Vision 2030 and the rise of semi-governmental entities
Saudi Arabia’s Vision 2030 goal is to leapfrog other nations in many sectors and become an international standard setter. A leader not a follower.
We have seen that over the past few years, and particularly with new emerging sectors in the kingdom, many greenfield, semi-governmental entities are being established to champion their respective advancements. These entities have an important role to play in the achievement of Vision 2030.
The challenge and opportunity
Establishing these new entities is a complex, expensive and time-consuming endeavour, and not many executives have experience doing it - particularly at the mega scale that is typically being targeted. Furthermore, the scale and urgency of the national transformation means that getting things right the first time is essential.
Our point of view
The purpose of this report is to provide an overview of the organisational establishment lifecycle from a people and organisation perspective. We build on our extensive experience in supporting flagship semi-governmental entities during their establishment journey, focusing on the Kingdom of Saudi Arabia.
The Organisational Establishment Lifecycle
We’ve defined four phases of the organisational establishment lifecycle, which has been segregated across the six critical foundational elements of the operating model of the new entity.
While we refer to the various dimensions, this report focuses in detail on our lessons learnt relating to the people and organisation agenda.
The People & Organisation Perspective
Organisation Structure
The organisation structure plays an important role in enabling the strategy and clarifying the roles and responsibilities across the organisation. This is particularly true during the early stages of the life cycle, where it is common to see uncertainty and duplication of roles between individuals. To ensure success, it is recommended to follow the below principles:
- Maintain a flexible structure that evolves as you grow
- Consider the ‘target state’ structure, even during transitional phases
- Take into account key organizational enablers (Authorities, job descriptions and workforce requirements)
HR Function and Frameworks
It is critical that the HR function is positioned as a strategic partner right from the start as it becomes more challenging to shift perspectives on the role of the department during later maturity stages. This is made more true given the large burden on the HR function to drive growth and maturity of the organisation - particularly given the high expectations and aggressive timelines that are common of entities being established in KSA. Accordingly, we recommend the following:
- Position the head of HR as a key player in the executive team
- Don’t target maturity too early
- Build an HR operating model that fits your needs, but remember the essentials
- Implement digital and analytics early
Employee Value Propositions and Rewards
Talent attraction and retention is a key challenge for newly established entities in Saudi, especially when it comes to attracting Saudi talent. We’ve seen that a significant number of semi-governmental entities seek to address this through highly competitive financial rewards and expedited career advancement opportunities, but this strategy may result in longer-term challenges for them. Instead we recommend developing an employee value proposition covering the below five core dimensions:
- Vision and Purpose
- Culture and Environment
- Pay and Rewards
- Growth and Development
- Leadership
Culture and Environment
Organisations that are newly established have a golden opportunity to shape the culture from the onset, without any of the existing challenges that organisations face during transitional shifts. We identified a set of practices to support in getting the right culture:
- Define the desired culture for your organisation
- Build leadership consensus and make sure they model such behaviours
- Encourage inclusion and diversity in everything that you do
- Embed the values and behaviours across the organisation and its HR frameworks
- Continuously communicate with your employee population
Talent Acquisition & Management
During the earlier phases of establishment, there is significant pressure to effectively recruit high-performing talent - given its importance to getting the organisation up and running. This means organisations need to effectively source, screen and recruit talent in an efficient and effective manner. We have outlined five core recommendations for doing so:
- Identify and fill no-regret positions
- Hire top-down, starting with the CEO
- Establish a robust screening & selection process
- Consider cultural and behavioural fit
- Establish an effective and differentiating onboarding experience
Talent management is a core component of the employee value proposition and provides the right foundation for the success of the new entity. That being said, newly established entities should avoid adopting very mature frameworks during early stages, as they are typically not fit for an evolving organisation. As such, we recommend a flexible approach to each framework as outlined below:
- Learning & Development - Start with core training focused on onboarding,soft skills and reinforcing the culture initially, and then develop a more comprehensive L&D Strategy.
- Employee Performance Management - Create a flexible framework in the beginning and define a target framework that is fit with the target culture of the organization.
- Succession planning - Consider succession planning early with a mix of internal and external candidates to reduce key person risk.
Key Takeaways
It has become somewhat of a cliche to ascribe the importance of people to the success of any organisation, but for new entities, the human component really is the most critical aspect of its success. The establishment of a new entity is a great opportunity to build a best-in-class and future-focused organisation structure, HR frameworks and HR function, without any of the restrictive legacy frameworks, challenges or considerations.
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