When considering appointing candidates in Africa, it’s easy to become overwhelmed by the amount of information in the public sphere. Knowing which sources to believe is itself an exercise in due diligence. When we sent our Africa pre-hire checklist a few weeks ago, a number of executives like yourself reached out to us to ask how salary packages are structured on the continent and what remuneration elements to consider so as not to be tripped up at the last stages of negotiation. I guess they’ve learned the hard way that when a candidate says “I earn this much”, that’s really not the end of the story.
Well, they were right to ask us – we’ve found and placed candidates in close to 30 African markets and, while there are nuances in each, here are some of the compensation considerations before you commit to your next hire:
RELOCATION EXPENSES
While there is greater emphasis placed on hiring local talent, the reality is that African candidates are mobile, either in the rest of the continent or further afield. Even if you intend to hire a local citizen, chances are, you would need to build in relocation costs, which include flights and moving of personal effects.
HOUSING COSTS
These include rental, furnishing and employment of domestic and security staff, and need to take into account for the higher living costs in urban centres.
CAR OR DRIVER ALLOWANCES
These are especially necessary in areas with limited public transportation or less-than-ideal commuting options.
SCHOOL FEES
School fees for private or international schools for minor dependants.
GENERATORS
Generators and associated fuel allowances to ensure uninterrupted electricity supply.
CONNECTIVITY
In-home connectivity – in countries where internet connections come at prohibitively high costs for individuals, companies are expected to pay for connections to the home.
CLUB MEMBERSHIPS
Club memberships – for executives in client-facing roles, memberships to local country clubs or similar are considered as indispensable business tools.
HARDSHIP ALLOWANCE
Hardship allowances to compensate for lack of infrastructure.
LOCAL & INTERNATIONAL TAX
For candidates who need to maintain tax domiciles in multiple territories or who are taxed on worldwide income, the package needs to ensure that they do not find themselves in an inferior position, from a net pay perspective. In these complex cases, you may need to consider securing the services of an experienced international tax consultant.
HEALTH INSURANCE
Apart from access to private local healthcare, in the case of emergencies, this allowance would need to cover the costs of airlifting to a more developed country).
COST-OF-LIVING
Cost-of-living and exchange rate adjustments – for multinational companies, fluctuations in exchange rates can impact salary competitiveness. You need to ensure that the remuneration you offer affords your candidate similar or greater purchasing power across jurisdictions.
ANNUAL TRAVEL
Annual travel back to the candidate’s home country, if not a local placement.
All this in addition to the traditional pension and provident funds and cash bonuses. Don’t even get us started on long-term incentives and the complexity of share allocation when the parent company is listed in a different country!
If you’re on top of all of this, we’re glad to hear it. But if you still need an experienced partner to help you navigate this murky world, please reach out. We’ve got the benefit of data and experience and would love to help.
