

There’s a thousand different ways to become a leader but there’s only a few ways to become a great leader.

If you ask any leader of a team, organisation or company, he or she will tell you that being a great leader requires a mix of nature and nurture.

You have to start off with some basic leadership skills and through your experience, you sharpen those talents.

Just because you’re a leader doesn’t mean you’re a great one (we recently witnessed a shocking implosion of a CEO at a major drug

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maker. Some leaders rise quickly and fall just as fast. Others keep the ship running but don’t inspire much in their troops. Sadly, a good many lead by terrorising their employees.

A great leader, though, will do one thing that the others don’t: he or she will make the people around and below better.

Why is this the hallmark of a great leader? Let’s use the four-quadrant concept of leadership (see Diagram One provided by the Centre for Organisational Design).

On the vertical axis from low to high is “assertiveness” – a key trait in leaders. On the horizontal axis from low to high is the opposing trait, “empathy.” From this chart, you can figure out exactly where you stand between getting things done (assertiveness) and being a team player (empathy).

Leaders who fall into the top left quadrant are dominant leaders - they’re highly assertive and lack empathy. Leaders like this motivate by their sheer force of brutish

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Organisation & Structure

Diagram one High

Assertiveness (Concern for getting things done)

Q-1 Dominator • High on task, low on people • “Big boss”/run the show • Sets high expectations • Concerned with results • Suppresses disagreements • Gets things done • Competitive and confidents • Doesn’t listen to others

Q-4 Collaborator • High on task and people • Sets high expectations • Concerned with results • Involve people in decisions • Deal openly concerns • Seek win-win solutions • Encourages responsibility • Interdependent

Q-2 Avoider • Low on task and people • Keeps a low profile • Hesitant and cautious • Doesn’t want to make mistakes • Follows tried and true • Avoids conflict/disagreements • Doesn’t provide direction • Carries out what others want

Q-3 Accomodator • Low on task/high on people • Warm and friendly • Keep people happy • Smooth over conflicts • Easy going/overlook mistakes • Let others decide • Loose structure

Low Low

A great leader, will do one thing that the others don’t: he or she will make the people around and below better.

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Empathy (Concern for relationships)

personality, the “either you do this or get out” style. Some companies, particularly those on the verge of collapse, need this kind of leader because they get results, though the results tend to be short term.

Leaders who fall into the lower left quadrant are really not leaders at allthey lack assertiveness and empathy.

Usually, you’ll find people like that have risen to a job they didn’t deserve and once in that position, they become exposed very quickly.

These people tend to last a very short time in their post.

Leaders in the lower right quadrant are high on empathy but low on assertiveness. These leaders are beloved by their staff but you might mistake their company as a little sleepy. Perhaps the company has been successful for a long while and nobody has needed to rock the boat.

It’s a fine place to be but eventually, the market and competitors get ahead and before you know it, an abrupt change takes place.

High

The “sweet spot” is in the upper right quadrant where you’ll find a leader that’s both assertive and empathetic. This is the secret sauce to great leadership. That person is not only marching up the mountain but has hundreds of people behind him or her.

Why? Because they can juggle what others can’t; being both aggressive and collaborative at the same time! They make the people around them better by being genuinely concerned about their growth. While they’re aggressive about getting things done, they involve people in those goals and delegate well.

If you want further proof, just think about people in history who are revered as great leaders. Abraham Lincoln (assertive, empathetic), Winston Churchill (assertive, empathetic), Martin Luther King, Jr (assertive, empathetic). If you’re even managing one person or a team or a company, this is your goalpost.

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Organisation & Structure

End of Service Gratuity in the UAE

End of Service Gratuity (Gratuity) is a statutory severance pay across most Middle Eastern jurisdictions and one which is conceptually analysed as akin to a retirement savings scheme or pension scheme. This article explores some of the common pitfalls and tricky issues which arise in relation to statutory Gratuity in the United Arab Emirates (UAE) under Federal Law No.8 of 1980 Regarding the Organisation of Labour Relations, as amended (UAE Labour Law). This is, however, a regional issue and many of the points flagged below will apply equally across the Middle East.

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Potential pitfalls when calculating gratuity The UAE Labour Law sets out a prescriptive formula for calculating Gratuity and whilst it does not expressly state that this benefit is payable in relation only to service in the UAE this is certainly the accepted position. However, many employers often inadvertently recognise nonUAE employment service through contractual agreement, for example where an employee is an international transfer from another jurisdiction within the business. It may be possible to recognise seniority but contractual provisions should be carefully worded so that the Gratuity benefit is not thereby enhanced.

Another area for consideration is where an employee receives commission or bonus payments during the employment. The UAE Labour Law provides that Gratuity should be calculated on the basis of remuneration excluding all benefits in kind and any type of allowance.

This wording leaves the position of commission or bonus payments potentially ambiguous and whether or not such payments should be taken into consideration when calculating Gratuity will very much depend on the particular details of any commission or bonus scheme.

Gratuity as an inherent employee entitlement Employers new to the Middle East can sometimes be surprised at the inherent nature of the entitlement to Gratuity and that it is, generally speaking, payable regardless of whether the employee resigns (albeit sometimes subject to reductions, explained below) or is dismissed (other than for gross misconduct).

Gratuity may be subject to reductions where an employee resigns from his/her employment

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Turbulence in the global economy is likely to increase the number of international disputes.

International arbitration is increasingly popular as the means of resolving them.

depending on the type of contract and the employee’s length of service.

However, once an employee’s service reaches 5 years, they will be entitled to their full Gratuity payment, notwithstanding that they have resigned from their employment.

No Gratuity is payable where an employee’s employment is terminated for one of the exhaustive list of gross misconduct reasons set out under Article 120 of the UAE Labour Law. However, this Article is generally reserved for the most serious acts of gross misconduct, often involving a criminal element, and in practice it is extremely difficult to validly terminate on this basis.

More commonly, in cases of poor performance or misconduct, employers will terminate on notice 70

for, what is referred to under the UAE Labour Law as, a “valid” reason. In such circumstances, the employee is entitled to their full Gratuity, notwithstanding that the reason for the termination of their employment is their poor performance or misconduct, for example.

Interaction with pensions – GCC Nationals The UAE has in place reciprocal pension arrangements with other GCC countries The aim of this legislation is to ensure that a GCC national receives the same treatment or benefit with regard to state pension as he would have had if he worked in his home country, in accordance with the laws of his home country.

There are minimum and maximum

earning levels for such pension contributions to be made and a GCC national is potentially entitled to Gratuity on any basic salary earned in excess of the maximum earnings level for pension contributions. On a contractual basis, employers should take care not to inadvertently grant such GCC employees Gratuity in addition to contributions into the state pension scheme.

Interaction with pensions - Non GCC Nationals Under the UAE Labour Law, it is possible for an employer to contribute into a pension scheme for the employee in lieu of the obligation to pay Gratuity. On termination of employment, the employee can choose to receive either pension or Gratuity,

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Organisation & Structure

whichever is more favourable to him/ her.

In our experience, it is often difficult for employers to establish that contributions made into a pension scheme on the employee’s behalf validly replace the right to Gratuity, particularly where such contributions are made into an international pension scheme.

The UAE Courts appear to be reluctant to accept that contributions into an international pension scheme are more beneficial to an employee than Gratuity as an employee will generally only receive the pension benefit once he/she reaches the relevant retirement age, whereas Gratuity is payable immediately.

Nonetheless, employers may wish to offer pension benefits as a

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means of retention or, increasingly, because it is market practice to do so (particularly for senior or C-suite level employees and internationally mobile employees). Where such a benefit is provided, the risk of having to provide both Gratuity and the pension benefit may be mitigated through contractual provisions to ensure a double benefit is not provided; essentially through securing clear employee consent to the pension being in lieu of Gratuity and also agreed claw back of contributions if Gratuity is later claimed by the employee. The rules of any pension scheme or savings scheme should also be reviewed and the administrator or provider of the scheme consulted to ensure that the schedule rules themselves can protect the employer as much as possible.

Further information If you would like further information on any issue raised in this update please contact: Rebecca Ford Partner, Clyde & Co Sara Khoja Partner , Clyde & Co

Clyde & Co LLP PO Box 7001 Level 15, Rolex Tower Sheikh Zayed Road Dubai, United Arab Emirates T: +971 4 384 4000 F: +971 4 384 4004 Clyde & Co accepts no responsibility for loss occasioned to any person acting or refraining from acting as a result of material contained in this summary. www.clydeco.com

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SME Unplugged

A TEMPLATE FOR HR GROWTH

How can SMEs facing manpower constraints cultivate their talent pipeline and grow their businesses? We ask the prominent SME development agency SPRING Singapore to share best practices and their world-class strategy…

SMEs are a vital pillar of any economy, contributing a significant amount to the GDP and employing 70 per cent of the workforce.

Yet, as the economy restructures to ensure productivity and innovationled growth, many smaller companies find it a challenge to recruit talent in a competitive labour market.

“Manpower shortages can be a concern for many SMEs,” says Christophane Foo, Executive Director, Human Resources & Organisation Development, SPRING Singapore.

“As a result, harnessing human capital is becoming an ever more important part of sustainable business growth. To remain competitive, companies need to recognise the

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need to do more with less, provide meaningful jobs and a quality workplace to attract and retain staff.”

Promoting organisational strengths Young talent can offer a fresh perspective that complements the experience of existing employees – which can help companies stay innovative and resilient. SMEs have several value propositions when it comes to being an employer of choice for a younger generation.

For example, SMEs are typically more nimble in adapting to change and seizing business opportunities, a strength they can tap to attract young candidates. In addition, a flatter management structure often allows

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SME Unplugged

new recruits to work closely with and learn from senior management team.

Working in an SME can expose graduates to different job functions and roles in which they’re less constrained by complex reporting and decision-making structures, says Foo. At the same time, SMEs often have a close-knit, family-like corporate culture, where staff are valued for their strengths and are mentored and trained by senior management.

“If SMEs strive to make their workplace a better environment where happier staff are motivated to achieve higher performance, this can set in motion a positive cycle of reinforcement,” Foo explains. “SMEs that are performing well can carry on invest- ing in training and developing

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their talents.”

Developing a strong employer brand Some SMEs are making efforts to develop a compelling employer brand that appeals to a younger worker demographic, to build up a talent pipeline that can support longterm growth.

“SMEs should think about developing new corporate practices to suit different career aspirations, being flexible and finding creative ways to reward good performance,” explains Foo. “This could mean introducing such things as profitsharing schemes, personal rewards, and support for further studies by staff and their career development.”

SMEs need to view human capital as a strategic tool to help drive business growth and be more forwardlooking in their HR practices.

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SME Unplugged

Human Capital Development

leadership skills of their senior management as well as staff training to help them acquire the right skill sets to grow in their careers.

practices and talent attraction and retention strategies.

The future of SMEs For SMEs to survive the labour crunch, they need to optimise their manpower, invest in human capital and put in place strategies to survive and grow. These include having strong leaders with a talent mindset, creating a trusting environment to motivate staff, adopting good HR practices to strengthen their brand proposition and improving business processes to build dynamic companies.

As Foo puts it, “SMEs need to view human capital as a strategic tool to help drive business growth and be more forward-looking in their HR practices.”

SMEs can develop a strong human capital foundation for business

HR Management & Development HR practices to support SME growth strategies.

Talent Attraction & Retention Develop and anchor a strong pipeline of young local talents.

Reproduced with permission from SPRINGnews February 2015 issue. Published by SPRING Singapore.

Become the employer of choice.

At the same time, many SMEs are expanding operations into new international markets, which leaves them well positioned to offer graduates overseas career opportunities.

“Talents that are committed and perform well may be given opportunities to be part of the pioneering teams working on major projects,” Foo says, adding that this should not be overlooked when promoting an employer brand.

Filling the gaps Many forward-looking companies have already started to address their talent challenges by taking a serious look at their HR management practices. A critical part of any corporate strategy is the ability to identify the right person for a job, exciting them to take up the role and 74

then retaining them.

Great examples are initiatives such as SPRING Singapore’s SME Talent Programme (STP). SMEs can attract young talents from the Institute of Technical Education, polytechnics and universities by offering internships, study awards and employment opportunities. SPRING partners with Trade Associations and Chambers (TACs) to administer the programme.

“Through STP, strong partnerships can be established with the Institutes of Higher Learning to ensure good job matches,” explains Foo. “At the same time, attractive career prospects in SMEs are promoted to students and graduates – so it’s a win-win situation.”

SMEs have also implemented HR capability improvement projects and focused on strengthening the

Many forwardlooking companies have already started to address their talent challenges by taking a serious look at their HR management practices. www.smeadvisor.com

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Technology for Business

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Technology for Business

LOOKING TO THE FUTURE:

The age of man-machine collaboration

One burning question that has troubled business owners in the recent past is – Can robotics completely transform work, as we know it, in the next decade?

Is there an actual possibility that a robot can be your next hire?

We take a closer look at the new era of robotics and analyse the evolving landscape…

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Picture this: John works within your operational team; managing paperwork, filing, escalating issues to the relevant department, interacts with fellow colleagues and gets the job done. John is a robot.

Many companies today are looking at artificial intelligence as a viable business opportunity – given the terrific speed and precision robots add to the equation. Working with trained machines can prevent serious injury to humans (in an industrial setting), increase accuracy and boost efficiency. Sophisticated conventional robots, which work in close proximity to humans, have sensors and powerful software that enable them to predict collisions and work seamlessly in an office setting.

The reality is that human-robot collaboration is gaining serious traction – all across the world. In fact,

countries such as China are making great inroads in this field with the modification of over 500 factories to include robots taking over work that would normally be accounted for by 300,000 workers.

This new era of man-machine collaboration is altering the dynamics within workplaces, encouraging humans and robots to not only coexist, but rather work together in new efficient ways.

Entering the era of man-machine collaboration There was a time when artificial intelligence was seen as a thing of the future, but the fact is it is closer to reality that we would like to think.

It is a technological change that is quickly transforming the way we live and work. Robotics, in the immediate future, will be incorporated into

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Technology for Business

business and companies need to be prepared for it. To get ready for this inevitable change, here are a few questions to consider – • In your organisation, what would be the perfect balance of man and machine? Are there specific areas of work that can be automated?

• Can robotics be used to drive innovation within your business?

• Is there a department within your organisation that is (or would be) directly responsible for managing robots and automation?

As the field of robotics grows, every business owner will be confronted with these questions. Moreover, CEOs and business leaders will also need to significantly reinvest in training their workforce. They will need to help them build the skills to work alongside machines, manage robots and oversee automated processes.

The employment misconception There is always a buzz around the topic of robotics suggesting that they will soon replace the human workforce. But, to what extent is that true? A PwC report on the topic explains: “There’s often a tendency to frame robotics either in terms of superhuman intelligence – think shiny walking things taking control of the human race - or, at the other extreme, as mere mechanical replacements for blue collar assembly jobs. The reality, however, is somewhere in the middle: increasingly robotics is assuming a more cognitive role – incorporating an element of decision-making once the sole preserve of human employees. While robotics may still be a long way off world domination, this technology has already moved past the point of simply substituting existing human roles to the beginnings of an augmented and collaborative working model alongside people – what we call the

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‘blended workforce’.”

The report also points out: “Interpreting the rise of robotics only in terms of direct job losses misses the point of how robotics can also create new jobs and opportunities for workers. It could achieve this by handing off the traditionally low-paid, low-skilled jobs to the bots while freeing workers to pursue alternative or more rewarding career paths. There might be less demand for factory workers but more demand for machine maintenance or programmers.”

Case study One: The most prominent of the simpler, safer robots introduced in the last few years is Baxter, developed by the Boston-based startup Rethink Robotics (Baxter, which has two arms and a cartoonish face shown on a touch-screen display, is very easy and safe to work with. To program the robot, a worker simply moves its arms through an operation to show it what to do. And should anyone get in the robot’s way, it will either stop or, at worst, hit the person too gently to leave a bruise.

Most important, Baxter is remarkably cheap, costing just US$22,000 when many conventional robots cost several hundred thousand dollars.

Case study Two: The Danish company called Universal Robots offers small, more conventional-looking robot arms that are similarly cheap (US$31,000 each), simple, and safe to operate. But these robot arms also offer greater precision and programmability, meaning they can perform complex work and either step in for a human worker or work alongside one. They can quickly be repurposed for a new job without requiring much reprogramming. Edward Mullen, national sales manager for Universal Robots, says the company has sold around 2,500 robots since launching in 2009, and he estimates that 80 per cent are running unguarded.

Many of the robots have been sold to small or medium-sized companies that do not otherwise use robots.

RSS Manufacturing, a company in Costa Mesa, California, that produces custom automobile and plumbing components, uses Universal Robots machines for jobs including manipulating pipes in a tube bender and producing valves on a milling machine. The company’s production runs can be as short as 24 hours, so the robots have to be swapped quickly between different tasks.

Source: technologyreview.com

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Technology for Business

The business view on Robots 64% believe robots will bring in new innovations into their business models

94% that are on the man-machine collaboration bandwagon say that it has increased productivity 64% suggest that this will increase their revenue per employee 33% believe that robots can expose their business to security-related risks

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67% say that robotics will in fact create fresh opportunities for employees by taking over the mundane repetitive tasks 58% look to reduce their employee headcount as a result of robotics making way into the workplace

What business functions do robots help with?

• Manufacturing and production: 39% • Research and development: 11% • IT: 9% • Customer service: 8% • Sales: 6% The great debate: will robotics significantly impact the society?

• 25% say it will have a negative impact • 58% say it will have a positive impact

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Technology for Business

Do thinking machines in the workplace really work?

SME Advisor took a sneak peek into Cisco’s futuristic HQ, where sleek modern design meets network capabilities and walking robots. You have to see it to believe it! Stephanie Chan, Editorial Producer at Cisco, shares her first-hand experience...

“We want Cisco to be viewed as having the most innovative employee experience in technology or in corporate America.”- Chuck Robbins Walking throughout the halls of Cisco’s Building 10 in San Jose, California, one might stumble across a telepresence robot. This self-roaming robot is equipped with a large screen as a head that allows people from across the world to connect to Building 10 via live video. As they traverse the shiny white and blue building, visitors may notice the intelligent kiosks, standing desks, and Power-over-Ethernet LED lighting.

Cisco has long been known for its technological advances, and the company’s new Building 10 headquarters is no exception. Through blending the physical and virtual work environments with leading tech, Building 10 highlights and celebrates the people working in the environments themselves. And these employees are exactly who Cisco looks to drive the

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future of the workspace.

After taking over as Cisco’s new CEO, Chuck Robbins spoke about wanting to transform the workplace experience.

“I want Cisco to be viewed as having the most innovative employee experience in technology or in corporate America,” says Robbins.

This goal manifests in the company’s People Deal, a mission set by Cisco to shape and enhance employee experience. The People Deal, created from employee feedback, seeks to highlight and support Cisco’s workforce. By focusing on everything from new tech, to maternity leave, to food services and more, the People Deal says technology isn’t at the centre of innovation, people are.

And the incorporation of new technology in Building 10 only works to bring employees together in collaboration—exemplifying the idea that the answers don’t just come from technology, it comes from people.

Mark Miller, who is a manager within

Cisco’s Worldwide Collaboration Sales team, states that above all, Building 10 should be observed as people-centric.

“It’s about driving employee engagement, it’s about driving innovation, it’s about people,” says Miller. “This is a people discussion, not a financial discussion. It’s about how important the workplace is for this company.”

Alan McGinty, Senior Director of Global Workplace Innovation, directed the design and delivery of the new headquarters project.

“We had the challenge to deliver a facility that projected Cisco’s position as the number 1 IT company,” says McGinty. “This space needed to express the Cisco brand through design elements, pervasive technology integration, an upgraded Customer Experience Centre, and the most technologically advanced boardroom experience in the world. We met that challenge.”

Cisco Building 10 certainly takes

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Technology for Business

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Technology for Business

boardrooms and telepresence technology to a whole new level – with an entire wall of the room operating as a dedicated video screen.

The technologies implemented into Building 10 were created specifically to encourage employee interaction, thus sparking the seeds of innovation not previously imaginable. Amongst the sleek interior design of shiny white and blue décor is the network running through corners and walls to support new tech like connected lighting, sensor technology, and Smart Spaces.

Smart Spaces is a Cisco developed space management solution that can be accessed through a kiosk, mobile app, or desktop. Smart Spaces allows an employee to identify, reserve and locate a workspace setting that is most appropriate for the work activities they are looking to perform. Once the workspace is selected, the solution automatically configures the space to the individual preferences of the employee.

“The next-gen work environment needs to revolve around flexibility, personalisation and choice,” says Miller, “Having both workplace policies 82

and tools, like Smart Spaces, in place to ensure this happens is absolutely critical. In addition, we find that our employees are much more mobile within the new work environment, working in a variety of different spaces throughout the day. The employee locate feature within Smart Spaces ensures that our employees can find their co-workers easily and efficiently.”

The co-working space is among the top driving tech trends that Cisco aims to follow in transforming the workplace.

Other trends include changing workplace demographics, use of contingent workers, and flexible work environments.

“The Cisco Connected Workplace deploys a wide variety of space types to support the different work needs employees display through any given day,” says McGinty, “Open, collaborative space, quiet rooms.

Creativity Zones, outdoor meeting areas, eCafes, residential soft seating areas are all provided and equipped with ubiquitous high speed wireless connectivity and video everywhere.

Our people can work anywhere, on

any device at any time. Technology is driving our space design now and into the future.”

Building 10 has been outfitted with video capabilities in order to reach employees around the globe. Each meeting room is armed with the audio and video needs of each employee to connect in meetings via telepresence.

Trends continue to change, and the nature of work is in constant state of flux. The technology Cisco has incorporated in Building 10 and its worldwide offices are prepared for the impact that change will have.

“We are aligning space, technology, and workplace policies,” says Miller, “We are consolidating and transforming our workplaces. We are creating a workplace that can quickly adapt to the needs of the business.”

The workplace design is fundamentally prepared for the future of Cisco and its employees. Gorgeous and modern interior design will make Building 10 occupants and visitors comfortable, while front line technology assures that Cisco’s driving force is and will be innovation.

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