How can an HR strategy help to roll back energy poverty?

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1 Enterprise Growth Services How can an HR strategy help to roll back energy poverty? With EY s help to redefine reward management, SolarNow can release the full potential of its people to spread clean, affordable, off-grid energy in East Africa. ey.com/egs #BetterQuestions

2 Social entrepreneurs are using the power of the market to innovate paths out of problems as diverse as job creation, social inequality and lack of access to lifeenhancing services such as health, education, energy, clean water and sanitation. Enterprise Growth Services (EGS) exists to support these true legacy builders. Operating at heavily subsidized rates, EGS extends the benefit of EY s services to people and places we don t normally reach. By helping these small and growing entrepreneurs to operate more efficiently and grow sustainably, we extend their reach and impact a ripple effect that is changing lives and livelihoods in some of the world s most deprived communities. The quality of life imperative. Without electricity, you can t study or work after dark without having to rely on dangerous, expensive and polluting kerosene; you can t power a fridge to store food or vaccines safely; and you can t charge a phone, listen to the radio or watch TV to stay connected with the world. In short, access to electricity is essential to improving quality of life. 2 Enterprise Growth Services SolarNow

3 Helping entrepreneurs change lives In Uganda 85% of the population is in the dark More than 35 million people affected Air pollution 13,000 premature deaths The affordability imperative. More than 85% of the Ugandan population lives without electricity. Around one-third of people in these unserved communities live on less than US$2 a day, with a further 40% living on less than US$4. Many of them spend up to a third of their income on kerosene for heating and lighting. The health imperative. In Uganda alone, exposure to household air pollution from burning solid fuels and kerosene affects more than 35 million people and contributes to 13,000 premature deaths every year. Women and children are at greatest risk. Enterprise Growth Services SolarNow 3

4 1 The project More than 500 million people across sub-saharan Africa lack access to electricity, and the International Energy Agency expects that number to increase to 700 million by Since extending the grid to them would cost trillions of dollars, micro-scale, off-grid power from solar or clean biomass is often the only viable answer to energy poverty. In countries like Uganda, where only 15% of the population has an on-grid connection, there s undeniable potential for solar to leapfrog traditional energy provision models; however, affordability, perceptions of low quality and the absence of last-mile distribution and maintenance networks are curtailing development. These are the very problems that the Uganda-based company, SolarNow, was founded to solve. It sells high-quality solar systems to fit the needs of rural households and small entrepreneurs from 50-watt-peak home set-ups capable of powering a radio, phone and small number of lights to 5-kilowatt-peak systems that can power a small office plus a range of consumer electronics specifically designed to work on DC power from solar. Crucially, SolarNow also provides credit that allows customers to spread payment for all these products over two years. Together with a network of more than 30 branches and a price plan that includes full installation and maintenance backed by a unique two-year warrantee it would seem that SolarNow had all the pieces in place. With SolarNow projected to impact the lives of one million people across East Africa by 2020, a well-motivated and high-performing workforce is essential. Yet, despite the existence of targets and a bonus plan, the company estimated that sales staff were only operating at 40% of their full potential. In fact, the worst performing branches were only averaging 4 sales per month, vs. a realistic target of 18. Helping SolarNow to get to the root of that conundrum was EGS. Elizabeth Wallis a Senior Manager from EY South Africa s People Advisory Services practice spent two months with SolarNow s management team to diagnose the underlying causes of underperformance and help them devise a comprehensive program of measures to address them. With SolarNow projected to impact the lives of one million people across East Africa by 2020, a well-motivated and high-performing workforce is essential. It s one of the most important drivers of growth for a business already offering a brighter future for thousands living off the grid. 50-watt-peak home set-ups capable of powering a radio, phone and small number of lights 5-kilowatt-peak systems that can power a small office 4 Enterprise Growth Services SolarNow

5 Project phases Diagnose Conduct desktop research, branch visits and stakeholder interviews Develop testable hypotheses as to the root causes of poor sales performance Observe several sales cycles (both successful and unsuccessful) and refine hypotheses Discuss findings and initial recommendations Design Draft high-level HR strategy and supporting documentation Model financial options for new salary structure Agree detailed recommendations and develop initial implementation plan Work with HR to finalize HR strategy, competency framework, role descriptions and performance management documents Prepare detailed implementation plan Deliver and sustain Develop and launch leadership roadshows to explain new HR strategy with employees Coach and work closely with management, HR and branch teams to support implementation Review progress with management team at fourmonth point Enterprise Growth Services Jibu 5

6 . 2The client s perspective: Willem Nolens One of the big barriers to widespread adoption of solar aside from affordability is that villagers tend to distrust solar systems. They ve been sold cheap products that didn t last or bought appliances they didn t know how to use properly. We ourselves have had to change suppliers in the past because of poor quality. On one occasion, we even took the step of replacing over 3,500 lights, free of charge, because we felt our customers deserved better. They were shocked at first why were we replacing a load of lights that were actually working? but it really brought home our commitment to quality. I share this example because it underlines the vital importance of aftersales service. Selling a solar home energy system is not the end of the journey for us. It s just the beginning of convincing people that solar is every bit as reliable and easy to use as its more dangerous and unsustainable alternatives. Elizabeth has helped us put real substance behind the words of our goal to build a client-focused workforce with strong, committed professionals. I can t imagine anyone doing a better job. We need a sales force dedicated to the cause of making clean, reliable, affordable solar energy the most desirable way for people to survive and thrive off the grid. And, while I firmly believe that commitment has always been there, with the benefit of hindsight, I realize now that we were stifling it by failing to meet some of our people s more basic needs. It doesn t matter how strong people s connection to your purpose is if they are preoccupied with matters closer to home like putting food on the table for their families and being able to educate their children. Free replacement We even took the step of replacing over 3,500 lights, free of charge, because we felt our customers deserved better Elizabeth clearly understood that and quickly honed in on the structure of our bonus scheme as one of the most likely causes of underperformance. What really impressed me about her work, though, was her willingness to ask questions, rather than just serve up answers. She knew that, for the effect of her recommendations to last, the answers had to be ours. Those recommendations included rebalancing employee benefits, exchanging larger annual bonuses for improved base pay and shorter-term incentives. The more we thought about that as a management team, the more it made perfect sense, and we re already seeing a marked difference in our ability to attract and retain high-quality salespeople as a result of implementing it. More than that, her guidance on developing clear, long-term career paths and articulating a more structured, holistic approach to performance management and career development have put us in a position to challenge perceptions of sales as a transitional job rather than a destination career. In short, Elizabeth has helped us put real substance behind the words of our goal to build a client-focused workforce with strong, committed professionals. I can t imagine anyone doing a better job. 6 Enterprise Growth Services SolarNow

7 3The consultant s perspective: Elizabeth Wallis At EY, we talk a lot about asking better questions. That s because better questions can shift the way we perceive or think about something and serve as a catalyst to bring about actionable change. I ve always found why? questions really powerful in helping to take a step back, challenge assumptions and gain a deeper understanding of the problem at hand. And it s a couple of why? questions that made this such an interesting and challenging engagement. Firstly: It s been an inspiration and a privilege to work with such a genuinely purpose-driven business one that s literally changing people s lives. Why, when there s clearly so much buzz and excitement around SolarNow s purpose, should any group of people be underperforming? As someone who s worked in organizational behavior for more years than I d care to mention, I ve long been sold on the power of purpose to galvanize teams and inspire high performance, and I ve seldom come across a company with a stronger sense of purpose than SolarNow. So I was curious to understand how it could be that sales teams weren t fulfilling their potential. What I learned was that this wasn t a problem unique to SolarNow. Sales has a prestige problem right across Uganda. It s just not viewed as a career choice. It s something you do while you wait for something better. Of course, that cues a second why? question: Why is that? (And does it have to be that way?) As it turns out, it s often because big company approaches to performance-based pay just don t work in a small company context. When you have children to send to school and families to feed, a big end-of-year bonus isn t what you re looking for. You d gladly swap some of that for the stability and certainty of improved base pay and predictable career progression. So those were the things that formed the core of the package of measures we put together to solve the problem of underperformance and, even though it s still early days, there are encouraging signs that the plan is working. Not only is SolarNow attracting better candidates to fill sales positions, but experienced salespeople who had previously left the business are now looking to return. It s been an inspiration and a privilege to work with such a genuinely purpose-driven business one that s literally changing people s lives. If my involvement has freed up SolarNow s people to pursue that purpose with even greater vigor, then that s a worthy legacy to leave behind. Enterprise Growth Services SolarNow 7

8 EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. Contacts Jon Shepard Abi Smith EYGM Limited. All Rights Reserved. EYG no GBL BMC Agency GA 0152_05744 ED None In line with EY s commitment to minimize its impact on the environment, this document has been printed on paper with a high recycled content. This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice. The views of third parties set out in this publication are not necessarily the views of the global EY organization or its member firms. Moreover, they should be seen in the context of the time they were made. ey.com

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